There are a number of functions in an organization where it’s tough to move the productivity meter. You might actually produce more but the base costs don’t change so the true productivity measured from a financial perspective doesn’t change. Material or supply costs could actually increase so it could actually end up costing you more.
One example is where there is a steady and constant, and sometimes ancient, backlog of work. Maintenance, engineering, IT groups, and other “project-based” functions are examples. You can quantify the jobs that need to be done but because of the large backlog, it’s very hard to actually take cost out of the area. What happens instead is that you end up burning down the backlog to an acceptable level. This is a case where for a period of time you can be physically more productive but financially the costs are effectively the same as the earlier period.
Analytically, it’s helpful to do a few things with regard to work backlogs: 1) quantify the work that needs to be done, (2) sort the backlog in terms of priority and need, and (3) purge the backlog eliminating things that may have been a good idea at one time but are no longer needed (the lowest priority items). You also need to try to identify what types of work come into these areas, which naturally add to the backlog. For example, you can have repeat or planned work that you could schedule, emergency work that is more random but might have some predictability over time and finally “pet projects” that get loaded in which may have more utility to a particular manager than the business as a whole.
For financial productivity gains, the opportunity lies in trying to determine what the acceptable backlog level is in the area and consciously managing the inputs and outputs to operate at this level. Like a lot of business concepts, it’s easier to write about then it is to execute. Going this route usually highlights that both forecasting and work estimation are areas that qualify as opportunities ripe for improvement.
