All businesses have processes in place, and many of these processes can be improved to lower costs, increase revenue, and reduce time. Business leaders use process improvement to achieve these goals.
1. What is Process Improvement
2. The Purpose of Business Process Improvement
3. Types of Business Processes
5. How to Implement Process Improvement
6. Implement Continuous Improvement
7. Why Process Improvement Matters
Process improvement, also called business process improvement or functional process improvement, is a management exercise that utilises methodologies to assess business procedures to identify areas that can be improved to be more efficient and/or effective. It also involves the analysis and redesigning of processes to make the improvements a reality.
Business processes can be divided into two types, both of which can be addressed with process improvement strategies:
Here are some of the most commonly used strategies to implement process improvement and implement continuous improvement:
Lean - A customer-centric approach that believes in maximising customer value while minimising waste. Lean is about what you do and encompasses: value, perfection, pull, value stream and flow.
Six Sigma - A focus on reducing the errors within a process which can be evaluated when all processes are defined, measured, analysed and controlled. Its main philosophy is about improving the quality output of a process with value targets like: reduce process cycle time, reduce costs, reduce pollution, and increase profits and customer satisfaction.
Rapid Improvement - Application of simple and tactical focus on problems that are easy to address with quickly implementable solutions. There are strategies that can be used to do so, including:
Here is our five step process improvement plan to help you get started:
Define the process process opportunity from a business and customer perspective
Pick the Process: Like all issues, the first step is admitting there’s a problem. First, decide what process you want to improve first. For example, do you want to:
In order to tell if your BPI strategies are working, you have to identify critical measures, baseline process and operational performance to quantify opportunity for improvement. There are different types of measurement, but here are the most common things to consider:
Effectiveness: This is a measure of how well the process is functioning when it comes to quality. Data and reports are useful to assess this, such as customer feedback and complaints.
Efficiency: This is a measure of the time it takes to complete a cycle or task, as well as measuring the amount of input it takes to produce one unit of output.
Analyse process performance to understand pain points and determine/validate root causes. To be able to do the best analysis you need to be able to have the most accurate and clear data.
Whether this means utilising a data tool that can collect and process data from many sources, and formulate results based on data and/or hiring a team of analysts to crunch the data themselves, having the measurements is only as useful as the company's ability to interpret it. The goal is to be able to provide actionable insights to implement process improvement.
Once you begin the analysis, you can start by locating the inefficiency. After you’ve outlined the process, you can ask questions to find out which part of the process is inefficient and needs to be improved. Here are some methods to assess inefficiency:
Cause and Effect Analysis: A problem-solving technique where you can outline the likely causes of a problem. Start by writing the problem on the left side of a piece of paper with a box around it. Draw a straight line to the right side of the paper and draw several diagonal lines extending above and below the horizontal line with all potential causes of the problem. From these diagonal lines of potential causes, draw small horizontal lines with all the potential causes of the problem related to each factor.
Root Cause Analysis: A problem-solving approach that believes in finding the reasons of problems in order to prevent them, rather than solve them when they occur. It works by defining the problem, gathering information and data, and identifying ways to eliminate the root causes of the issue.
The 5 Whys: This tactic is best used for simple or moderately difficult problems as you assemble a team that’s fit to analyse an issue and ask “why” five times in an effort to get to the origin of the problem.
Develop improvement solutions to address issues/opportunities and implement the changes. Here’s how to do this in an orderly approach:
Ask Your Teams: Assemble the teams who are related to the task at hand and hold brainstorm sessions to identify solutions.
Redesign the Steps: Once you’ve identified where issues reside, you can work together as a team to redesign the process by gaining feedback from your team and narrowing down the list of best fixes to implement. There are types of analysis that work best to move forward:
Find Resources: To make the change happen, write down the resources (human and tools) that are needed to make this change. By outlining the costs associated and necessary ingredients for change, you can create buy-in from stakeholders by preparing a business case. Then, once everyone is on board, you’ll want to incorporate the group that will be responsible for implementing the change to ensure they understand the goal of the process improvement.
Manage Roll-Out: The work is just getting started. Now, it’s time to implement the new process, which involves your entire organisation to be on board. In order to manage roll-out in an effective manner, be sure to establish clear lines of communication and leave adequate time for testing and feedback so that if a process needs to be refined again, there’s time to do so.
Once a process has been changed with the intention of improvement, it’s necessary to review it to make sure that it’s working as expected. By communicating with team members and comparing reports to measurable benchmarks, the data will help to show if the change is for the better. For example, you can use time management software and audits to see if a process has become more efficient if the amount of time it takes to complete a task has decreased since the chain.
As business continues to change, you’ll have to set continuous check-ins, as well as trainings so that the formal processes continue to be implemented as desired.
Rolling out a new process can be cumbersome and requires a lot of energy from different people within an organisation. However, once you have done it once, you can move forward by implementing continuous improvement in the same way you started. Whether you choose to improve the same process that you have already edited, or expand to different areas within the business, process improvement technically has no limits.
By using data to measure outcomes and track progress, you can see what works best and what doesn’t. Having the help and feedback of your team and software that can provide valuable insights makes the process easier to enhance. While the old adage may say, “If it ain’t broke, don’t fix it,” businesses have to be willing to push the boundaries and test their own way of doing things in order to remain competitive and continue to improve.
Since all processes aren’t the same, be sure to take time when implementing process improvement and rolling out continuous improvement. Leverage your resources wisely and devise plans to share use cases to quantify how your efforts usher in positive ROI.
In a competitive business landscape, the way a business runs is what will set it apart from other businesses. In order to continuously improve the quality of products and services, as well as employee satisfaction, it’s important to regularly assess formal and informal processes in an effort to optimise both input and output.
The order to cash process is what keeps money flowing into your business. Check out these best practices and how you can utilize automation.
Considering tools for continuous improvement and looking to know what will work best? Look at this guide for how to make change happen.