Improving profitability or efficiency of the business process
Per the textbook, to eliminate or reduce non-value-added work is a core step in improving profitability or efficiency of the business process. Give your opinion on whether or not you agree or disagree with this statement and include one (1) example of a business process which supports or criticizes the aforementioned statement to support your position.
- “The work associated with any process can be divided into two categories: value added, and non-value added. Value-added is required to produce the product or services, even when the process is functioning as desired” (Hoerl & Snee, p.65). In contrast, non-valued added work is not necessary to produce the product or service and it often appears in the form of finding and/or correcting defects or errors in a process.
I am in total agreement that there should be mechanisms in place in every organization to recognize value-added and eliminate and/or reduce non-value added. I am also in agreement that this is a “core step in improving profitability and efficiency for any business process”. This is supported in the practicality that “to provide any product or service, you have to use resources like money, materials, labor, time, and information. Lean is one (1) business process that is used quite often in businesses as a core step in improving profitability and/or efficiency.
(Taylor, n.d, para. 2)
“The focus of Lean is on maximizing value for customers and the organization by eliminating wasteful practices, streaming processes, optimizing the flow of work, and ultimately seeking to produce very high quality services (or products). As part of these efforts, Lean leads organizations to identify the root causes of problems and find solutions to them. The methodology also emphasizes ongoing measurements and careful assessment of how processes function, and their continual improvement. All this comes from a standard set of tools or methods to execute the various stages of the improvement process and make it a regular and standardized part of everyday work environment.
As read in the textbook, one of the main non-valued added items is that of wastefulness. ‘Lean’ methodologies assist in identifying these non-valued added items. Some types of waste revealed through “Lean” can be in the areas of:
- Unnecessary processing or steps in a process
- Transporting materials or information over long distances
- Idle inventory/resources
- Unnecessary or excessive motion/movement of staff
- Rework/fixing defects that should not have occurred the first place
- Producing more than needed to meet demand
- Underutilizing of staff, their knowledge and/or skills
Another example business process that supports addressing non-value added processes is what is referred to as RAMMPP (Reports, Approvals, Meetings, Measures, Policies and Procedures). I have actually been part of a RAMMPP focus team during my career and know firsthand the positive results of this process when managed well. Jack Welch developed this concept during his era at GE and it has been known to be quite effective. “RAMMPP focuses attention on those mechanisms that are most prone to becoming non-value adding over time” (Garcia, 2015). There are several general steps to implementing this process in an organization:
- Poll your company or group or department or division to identify possible non-value adding (NVA) items in the RAMMPP categories.
- Once you collected them, gather a representative team of stakeholders to vet these NVA candidates.
- Begin with the NVAs you have the most control over. No use, for example, trying to eliminate or simplify something that is rigidly mandated by government regulation.
- Determine whether the NVAs under your control can/should be completely eliminated or, at least simplified and streamlined in more efficient ways in view of today’s –not yesterday’s environment.
- Create recommendations for eliminating or simplifying the NVAs you have targeted, and build a business case to support your recommendations.
- Present your recommendations to a group of the appropriate decision makers in your company whose approval of what you are recommending will be binding for all.
- Set up a well-publicized accountability structure or timeline to monitor the implementation of your approved recommendations.