Business process improvement is a systematic approach to enhance business process efficiency and effectiveness. It involves analyzing and improving existing processes to meet new business goals or quality standards so organizations can do more with less and faster.
Without it, organizations may be unable to survive and thrive amid stiff competition.
Read More about Business Process Improvement
Before knowing more about the systematic approach, let us tackle what a business process is and what processes typically require improvement.
What Is a Business Process?
A business process refers to a series of tasks individuals and teams do repeatedly to create a product or service for stakeholders, sponsors, or customers. It typically takes the form of a flowchart that details the tasks necessary to serve a particular business goal.
Take a look at the example below, which shows the steps in improving the software development process—a standard for tech startups.
What Are the Types of Business Processes?
Business processes can be categorized into three major types—core, support, and management.
Core Processes
Core processes are activities that deliver value to customers. Examples include product development, marketing, and sales.
Support Processes
Support processes refer to activities that assist core processes. Examples include human resources (HR), IT support, and accounting.
Management Processes
Management processes are activities related to overseeing and guiding core and support processes. Examples include strategic planning and performance monitoring.
What Are the Purposes of Business Process Improvement ?
Organizations improve business processes for various reasons. Here are some of them.
Operational Efficiency
The approach eliminates bottlenecks, thus reducing activities that do not add value to the business. Optimized workflows improve productivity, minimize delays, and reduce time to complete tasks. Overall, this increases efficiency, resulting in faster delivery of products or services, improved response times, and better resource utilization.
Cost Reduction
The approach identifies and eliminates wasteful activities, redundancies, and unnecessary process steps. As a result, they can reduce costs, amounting to better returns on investment (RoIs) for continuous improvement. With its help, organizations lower operational expenses, minimize rework or errors, and optimize inventory levels. In the end, lower costs translate to improved profitability and financial performance.
Quality Improvement
The approach identifies and addresses the root causes of defects, errors, or customer dissatisfaction. That way, organizations can reduce errors, improve accuracy, and enhance their overall product or service quality by implementing standardized processes, error-proofing mechanisms, and quality control measures. At the end of the day, improved quality leads to better customer satisfaction and loyalty.
Employee Engagement and Empowerment
All employees must practice this approach. The more engaged they are, the more empowered they will be to contribute ideas, knowledge, and expertise to enhance business processes. Their involvement will foster a sense of ownership, boost morale, and strengthen teamwork. Organizations will thus have more motivated, productive, and committed employees dedicated to achieving their business goals.
What Are the Steps in Business Process Improvement ?
The approach requires organizations to follow six steps.
- Identify the process that needs to change: This stage requires mapping business processes or visualizing the steps, activities, and workflows the process involves.
- Analyze existing pain points: Before processes can be improved, organizations must first identify bottlenecks, inefficiencies, redundancies, and other issues within workflows. They can use visualization tools for that, along with inputs from stakeholders.
- Conduct a root cause analysis (RCA): An RCA is a means to discover the root cause of a problem to identify appropriate solutions. Its users assume it is more effective to systematically prevent and resolve underlying issues than to treat ad hoc symptoms and put out fires. This step helps organizations determine how best to improve or eliminate problem areas.
- Design and evaluate the process: This stage involves streamlining activities, reskilling workers, or adding new technologies like robotic process automation (RPA). It also includes analyzing and testing proposed solutions to avoid unintended negative consequences.
- Implement the new process: Asking people to change is never easy. So, to implement the new process, organizations may need to employ change management techniques.
- Evaluate and quantify results: New processes only work if they produce the desired results. And the best way to measure success is to review pre-established metrics.
What Business Process Improvement Methodologies Can Organizations Use?
Different strokes for different folks apply to organizations when applying the approach. We listed some of the most common methodologies below.
Six Sigma
Six Sigma aims to minimize variations in end products. It was developed by Bill Smith in 1986. The process uses statistical data as benchmarks to help business leaders understand how well processes work. In it, a process is considered optimized if it produces fewer than 3.4 defects per 1 million cycles. In manufacturing, it helps minimize defects and inconsistencies and optimize for consistency, leading to customer satisfaction.
Six Sigma uses two main processes—Define, Measure, Analyze, Improve, and Control (DMAIC) and Define, Measure, Analyze, Design, and Verify (DMADV). DMAIC is for existing processes, while DMADV is for new ones.
DMAIC involves these steps:
- D: Define the opportunity for improvement.
- M: Measure the performance of existing processes.
- A: Analyze the process to find defects and root causes.
- I: Improve processes by addressing root causes.
- C: Control improved processes and assess future process performance to correct deviations.
DMADV, meanwhile, follows these steps:
- D: Define goals and customer deliverables.
- M: Measure customer satisfaction.
- A: Analyze design concepts to address customer concerns.
- D: Design a prototype using the chosen concept.
- V: Verify the effectiveness of the prototype.
Total Quality Management
Total quality management (TQM) is a customer-focused method that involves continuous improvement over time. It is often used in supply chain management (SCM) and customer satisfaction projects. It relies heavily on data-driven decisions and performance metrics. Organizations utilize success metrics to solve problems. Essentially, they use the success metrics to decide how to improve a process.
Lean Manufacturing
Lean manufacturing is a production process that focuses on maximizing productivity while minimizing waste. In the lean principle, waste refers to anything that does not add value that customers are willing to pay for. Overall, lean manufacturing reduces lead times and operating costs and improves product quality.
Kaizen
This method is guided by the Japanese philosophy of kaizen or continuous improvement. The concept can be applied to business since an organization will become more successful as it improves. It aims to optimize activities that generate value and eliminate waste.
Plan, Do, Check, Act
The plan, do, check, act (PDCA) cycle is an interactive form of problem solving that aims to improve processes and implement change. Walter Shewhart created it when he applied the scientific method to economic quality control. W. Edwards Deming developed it further when he used the scientific method for process improvement in addition to quality control.
5 Whys Analysis
5 Whys is a process improvement technique that identifies the root cause of a problem. Organizations gather a group of stakeholders involved in a failure and ask why it went wrong. They repeat the question until they get to the root cause. The analysis identifies issues within a process but not human error.
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As you have seen, there are several ways to go about business process improvement. Organizations must choose the best one that applies to their situation.
Key Takeaways
- Business process improvement enhances business process efficiency and effectiveness. It involves analyzing and improving existing processes to meet new business goals or quality standards so organizations can do more with less and faster.
- A business process refers to a series of tasks individuals and teams do repeatedly to create a product or service for stakeholders, sponsors, or customers.
- Organizations typically improve core, support, and management processes.
- The approach enhances operations, reduces costs, improves quality, and engages and empowers employees.
- It requires following six steps, namely, identifying the process that needs to change, analyzing existing pain points, conducting an RCA, designing and evaluating the process, implementing the new process, and evaluating and quantifying results.
- Six Sigma, TQM, and lean manufacturing are examples of business process improvement methodologies.
Sources
- https://asana.com/resources/process-improvement-methodologies
- https://www.simplilearn.com/what-is-six-sigma-a-complete-overview-article
- https://www.investopedia.com/terms/k/kaizen.asp
