Before you speed it up, find out what’s slowing it down

Written By Jelena Angus

Where is your organisation getting a poor return on effort?

Last week the Business Council of Australia (BCA) released analysis, reported in The Australian, showing the 2020s are on track to be the weakest decade for productivity growth since records began in 1960. The ABS puts annual productivity growth at minus 0.2 per cent. On the BCA's figures, productivity would need to rise by 3 per cent a year for four years just to catch up with the 2010s, which was itself the worst decade on record.

Westpac's new W Talks report, Productivity in Practice, tells the same story from a different angle. Labour productivity grew by around 13 per cent in the decade to 2015, and by just 3 per cent in the decade to 2025.

The urgency is real. The conversation about what to do next is where things usually go wrong.

Waiting for Canberra won't fix your distribution centre

Much of the public argument is about tax, workplace relations and regulation. Whatever view you take of those policies, none of them will be settled in time to help a retailer trying to get stock from supplier to shelf this Christmas.

Westpac's Chief Economist, Luci Ellis, makes a point I have been making to executives for years. Productivity is not something imposed on businesses from outside. It comes from the decisions individual organisations make about how they use their people's time and resources. The most important levers are already inside your own operating system.

So, the immediate opportunity for supply-chain leaders is not in Canberra. It sits in the handoffs between buying, planning, warehousing, transport and stores, where effort quietly disappears.

Return on effort

Bernard Salt's line in the Westpac report deserves to be pinned above every operations desk: "Productivity is about return on effort." Grattan Institute CEO Dr Aruna Sathanapally frames the leader's job just as clearly. Leaders should ask what is wasting people's time, not how to keep them at their desks longer.

That reframing changes the question. Productivity is not simply a matter of making people work faster, adding automation or cutting costs. It is about how much unnecessary work the organisation can remove before it asks people or technology to do the rest.

In retail supply chains, that becomes a sharper discipline:

Before you invest in making the supply chain faster, understand what is making it slow. Before you automate the work, establish whether the work should exist.

Ellis puts it in an economist's language. She asks which parts of a business model could be "redesigned rather than merely digitised". She also warns of the J-curve, where costs arrive before benefits, and notes that management decision-making can itself become the bottleneck. If you automate a process riddled with rework, you get rework at machine speed and a larger capital bill.

How much work shouldn't exist?

The answer is more than most executives would believe. With colleagues from the University of Melbourne, I co-authored research, published in the Australian Journal of Management, that examined 268 process-improvement interventions across 17 sectors. The median level of non-value-adding work, which we call noise, was 36.1 per cent of staff time. In a 1,000-person organisation, that equals around 360 full-time roles spent re-checking, chasing, correcting, re-keying and waiting. Transport and logistics sat at 38.5 per cent, and retail and consumer goods at 38.3 per cent.

Most of that noise is invisible to management. Conventional process mapping follows the "clean" transaction and typically misses around two in every three activities people actually perform. Those missed activities are the workarounds and rectification loops where the waste lives. The waste is also rarely created where it shows up. An incomplete purchase order raised in one team becomes a receiving exception in the distribution centre, then a manual inventory adjustment, then a missed replenishment in store. If you fix only the symptom downstream, you may simply add cost.

Why this succeeds where Lean so often fails

Lean management promises much and too often delivers little. Our research identified five conditions that separate success from disappointment:

  • Analyse roles and processes together, so waste caused in one function and felt in another becomes visible.

  • Work end to end, rather than solving isolated "spot" problems.

  • Build the evidence from the people doing the work, because they know where the noise is.

  • Go down to activity-level detail, because errors happen in the detail, not in the boxes on a high-level map.

  • Measure adherence to the new way of working, so improvements stick.

These principles are built into XeP3, the platform I develop, which puts the 3P method examined in the research into staff hands. Of the projects that implemented their changes, every one reduced waste. More than half delivered a measurable financial benefit, and around half cut lead times.

This matches what the Westpac report finds about culture: technology delivers when people are engaged and brought along. When staff document and code their own noise, they own both the problem and the solution.

Start with the question

The national debate will run its course. In the meantime, retail supply-chain leaders can recover a significant share of lost capacity from within their own organisations. They can do it before the next automation business case, the next restructure or the next cost-out program.

So ask it in simple terms: where are we getting a poor return on effort? Then find out, in detail, before you spend another dollar making the wrong work go faster.

Sources

Jelena Angus
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