In our latest LinkedIn poll, 17% of respondents said achieving cost savings was their top process improvement problem. Using process simulation is one way of dealing with the challenge.
Cost management must be an ongoing activity
Every business wants to reduce costs, waste and inefficiencies, particularly with the potential of recession in the UK. There are always quick fixes to accomplish this. Outsourcing some activities to a cheaper provider is one. Maybe making redundancies, although this is a more drastic measure.
However, to deliver sustainable results you should integrate cost management into your continuous improvement strategy. Running a process model simulation can support you in this.
Process simulation helps tackle current and anticipated expenses
I’ve always wanted to have a go on a flight simulator. I bet a lot of people have. To see what it would be like to pilot a jumbo jet without the risk or pressure.
If you made a mistake, it wouldn’t be too bad. You’d be able to adjust your actions until you fixed the problem. In process improvement it’s similar; a simulation provides a safer way to test and perfect your model.
Identify costs, achieve savings and monitor the results
A simulation has the advantage over a static model for the simple reason that you can adjust your process and immediately assess the results. It minimises disruption, as scenarios can run in the background without disturbing day-to-day business. And it’s risk-free; if a process change increases costs then it can quickly be amended. Use it to:
1. Identify costs
- Define, assess and prioritise which costs to tackle
- Factor in the number of full-time employees (FTE) needed to complete the activity, the cost per hour, any fixed costs like callout fees, or postage and packing
- Flag up any inefficiencies, underused resources or redundant tasks that may be adding cost
2. Achieve savings
- Having created the ideal future state and established the problem costs, begin running scenarios and evaluating the effects
- If you reduce costs, consider the effect on other resources, like time
- Run multiple scenarios in parallel to compare and contrast the effect
3. Monitor results
- Compare the as-is and to-be costs side by side for each resource, or the whole process
- Assess costs from various viewpoints, like annual costs, or cost per unit
- Ensure you remain proactive by running simulations regularly as part of continuous improvement
Image source: BusinessOptix
Try a simulation for yourself
The BusinessOptix transformation platform supports you on the full process improvement journey, from discovery to optimisation and beyond. Let us show you how: claim your free BusinessOptix demo here.