December 13, 2012 ISSN# 1545-2646
Improvement to a Fault
If you read my articles on a regular basis, you most likely gather some insights on improving your business or leadership skills. Many articles focus on ways for you to review your existing processes or procedures and improve on them so that they deliver more value and profit to your bottom line.
Today Im going to challenge a small group of readers that could possibly fall into a special area of over improvement. This group of very qualified leaders unfortunately get caught up in trying to continuously improve things so much that they lose sight that the cost of the improvement does not justify the end result.
Lets look at an example to help focus in on the type of behavior that can happen in a business. For those of you that are clients, you have most likely heard me say it is like counting how many fleas are on the dog when you dont even know how many dogs you own.
To grow a business requires a solid balance between the cost of doing a transaction which produces a result and the savings by not doing the transaction and allocating that time and energy to a more worthy investment.
Take a look at inventory and the process for counting or taking a physical inventory. Each year businesses go through the effort to reconcile inventory to what is physically on the shelves to what their control sheet indicates they should have on the shelf. It is time consuming but required. I have witnessed companies putting in elaborate computer systems, weight stations, inspection stations etc. all of which do contribute to a better overall count but at what expense.
The same holds true for most any number counting related activities in the business. I have seen elaborate processes and procedures to track each little transaction down to the penny and know where each and every penny is only to have the cost of tracking each penny far exceed the return. In other words spending two pennies to save one.
This type of over improvement cost a business lost of dollars and unfortunately is hidden because it is hyped under the banner of constant improvement.
This week look around your business for the over improved processes or ways of running your business. Start looking in any of the areas where number counting is involved. Im not suggesting violation of any practices that would cause failure of an audit of any kind. On the other hand, sometimes the cost to find details for an occasional non-recurring audit would cost less than running overboard processes all year long and having to have additional staff just to accomplish the routines.
Wondering which processes in your business are hindering your growth strategies? Give JKL Associates a call at (313) 527-7945 or send us an email to discuss.
Questions or comments – email us at partners@jklassociates.com or call our Office at (313) 527-7945
Copyright – JKL Associates 2012
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