In business, there is always room for improvement, especially when it comes to the current processes in place. This is where business process improvement comes in, especially since technology, customer expectations and workplace culture continue to evolve.
Whether you’re a new business or have existed for a long time, it always proves to be a useful exercise to analyse, assess and enhance how your company operates on a day-to-day basis. Increasingly, CFOs are facing pain points when it comes to compliance, financials, and communication internally and externally. When applying BPI, you can find gaps in the process chain to make your job easier.
1. What is Business Process Improvement (BPI)?
2. Benefits of Business Process Improvement?
3. BPI Methodologies & Tools to Help You
4. Business Process Improvement Steps: 5 Ways to Start
Business process improvement is an approach to evaluate and redesign existing business processes to improve efficiency, enhance workflow and increase production.
But, first, what is a business process? There are many types of business processes, and all of them revolve around the tasks that your employees and team performance to deliver a result, whether it be a product or a service, to customers, stakeholders and/or sponsors.
Business processes can be broken down into three main categories, namely:
Operational: These relate to the value stream, such as customer accounts, orders, shipping, manufacturing, etc
Management: These include the procedures for oversight, budgeting and communication.
Supporting: These processes are done by supporting teams, such as accounting, technical support, recruitment, etc.
Better Compliance: When you know how processes are meant to run, you can put in place the proper methods for compliance in the appropriate phases. Compliance risk is a real threat for CFOs, so knowing how your reporting works can help to ensure that the process is optimised and always carefully managed. If it is not already, this entire process can be automated with process automation software which would ensure that compliance is maintained correctly, without holding any one person to be solely responsible.
If you’re questioning why you take time to complete business process improvement, here are just a few of the benefits of such an exercise:
Decrease Time: In essence, decreasing workflow time saves money, and can result in increased customer satisfaction.
Improve Output Quality: Whether you offer a product or a service, a priority is always providing the best customer experience for satisfaction and loyalty. This operational process improvement will add money to the bottom line and help retain customers, which is important because it costs five times more to acquire a new customer than to keep an existing one.
Reduce Errors: If a process isn’t running smoothly, there’s more room for error. This can be avoided by discovering problems within a process.
Lower Waste: A process may be exacerbating human effort and/or technological waste that can be eliminated.
BPI can take its shape and form in various methodologies, and each is a matter of preference. Depending on your team and your liking, you can choose how to implement business process improvement using one of the following methods:
Six Sigma: Using a statistical approach, Six Sigma requires a procedure known as DMAIC, which stands for Define, Measure, Analyse, Improve and Control. Six Sigma works best to tackle processes that have a defined input (x) and output (y) such that y= f(x), meaning if you can control the input, you can control the output.
Lean Management: Lean Management is a unique approach to identify waste. It involves employees and relies on continuous improvement to maximise customer value and minimise waste. It works by following these steps:
Agile Management: Agile management is at the root of software development organisations, but it also extends beyond to different businesses. By acknowledging and responding to rapid changes within the environment, rapid business process improvement involves customer collaboration, quick production and the flexibility to adapt. It takes a philosophy of “fail fast” and benefits from transparency and employee empowerment.
Total Quality Management (TQM): Although TQM seems to be less popular these days than other methodologies, TQM is useful for delivering long-term satisfaction via customer satisfaction. TQM is a robust approach to BPI that requires: involvement from all employees, is customer-focused, process-centred, integrated, systematic and utilises continual improvement, fact-based decision making and communication.
Kaizen: In Japanese, Kaizen means “continuous improvement,” and as such, this method focuses on consistent and small changes to make for enhancements. It’s an approach that relies on bottom-up, so everyone feels empowered to make small changes that help the whole function better.
Now, you may have an idea of the approach you want to take to implement business process improvement in your organisation, but where exactly do you start? Here’s a 5-step process.
Begin by asking “what needs to change?” You can use business process mapping to create an overview of current business processes. Like all changes, you have first to admit there’s a problem.
Once you can identify where you need to exert resources and energy, you can use business process improvement to re-establish the process. You can even implement data automation and process improvement tools at this step to analyse processes, the workflow, and increase accountability of responsible parties.
Recognise where things are not working as well as they could. You can leverage the entire team to provide feedback and ask questions about the processes.
For example, if there is a bottleneck within a department due to data being siloed, you can consider implementing a business process automation platform that will allow data to be accessed by anyone with permission within your organisation at any time. This will increase communication and let for everyone to easily see the status of the workflow with real-time analytics, reporting and dashboards. Therefore, your employees are held accountable and are also empowered to make better decisions.
For instance, you can try the “5 Whys” method, which begins by asking a question and then tracking the line of thinking by asking “why?” Five times to get to the root of why something is done a certain way and find where the logic or process breaks.
Naturally, every business is different, so Business Process Improvement is not a one size fits all approach. Instead, it’s essential to outline your business’ goals such that you can define proper metrics to assess process changes.
Create a strategy by incorporating the team and delegating who is responsible for each step in a process. That way, every person is accountable for their work, and it will come together to benefit the whole organisation.
Since businesses don’t operate alone, you need buy-in from employees and stakeholders alike. Obtain both commitment and support by outlining what it is that will improve with this process change.
Most people are wary of change, but if you can communicate the reasoning, it’ll be easier to acquire the resources you need to get it done. You can even start small by testing small portions of the process and see how it works. That way you can reduce risk. Once you have the resources and buy-in, you’re ready to make the change!
BPI is not a one and done deal. It requires that you continue to refine the processes always to evolve and enhance with changes both internally and externally in your business environment.
You can utilise business analysis tools to quickly view metrics with automation, reporting and dashboards to assess how changes are taking effect and the outcomes. Process automation tools can help by speeding up month-end reporting, reconciling data, providing monthly business reports, preparing assumptions for actuarial models, and more. Whatever approach you take, don’t be afraid to modify along the way!
The only certainty in business is that uncertainty will always exist. In a continually changing environment, it is necessary to take a step back from how you’re used to still doing things to look for how and where you can improve. Business process improvement provides benefits for your business internally and externally that will not go unnoticed once completed.
Looking for ideas for process improvement? Read these process improvement examples and best-in-class tips to make your business run better.
There are many continuous improvement methods to choose from. Check out this summary of your options, and how automation solutions can help.