In this morning’s Globe and Mail, Business section, front page, is an article on the dismal state of Canada’s productivity ! Numbers from Stats Canada once again show how poorly we are doing and how the productivity gap is affecting our recovery and rebound from the recent recession. This gap is all the more pronounced now that the dollar is close to or at par with the USD.
I’ve blogged on this in the past, that the only real and tangible way to improve productivity particularly in businesses that are labour intensive is to eliminate repetitive manual processes with automation. This is particularly true in business where there is a heavy reliance on manual data entry to move data around and in and out of an organization. So I just shook my head this morning when I read the article while having coffee. It seems business owners don’t get it or are afraid to get it. The problem as the article states, and I quote, ” is that companies are relying too heavily on labour, but failing to invest in new business processes and innovation to meet future demand”. Too true, I see it everyday.
The reality is, as David Tager CEO of HSE Integrated Ltd. states very well ” On the labour side, in terms of output per hour of work, there’s not much we can do on productivity”. So at the end of the day you either add bodies, which fits into that old school I got my empire model, or you become more efficient through automation and improved processes.
So lets look at this scenario, a company with four CSRs entering order data manually on a daily basis from sources that are coming in electronically. Four full time jobs doing order entry. If you reduce 25% of each CSR’s workload through data automation you have opened one body of labour input to be redeployed to do more valuable work for the organization. If the integration costs $15K and that body is paid $40K (numbers are all thumb sucks) then the return on that investment is twofold; one is enhanced productivity by freeing up a body to do other more valuable work and second the reduction in data entry errors which are a hidden cost. So there is a significant ROI here and this is just one small example. You only have to do a 360 at any business, regardless of how simple or complex they are and I can guarantee you there are efficiencies to be had through out. Some examples; automate the sending out of POs for all purchasing (stop the manual faxing), automation of customs documentation on the back end of the business (very paper based and labour intensive). On the front end of the business; design a spreadsheet for your small customers to order with and have them email those orders to you. Automate the reception and manipulation of that spreadsheet data. All pretty simple and not that expensive to implement.
The problem is that unless a company takes this stuff seriously and tackles the repetitive processes through a concerted effort in identifying inefficiencies it doesn’t happen. If automation is not part of a corporate productivity strategy it then becomes all about the dollars and cents and putting the proverbial crowbar into one’s wallet. If the mindset is how much does it cost, or why does it cost so much and not what can I gain from spending X dollars, this type of automation will never happen. The result is our productivity in many areas stagnates. So I challenge each and every one of you who read my blog to step up and see what you can do to enhance productivity in your own organizations.
In my next blog article I’ll work through the checklist that Josh Bernoff and Ted Schadler put together in the book Empowered to size up HERO projects. Stay Tuned. In the meantime you can watch former Finance Minister Michael Wilson talk to the productivity gap issue.
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