Particularly in this economy, the need to reduce costs is more important than ever.  There are several questions that help address the decisions about where to make changes:

• If you are experiencing reductions in your workforce, aren't you still trying to maintain the level of service to your customers and clients? 
• If your processes aren't optimized, have you seen rework and delays that frustrate not only the customers but also your employees?
• Are your processes producing excessive and costly waste?

You can impact each of these areas of your organization by taking a process perspective.  Consider the definition of a process that focuses on completing a series of steps, one after the other, to create an end result, such as a product or service.  Taken from this view, a process can include, for example, conducting a meeting, manufacturing a product, offering a service to a customer or patient care in a healthcare setting, producing a report, or many other examples.  Examples of waste, rework, and delays are easy to think of: How many times have you been part of a meeting with no end result, one that had numerous people talking at once, no focused purpose, and left you and others feeling frustrated and unsatisfied or confused about what course of action to take at the conclusion of the meeting?  The measures of hours and cost of such meetings has been documented at astonishing levels.
Process improvement follows some general and specific steps:

• Choose a process to focus on. 
• Articulate the steps of the process in their logical order.
• Look at the steps and assess the efficiency and effectiveness of the process.  In other words, examine to what extent the steps of the process are impacted by rework and other delays.  Taken as a portion of the process cost, these efficiency and effectiveness measures can help you determine the significance of the impact on the process.
• Use the assessments of process efficiency and effectiveness to point you in the direction of where to develop and implement solutions to the problems.  For example, suppose you find that an ineffective meeting is impacting the time, energy, and productivity of 10 people and ultimately wasting 10 - 20 hours that could be far better spent.  This is not an uncommon example. 

What are you waiting for?  Why not take some steps to improve your processes? 

Much is written about the connection between activity-based costing (ABC) and process improvement.  Some of it is elusive and hard to incorporate into a practical approach to improving an organization.  As a tool for process improvement, ABC is a fabulous asset that offers a significant approach to finding out what’s wrong in the processes of an organization.  A common application of ABC is for the analysis of overhead.  An alternative, less frequently used, application is to use it to analyze the activities of the process itself. 

In this approach, there are several specific steps:
• Determine what the top 6 – 10 activities of a job function are.
• Estimate the percentage of time spent on each activity. 
• Then, ask additional questions about the extent of rework and the extent to which the worker has everything that is needed to complete the specific activity. 
• Next, develop additional specific questions that can be asked at the level of the activity. 
• Marry this quantifiable information with the cost of the process measured by the combination of salary, benefits, and overhead attributed to the job function. 
• Summarize totals by department, business unit, or any appropriate cluster. 

The immediate result is an assessment of the extent of rework and delays at the level of the activity as a percentage of the total process cost.  This information is a fabulously effective tool for determining where to fix the process, since fixing the areas of highest rework and delays will put labor dollars back into productive endeavors rather than leaving them generating the waste of rework. 

Usually, organizations are unequipped internally to conduct a thorough and rapidly useful process evaluation, process analysis, or process improvement initiative.  They aren’t prepared to implement improvement actions to achieve the results that will actually improve the process and the resulting bottom line.  It takes courage and work and more than a little process improvement subject matter expertise.  That’s why the field of process improvement has evolved, and there are plenty of well qualified consultant experts who make this their life work and can facilitate your initiatives using activity-based costing or other approaches.  Just look for them.