Hidden Treasures in your Compliance Efforts

Leveraging Your Compliance Program to Cut Costs

NOTE: This article originally appeared in the November 2008 issue of Flawless Compliance, under the "Hello Rubber, Meet the Road" section. The link to the actual issue is at the bottom of this article.

An essential part of your compliance program is your process maps. You must have process maps in place for all your critical processes, as a starting point for demonstrating that you are in control of them. Building simple process maps for strategic reasons is always a good idea, but when it comes to compliance, then need to be a little more robust.

At this point, you should create what Lean Six Sigma practitioners call a “value stream map” of your processes. What a value stream map does, is categorize your process steps into three categories: value added, value-enabling, and non-value added. Value added process steps are anything the customer would pay for, value-enabling process steps are for compliance, and non-value added is everything else.

As I’ve mentioned in previous articles, you must go through this process for your compliance program. Documentation that clearly highlights your value-enabling (compliance) process steps is a clear sign to your auditors that you have a good grip on your compliance concerns. It also gives you a great platform for compliance process improvement.

There is another side-benefit to this activity, in that it can really help you reduce costs. The “Lean” part of Lean Six Sigma is interested in reducing waste, which translates to cutting costs without sacrificing value. By building a value stream map of your processes, you can easily highlight waste which when eliminated, should reduce costs.

You can take it a step further however. Overlay your value stream process map with a cost analysis. This can be done in a number of ways. First of all, each process step should have time metrics attached to them. An estimate is fine, but if you can collect real statistics (mean, standard deviation, etc.) that’s even better. You can then translate time to cost by monetizing, among other things, human resource time spent. Once this is done, you can launch an improvement project with the goal of reducing time: which will translate to cost savings.

The other, more direct use of your value stream process map, is to attach cost directly to the process steps. For instance, let’s say part of your process is to send your report to a duplication house for copies. The estimated (or empirical) cost to make the copies can be directly assigned to the process step. Once this is done, you can launch an improvement project with the direct goal of reducing cost.

Getting more out of less has never been more important than it is today. The reality is however, that you will need to spend money in order to save money, by launching cost reduction projects that have a tangible return on investment. The good news is that great leverage can be found in your already existing compliance program. By minimizing your investment, you can maximize your return. Break open your process maps today, and start looking at where your costs are going.