Simple changes could make companies leaner

Most business owners could make their companies leaner and more efficient if they looked very closely at making some very simple changes, says business advisor and accountant Michael Ogilvie.

Michael explained: “Every process in your business either delivers value for your customers or it doesn’t. Reduce the waste in a process and you either reduce costs or impress customers or both.

There are seven types of waste that can be better managed to avoid missing out on the profits, cash and growth you could have.”

The seven types of waste are:

Unnecessary waiting waste – people stop working because they are waiting for something

Over-production waste – doing more or making more than is needed eg a taxi firm sends an eight-seater to collect two passengers.

Transportation waste – moving products or equipment around unnecessarily eg carrying one box at a time from a store room instead of using a trolley.

Processing waste – repeated action that adds no value for the customer eg a 30 page report is produced when a two page summary would have done the trick.

Inventory waste – unnecessary levels of stock or work in progress eg projects get started but not finished on time, building up work in progress that can’t be invoiced.

Motion waste – unnecessary work that does not add value eg are there too many steps needed to set up a new client.

Defect waste – poor customer service or “not fit for purpose” products are produced eg a fitted kitchen needs rework because the initial measurements were inaccurate

In order to identify waste, business owners need to look at a process that is regularly carried out in their company and then look for one or more of the seven wastes.

Michael, a director with OBC The Accountants, said: “Ask your people performing the process if there is one thing that is making their job harder than it should be, then listen to all the answers, capture all the suggestions and seek out what you can quickly change.

“Getting team engagement can be tough, yet managing waste can be the easiest way to get their buy-in. After all you’re talking about making their job easier and making their job more pleasant. A small change can have a big impact on a team.”

If you would like a toolkit to identify waste in your business then contact Michael Ogilvie at OBC The Accountants on 01323 720555.