June 2011

They say that there are three topics you should avoid in polite company - politics, religion and football.  Usually I stick to that advice.  But I'm about to throw caution to the winds.  I've chosen NHS modernisation as this month's topic.

Don't worry - I don't have an ambition to become a political columnist.  Let me tell you why I'm writing about this.  Everyone wants to improve efficiency - but they're all talking about re-organisation.

That's where I get confused.  In my world, there are three ways you can improve efficiency - and none of them are about changing your organisation chart.  That's the same for your business as well as the NHS.

So here's my contribution to the debate - Stephen's three methods of improving efficiency.  And they'll work for the NHS - and you.

#1: Doing Things Differently

The first way you improve efficiency is to do something differently.  You change the way you make your product or provide your service, so that you get the same result for less money.  Here are some of the ways you can change things.

You can change a process to save man-hours.  For example, we've reduced the time to pick small orders for our clients by showing them how to group several orders onto one pick sheet.  This reduces the distance their pickers walk - and the time it takes.

Or you can automate or mechanise an activity.  You replace a continuing cost (usually labour) with a one-off cost (the equipment).  Once you pass the break-even point, you're saving money.

You can reduce the raw materials you use.  For example, a company making pre-fabricated buildings had to scrap the panels stamped out of doors and windows.  A small change to the design allowed them to re-use these blanks as part of their floor panels.  So they could make the same building from fewer panels - and at less cost.

#2: Keep Your Resources Occupied

The second way of improving efficiency also allows you to reduce the resources you need, but not by changing the way you work.  Instead, you make sure that if you pay for a resource you keep it fully occupied.

You can see an example of this simply by going into your nearest Post Office.  Almost certainly you'll see a queue of people waiting to be served.  That queue is the Post Office's method of keeping their counter staff fully occupied.  You have to wait to be served - but the counter clerk doesn't have to wait for a customer.

A queue is the clearest example of matching demand to supply, but you can achieve the same result using price instead.  This is exactly what the budget airlines do.  They want to match demand for a flight (the number of people booking) to the supply (the number of seats available).  So they simply keep adjusting the price of the flight until they've matched passengers with seats.

Both these techniques reduce idle resources by changing the pattern of demand to fit the resources available.  But there is an alternative.  If you can't match your customers' demand to your resources, then match your resources to your customers demand.  It's difficult to get this exactly right - but it's surprising how few people even try. 

To do this successfully, you need three things in place:

- to know how the resources you need are related to your demand

- to be able to forecast your demand

- to have flexible staffing arrangements so that you can match your hours to your activity

If you're interested, you can read more about this technique in a newsletter from my archives.

 

#3 Paying Your Suppliers And Your Workforce Less

So now you've seen that you can improve efficiency by redesigning your work to consume fewer resources; and by taking action to match your resources with your demand.

There's a third way -but you may not even think of it as a way of improving efficiency.  If you can pay less for your labour, raw materials, consumables and so on, then you'll get the same output for less money.  And - because we're using cash to measure what we put in - that's also an improvement in efficiency.

So there you are.  If you want to improve your efficiency, you've got to start with the three fundamentals. 

- do something differently

- match demand to your resources - or your resources to demand

- pay your suppliers and your labour less

And if you want to find out how these fundamentals apply to your business, I can help.  Just give me a call on 01244 314567 or email me at stephen.errey@lucidea.co.uk  and I'll explain.

 

Of course, I'm not saying that the way you organise yourself won't help you get these fundamentals right.  But make sure that you focus on the fundamentals, not the organisation.

 

 

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