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5. WHERE DO YOU WASTE TIME OVERPRODUCING?

WHERE DO YOU WASTE TIME OVERPRODUCING?

There are nine categories of waste in CPA firms - defects, overproduction, waiting, not utilizing people's talents, transportation, inventory, motion, excess processing and attitude. These categories are referred to as DOWNTIME + A. Why? Because the more waste in your processes, the more downtime you have - which increases the amount of time it takes to deliver your end product.

One of the more common wastes observed in many CPA firms is overproduction. While it is important to identify and remedy all of these wastes, overproduction can really wreak havoc on undisciplined processes.

Doing More Than What's Needed

Overproduction is apparent in processes when work is not properly prioritized. Said another way, it is doing more in the short-term than what is truly needed.

There are a few key reasons you may overproduce. First and foremost, you may actually be encouraging this behavior by focusing on chargeable hours. If your staff members, including seniors and managers, believe they are employed to get chargeable hours, they'll deliver charge hours. Unfortunately, this mindset causes additional problems including:

• "Milking" projects in order to get more charge hours
• Starting more tasks than what can be realistically handled
• Playing "hot potato" with tasks (not focusing on completing work, just focusing on moving work)
• Providing poor client service

If these problems are prevalent in your firm, you need to change the mindset. Instead, empower your people to work as effectively as possible to deliver superior client service and work product the first time.

Overproduction also occurs as a result of utilizing an undisciplined approach to assigning and starting client projects like tax returns, audits and special consulting projects. Left to the forces of nature, work is not prioritized and individuals work as individuals, not as a disciplined team of experts. When the going gets tough it's much easier to set aside the current client project and pick up something new. This leads to delays in finishing, poor client service and extra charge hours that you will probably have to write-off.

Reducing Overproduction

There are two common ways you may be overproducing. First, do you spend the heart of busy season working primarily on time sensitive returns and not those that end up going on extension every year? And do you proactively manage the number of client projects in process at any given time in your work pipeline?

If you didn't answer yes to either question, then your processes are ripe with overproduction. The good news is that these, and all overproduction areas, can be fixed by:

1. Controls. Develop a consistent firm-wide process that has controls and discipline set in place to limit the amount of overproduction that is taking place.
2. One Firm. Instead of acting like a bunch of sole practitioners, become "one firm." Work together to proactively identify those clients that always go on extension and properly plan this work earlier in busy season. Do what's necessary to prepare estimates and properly file extensions, but don't spend excess time that could be better used on a client that is deadline driven.
3. Work in Process. Develop a procedure to control WIP in your processes. The more you fill the work pipeline with clients "barely in progress," the more chaos is created and lead times increase. Instead of getting it done correctly the first time, it's easier for your staff to set down that work and pick up new work to get charge hours. Until that mindset is fixed, your processes will continue to be undisciplined. And you will continue to be the firm that is great at starting work but terrible at finishing it and getting it out the door.