Using Your Head to Help Your Bottom Line-
Focusing on Cycle Time Reduction Techniques

by Doug Brown

Since 1985, many of the largest organizations of their kind in the world have tapped into Doug's consulting expertise and experience. As a management and sales consultant, Doug works side-by-side with an organization's senior executives and teams of thought leaders on issues of strategic importance. Together they quickly distill what strategies and tactics will be necessary to achieve their desired business results and metrics, whether via top line sales growth or bottom line profitability. Business leaders who relish intellectual stimulation and don't shy away from being asked 'tough questions' will get the greatest benefit as a result of working with Doug. Organizational leaders who are willing to question their own underlying assumptions and proactively embrace change truly appreciate his thought provoking approach. To stay grounded in reality, Doug insists that everyone bring all of their business acumen and common sense to the table. He then finds a way to leverage it to their collective benefit. As a result, they experience a tremendous return on their investment.

While the case can certainly be made that increasing top line sales is a sound strategy, the adage that has been kicked around the financial services world for years has been, "it's not what you make, it's what you keep that matters". This article provides a rationale for examining the internal costs and driving them out of your business processes.

You may be somewhat familiar with the concept of "lean manufacturing" as it is commonly referred to in a manufacturing environment. Lean simply defined is eliminating all forms of waste that currently exists in a process. What many people in service firms fail to realize is that the benefits that accrue to manufacturing or production environments also applies to them. These wastes may take the form of excess travel between pieces of business equipment, transportation of people or paper, excessive inventory in terms of multiple sources of supplies around the office, inefficient or unnecessary movement during repetitive tasks. Even in a manufacturing environment, almost half of the costs can be tied into business processes, such as order entry, accounting processes such as accounts payable, accounts receivable or billing, order fulfillment, recruiting and training staff, etc.

Reducing cycle time is one of the most sought after goals in almost any industry (manufacturing or service) today. If you can increase productivity and customer responsiveness without compromising quality, everyone wants to know about it. The question is how to do it on a continually improving basis that makes common sense even among small firms.

Cycle time reduction is an overall process that requires constant attention and fine-tuning at each of its stages. One should never be satisfied with yesterday's levels of productivity. Especially in fast-paced, constantly evolving industries where the paradigm is shifting, there are constant demands for improvement. Many are searching for ways to preserve precious resources, maximize profitability, and of course, increase the quality of services provided to customers both inside and outside the organization.

These are several essential factors to take into account in reducing cycle times today. One thing to consider is that everyone who focuses on providing better, faster service to their customers is attempting to increase their competitive advantage as well. A wise way to go about this is to maintain a continuous improvement philosophy. If you don't focus on continual improvement efforts, you can be sure that some of your toughest, most aggressive competitors will.

To ensure that you don't miss an important nuance, when we refer to "continual improvement efforts", we mean that we making positive changes, holding the gain just long enough so that it becomes ingrained, and then making the next change. Think in terms of a "step function" graph vs. a continuous upward curve.

The Changing Competitive Advantage
Is the meaning of "competitive advantage" changing for today's organization? It appears to me that one of the most important factors in capturing or holding on to a customer has been the perceived speed and responsiveness to handling inquiries, changes, and delivery in order to meet expectations (whether implied or stated). It also seems that until unnecessary time and energy are driven out or removed, the transaction cost of servicing those customers is higher than it could be and those human assets cannot be redeployed for even higher level utilization. An example of "highest and best use" may be an increase in the amount of proactive calls and customer contacts that could be made. Often times I'll ask business and agency owners this question, "If I gave you a fully trained person for a year at absolutely no cost to you, what would you have them do that your organization never seems to get to now or doesn't get to as often as you'd like?" You know they almost always seem to have an answer.

Even The Usually Well Managed Need Help
To give an illustration of how even companies with good reputations can find opportunities for improvement, I'll relate a story. Several years ago, a colleague of mine, was provided a tour of a well-known computer manufacturing facility. During the tour he observed several people grabbing full bags of mail, putting them on an industrial scale, weighing them, and recording the weights. He found out subsequently that a report would be created each day, and ultimately sent to multiple layers of management. When the curiosity got the best of him, he asked the mailroom personnel, "Why are you doing that?" They somewhat sheepishly replied that they had no idea. They were just doing what the job entailed. My colleague followed up with others in the organization and found out that they had been 'weighing the mail" for about 4 hours per business day for more than 25 years! The best guess he had heard from people within the organization was that at one time the mailroom operator must have said to his boss that he was getting swamped with mail and needed a helper. When the boss asked something like, "Do we know how much mail are we getting each day so we can determine when we need to add a helper?" The answer was probably something, "Not really". So the manager must have suggested they begin to weigh it. What adds insult to injury is that not a single person who was getting this report each day paid any attention to it. While this may seem somewhat insane at first blush, almost every organization can find their own examples of "weighing the mail" once they start looking.

Develop Intelligent Processes
The real key to success for developing breakthroughs in cycle time is to answer several questions before you get very far into the examination process. Those questions examine the overall value of the process being considered to undergo the cycle time reduction process. In addition to your own internal reasons for the attention such as high cost, do your external customers care about the outcome of the exercise? Do you know or suspect how broken your current process or procedure is? Have you identified what issues or circumstances, if any, are off the table for this go round?

To begin the actual process, we recommend that you start by looking at the job titles or functions that are necessary to complete the predefined, existing cycle. Select participants who are actually engaged in the day-to-day work. Resist the temptation to select managers of a process at the exclusion of the people who are actually doing the work. That is not a shot against you or the managers in your organization. There are simply too many times that a time estimate will be required during the process, and the closer to the real, actual number the better. Managers will often relate how something was designed to work, or thought to work, instead of describing the actual process of today.

Begin to capture how the work actually passes from function to function in the present process flow. Where are the handoffs among participants? Where are people coming in and going out of the process? Are there functions that are only occasionally active? Look to identify existing bottlenecks and potential problems. Eventually you will begin to design the ideal process or "production work flow" (This choice of words is true even when you are examining a business process versus a production process.) Rules to follow when you go to design the new process include eliminating redundancy, including looping back and checking back with others, moving processes upstream as early as possible, and defining cycle time objectives. One of the things most firms discover at the planning stage is that redundancies are often due to the fact that different groups use different tools or methods to perform the same tasks. This kind of redundancy costs time and money even if not direct out of pocket costs.

Only when a well-paved road replaces the many gravel roads of everyone "doing their own thing their own way", can the payoff of a cycle time reduction process truly begin. The future step in the evolution process may be automation, but it would be foolish to automate a flawed process so that it produces a bad output faster, wouldn't it?

Today, streamlining a process between multiple departments and multiple processes can be achieved through basic scripting and computer programming, using electronic forms and workflows.

Ideally, this automated electronic process takes every transaction from one completed process stage to the next; the forms follow the job with paperless documentation; and the workflows serve as guardrails, keeping people and processes on the same track.

I would expect that eventually new data technologies will allow for formatting and translating data to meet the needs of different industry segments and lend themselves to a whole new approach in the working relationships.

Conclusion
As cycle time reduction demands are burgeoning through all types of business segments and organizations, cycle time opportunities are quickly emerging and expanding. The use of interconnecting technologies should allow for the "re-engineering" of the entire spectrum of work among and between departments, areas and business partners. As suppliers continue to embrace new technologies and develop and refine their own infrastructure and capabilities, the opportunities to do "more, better, faster" with existing resources will grow. With the advent of true integration, a new level of collaboration can be developed. Once this level of information is shared and understood, the supplier and customer working environments can each attain even better efficiencies. Advancing developments in software should allow each link of the chain to parlay each other's technology capabilities to achieve even greater efficiency. This will allow the deployment of resources to better serve the customers or grow your business.