There is a fabled story from the Industrial Revolution that tells of how electricity replaced steam - but in doing so, many factories simply replaced the steam engine in the centre of a factory with a large electric motor, and retained the complex set of connecting rods and levers to drive each workstation and into the far corners of the building. 

As ridiculous as that sounds now, the reality is that much more modern businesses have also piled on complexity as they have evolved, all of which has added cost and risk to their business. 

This complexity has many forms and causes, such as:

• Acquisitions not being fully integrated, leading to duplication of functions or activities and, in turn, additional administration and absorption of management time.
• Diversification leading to growth in the number of product lines and stock keeping units (SKUs). Some of these have low volumes of sales, resulting in variable cost of sale and thin - often negative - profit margins. 
• Service based businesses developing new services in response to the changing needs of customers or market trends. This can result in a business losing sight of its core purpose, diminishing its value proposition, and being viewed as a generalist in its field.
• Supply chains coming under pressure due to macro-economic factors such as inflation and a war for talent. This can lead to workarounds and, often, involving more suppliers, longer supply lines and increased time to fulfil. 
• The accelerating environmental focus leading to many adjustments impacting funding, governance, manufacturing processes, risk controls and reporting. Much of this change has been built on top of existing practices instead of merging with them.
• Processes and management information becoming increasingly more complicated and relying on a few people and spreadsheets. This leads to key person reliance, and the quality of their inputs to manage the business. A lot of data exists; the challenge is having appropriate KPIs to monitor performance against the organisation’s strategic goals.

Like the earliest electrification projects, all of these aspects increase complexity and amplify the challenges relating to efficiency and effectiveness that impact profitability and shareholder value.

Whilst not simple, simplification projects are highly effective if set up to look objectively at the whole of the business, and not by targeting elements in isolation. Our expert team has many years of experience in assisting clients with their simplification projects and can make a real difference – one client commented, “Johnston Carmichael gave us a huge injection of pace, they provided strong critical thinking, and provided clear input into our future design”.

If you would like to discuss how we could help simplify your operations and improve your efficiencies, please don’t hesitate to get in touch with me or another member of our Consulting team.