All operations are too expensive, no matter how good they are there is always an obligation to reduce cost further, and when the cost has been taken out there will always be pressure to remove more.
There are 5 key problems that are common to operations of all types:
1. There are numerous opinions about what the operation is there to do. The operational purpose and specification are not crisp.
2. There is proliferation of products and services. There is far more complexity than necessary.
3. Operational activity is slow, resource hungry and error prone. There are frequent process breakdowns.
4. Customer demands don’t match what the operation can supply. Forecasts are volatile and capacity is inflexible.
5. It is unclear how the operation is working, multiple issues and a lack of understanding hide real performance. There is a need for operational transparency.
Understanding the causes of these problems and finding solutions is the key to reducing cost.