It is estimated that for most companies the cost of poor quality is approximately 25 percent to 40 percent of its gross revenues.

Pasta – who doesn’t love it? It comes in all sizes – small, long, thin, wide. And you can get lost in the shapes – acini di pepe, angel hair, elbow macaroni, linguine.

In fact, many of us work in pasta factories without realizing it. Within companies, “spaghetti charts” are processes that are overly complicated, take too long to complete, and cost too much to produce the deliverable results.

The origins of this description began in manufacturing operations. A spaghetti chart was defined as a two-dimensional drawing based on a floor plan that includes lines that track the movement of an employee throughout the manufacturing area.

Lean accounting management, which involves identifying and eliminating the non-value-added activities associated with doing business, uses “before” spaghetti charts to track improvements.

Many people may ask: “Do I work in a pasta factory? What are some of the typical signs that my processes may be overly complicated?” The following set of questions usually helps to determine the pain points:

• How long does the process currently take? According to customer requirements or benchmarked standards, how long should this process take?
• Are there any places in your process where paperwork/information is frequently delayed? Does paperwork go into a department and never come out?
• Do you or your staff spend time rushing around so that work can be completed on time? If you do, how frequently does this happen – rarely, occasionally, frequently, almost every time?
• When you think about your process, does it make sense? Is the work flow logical and are the right people involved at the right time in the process? If not, where do you think the unnecessary work is being done?
• Would your customer say that every process step is either value-added or is critical for either business reasons or to meet governmental requirements?
• If each step of the process was value-added, how long do you think it would take to complete the process from beginning to end?

Unless a company has made a concerted effort to lean its organization, somewhere in the company one or more spaghetti chart processes can be found. This may not seem significant compared to other issues you may face, but it is estimated that for most companies the cost of poor quality is approximately 25 percent to 40 percent of its gross revenues. Every unnecessary step in a spaghetti chart process is a cost of poor quality.

Getting To Work
So what can you do if you think you may have a spaghetti chart process? If you have a quality department, you may ask it to diagram those processes that seem the most problematic, or hire an outside quality professional to help you do this.

One of the most effective ways to both diagram and solve the problem is to have the quality professional and someone in the department who really understands the process – the team member – work together to lay out the spaghetti chart. After the quality person and the team member diagram the process, they should take a first pass at identifying non-value-added steps. At this point the team leader should review the spaghetti chart – you may have reasons why steps they have identified as non-value-added cannot be eliminated.

After you are comfortable that those steps identified as non-value can be eliminated, let the quality person and team member work together to redesign the process, including flowing the process and connecting lines between each process step. Ideally, they should include the average amount of time it takes to complete each process step. By now the process steps should be logical, the flow should appear almost linear, and you should understand the reason why each step is necessary.

Applying lean accounting principles to organizations isn’t technically difficult, but it is surprisingly challenging. Here are some of the roadblocks that can arise when applying lean principles in an organization:

• Nobody recognizes that there is a problem. The process is so familiar that even though they may have questioned why a process seemed so cumbersome, they no longer do so. Usually people question a process’ logic when they are new to a department/organization.
  
• People don’t like change. They will subconsciously resist it even though they know the change will benefit them in the long run.
  
• Political hot potato issues – nobody wants to tell the company’s president that his nephew’s work is non-value-added.
  
• Time constraints – everybody is so busy rushing around to get the work done in the spaghetti chart process, they do not have time to work on fixing it.
  
• Change has to be driven from the top. If senior management doesn’t support the change, it either will not happen or the change will quickly disappear.                                                   
  

If these are the barriers to fixing a process, what are the factors that are critical to succeeding  process change? The following are characteristics of successful organizational change:

• Senior management has a vision of a different/better organization.
• Senior management is committed to the vision and isn’t discouraged when road blocks arise.
• Sufficient resources are allocated to making the change.
• Creative thinking is allowed. Novel ideas and approaches can be expressed without fear.
• The team is committed to improvement and is an ambassador of change in the organization.

Putting It Into Practice
Fortunately, all of these factors are not necessary to fix a spaghetti chart. But the more of these characteristics you and your organization possess, the easier it is to drive changes that last.

One well-known, successful business experienced a “spaghetti factory” with its company move process. Within a 10-mile radius, the company has three separate sites; one site is a campus with eight buildings on 100 acres. Intra-building, intra-campus, and inter-site moves are a regular, ongoing component of the company culture. Moves involve many people from many different departments who may or may not understand their role in the process.

To describe it as a challenging process is an understatement. The person responsible for inter-office moves was given a mandate to simplify the process and reduce the cost to move. An additional requirement of the process redesign was increased customer satisfaction. The customers (employees who moved to a different office) frequently found that their new offices were not ready for them. 

Consultants worked with the move coordinator (MC) to flow the process. The MC met with the different departments responsible for components of the move to find out what work they do, how much time it takes, and when they need to be notified so the work could be properly scheduled.

The MC took all this information and created a spaghetti chart. The MC created the chart on brown paper and attached samples of every type of document necessary to complete the move process. There were about 70 steps in the process and the spaghetti chart was 17 feet long.

You may not have a process that would take 17 feet of paper to flow, but you probably have many processes that would benefit from lean accounting methodology.

Gail Erwin, CPA, MBA, is a consultant with Cohn Consulting Group, a division of J.H. Cohn. She can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or 609-844-3006.