Uncover Hidden Cost Savings in Your Overhead Processes

October 9, 2024 | by Todd Hanlin

As companies strive to enhance profitability, reducing costs often becomes a primary focus. It’s relatively straightforward to identify waste in manufacturing or production processes. However, the same cannot be said for the transactional, administrative functions that constitute much of a business’s overhead. These “hidden” areas routinely go unnoticed, yet they hold significant potential for cost savings.

Beyond Order-Taking

The challenge with transactional environments lies in the difficulty of seeing and quantifying waste compared to the more observable waste in a production setting. Imagine teams focused on order-taking, sales, or accounting; the inefficiencies within these roles remain largely invisible. Waste manifests as time lost waiting for information, resolving discrepancies, or executing redundant tasks.

Uncovering Hidden Opportunities

To uncover these hidden opportunities, taking a collaborative approach is essential. Forming a diverse team comprising those immersed in the process, familiar with it but not directly involved, and newcomers who can ask fresh questions can yield the best results. By mapping out workflows and identifying pain points, the team can pinpoint areas ripe for improvement. This method fosters a dialogue that brings hidden inefficiencies to light—inefficiencies that otherwise would remain unaddressed.

It’s crucial to move past the natural tendency for team members to feel like they are “tattling” on one another. When framed as a collaborative effort to enhance the process rather than assign blame, the team can identify systemic issues and work together to find solutions.

Shifting Your Focus

The next step involves quantifying the potential savings. This phase is often challenging as the impact may be more indirect, focusing on redeployment of resources rather than direct headcount reduction. Organizations should shift focus to how these saved hours can be allocated to more value-added activities.

Unlock Hidden Cost Savings

Leadership buy-in is vital to this process. It’s easier to see cutting headcount as an immediate cost-saving measure, but redeployment of resources to strategic priorities can generate more sustainable long-term benefits. By demonstrating the long-term advantages of process improvement and intelligent resource use, organizations can unlock hidden cost savings while also enhancing employee engagement and organizational capabilities.