Small Improvements vs Big Improvements

Micro level improvements are usually used by Six Sigma efforts to calculate savings in $. But are these numbers always true? That’s an interesting question for which the answer seems to be ’It Depends".

In many cases, small local improvements do add to an large overall improvement. Especially, if you look at manufacturing assembly lines, systems like the Toyota Production Systems have shown that as long as local improvements don’t cause unforeseen side effects down the line, small improvements done over a long period of time, add up to phenomenal overall savings, increase in quality and less rework.

Is it the same for Business Processes? This is where we need to be careful in adapting and modifying lessons learned from manufacturing to business process management.

In business processes, small local improvements may improve a local department’s or division’s performance but may be at the cost of the overall picture. There may be many sub-optimizations that may go on. For example, improving the speed of order processing without worrying about whether the warehouse, shipping and logistics can keep up with the additional speed with which orders are getting processed!

Strangely, if third parties are involved in different parts of the process, small improvements result in dramatic results for the third party company. If order processing is done by a third party company and they can do more orders with less people, they maximize their efficiency and effectiveness. The Outsourcing buyer may still need to worry about the shipping and logistics but the third party vendor may benefit.

Something to consider by Business Process Outsourcing providers when contemplating small improvements in their parts of the process. They may need to coordinate with the buyer and make sure that their improvements do not adversely affect the overall process. Of course, if the buyer improves the shipping and logistics function also, everybody wins!

Something to think about!

Where we cannot invent, we may at least improve - Charles Caleb Colton