May 09 2011

Surely there comes a point where the cost of achieving greater efficiency/reduced waste/loss is greater than the cost associated with the waste/loss? As a Lean/TPM consultant I would never say so, but does there come a point when it is not worth the effort? Does the law of diminishing returns play a part in business improvement?

I used to have a boss who would have several of us sit in an office, spend an hour or so going through loads of data and history to figure out where/why we lost 150 cardboard boxes. At 35p each that’s about £52.5 worth of cardboard, hardly worth the effort and definitely not enough to pay the wages of the group of people in the office for the hour or so. It used to drive me mad, and I still wonder why sometimes; but then I remember WHY!

It is not the single savings that you get from the exercise, its the learning and the improvement to your process or system that will provide returns on the effort for years to come. You may have cost a bit extra now, but in the long run you save loads. In a way its the story of the Kingdom lost because of a nail.

For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.

Little things can have big consequences and putting in place little things to save a few pennies can add up over the years. Above the stores where I am currently working is a sign that reads similar to the above proverbial rhyme – I can’t remember the wording but it goes something like:

“Save yourself 5 minutes downtime today and don’t book out your part, then it won’t get ordered and the next time we need one, we wont have one. So is it really worth the extra 5 minutes you’ll save in downtime today if it will cost us hours tomorrow because we don’t have the part that you failed to book out to save 5 minutes of downtime today?

Tesco’s even thinks this way (or is trying to get us to) with their “Every Little Helps”. It may seem like a petty or trivial matter to spend so much effort on, but if it is something that is repeated over and over again, the savings will add up! The caveat of course is that you have to consider how often the task or activity happens, if it happens once a year, and you are going to spend 2 days to reduce it by 20 minutes, how long will it take before you have paid for the effort?

Life is full of little decisions, one of the keys to success, in my eyes, is making the right decision based on the right evidence in the right perspective. Think long term, think beyond today, think about the kingdom, not the battle, not the rider, nor the horse or the shoe – it may be a little nail, but the consequences long term can be great!