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It’s about time somebody put some numbers to this

Blog: musings

Mike blogged on these shockingly high numbers produced by IBM, Gartner et al and all I can do is applaud the fact that people are starting to wake up to what the lack of well managed end-to-end processes is costing us all.

And I mean us all; inefficiencies in the private sector mean products cost us more, in the public sector they mean higher taxes (and I know all too well what an inefficient public sector is like, I live in France.. ;-)).

I find it astonishing that more companies don’t count the cost of process inefficiency; just because something might be difficult to measure and/or intangible does that mean it’s OK for management to abdicate responsibility for it?

Here’s a true anecdote from one of the vanishingly rare organizations that has tried to count the cost of this, which might illustrate the point:

A couple of years ago I was sitting with the Operations Director and Finance Director of a UK central government agency, budget of some £6 billion. The Ops guy said;

“We have a problem with process standardization. we have about 5500 people doing the same things in countless different ways”

When prompted to put a figure on the inefficiency he said;

“We did a quick and dirty project which highlighted that we were wasting between £300-500 million per year”

Gulp!

How many Boards of Directors would turn a blind eye to between 5-8% of physical stock somehow going missing from company warehouses every year??

Just because we can’t see process inefficiency doesn’t mean it’s not there…

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