Template:Over-processing: Difference between revisions
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==={{wasteprov|Over-processing}}=== | ==={{wasteprov|Over-processing}}=== | ||
'''Headline''': ''Contractual risk protection standards, for both parties, are stuffed with redundancies, anachronisms, over-reaches and nice-to-haves. Each one is liable to challenge. Each challenge brings its own process wastes.' | '''Headline''': ''Don't design your aeroplane to be waterproof if it falls into the sea. Design it so it doesn't crash.'' | ||
Contractual risk protection standards, for both parties, are stuffed with redundancies, anachronisms, over-reaches and nice-to-haves. Each one is liable to challenge. Each challenge brings its own process wastes. | |||
[[Risk controller]]s are short an option. They are incentivised to err on the side of caution. They don't get a bonus if the client generates extra revenue. They get fired if the client blows up owing the firm money. So no wonder there are overreaches. | |||
But first, differentiate between measures that ensure the firm loses no money on default (waterproofing the airline cabin), and measures to avoid default in the first place (making sure the engines are attached properly). | |||
In its original physical manufacturing sense, {{wasteprov|over-processing}} refers to unnecessary complexity in design, whether brought about through careless design or over-specification. The production cost of features that neither you nor your client are realistically ever going to use is as much a form of wastage as any. | In its original physical manufacturing sense, {{wasteprov|over-processing}} refers to unnecessary complexity in design, whether brought about through careless design or over-specification. The production cost of features that neither you nor your client are realistically ever going to use is as much a form of wastage as any. | ||
The chief production cost in negotiation is time and human resource. It follows that the longer a contract takes to read , and the more it invites challenge, the more expensive (in these terms) it is to produce. ''Any'' time taken over the utter minimum and ''any'' client challenge to a term that is not vital the the firm's risk protection strategy isa form of waste in the process of reviewing review approving and concluding the client contract. As we have seen, client challenges to credit terms create their own additional wastes ({{wasteprov|waiting}}, {{wasteprov|transport}}, as well as risking of {{wasteprov|overproduction}} and {{wasteprov|defects}}). | The chief production cost in negotiation is time and human resource. It follows that the longer a contract takes to read , and the more it invites challenge, the more expensive (in these terms) it is to produce. ''Any'' time taken over the utter minimum and ''any'' client challenge to a term that is not vital the the firm's risk protection strategy isa form of waste in the process of reviewing review approving and concluding the client contract. As we have seen, client challenges to credit terms create their own additional wastes ({{wasteprov|waiting}}, {{wasteprov|transport}}, as well as risking of {{wasteprov|overproduction}} and {{wasteprov|defects}}). | ||
Revision as of 08:19, 1 June 2019
Over-processing
Headline: Don't design your aeroplane to be waterproof if it falls into the sea. Design it so it doesn't crash.
Contractual risk protection standards, for both parties, are stuffed with redundancies, anachronisms, over-reaches and nice-to-haves. Each one is liable to challenge. Each challenge brings its own process wastes.
Risk controllers are short an option. They are incentivised to err on the side of caution. They don't get a bonus if the client generates extra revenue. They get fired if the client blows up owing the firm money. So no wonder there are overreaches.
But first, differentiate between measures that ensure the firm loses no money on default (waterproofing the airline cabin), and measures to avoid default in the first place (making sure the engines are attached properly).
In its original physical manufacturing sense, over-processing refers to unnecessary complexity in design, whether brought about through careless design or over-specification. The production cost of features that neither you nor your client are realistically ever going to use is as much a form of wastage as any. The chief production cost in negotiation is time and human resource. It follows that the longer a contract takes to read , and the more it invites challenge, the more expensive (in these terms) it is to produce. Any time taken over the utter minimum and any client challenge to a term that is not vital the the firm's risk protection strategy isa form of waste in the process of reviewing review approving and concluding the client contract. As we have seen, client challenges to credit terms create their own additional wastes (waiting, transport, as well as risking of overproduction and defects).
While credit teams do not typically monitor or collect data about the frequency with which they invoke specific credit terms, we know for sure that well over 90 percent of contracts are never closed out at all, and the vast majority of those which are closed out generally make use of standard (uncontroversial) events of default which are generally not challenged in the first place: failure to pay, or insolvency.
- Credit points never used
- Superfluous templates
- Redundancy
- Unnecessary drafting
- Reading/reviewing unnecessary/convoluted text
Summary: "