Everyone wants to reduce cost

Cost, cost, cost. Everyone wants to reduce costs

Everyone wants cost benefits. There’s no point in pretending this doesn’t exist. It costs money to improve your business, so the funding needs to provide a return on investment.

Yes, there are lots of other benefits and your organisation might be genuinely interested in delivering them (at least I hope so!). But it’s rare that there aren’t some cost benefits attached to delivering improvements.

Cost Category

So what types of cost benefits are out there? How do we categorise benefits in order that we can clearly record and track them through the DMAIC cycle to realisation?

To ensure clarity of what benefits we are looking to achieve and track, we must start this at the Define stage and manage how the value is being created not just to Closure, but to an agreed point after implementation in order to show and agree on overall benefits realization.

Benefits should therefore be signed off at each tollgate review by the Process Owner or Sponsor.

To help with defining the Benefit Categories, I have created a simple table that shows what I think are the main benefit ones in DMAIC. I believe these are the ones we tend to actively manage to create and sustain the value.

It is by no means a definitive list, but I think it will help when you need to get your benefits prioritised, understood and agreed upon. It gives clarity to how you can track and refine the beneficial impact to the project or process improvement. Of course, once the improvements have been implemented you will then calculate the ‘actual’ net benefit realised.