Best Practices

Best Practices


Efficiency projects are usually not too exciting, especially when compared to activities that are aimed at growing the business, launching new products or trendy new marketing plans. However, I believe the time is right to take another look at efficiency projects, as their returns may be better than you expect given the likelihood of increasing labor, materials and energy costs over the coming years. This column is devoted to some useful places to look for improved efficiency.

Lets start with energy efficiency projects, which may have been sidelined for a long time when oil prices tanked between 2014 and 2015. Oil prices have more than doubled since those lows, and it behooves you to revisit energy efficiency projects. Examples include:

Office projects such as installing automated light switches, solar panels, more energy-efficient heating and cooling systems, and the like. Consider also whether you can reduce office space by allowing increased flexibility to work remotely, which is becoming more accepted and viable due to improved technology tools.

Plant projects like improving the efficiency of boilers, metering and other equipment. Use publicly available tools such as those offered by the Energy Star program. Commission a team of knowledgeable engineers and plant employees to do an energy survey at one or more of your plants. If you have multiple facilities, set up a network of experts to share ideas and best practices across plants.

Next, consider people efficiency. Make sure you are tracking productivity measurements in your company such as revenue, employee overtime and number of employees by department. If productivity is not improving over time, implement some new tools. Supply chain tools can curb error and reduce the number of people who spend time fixing mistakes, in addition to having a beneficial impact on inventory management and customer satisfaction. Automating business reports and accounting functions can allow reduction in back-office personnel and analysts, as well as give business managers better access to data on which to base decisions.

Look at your organizational chart and whether you can flatten out the structure or increase span of control. Evaluate efficiencies in the procurement process, too; perhaps you can work with suppliers to automate activities like procurement of lower-value-added items or those that are regularly purchased over time. Consider using some type of time analysis for your sales or procurement activities. You may be surprised by the amount of time employees spend on administrative or low-value-added tasks that could be more efficiently done at a lower level in the organization or through system improvement.

Another fruitful area to scrutinize is that of waste generation. Examining efficiencies in this area can generate savings as well as contribute to goals that you may have in the environmental or sustainability area. Employees may be highly motivated to work on these projects given the potential societal benefits. Look at your trend analysis in the area of waste generation, and if you do not have sufficient data, organize a process to measure and track it.

Paper use is likely a suitable target area, and management may want to move the culture of the company to as much of a paperless one as is reasonably possible. This not only reduces paper and copying costs but also postage and the costs of filing and storage.

You may want to also encourage the elimination of single-use plastic items. Examine in your laboratories how waste is generated, collected and categorized for disposal, as costs can be significant. Look at those processes in your plants that generate significant waste, such as filtration, and consider whether alternate processes that reduce waste are possible.

Take a look at efficiencies that may be possible in your supply chain. You may want to create some form of Pareto chart in this area so that you focus on the longest or most expensive supply chains that exist both for incoming components and outgoing products. Now is a particularly useful time to evaluate the supply chain, as you likely have been focusing on this area anyway due to potential tariff impacts. Consider whether swaps or deals with competitors could reduce costs and improve service to your customers. Make sure that you are utilizing the best form of transportation, as well as the most effective transportation providers, and that you have a process in place to evaluate this on a regular basis.

Last but not least, is time efficiency. I have covered this in some previous columns, notably in the March 2016 issue of LubesnGreases, but I include it here for completeness. The number one time waster in most companies is meetings: too many meetings, too many people at meetings and meetings that are overly long. If you are in management, set an example and go about reducing the department meeting schedule for the year and encourage your staff to do the same.

Also, consider carefully the messages and directives that you send your staff, as it is quite likely that you are underestimating the amount of work that you cause simply by asking questions or showing interest in some new thing. Set up a discipline that, as you take on new work, you ensure that you do so after completing, dropping or reprioritizing some ongoing project. Having too many projects at once can cause confusion as well as inefficiency.

A key point to consider in advance of any of the above activities is to ensure that you develop and communicate the rationale for the efficiency efforts. Your staff may be confused or frustrated if the activity isnt properly explained. The argument for efficiency activities has to do with maximizing company profitability in a time of increasing costs in a low-growth industry and in the late stages of the economic cycle. You may have more company-specific reasons that will better resonate with your staff.

Efficiency projects may lack pizazz, but they can reliably deliver to your bottom line!

Sara Lefcourt of Lefcourt Consulting LLC specializes in helping companies to improve profits, reduce risk and step up their operations. Her experience includes many years in marketing, sales and procurement, first for Exxon and then at Infineum, where she was vice president, supply. Email her at or phone (908) 400-5210.

Related Topics

Best Practices    Business    Market Topics