Want to reduce your operational costs but don’t know where to start?

Want to reduce your operational costs but don’t know where to start?

Most successful CEO’s have a strong instinct for waste elimination and expenses reduction and if that’s an impulse that you recognise and share, your operational area may be the perfect place to start – because in most organisations, this is precisely where the largest gains are to be made. If you’re truly ambitious then you might be hoping to increase capacity for growth or deliver an improvement in operational performance alongside a significant reduction in operational costs, and to achieve this, there are four key areas to consider.

1. Operational management – right people with the right skills in the right place at the right time

Intelligent operational management lies at the core of an efficient operation that consistently achieves targets and delivers positive customer outcomes. This is best facilitated through a single work measurement and tracking system that has the ability to monitor each work item from receipt to completion. Although sophisticated management systems require investment, they provide complete transparency of workflows, identifying any misallocation of resources and highlighting workforce skills deficits and potential bottlenecks. Such systems can provide real time data, allowing you to manage resources in line with demand and to quickly respond to any event that threatens the smooth running of your operations.

“Management is doing things right; leadership is doing the right things.”

Peter Drucker

2. Leadership capability – Consistent high performing teams create credibility

Enhanced leadership capability within your front-line management can deliver enormous productivity gains that frequently lie hidden in organisations where employees follow well-structured work flows but fail to be fully engaged by their employers. Successful managers in the best performing companies know how to motivate, coach and challenge individual and team performance levels. They know how to promote internal competition to liberate the competitive spirit that often lies dormant within teams that are managed but not motivated. Empower your managers with positive performance techniques and they’ll raise the bar, and keep on raising it.

3. Organisational design – Start with the customer in mind

The key to efficient organisational design is to begin with the customer positioned firmly front-of-mind. To understand your existing operations you’ll need to map front office and back office activities then analyse process design and workflows. In addition to revealing inefficiencies and areas for potential productivity gains, by viewing workflows under a “service” lens you will begin to understand where customer outcomes are currently less than optimal. This type of analysis almost always reveals significant wastage, poor allocation of assets, plus areas where resources are devoted to non-value-adding activities, all of which not only impact on efficiency levels but also adversely affect service quality.

“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”

Sam Walton
Handshake in front of business people

4. Business process management – Faster, Better and more competitive

Effective business process management can significantly improve service delivery and lower your cost base. And the first step typically involves a fundamental reassessment of your firm’s strategic goals, together with a review of customer needs and why they transact with the operation – which may sound almost too elementary, too primitive. Yet only by carefully defining what it is you’re looking to achieve, can you hope to develop business processes that will deliver it.

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