Using Technology to Implement Business Process Improvements From Employee Suggestions

Organizations must continuously improve their processes and increase efficiency in order to stay afloat in a globalized economy. Fortunately, American businesses can become sustainable organizations capable of competing in a global marketplace, by implementing a variety of cost reduction techniques and making business process improvements to increase operational efficiency.

Importance of Employee Suggestions in a Cost Reduction Strategy

Your employees are the driving force behind your organization and are valuable assets to the company. Utilize their knowledge and experience by asking them for suggestions or feedback as to how you can improve the business. Your employees are the first point of contact for customers and represent your company. While you may be implementing productivity and efficiency policies upstairs, they could have a negative effect on the floor.

According to recent studies, only 41 percent of employees think their managers listen to their ideas, which hinders innovation and leads to detrimental communication problems down the road. The same study indicates 37 percent of respondents felt their company's management was inaccessible to them. Suggestion programs have a bad name because corporations would implement - but never listen to - employee suggestions, which is why 60 percent of respondents indicated their company's suggestion program was inefficient.

Employees experience your business from a different perspective, offering profit building advice and feedback about company policy you - or your colleagues - developed to increase efficiency. You can only derive so much information from facts and figures, which is why employee suggestions are vital to your business's success. A research firm calculated each employee suggestion to be worth $6,000 in a cost reduction strategy, with small and large companies seeing savings of more than $300,000 annually, with only a 54 percent participation rate. Each suggestion sparks innovation and decreases operational expenses and supply costs. Each idea saves a little money, time, makes their job easier, improves customer satisfaction, or in some way makes the business more efficient.

Why Use Employee Suggestions?

Employee suggestions improve your business by building teamwork, removing barriers, saving money, boosting morale, and ensuring compliance with government regulations. Suggestion programs increase cost reduction efforts and inspire employee confidence by showing them you care about their ideas. Those employees frustrated with the current administration have an outlet to voice their concerns in a non-threatening environment. The suggestions spearhead cost reduction efforts by increasing efficiency while reducing expenses. The suggestion programs also ensure your organization is compliant with the Sarbanes-Oxley Act, which requires companies to allow employees to submit anonymous messages to the company's review committee.

Business Process Improvements

View your company as an intricate system of processes, each of which works together to create a product or service. Business process improvements and cost reduction strategies work together eliminating waste, increasing productivity, maximizing effectiveness, and reducing labor costs. Each action your organization takes to produce a product or service is a process. Use employee feedback in addition to cost reduction in order to simplify, merge, and remove wasteful processes that are not profitable.

Employees are the people executing your business processes, thus they have the knowledge and information to expedite the process. They are the experts regarding the manufacturing or production process and should be treated as such. Use their suggestions and match them with the appropriate business processes. Once the suggestions are matched appropriately, analyze the current process in comparison to the employee's suggestion. Implement the proposed change if it saves time, money, or human resources without interfering with rigid quality control standards.

Use Technology to Monitor Suggestions

Technology automates and streamlines the process of improving your business using employee feedback. The software applications enable businesses to input their current processes into the system and modify the processes using the employee suggestions. A simple What-If report analyzes the suggestions and determines whether the changes are profitable, saving the company additional capital investment on trial and error. The programs simulate the events before they occur, reducing implementation costs and improving productivity.

The suggestions can be deployed immediately and are compared to the previous implantation. Employers tweak and modify processes based on employee suggestions and policy documents. The software programs offer a low cost of implementation and high returns of investment. Depending on the solution your business chooses, BPM programs define, analyze, and document business processes, improve operational effectiveness, build innovative solutions, and provide detailed reporting and metrics.

Cost Reduction: Surviving in a Globalized Economy

Globalization and the Internet create a global marketplace that allows customers to shop from stores around the country. Globalization is a threat to American businesses and requires companies to gain the competition by offering the lowest prices possible. For cost reduction to work, companies offer lower prices on their products while lowering internal costs. Increase revenue generation by eliminating wasteful business processes, lowering labor costs, reducing supply expenses, and increasing sustainability.

Organizations can significantly reduce their supply costs via cost reduction. Raw materials and supplies are business expenses that can - and should - be minimized to increase revenue. Engage with the suppliers or vendors to create a cost effective strategy for your organization by using managed inventory programs, reducing shipping and transactional costs, decreasing lead times, and reducing the amount of inventory you carry at any given time.

Cost reduction strategies indicate monitoring the business process work flow for inefficiency which can reduce labor costs. Reevaluate your staffing needs by pairing each employee with a business process, and determining sustainable work levels by monitoring the floor. Avoid over and under staffing as each lead to decreased profitability through conflict. Consider removing or merging inefficient processes in the organization in order to streamline the process, automating as many tasks as possible.

Options For Business Process Outsourcing in the Logistics Industry

Business Process Outsourcing can be a practical and beneficial option for most companies. Organizations outsource for many reasons, with the desired outcome being reduced costs, improved operations, overcoming a lack of internal capabilities, gaining competitive advantage, and other benefits that are both tangible and intangible.

Outsourcing can be used in many parts of a business, but most often for what a company defines as non core functions; accounting, legal, human resources, information technology, manufacturing, sales, sourcing and logistics / supply chain management. Of course "non core" and "core" differ by company and industry. Non core can be important and critical to a company, but does not define the company and set it apart from competitors.

When it comes to logistics and supply chain management, there are two primary methods to take advantage of business process outsourcing - 3PL and Logistics Service Integrators (also known as 4PL or 4th Party Logistics).

3PL (3rd Party Logistics provider).

For about the last 20 years, 3PL's have led the way in logistics outsourcing. Drawing on its core business, whether it be trucking, fulfillment, warehousing, etc. - 3PL's have expanded their offering with new or additional services. It presents a way for essentially a commodity type service logistics provider to move into higher margin, bundled services and further develop and leverage their customer relationships. Customers, seeing value in the concept of the 3PL and always looking to reduce costs, have recognized value in the concept. The result is the market opportunity for outsourced logistics service providers, whether domestic or international became and remains sizable.

Unfortunately the reality has not lived up to the promise. The reasons are varied, but the bottom line is many 3PL's have failed at their own business transformation beyond adding the "Logistics" moniker to their company name. Often 3PLs have not successfully moved past their core commodity service to become true multi-service providers - the trucking company is still just providing trucking services, not providing value or improving the customer's logistics network. Others have failed to differentiate themselves against the competition. Many 3PL's have done a poor job positioning and defining themselves in the marketplace while others have commoditized their 3PL service, as a result undoing the very purpose of their 3PL.

The complicated and varied methods for how 3PL's look to be paid for services has added to the challenge. Shared savings, contingency and transaction based fee structures are among the many ways 3PL's are compensated. The very method for how a 3PL is paid can be in direct conflict with the best interests of the customer whether it be a consideration of cost or service. Customers can still find they have no understanding of their true costs and service performance with all the shipping data and information moving through a 3PL.

These setbacks have prevented the growth of some 3PLs in terms of both retention and new customers. Broad fragmentation of the sector reflects both the uncertainty of how 3PLs view themselves and the diversity of customer needs. With the involvement of multiple 3PL's customers are often forced to deal with proposals or solutions that cannot be measured against one another.

Business Process Outsourcing and the Logistics Service Integrator (LSI, or 4PL).

First, note that Business Process Outsourcing (BPO) is not traditional outsourcing. Traditional outsourcing is typically taking a set of tasks or functions and simply moving them to an outside service provider. A BPO provider, or in the case of the supply chain/ logistics industry, a Logistics Service Integrator (LSI), brings an expert perspective, specific knowledge and experience as well as technology to an organization. The LSI works with the company to develop a solution to improve an existing or new process through independent and unbiased analysis and recommendations.

From the service vacuum created by 3PLs, the LSI has emerged. Using a Logistics Service Integrator is much different than the traditional 3PL. The LSI is a BPO provider, is neutral, and will manage the logistics process correctly, regardless of what resources need to be used. This includes carriers, fulfillment vendors, freight payment providers, 3PL's, or any other logistics service providers that are part of the company's network.

The goal of the LSI is to represent the interests of the customer by bringing their specific expertise into the qualification and management of the logistics service providers. An LSI wants to position itself as an extension of and as part of its customer.

Conclusion. Although born out of good intentions, in general 3PL's have not fully served the purpose for which they were conceived. The reality is 3PL's have remained too focused on managing tasks and transactions in a very short sited way, and not on the important broad focus and processes of their customers. The results are missed opportunities to present real value to the organization being serviced. Logistics Services Integrators have become a good alternative for business process outsourcing. The value lies in the LSI being positioned as an extension of the organization itself. Processes are analyzed and vendors qualified independently based on the unique needs of the business, with no preconceived ideas or over-riding commitment to a 3PL's own interests. LSI's are compensated based on the value they add, with complete transparency of costs for the business they have partnered with.