Why processes cost money

You've probably run into this before. You work in a large organization and you have to buy something - a stapler, a hotel reservation, whatever. You find a low cost item, but then find out that the organization's processes, in an attempt to save money, dictate that you buy a higher cost item.

Sometimes there's a true rationale behind this. Perhaps you are required to use a particular hotel chain, and that hotel chain offers free wi-fi, which provides a net savings to the organization.

Sometimes there's something behind the scenes. I'm not sure if I've shared this story in this blog, but I once knew of an organization who purchased from a particular computer hardware company because it would provide free loaner equipment for trade shows. Eventually the company stopped providing free loaner equipment (for reasons that I won't get into here), and you can guess what happened next.

And sometimes there's no rationale whatsoever. Some decision was made at the top levels to do something that some study said would reduce costs. However, at the end of the day, the process didn't take all of the variables into account, and the new process actually resulted in increases in costs.

(Well, at least until the people measuring the process changed the variables being measured in order to show that there was a cost savings. Call me cynical.)

Now many people reading this post are nodding in agreement and saying, "Yes, that's what's wrong with the government/Fortune 500 whatever. All of these big organizations have too many people running around, unlike my favorite lean/mean organization."

If you're saying this, I hate to burst your bubble, but processes get in the way at small companies also.

Recently I went out to lunch. I normally bring my lunch to work, but didn't on this particular day. I won't name the place where I went for lunch, because I really like the place and don't want to embarrass them. But I went there and ordered a meal to go - hamburger, fries, and drink. They prepared my order and put it in a bag, and I left.

When I opened the bag, I discovered my hamburger, my fries, almost a dozen ketchup packages, and no napkins.

Unfortunately, I had no interest in ketchup, but I did have an interest in napkins.

My restaurant isn't the only place that does this. If you don't happen to eat at such fine establishments, I should advise you that a lot of these places just throw a bunch of ketchup packages into your bag, whether you ask for them or not.

Why? Because they are called "fast food" restaurants, which means that they have to get your order to you as quickly as possible. In their view, it's better to waste the money on giving ketchup packages to people who don't want them, than it is to waste the seconds asking people if they want ketchup or not. After all, they could be serving other customers while they're wasting time asking about ketchup. In their view, their "give everyone ketchup" process results in enhanced company revenues.

Presumably similar calculations are being made at larger companies, and when all factors are considered, there is a net benefit.

Or maybe not. Perhaps some companies end up setting up processes because some executive read a book, or because they heard about some company that saved $10 million seven years ago.

Or maybe customers are demanding ISO certification, because one of the customer's executives read a book, or because the customer's consultants heard about some company that saved $10 million seven years ago.

At the end of the day, however, all I have are a bunch of packages of ketchup. Actually, I trashed them - I would have saved them, but I've already saved a few dozen ketchup packages from other lunch trips.

If there's a bad tomato harvest, I'll be able to retire a millionaire.