INTELLIGENT SYSTEMS

Profitability through Creative Streamlining

(Lean, not mean)

Sometimes it’s refreshing to state the obvious and there are three obvious ways an enterprise can become more profitable:

1. Increase revenue.

2. Decrease costs.

3. A combination of the two.

Increasing revenue is a matter of marketing strategy and sales tactics with respect to products and services. Decreasing cost should be a matter of resourcefulness, but most of the time it’s not.

Typically, cost reductions are sought through one or more of these traditional tactics: layoffs, offshoring, expensive “fully integrated” systems, impersonal communications systems, etc. Many of these conventional cost reduction methods tend to damage customer service and employee morale, which in turn can lead to decreased revenue and even increased expenses in the long run.

Would it not be interesting to decrease expenses by merely being more creative and efficient? We certainly believe so. In fact, we believe all organizations should always fight complexity, bureaucracy, and never fear simplicity. This is the best path to decreasing expenses.

One creative method is called “process streamlining”. The steps follow:

1. Define the process.

2. Create a "value stream" map of each process.

3. Separate "process time" and "elapsed time".

4. Reconcile the difference.

Here is an example of process streamlining for invoicing, which is the life blood of cash flow and survival:

Process invoice from remote timesheets

Step	Activity	Touch Time (in minutes)	Elapsed Time ¹ (in minutes)
1	Download timesheet off e-mail from staff.	1.0	1.0
2	Print out timesheet and review.	1.0	30.0
3	Copy and paste information into Word document as an invoice.	8.0	9.0
4	Key summary billing information into QuickBooks.	3.0	3.0
5	Print out invoice and review.	3.0	3.0
6	E-mail attached invoice to client.	1.0	1.0
	Totals	17.0	47.0

¹ Elapsed time is touch time plus wait time.

By mapping out the process, we can see the need to have remote staff to enter timesheets, regardless of the technology, directly into a time and billing system from their location. In today’s world, that would be a screen on a remote computer that is possibly linked to a web site via the Internet. This change alone eliminates step 3, cutting the total time by nearly 50%. An interface between the time and billing database and the accounting system would save about half the time of step 4. Two changes cut 17 minutes to process an invoice down to 7 minutes. What would make elapsed time different than touch time? Elapsed time is real time or touch time plus “wait time” -- time that must be attacked long before touch time.

Cutting benefits or asking people to work longer hours is rarely the answer. Wait time could mean a staff member sent the wrong information. Or, part of the system is not working right; for example, a printer may be down.

In the above case, elapsed time turned out to be 30 minutes more than expected, which needs to be investigated and corrected. Often, common sense, not technology, is the answer.

Technology is not always the answer. If time is money – a trite but usually true statement – and technology saves time, we can logically conclude that technology saves money. However, that’s not the whole picture. The process needs to be correct, or all that technology accomplishes is making the wrong process to go faster. Also, there are cases the volume of work is not high enough to justify the cost of throwing technology at the process. However, if an organization plans to grow, it cannot overlook the benefits that technology brings to the streamlining process. Early introduction of technology can allow an organization to be leaner in head count, avoiding the need for layoffs that might be associated with a later implementation. As a final note, technology is applied after the process is streamlined.

Process streamlining may seem low-tech and simple. However, more often than not, it touches areas where there is a personal emotional attachment, and this fact alone makes it hard work, requiring a lot of cooperation from all involved. Process streamlining also needs to be a face-to-face job and must be done with local personnel.

When selecting a consulting firm, for objectivity, competency, and attention to detail, it is usually best addressed by a firm with no ties to any technology product or vendor. In other words, the firm has no “strategic alliances”, so there is no vested interest to set up a product sale, which should never be tolerated. The consultant should be selected based on reaching goals based on the client’s needs instead of based on the consultant's expertise with certain products, which is usually the case.

How often do companies really map out a process? Seldom, but the need is huge. Consider how much time and money are saved with the invoice example. How many processes are in your company? How much can be saved for each one? Process streamlining will give you an answer.

Before you work your employees into the ground, cut benefits, cut prices and expect your vendors to do the same, over-spend with the wrong form of technology, or send work to foreign countries, give process streamlining a chance. For more information on streamlining, give Chenault Systems a call at 972-306 -3839 or e-mail at tom@chenaultsystems.com.

Bowl Games and the BCS Computer

By Tom Chenault

Yes, we have another year of college football and the Division I rankings, along with deciding who the national champion is, are totally convoluted. A few years ago, one of our clients asked us how we would fix the “computer problem” of today’s college football rankings. First of all, this is not a computer problem. As with so many other business problems, such as foreign offshoring of software development and some enterprise resource planning (ERP) systems, this is a people problem based on how a system is designed. The rankings are based on media and coaches polls, along with quality of schedule and win/loss records. We feel the Bowl Championship Series (BCS) is just one more mistake based on misguided business goals and politics. Here is our proposed solution:

1. Re-organize the top six conferences (ACC, Big 12, PAC 10, Big East, SEC, and Big 10) into ten schools each. We would call this the “A League”. All the other Division 1A conferences, such as C-USA, WAC, Mountain West, etc., would be the “B League.”

2. Each school plays all other nine members of their respective conference for a true and complete round robin, i.e. nine conference games. This will provide a true conference champion with no extra title game. There can be an NFL type tiebreaker if there is a tie (e.g. 3 teams have a 7-2 record). Each school also plays three non-conference games outside their conference or league.

3. If a school performs poorly for a number of years in the A league, they get demoted to the B league and replaced by a school doing well in the B league. For example, if Iowa State, in the Big 12 (with 10 teams), goes 2-10 for three years in a row, they move down to the Mountain West conference. They could be replaced by a Colorado State, from the Mountain West, who may go something like 10-2, 9-3 and 11-1 the last three years. Rules need to establish this. Perhaps the Jeff Saragin rating system would work.

4. At the end of the season, the six A league conference champions, combined with two Cinderella at-large teams from the B league, play it off in an eight-team tournament for three more weeks during the holidays. This would take up seven bowl games. The other twenty-one bowl games can go after the other teams that are not in the top eight tournament.

This plan is not perfect (and would probably be rejected by the corporate controlled NCAA), but is far better than what we have with the BCS. College football championships need to be settled on the field. Voting is for gymnastics.

Quotes Worth Noting

“A computer is not—and will never be—a substitute for getting out in your stores and learning what's going on.” – Sam Walton

“Work expands so as to fill the time available for its completion.” – Parkinson’s Law

“Some companies change what they are doing to get the future they want. This is a waste of time. You can get the same result by adjusting the assumptions in our business plan. Remember, the future depends on assumptions and the assumptions are just stuff you make up. No sense in knocking yourself out.” -- Scott Adams, The Dilbert Principle

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