Every Handoff Has a Cost

A process takes five days from request to completion, so naturally we call it a five-day process.

But when you actually follow the work, you might find that people only spent four or five hours working on it. The rest of those five days? The work was sitting somewhere.

It was waiting for another department to review it. Waiting for information that didn't come with the original request. Waiting for someone to answer a question. Or simply sitting in a queue until the next person had time to pick it up.

That's a very different problem from five days of work.

Most organizations know how long their processes take from beginning to end. What isn't always as clear is how much of that time is spent doing the work versus waiting for the work to move.

As an organization grows, that difference matters more. There are more departments involved, more specialized roles, more systems, more approvals, and usually more places where work has to change hands before it's finished.

You can improve productivity inside every one of those departments and still have a slow process.

Because how efficiently each department works and how efficiently work moves through the organization are two different things.

Follow the work and you'll see the difference

From a distance, a workflow can look pretty clean.

Sales receives a customer request. Operations plans the work. Engineering provides the technical information. Procurement gets what's needed. Production performs the work. Quality verifies it. The finished product or service reaches the customer.

There's nothing obviously wrong with that process.

Now follow one actual request through it.

Sales sends the request to Operations on Monday. Operations reviews it Tuesday and realizes a specification is missing. The question goes back to Sales. Sales has to contact the customer. The answer comes in Wednesday afternoon. Operations updates the package and sends it to Engineering. Engineering gets to it Thursday.

Several days have passed, and relatively little actual work has taken place.

Here's what makes this difficult to spot: nobody necessarily did anything wrong.

Sales responded. Operations performed its review. Engineering may still complete its portion within its expected turnaround time. Each department can meet its own expectations while the overall process remains slow.

Ask each group how it performed and you may hear, quite accurately, "We did our part."

That's often exactly where the problem is.

The delay didn't happen inside any one department. It happened between them.

The handoff costs more than the time spent waiting

Waiting is the obvious cost of a handoff. The coordination around the handoff is easier to miss.

When work arrives, someone has to figure out what they've received. Is everything there? What exactly is being asked for? How urgent is it? What happened before it reached them? Can they move forward, or do they need something else first?

If something is missing, the work starts traveling backward.

An email goes out. Someone searches for a document. A question gets asked in Teams. Maybe a quick call turns into a meeting because explaining the situation is easier than going back and forth in messages.

Eventually the missing information arrives and the work moves again.

None of that is unusual. That's part of why it can be so expensive without looking expensive.

There isn't a line on the budget called "time spent figuring out what the last department meant."

The cost gets buried in labor hours, longer schedules, meetings, rework, follow-up emails and the small chunks of time people spend piecing together information someone else already had.

McKinsey found a particularly large version of this problem in logistics. Its analysis of parts of the U.S. middle- and last-mile delivery market estimated $65 billion to $95 billion in annual waste at interaction points among shippers, dispatchers, logistics providers and carriers.

That's a specific industry, so the dollar figure shouldn't be applied broadly. What's interesting is where the waste showed up: at the points where work, information and responsibility moved from one party to another.

That's the part of the process we don't always measure.

"I sent it" and "they can work it" are not the same thing

This may be one of the easiest handoff problems to recognize.

Someone asks where something is.

"I sent it to them yesterday."

And technically, that's true.

The file was uploaded. The email was forwarded. The ticket was assigned. The purchase request changed status. The project moved to the next stage in the system.

But did the next person actually have what they needed to continue the work?

That's a different question.

A good handoff transfers the work itself, but it also transfers enough context for the next person to act.

A drawing can arrive without the latest customer change. A request can arrive without a clear priority. A project can be reassigned without the history behind an earlier decision. A package can contain every required document and still leave the receiving person wondering what they're supposed to do next.

The system may show that the work moved.

In reality, the next person has to go backward before they can go forward.

That's something worth watching.

Occasional clarification is normal. But when the same questions keep coming back at the same point in a process, it's probably not just a communication issue anymore.

The process is creating the question.

AI can make the wrong part of the process faster

There's a newer version of this problem showing up now.

Companies are using AI and automation to make individual tasks dramatically faster while leaving the handoffs around those tasks almost untouched.

Say our five-day process contains four hours of actual work. One of those activities takes an hour, and AI cuts it down to 10 minutes.

That's a real productivity gain.

But if the work still spends several days moving between departments and waiting in queues, the customer may barely notice the difference.

We made the task faster. We didn't necessarily make the process faster.

McKinsey's 2026 research on AI operating models found that top AI performers were twice as likely to redesign workflows before selecting tools. That makes sense when you look at the problem this way.

If the real constraint is a missing piece of information at a handoff, automating the task before it doesn't remove the constraint.

If the work waits a day for approval, completing the preceding task 30 minutes faster doesn't remove the wait.

If nobody is sure who owns the next step, moving the information there instantly doesn't create ownership.

Sometimes technology fixes the work.

Sometimes it just gets the work to the next problem faster.

Some handoffs absolutely belong there

The goal isn't to eliminate every handoff.

That wouldn't make sense in a complex organization.

Engineering expertise exists for a reason. Quality may need to be independent from Production. Procurement has responsibilities around vendor commitments. Finance may need to review financial exposure. Certain decisions need additional controls because the consequences of getting them wrong are significant.

The question is whether a handoff exists for one of those reasons or simply because that's how the work has always moved.

Processes have a way of accumulating steps.

A review gets added after something goes wrong. A temporary approval becomes permanent. A report is created for a leader who needed it three years ago and continues after that leader leaves. A new system replaces an old one, but part of the old process survives.

Eventually, people can explain exactly what they're supposed to do without being able to explain why all of those steps are still necessary.

That's when it's worth asking a very basic question:

Why does the work change hands here?

Maybe the answer is expertise, risk, control or a necessary decision. Great. Keep it.

But if nobody really knows, that's worth looking at.

Look at the time between the work

Most operational reporting tells us a lot about activity.

How many requests were processed? How many units were produced? Did the department meet its target? How long should this task take?

All useful information.

But if a process contains six hours of actual work and takes four days to complete, shaving an hour off the work may not be where the biggest opportunity is.

I'd want to know what happened during the rest of the four days.

Where did the work sit?

Where did it get sent backward?

Where did someone have to stop and find information before they could begin?

Where did a transfer create another conversation before the work could continue?

And where are we still moving work from one place to another without being completely sure why?

Those questions tell you something departmental productivity numbers can't.

You can have good people doing good work in well-run departments and still have an organization that struggles to move work from beginning to end.

When that happens, asking everyone to work faster isn't necessarily the answer.

Sometimes the work isn't the problem.

It's how the work moves.