I write a lot about leadership. I have developed and presented leadership training to a lot of organizations and people. They learned about inspiring, motivating developing and communicating a vision. In every case, from the US Army to Corporate America these leaders have used those skills to reduce waste, or if you prefer, to reduce cost. I am not claiming responsibility for the outcomes they created. I am saying that regardless of their environment each of them has, through the leadership skills they learned, honed and used, contributed to their organizations in such a way as to reduce or eliminate waste.
Why would anyone say that leaders do this? They do not personally perform the work that results in these reductions. Nor do they make the decisions that create these reductions. What they do is inspire others to create these outcomes. Waste is present in all processes. Often times after a quality initiative organizations believe they have reduced waste, and the cost associated with it, almost as much as it can be. It is at this point that the leader truly shows their value.
We have all heard the praise, the congratulations and other accolades after a successful quality program initiative. In the past, both manufacturing and non-manufacturing businesses often viewed waste as a cost of doing business. Efforts were made to be efficient, but there was little incentive for businesses to eliminate all forms of waste. Many processes produced an inevitable waste stream which was folded into overhead operating costs. Business took that position of some waste is a cost of doing business and in essence said “some waste is acceptable”.
It is understood that reducing waste results in reducing operational costs. Waste reduction helps businesses be more competitive. At the same time, there are distinct barriers or obstacles that could discourage a company, or be used as a convenient excuse not to change. Resistance to change is a constant challenge. Companies willing to change can reap the benefits at the expense of those who think change is unnecessary or not worth the effort. Taking the position that “we can eliminate all waste” truly presents the vision that an organization is committed to quality, and wants to live that vision. Leaders make that happen and do not settle for “good enough”.
It is in this leading of change that leadership proves its value. While certainly it provides value in other ways, creating a new culture embracing more change is critical to any waste or cost elimination initiative.
Traditionally businesses cost and approach waste through the Traditional Cost Model. While accounting systems vary in the costs classifications, typical cost categories include:
Direct costs such as materials and labor
Manufacturing overhead, or operating costs
Office or administrative overhead
Sales and service costs
Research and development
The ultimate solution is to look outside of these traditional methods of cost accounting. It is the leader who facilitates the change that makes this happen more efficiently and also by minimizing the resistance to this change.
All waste can be categorized into the following; they are:
Delay and Waiting
Scrap and Rework
Any waste elimination in each of these areas are the direct result of leadership. Only leadership through leadership can the environment and culture be created to effectively eliminate these. How leadership does that depends upon the company’s mission, its product or service. Never the less one thing is common in all company’s. It is leadership that will communicate the vision and motivate it to accomplish that which “we have never done that way before.” Combining outsourcing with knowledge of the business, its processes and fundamental leadership principles not only will accomplish this but the performance, productivity and profitability of the company will be improved.
In short, a company can be just as good as everybody else, or, it can be better by valuing leadership. The leadership that in fact makes it better.