How to improve and optimize business processes, step by step
As businesses grow and evolve, so do their business processes. Depending on the size of a company, there are dozens or even hundreds of business processes that stakeholders inside and outside an organization participate in on a daily basis.
A business process includes a sequence of steps that occur in a specific order to achieve a desired result. The process can be dedicated to an activity such as new customer onboarding, sales and marketing, customer support inquiries, order fulfillment, human resources, and accounting.
These processes are constantly evolving and therefore require constant evaluation, improvement and optimization. Outdated processes can create customer and employee dissatisfaction, costly operational inefficiencies and lost market share.
What is business process improvement and optimization?
Effective business process management (BPM) requires a well-thought-out plan that addresses the ongoing needs for process definition, execution, evaluation, and iteration. Improving and optimizing business processes is at the core of this strategy, an operational practice that identifies, assesses, and resolves business process issues and concerns.
Business process improvement and optimization aims to redesign an existing process to make it more efficient, streamline operations, upgrade communications, reduce errors and costs, and improve workloads. These improvements must be continuous as businesses change, evolve, grow, and implement new technologies.
There are several proven methodologies for improving and optimizing business processes. The following techniques and tools place the customer at the center of all business operations:
- Six Sigma has been around since the mid-1980s as a general approach to process improvement and total quality management. It uses the DMAIC concept (define, measure, analyze, improve, control) as a framework for making continuous process improvements.
- Lean thinking is a modified version of Six Sigma. It focuses on specific tasks that deliver more value to customers and identifies areas of potential process inefficiency.
- Total Quality Management, or TQM, was popularized in the 1980s by manufacturers and government agencies. It focuses on eliminating process defects and improving the overall quality of the final product or service.
Why is business process efficiency important?
All companies recognize the value of efficient processes, but the reality is that many companies encounter workflow inefficiencies that need to be addressed. As businesses digitally transform in today’s highly competitive business landscape, inefficient processes can negatively impact a company’s entire business operations. A single inefficient process can affect resources, labor, profits, and the quality and reliability of products and services. Inefficient processes can create bottlenecks that hamper operations, increase costs, force missed deadlines and uncompleted tasks, and slow an organization’s reaction to market fluctuations.
Creating effective and efficient business processes can be complex and time-consuming. But keeping these processes up-to-date, improving them as needed, and continuously optimizing them can be even more challenging. People are often resistant to change, especially when processes have been in place for a long time. Yet, making a process more efficient can help streamline procedures, eliminate unnecessary tasks and duplicates, automate certain tasks, increase return on investment, and improve employee and customer satisfaction.
What are the benefits of optimizing business processes?
A well-managed and continuously improved process can reduce errors, shorten process turnaround times, improve workloads, identify waste, eliminate duplication, and increase overall business performance. Optimizing a business process can also increase consistency, quality, and compliance, reduce risk, and provide greater visibility to customers and executives.
Steps to improve and optimize a business process
When planning a business process improvement and optimization initiative, determine the business goals, where improvements are needed, and what needs to be optimized. A goal-focused vision lays the foundation for measuring and evaluating progress.
1. Identify a single process that needs improvement, no matter how small
Focus on a process that needs immediate improvement, reach out to stakeholders and team members to determine which tasks and activities are taking the most time and resources, and collect recommendations on how the process can be improved. improved. In this process, choose a task that is the least complex and the least time-consuming to optimize, but will show an immediate return on investment, regardless of its size. Small optimization projects can still show significant results, provide easy wins for stakeholders, and gain company-wide buy-in for more complex process optimization activities.
2. Set business goals for process improvement and optimization
Once a process has been identified for improvement, define the goal for process optimization, set the overall goals as well as smaller, immediately measurable goals, and design a plan to achieve those goals. Have a clear understanding of what optimization will accomplish – for example, financial savings, resource savings, or time savings. Communicate these goals clearly to leaders and stakeholders so everyone is on the same page and in agreement.
3. Create a map of the existing process
Visually map the business process using BPM and business process modeling methods that have been popularized over the past decades. These tools can provide an easily understood and standardized way to define how a current process flows through different departments, different process steps, and process components that run sequentially or in parallel.
4. Analyze the current process to isolate weaknesses
Process mapping helps analyze the current process and locate areas of inefficiency or inefficiency that can be improved and optimized. Also use stakeholder feedback to analyze which process steps take the most time, create bottlenecks, cause communication breakdowns, don’t add value and can be reworked or eliminated, for example by making certain tasks conditional, by integrating certain tasks, adapting data authorizations or automating manual tasks.
5. Target specific tasks for automation
Automation provides opportunities to rapidly improve and optimize a business process by eliminating manually caused bottlenecks, solving repeatability and quality issues, and removing inefficiencies. Determine what monetary and time resources are available to invest in business process automation software and whether the necessary tools already exist in the organization.
6. Check the initial objectives of the process redesign plan
Ensure that the process redesign will meet established business objectives and have a significant impact on process efficiency, resource savings and return on investment. Business process modeling software can help measure impact and provide recommendations for process improvements while still in the pilot stage.
7. Test the new process before full implementation
Testing and quality assurance are equally important steps to ensure that the new process will work before full-scale implementation. Optimized business processes can often be hampered by unforeseen circumstances. Testing the entire process before full implementation avoids re-examination and iterative redesign after deployment.
8. Continuously improve and monitor the post-deployment process
Once fully implemented, measure the efficiency and effectiveness of the new process. As market conditions and business operations change, business processes also change. Therefore, a business process requires continuous evaluation and monitoring to ensure that it provides more value compared to the old process. Collect feedback from stakeholders and monitor the process for any new issues to be resolved.
The ripple effect
Used effectively, improved and optimized business processes will inevitably have a positive impact on most aspects of business operations. Improving and optimizing just one inefficient business process can have significant business payoffs.
Focus on quality, measure the new process against clear, realistic, and measurable goals, and regularly communicate progress to stakeholders, executives, and customers. These fundamental steps of improving and optimizing business processes will produce a more efficient, more agile and more intelligent organization.