- Jun 25, 2019,
Wasteful spending can increase your operating expenses, slow down your company’s growth, and adversely impact your bottom line. Large companies tend to waste millions of dollars on inefficient processes that do not improve the end product in any way or create value for the customer. For instance, a study conducted by Dr. Jonathan Koomey, who serves as a consulting professor at Stanford, revealed that companies spend more than $60 billion on cloud storage that they do not really need. Similar cases of wasteful expenditure can be found at every level in the corporate world.
In some cases, the solution to this problem can be found in the lean approach, which allows you to identify and eliminate waste, streamline business processes, and improve the overall efficiency of your operations.
How to Identify Waste?
The first step in reducing wasteful spending is to identify waste. Simply put, waste is an activity or process which consumes resources without adding any value to the end product. It is neither essential nor useful and does not have any impact on the quality of the end product.
The lean approach to eliminating waste is twofold.
- First, you need to identify and eliminate waste in the existing processes. It can help you save a lot of time, labor, and money without affecting the quality of the end product or user experience in any way.
- Second, if you are planning to expand your business presence, start a new venture, or add a new section to your existing business, you need to anticipate and identify potential wasteful activities and remove them in the planning phase itself.
Now, let us take a look at five key areas where you can eliminate waste and improve efficiency.
Production is an area where you can identify and eliminate a wide range of wasteful activities. The first thing you should look for is redundancy. Are there steps in the manufacturing or development process that are repeated? Could you combine two steps and still achieve the same results? By doing so, you can save valuable resources and achieve faster results.
Next, you should turn your attention to the problem of overproduction. It is a notorious problem in the manufacturing sector. Many companies keep producing goods at a much faster rate than what is actually required, just to keep the workers busy. It is not only a waste of time, but also leads to several unnecessary and wasteful activities.
For example, overproduction leads to unnecessary transportation (transporting the goods from the manufacturing plant to the warehouse), excessive storage costs, and unwanted motion (excessive physical efforts put in by the workers). The solution is to strip the production process of its excesses and retain only that which is needed. You should only produce what is needed, when it is needed by the end user.
Streamlining approvals to eliminate waste in manufacturing: A consolidated approvals process using Capriza ApproveSimple brings greater visibility to expenses associated with manufacturing, helping managers better understand the flow of expenses before they are incurred.
Inventory waste is tied into the overproduction problem mentioned above. If you produce more than what is needed, you will obviously end up with excess inventory. This excess not only increases your storage and maintenance expenses, but also adds to your depreciation costs. This is particularly applicable for perishable goods, which tend to expire after a period of time.
The rate at which you produce goods should be based on consumer demands. The amount of products in your inventory at any given point should be sufficient to meet the short-term demands of your customers. Anything beyond that should be rightfully recognized as potential waste.
Consolidating approvals to eliminate inventory waste: Capriza ApproveSimple reduces the friction for those submitting approvals during procurement. As a result, the risk of redundancy or wasteful purchases is decreased as approval submitters will stay better organized and have a clear view of what material they have in stock as well as what material is inbound.
Unnecessary transportation of manufactured goods is a wasteful activity that you should try to avoid to any extent possible. Like excessive inventory, unnecessary transportation too is tied into the problem of overproduction. The more you produce, the more you have to spend on transporting the goods from one place to another. If the storage facility is located far away from the manufacturing facility, you have to spend even more money on transportation. Ideally, facilities should be close to each other to reduce wasteful transportation costs.
Reducing transportation costs through simpler approvals: Capriza ApproveSimple helps organizations manage their transportation costs by providing drivers and their managers an easy way to submit and approve expenses. Submitting fuel, parking and toll expenses can be done from a mobile phone, reducing the need for drivers and vehicle operators to find an office computer to enter in expenses for approval.
- Lead Time
Lead time is the total amount of time it takes to manufacture a product or complete a project – the time period between the very first step and the very last step in the production process. It also refers to the gap or break between two different steps in a process. There are several ways in which you can reduce lead time. Instead of sourcing materials from a large number of suppliers, you can work with a small number of reliable suppliers to procure the components or raw materials you need. Similarly, you can work with local suppliers instead of overseas suppliers. Similarly, shortage of labor can also result in extended lead times, since an unexpectedly reduced group of workers cannot operate the entire manufacturing line.
Eliminating lead-time issues in manufacturing through better approvals. Having the right number of people working on the manufacturing line is easier when requests for time off are processed in a timely manner. With Capriza ApproveSimple, these requests can be processed without friction so that your manufacturing floor always has proper coverage…and so that your employees can have the time out of office that they need.
Reducing waste through common sense and consolidated approvals
It is crucial to remember that there is no idea, technique, or process that is too perfect to be corrected or improved upon. Simply stopping to examine where there might be waste in your manufacturing process can give you new insights into the areas for improvement. By also utilizing a consolidated and simplified approvals process in conjunction with these improvements can pay big dividends. While competitors are dragged down by inefficiency and ineffectiveness, your manufacturing business can optimize processes while reducing waste. If you’re interested in learning more about how Capriza ApproveSimple can help you elminate spending bloat, contact us here for a free demo. We work everyday with manufacturing organizations around the world to improve their infrastructure and we would enjoy the opportunity to share their stories with you.