When is an efficiency saving not an efficiency saving?

When its a cut!

What’s eating Shaun today? I’ll tell you what. It’s efficiency savings. Here’s an example of a political ding-dong where the major parties criticise each others’ projections for “efficiency savings”. The thing that is annoying me is the misuse of terminology – and I’m NOT being pedantic!

To understand my argument, you first need to understand what “efficiency” actually means. So if you don’t, and you want to follow the argument, you’ll find it helpful to read this first

Now I don’t have a problem with efficiency savings. Getting things working well, reducing waste and re-work, its all good. But the problem is that this is NOT what the political parties are talking about. What they are talking about is “CUTS” or, to put it in economic terms, economies

Efficiency savings and cuts – what’s the difference?

Well, if we were to achieve something that we can justifiably call an “efficiency saving”, we’d have to be able to outline a circumstance where we have identified ways of achieving a similar level of productive output for a lower input cost. What the political parties are actually describing is a circumstance where they will simply reduce the inputs (budgets) and see what happens next. This is an economy or a cut

Now it could be that an economy (cut) could lead to an efficiency. In fact this technique is commonly used in the automotive supply chain, where the value of the supply contract is reduced a little year on year, and the supplier simply has to find ways of preserving its margin. But is that likely to happen here? In the UK Public Sector? I’m not so sure. Already we’re hearing departments, councils and unions describing what the implications are likely to be if their budgets are cut, and they aren’t talking about efficiencies. In actual fact they are predicting that they will square the economic circle by reducing the outputs. That is, not by reducing waste, being more efficient and producing a similar output on a reduced budget, but by operating more or less at the same rate of efficiency, but producing less

The only way that the politicians would be able to be technically correct with their use of the term “efficiency saving” would be if they were to construct a system where the budgets would be cut but the productive output protected or guaranteed. Until we hear something like this, what we’re actually dealing with are CUTS

This entry was posted in Quality Improvement and tagged , , , , . Bookmark the permalink.

One Response to When is an efficiency saving not an efficiency saving?

  1. Pingback: A crash course in efficiency | Capable People Blog

Leave a Reply

Your email address will not be published. Required fields are marked *