The Hidden Costs of Business Process Waste

Have you ever wondered why some world-class companies like Amazon and Apple seem to operate with higher efficiency while others are struggling? Let me tell you this, the secret often lies not in what these companies do, but in what they deliberately avoid doing.

The High Cost of Doing Nothing Useful

I am sure we have all had these experiences where some companies have asked us to do the following.

- Fill out the same information three times

- Wait for approvals from departments that are not even relevant

- Get signatures from managers who don't really reject anything

- Submit physical copies of documents we have already uploaded online

And when you measure the cost to the company, it could run into millions.

But here is the real sad news - what's the value to customers? Zero.

What is a Non-Value Add Step?

Non-value steps are really steps that add friction to the process and have no value because the customers wouldn't be willing to pay for it if given the choice.

Here is my practical checklist to uncover them.

• Is it something customers specifically asked for? If the answer is No, then that's a Red flag.
• Is it contributing directly to the service/product? If the answer is No, then again it's a Red flag.
• Is it required by law/regulation? If it's a No, it's a Red flag.

Opportunities to Address Such Process Steps

Here are some steps that you can take in your job.

1. Multiple Approvals

- Old way: We need managers to approve a $100 expense

- Better way: Implement automated approvals for bills under set thresholds

- Result: You will achieve faster processing time

2. Data Re-entry

- Old way: Customer details are entered in different systems

- Better way: You only have to enter once, and then it is shared across platforms

- Result: You will achieve reduction in errors and save time.

3. Unnecessary Reports

- Old way: Generate 20 page weekly reports that nobody reads

- Better way: Create real-time dashboards with actionable metrics

- Result: You can save a lot of time per week

How Can We Calculate these Costs

If you want to know how much these non-value steps, here is a simple formula:

(Time spent per occurrence) x (Frequency) x (Labor cost) = Waste Cost
Example:
15 minutes x 100 times/month x $50/hour = $1,250/month in pure waste        

How to Solve This Challenge

Here are steps we can take to mitigate this problem and improve the customer experience.

1. Map Your Customer Journey

- Track every customer interaction

- Flag those steps where your customers have to wait or repeat actions

- Identify pure administrative steps

2. Adopt The "Why, Who, What" Test

For each process step, that you identified before, go ahead and ask these questions -

- Why are we doing this?

- Who benefits from this?

- What will happen if we don't do this?

3. Quick Wins

Document these quick wins to focus first on.

• Duplicate data entry
• Multiple approvals
• Manual reconciliations
• Unnecessary reports
• Physical paperwork

You will be able to reduce your processing time from weeks to hours by eliminating redundant process checks, automating document verification, removing unnecessary management approvals, and consolidating systems.

And implementing these process improvements can save you costs, improve customer satisfaction, and eventually increase your market share.

But Here is the AI Opportunity

You can now use modern AI tools to eliminating non-value steps, which is easier than ever. They can help you with -

- Document processing automation

- Intelligent form filling

- Automated verification

- Smart routing and approvals

I encourage you to start small by picking one customer-facing process, measure the time for each step, identify the steps your customer didn't ask for, calculate the waste and try to eliminate them.

Let me tell you ahead that you may get some pushback such as the following.

• "But we have always done it this way" The solution? - show them your cost calculation.
• "It is required for control" to which you ask them to provide specific risk examples.
• "What if something goes wrong?" To address this, start with low-risk pilots.

The Bottom Line

Every non-value step is a tiny impact on your business efficiency. While each might seem small, they compound dramatically. In today's competitive landscape, the leanest companies win.

What unnecessary steps have you eliminated in your processes? Share your success below!

#BusinessEfficiency #ProcessImprovement #cio #ceo #cto #cfo #cdo #DigitalTransformation #Innovation

All opinions are my own and not those of my employer.