As an organisation grows, so does the opportunity for waste. What worked in the beginning may not work now, as the focus expands to include that scary word: efficiency.
The scariest part is that the longer it takes to identify and remove waste, the faster it grows – and the harder it is to remove. Yet as a business grows, the small team operating the business is overloaded. Oftentimes, they’ll just do what it takes to deliver a quality product to the customer without the whole operation falling over.
While it’s commendable and noble to operate this way at the start, eventually this mode will cause a business’s collapse.
Inefficient work practices can impact a business’s ability to compete from a cost, product quality, or service delivery perspective.
The question is, how can waste be identified early without taking too much focus away from core operations, given the limited amount of time team members have?
One quick method that you and your team can use is a VBAR, or Value-Based Activity Review.
This method can be performed in a group or individually, so it’s flexible depending on your team’s time constraints.
The VBAR consists of three key steps:
- Writing down the tasks that an employee does in their job
- Categorising each task as value adding, value neutral, or value-detracting
- Taking action to eliminate value detracting tasks, and reduce the time spent on value-neutral tasks.
1: Writing down job tasks
If an employee job description is available, this is a good place to start, as the employee can compare what they do against the description and determine if it is accurate. If no job description is available, the team member should list all the tasks that they perform regularly, in as much detail as they can recall.
2: Categorising each task
A task can be categorised as value adding, value neutral, or value-detracting.
Value adding tasks are those that directly contribute to the creation or sale of a value-generating product or service. This means any task that directly relates to value creation or value protection. Examples can be operations, logistics, or marketing-related activities.
Value neutral tasks are those that indirectly contribute. These can be activities such as procurement, HR, finance, and other business management activities.
Value detracting tasks are those that do not contribute. These could be unnecessary meetings, reporting, or other activities that do not create or support the creation of value.
The following rules of thumb apply for employee tasks:
- There should be no value-detracting activities performed during employment hours;
- For small businesses, the % of time spent on value-neutral activities should be less than 10%.
- The larger a business becomes, the higher the tolerance for value-neutral activities becomes, as administration, stakeholder management, and information sharing become more critical and more time-consuming.
By following these three steps, and reviewing regularly, a business of any size can quickly identify any inefficiencies in the way their employees are working, and resolve it before it becomes systemic.
Need help with performing or facilitating a VBAR for your business? Get in touch and one of our consultants will arrange a chat to set one up.