Reducing waste

Waste in a business is defined as any activity which does not add value to the client.

Waste reduction can be one of the most effective ways of increasing profitability and cash flow by reducing costs and removing inefficiencies. In most cases, around 20% of costs can be attributed to waste. This is inherent in processes and procedures that have often built up over many years.

Identifying waste is not always easy as they are usually hidden costs, often missed when  practices undertake cost reviews. However, when the stakes involved include cash flow, profitability and long term survival, can you really afford to overlook this area?

Seven key areas to monitor:

  • Overproduction - duplication or work produced with noguarantee of billing.
  • Waiting - time tied up waiting for the next step. Consider the time spent waiting  for client instructions or on excessive travelling to/from clients.
  • Transporting - movementof people and information. Poor workflow systems and inefficient communication mediums can all create wastage.
  • Inappropriate processing - is the right tool, process and person being used for the job? Consider the grade of staff allocated to undertake the work.
  • Unnecessary inventory - for many firms work in progress (WIP) remains a key issue, with cash being tied up in unbilled time. Regular and prompt billing, accurate charging and advanced fee negotiation can all play a role in reducing WIP build up.
  • Unnecessary motions - simple areas such as poor office layout, stop/start mentalities and disorganisation all create waste.

  • Defects - these may result in additional time/costs being incurred. Do you have sufficient levels and quality of training? Are briefings clear? Is your database accurate?

Eliminating waste

Commitment to a structured waste reduction programme has been proven to achieve a return on investment of at least three to one.

The Waste Reduction Programme (WRP), developed by MacIntyre Hudson's Business Strategy Group, identifies waste, resulting in improved profitability and cash flow. It evaluates processes and procedures objectively - giving you control, protection and cost savings while liberating your own resources to focus on core business priorities.

Find out more about how you can reduce the waste in your firm by contacting our Business Strategy Group on strategicplanning@mhllp.co.uk