SYSTEMS

The Creeping Cost Issue Associated With Business Systems, And How To Fix It

No matter your business, your systems, or your planning, some excesses build up over time. In small amounts, these are rather meaningless. However, over time they can become a drag on resources.

Think of a simple example like your download folder on your computer. As you download files, they accumulate there. In small quantities this is ok. However, as the number of files increases, you lose time searching for files, and you lose space on your hard drive to store the files.

Files aren’t a big deal, and easy to fix… but what about all the excess that builds up in business?

  • Open Purchase Orders that should have been closed out but never were
  • Credits never taken by customers
  • Rejected parts that are sitting in a rejection cage
  • Obsolete stock that hasn’t moved in 2 years
  • Quality issues never fully closed

The truth is, there are three types of functions that everybody at a company should be doing no matter their role.

Truth is, most only do one of the three.

3 Types of Tasks

My view of the operations of a business is that it is like a machine, the more you work on it, the better and smoother it works. This line of thinking ends up creating 3 types of tasks or processes.

  1. System Tasks
  2. Maintenance Tasks
  3. Improvement Tasks

System Tasks

System Tasks are those that a person does to carry out a process or procedure.

This would include:

  • emailing a client an invoice as part of the Billing Procedure
  • processing an incoming shipment as part of the Receiving Process
  • Send followup emails as part of the Sales Follow-Up Work Instruction

These are the types of items we list on job descriptions, do most of the day, and consider our “jobs”.

They are necessary to keep the business moving, but not at all the most important. However, time allocation for most here is 100%. When most are done with these, they either go home if they have the freedom or begin personal things as they consider themselves caught up.

Maintenance Tasks

Maintenance Tasks are those to clean the excess accumulated from system tasks.

A responsible teammate will do this occasionally, especially if they like order and cleanliness. They won’t be able to handle or work in an environment with them everywhere.

I like to systematize these. With system tasks, there is usually a trigger. A package arrives, an email arrives, the phone rings, you get an invoice, etc. There is an action or event that tell you time to initiate the process.

Maintenance tasks generally don’t have a trigger (unless the excess gets so big that working becomes impossible). I have found it helpful to list these out for each process and /or role, along with a schedule, and some time trigger. It can be an email sent, or a calendar reminder to a teammate.

Here are some of the examples of maintenance tasks I have set up:

  • Clean all open Purchase Orders and Sales Orders Quarterly
  • Purge the rejection cage Semi-Annually
  • Check Inventory Annually
  • Archive open quotes Semi-Annually
  • Clean old contract reviews unfinished Quarterly

Your business will have other areas where storage and search costs are increasing as excess builds up. Create a regular process with a time trigger to keep these clean.

Improvement Tasks

Improvement tasks are those in which you are making the system more efficient.

A great teammate will work on this when other tasks are completed. Most never do.

These are things incremental changes that over time make your businesses deliver more value with fewer inputs, creating a company that is impossible to compete with or out deliver. They can arise from:

  • brainstorming sessions
  • introduction of new technologies
  • best practices cross-industry
  • issues or problems that arise
  • higher levels of business volume

Different situation present either the need or the opportunity to create new systems, and improve existing ones. Without addressing this on a regular basis:

  • systems get outdated,
  • take too long,
  • require more manpower than is needed,
  • can filled with mistakes,
  • hold your company back in growth or even attractiveness to newer or larger customers,
  • increase costs unnecessarily,
  • keep teammates busy with non-productive work,
  • and make it harder for you to compete with other companies.

I will get into this more in the future as I talk about creating Business Immunity.

The best way to start implementing maintenance tasks is to

  1. Make a list of all areas you hate to look or walk because the build-up is unsightly.
  2. Look at each process and see where items like documents, files, parts, names, emails, or whatever else don’t get completed and build up.
  3. Look at each build up and try to ascertain if the system needs improvement or a fix, or if they are simply a result of a natural course of events.
  4. If natural course of events, create a company-wide calendar with maintenance tasks assigned to various individuals with 3 day notifications prior to when the cleaning should be done.

This can be improved upon greatly, but it is a simple start to get the ball rolling on a more streamlined company.

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