The problem with much inefficiency is that we can’t see it. It lurks in all work – “baked in” to the way work is carried out, so to speak. Being able to see inefficiency is the first step to reducing it and becoming more productive.
To see inefficiency, we should make it visible. This means looking at work, asking what value is to be produced, and then analyzing the work activities to see which contribute directly to creating the value required and which do not. The “non-value adding” work steps are sources of inefficiency and should be reduced or eliminated from the work. This may be accomplished by either re-designing the work process or improving the way the work is carried out.
Every work process will have always have some slack or inefficiency. If the source of the inefficiency cannot be eliminated, it is sometimes a good idea to aggregate up the inefficiency and load it on to a worker (or group of workers) to make it visible and provide further impetus to reducing it or eliminating it. In this way, the value-adding work attains a higher efficiency and value-adding percentage because some of the inefficiency has been removed, aggregated and relocated elsewhere. The focus should then be on working to reduce or eliminate the aggregated non-value adding activity.
Keep in mind that efficiency is not just about doing more with less – producing more output with the same, or less, resources. Efficiency and productivity can also be measured by the value of output, not just by its quantity, per unit of input. A firm should always think of producing more valuable output with the resources it has, and not just only about producing more.
Inefficiency drives costs because it consumes resources. Inefficient activities have to be paid for. Firms should always pay attention to their value chains and seek to continuously identify and remove the sources of inefficiency. That’s what continuous improvement is all about.