Two ways to improve productivity in variable environments

Lesson Learned #45

carpedia-lessons-learned-45Lasting productivity gains in highly variable work environments can be elusive. Highly variable environments are those where the work volume fluctuates throughout the day, week, month or even throughout the year. Typical industries with big volume fluctuations include hotels, restaurants and retail, but you also see it in functional areas, such as accounting, where the volume of work peaks at month-end or year-end, as companies close their books. We have created method changes in these environments that made processes more effective, but were ultimately disappointing when the financial results got tallied. The reason is that making a process better in a non-peak period doesn’t have a financial impact unless you remove resources. You may improve throughput, cycle time or even customer satisfaction, but if your volumes are down and your basic costs are the same, productivity actually declines.

We’ve learned that the two main ways to improve productivity in these environments are to attack the peak and to creatively schedule off-peak periods. Attacking the peak simply means understanding which activities are done during the highest workload times and then trying to re-engineer them or remove some of them to off-peak periods. This reduces the peak’s cost requirements and therefore lowers costs in the off-peak times as well. The second approach, creatively scheduling off-peak periods, is easier in some environments than it is in others. For example, you may be able to have split shifts at a retail store, but this may be harder in an accounting department. Union environments are sometimes a little less flexible for this type of resource juggling. But this is where the creativity needs to come in. We have seen companies creatively use part-time resources, cross-train departments, pull in work from other areas or stagger shift times to try to balance their resources against their volume fluctuations.

When you come up against these types of volume fluctuations, it’s helpful to remember to attack the peak first, then creatively schedule the off-peak periods.