I've been writing a lot about productivity and methods to improve it. A great source for thinking about improving productivity in firms has been a book called "The Goal" (one of my key book selections). For those of you with a more manufacturing or operations mindset, this is a novel which incorporates the Theory of Constraints. I know, hard to believe, but Goldratt keeps it interesting throughout.
I am interested in productivity, especially in knowledge based businesses, since manufacturing in the US is increasingly moving overseas. The concepts of The Theory of Constraints still apply to non-manufacturing organizations. Let's call it the theory of the weakest link.
Basically, the Theory of Constraints says that your process is limited by a bottleneck. There is always a step in any process that is a bottleneck - usually because it cannot scale to accomodate more throughput while the rest of the process can. See this description and a good website on process management for more information. In any process, there are steps which can create bottlenecks to efficiency. It's our responsibility as managers to eliminate or at least reduce the bottlenecks in the process.
In a previous posting, Business Process improvement for dummies, I wrote about the classic HBR paper in which the authors recommended literally following an order through the customer order process. These authors were focused on the elapsed time that the order took to complete a process, and the tiny fraction of that elapsed time that the order was actually being reviewed, approved and filled. In the same manner, I think we should evaluate our processes and find and eliminate any constraints or bottlenecks, so that our processes operate as effectively as possible.
I once worked as a consultant for a large hotel chain. In working through various process improvement projects, we discovered a large bottleneck in the purchasing organization. There, the purchasing managers carefully reviewed every requisition from the hotel brand design teams. This review meant that products were often late to arrive at hotel sites. When quizzed on the time and care placed on the review, the response from the purchasing team was - the design team rarely specified the right products, and without the careful review by the purchasing team, many sites would receive the wrong chandeliers, coffee makers and carpets. Rather than creating a standard item database and training the design team, the purchasing team had become a constraint, but in this case they were both a positive constraint and a negative constraint. We worked with them to train the designers and to establish a common product naming/numbering scheme. Eventually this meant that product specification and purchasing time were reduced by over 40%, without an increase in product specification errors.
Before our evaluation of the process, it was simply assumed that purchasing was a bottleneck and should work "faster". Upon further review, we discovered that purchasing was taking on both a quality review of design's work as well as their own procurement duties. But the culture of the firm did not encourage purchasing to train the design team and create a common item database. Take some time to evaluate and understand the bottlenecks in your processes - why they are there and how to improve the process.
What's the weakest link in your business processes? Have you effectively evaluated your most important business processes to remove non valued added time and to eliminate bottlenecks? What would be the impact to your customer service, your design cycle or your financial closings if you did eliminate the weakest links?