31 recommendations for increased profit - reducing waste

Report, 2010

Those companies and organizations that wish to ensure long-term profitability must successively decrease resource use in both product development and in product usage. Primarily, it is waste that must be reduced, i.e. the consumption of resources that do not add to customer value or to the organization. Waste is widespread in all operations. Even in well-functioning processes, more than half of the resource consumption can be classified as waste. One obstacle to waste elimination is that most waste is hidden. Thus, executives, middle management and specialists must prioritize efforts to uncover the waste in their operations. Building and construction activities consist of a complex system of decisions, components, organizations and processes that must be coordinated. There are therefore many explanations as to why waste arises, or does not. Based on a series of discussions with experienced builders, consultants, contractors and materials providers, five main groups of factors that characterize effective operations were found. In this report these factors are illustrated in the form of a “value pyramid”. A holistic view of long-term customer benefits is the apex of the pyramid. Structure, competence, leadership and culture act as the driving forces at each corner of the pyramid’s foundation. Should one of the corners gives way, then the pyramid risks toppling over. With the value pyramid as support, 31 recommendations for what should be done to reduce waste are presented. These are aimed at standardizing the product from an overall perspective (five recommendations), defining and standardizing processes (ten recommendations), developing the organization and its competence (seven recommendations), disciplining management (five recommendations), and driving continuous improvement work (four recommendations). Reducing uncertainties and increasing effective time utilization are the red threads, as the Swedes would say, that run through all the recommendations. Everyone who uses resources has a responsibility to reduce waste. By systematically monitoring one’s own use of time, one can gain insights that will help improve one’s work situation. However, the burden of initiating and driving improvements overall obviously lies with management. How this should be done depends on the nature and purpose of the activities as well as on the organization’s capabilities. It is to manage this progress and achieve profitability that managers are appointed. It is in the interest of all enterprises and organizations to develop the ability and an interest to detect and understand what work/task is value adding what is not. This ability will provide possibilities to develop new competitive advantages and new business concepts.