'In Any Business, 60-70 % are Non Value Activities

A recent article I read was headlined "In Any Business, 60-70 % are Non Value Activities". Further investigation outlined the fact that this was related to the Indian health care system, but it did get me thinking about whether there is a similar percentage for other industries.

I don't think anyone would argue with me if I said that all industries have some sort of non-value added activities in their processes. My interest is in minimising these activities.

Of course Six Sigma specialises in identifying and minimising these, but the problem I have with Six Sigma is that it tends to focus on specific parts of a process rather than the process as a whole. This results in either a sub-optimised process (but one which can be easily measured and quantified) or problems being shunted further along the process chain in either direction (any Six Sigma black belts out there who have a different opinion are welcome to reply in the comments).

Why is there non value-added work? I believe in the old adage of 'If something is happening there is a process behind it. It may not be the best process. It may not be adequately documented. But it is a process'. In many of today's companies this adage is the way a lot of work gets done. Things have evolved over the years to a state where a company that has been in operation for a while may be riven with inappropriate and overinflated processes.(For examples of two of these see my posts 'The way it's always been done', and 'The way it's always been done, part 2'). A consequence of this is that there is non value-added work placed into the process workflow. A great example of this came at my previous company which was a large pharamaceutical organisation. Pharma companies are governed by a large amount of beaurocracy and governance to manage the discovery, commercialisation and selling of drugs. The paper trail for this is enormous (and mainly relates to offsetting litigation when a drug kills someone - as it quite often can do). The basic governance standard is set by the FDA in the US and associated governing bodies in Europe and round the world. The interpretation of this governance is up to the individual companies.

This is the sort of place where you need to have 24 people review a document before it can be officially approved. When electronic signatures were introduced into the process it was still felt that all 24 people needed to review each document despite the fact that research showed that, in fact, only about 5 people in each case had input into the review, the others either didn't review it or too so long to review it that the whole approval cycle took forever to complete. Reviewers were added so that they couldn't later come back and say 'Well I didn't know anything about this'.

When we looked at the problem through a different lens we were able to say 'Suppose this document was stored in a central place and you were informed when it was updated, would you be happy to take that as proof that you were informed, given 3 working days to come back with issues and - if nothing is heard - we take it that you are aware and up-to-date?' By adding in this 'Implicit review' step we were able to do several things.

1) We were able to minimise the number of folks reviewing the actual document.
2) We were able to substantially reduce the approval cycle time for a document.

The key was to ignore the way things had been done previously and concentrate on why we need to do things a certain way now. In an organisation with 45,000 employees I can imagine that the instances of activities being carried out which do not add value as being extremely high.

This doesn't mean that the non value-added work is wrong, or indeed that it isn't needed. In many cases it is part of the overall way things get done in a company - especially as it increases in size and bureaucracy. But for those companies looking to reduce their overhead, increase their efficiency and increase the bottom line, focusing on non value-added steps in a process is a sure-fire way of achieving these goals.

Reminder: 'The Perfect Process Project' is still available. Don't miss the chance to get this valuable insight into how to make business processes work for you.

Click this link and follow the instructions to get this book.

All information is Copyright (C) G Comerford

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