Earning Money from Within

 There are two ways to increase the bottom line of the business, and it is a well-understood axiom of the business world.  In simple terms, the two approaches are to earn money or to save money.  There is no corporation that can slash its way to profitability now.  But at the same time, for any business, waste and excessive internal expenses can eat away at any profits the business is enjoying.  So to move forward in a competitive corporate environment, both strategies have to be used.

When a business starts to consider cost cutting, there is a declared or unwritten business purpose that business owners will see a major leakage of revenues going on within the systems of conducting business.  So if you can optimize those systems to get rid of that waste, then literally the firm makes money from the inside out because the overhead of the business comes down so substantially.

The normal course of an undertaking such a cost reduction campaign by a corporation is to identify “the low hanging fruit” initially.  That is, middle management will look for superficial savings to meet the needs of management in the hope of achieving the requirement.  That usually translates to the transition from disposable cups to mugs, or cutbacks on break room amenities.

Unfortunately, whereas there may be some surface savings to be found in such places, the significant introduction of efficiencies for any organization lie at a deeper level and take a more in-depth process of discovering flaws with how things get done internally.  This process of looking out these money pits in a corporation is sometimes called “Process Improvement.”  The idea of process improvement is to diagram a specific business process from beginning to end and specify the phases it passes through , the passing of authority for the process and to identify points where inefficient methods are resulting in high cost in carrying out that process on the way to the final phase of process completion .

The company structure categories most routinely recognized as candidates for a process improvement examination are…

* Unneeded overhead between departments.  Departments inside a business are known to become fiefdoms and reluctant if not distrustful of other departments within the same corporation.  When this happens, the head of the department will add paperwork and extra processing to make "work" go to his/her department from another department, or to keep it coming once it is done.  This excessive overhead can be expensive at the department level and slow the firm as a whole down enough to actually hurt the profitability of the organization.

* Communication difficulties.  A business process flows across the organization as each department or entity provides value to the process through to the end of the work.  But if communications between departments or persons along the process chain are defective, a process can grind to a halt and sit for hours, if not days, until the missed communication is identified and the task is put into the cycle to be finished.  This slowdown or breakdown in communication can be a major burden on the firm.  The solution to the problem is the review of contemporary means of communication. Each significant person in the chain is promptly informed of work to be done and can indicate to the next agent that his step is complete and that the process is moving to the next stage.  

- An ineffective IT infrastructure. Old computer programs which are not integrated with each other are causing needless work to be done to take data out of one system and putting it into the next computer program only to be entered again at the next stop along the chain.  Standardizing and integrating the data and processes will greatly improve efficiencies in the process.

Streamlining that process can remove much of the inefficiency and waste that has become part and parcel of the process of moving a business requirement from inception to completion.  As soon as we are done, we can roll out the current integration designs on the IT and process level, allowing for a quick switch from one department to the next.   The result is a lean organization that is no longer “bleeding money” owing to inefficiencies and as such is producing money “from the inside out”.

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