Business processes are rarely as efficient as they could be. Most businesses never stop to re-evaluate their processes – they just stick to what they started out with. While this isn’t necessarily bad, it leaves room for mistakes. And that’s where business process improvement comes in.
What is Business Process Improvement (BPI)?
Business Process Improvement (BPI), while it doesn’t really have a universally-accepted definition, can be seen as the analysis, review, and improvement of existing business processes. This is done by mapping out the business process, identifying inefficiencies, redesigning the process & benchmarking to initial metrics.
Typically, the main goal of BPI is either, or all 3, of the following:
Goal #1: Reducing Process Time – Finding ways of carrying out the process faster or more efficiently. There are a lot of different ways this could be done, from eliminating useless steps to adopting new technology.
Goal #2: Improving Output Quality – Creating a better product with the same input of resources. This usually means finding steps within the process that negatively influence the end-product, resulting in defects and errors.
Goal #3: Cutting Out Waste – Discovering wasteful processes & cutting them out of the workflow. This may either help achieve the first 2 goals or simply just improve overall productivity. If your team doesn’t have to do useless work, they can spend more time on the work that creates value for the company.
Business Process Improvement (BPI) Steps
There are a lot of different business process improvement methodologies, but the general idea is usually the same – taking your old processes & finding ways to improve them.
The following is typical steps you’d have to take to carry out a BPI initiative…
Step #1: Mapping
If you don’t know what your processes are, how can you analyze their efficiency and improve them?
So, you’d want to map them out to get a birds-eye view of your business. Business process mapping is a good way to understand how your business works & find anything that might seem weak or inefficient.
The most basic way you could do this is through pen and paper, by drawing a flowchart of the steps included in a process. This, however, is a bit outdated – the best way to map out processes is through software.
Workflow applications, on the other hand, are much more powerful. The software allows you to track your processes in real-time, as opposed to just put them down on a graph. This has several potential benefits for your business…
- Complete Process Tracking – With a graphing tool, you have a simple document with a flowchart of your processes. With workflow software, on the other hand, you have the processes running in real time. You can see who’s working on what, whether someone is being late with a deadline, etc. This leads to…
- Accountability & Productivity – Since the entire process is being tracked by software, everyone knows whenever what they’re supposed to be working on, and are in turn more accountable for their own work. This, in turn, leads to higher overall productivity & product output.
- Automation – Workflow software usually comes with integration with different task automation tools, such as Zapier. This allows you to cut out any useless, menial processes (for example, sending out an automatic email), allowing your employees to focus on work that matters.
Step #2: Analysis
Once you have your process mapped out, you can start analyzing it. You can do this by asking yourself…
- Are there any steps in the process that are taking longer than they should?
- In case there are delays or missed deadlines, what is the primary factor for that?
- What are the steps that have the highest impact on product quality, and is there any way to make them more efficient?
- Are some of the steps more financially straining than the rest? Why & how?
You can also use different types of business process improvement tools, such as the 5 Whys, for example, as a framework for finding inefficiencies or problems.
The gist of 5 Whys is, you keep asking the question “why” until you discover the root cause of an issue. So for example, let’s say the problem is that the sales are down compared to the previous 3 months…
- Why are the sales down?
Because the sales team isn’t closing as many clients as usual.
Because the leads are weaker than usual (yeah, sure, blame the leads!).
Because the marketing team has been trying out new lead generation partners.
Because they can no longer afford the older partner.
Because the partner upped their rates by 20%.
Once you get to the root cause of the problem, it’s much easier to come up with a solution. In this case, you’d compare the new sales number with the old ones, and if the profit difference is higher than the 20% expense for the old partner, you’d want to consider switching back.
Step #3: Redesign
Once you’ve identified the inefficiencies in your old process, you’ll need to figure out how to change it. This is, of course, very much dependant on your specific situation, and there’s isn’t a one-size fit all solution.
There are, however, several best-practices you could follow…
- Pick the right metrics for comparison – you’d want to compare your new process to the old one in terms of efficiency, so you can empirically know whether it’s better or not.
- Work with the field-level employees. Chances are, they might have some input on what you could improve on.
- Think long-term & account for error. In some cases, your solution works wonders in the short-term, but prove to be inefficient or costly long-term.
- Define the exact scope of changes. You should know exactly what impact your solution will have, or you’ll be opening up to risk you could have avoided.
- Perform risk analysis. You can never predict the outcome at a 100% accuracy. You’d want to account for anything that can go wrong. The manufacturing methodology, for example, might seem to work wonders initially – right up to the point when it completely breaks down due to some minor oversight.
Step #4: Implementation
Implementation is a very critical step for the success of a business process improvement initiative – if something goes wrong, you might end up losing more than whatever the inefficient process was costing you.
The steps for successful implementation are as follows…
- Implement the changes at a small scale to mitigate risk. Before carrying out the changes throughout the entire organization, you’re better off testing it at a small scale & benchmarking it to the original process.
- Acquire the right resources & define the steps.
- Let all the shareholders know of the changes & start implementing it.
Step #5: Reflection & Benchmarking
Things don’t usually go exactly the way you plan them. Once you roll out the changes, you still want to monitor everything, making sure everything is as it should be.
Let’s say, for example, you’re optimizing your manufacturing process to increase output per hour. While you may succeed with this, it might turn out that while the output is better, so is the defect rate, leaving you with a new problem to work on (and back to square one, in terms of profits).
Even if that is not the case, BPI is a continuous process – there’s always something new changes you could test and implement.
Business Process Improvement (BPI) Methodologies
BPI methodologies help you apply a framework to your initiative, as opposed to just going with the flow. Some of the most famous BPI methodologies include…
Six Sigma was first developed by the engineers at Motorola and is used to measure defects or inconsistencies in a process. This, in turn, can be used to perfect the end-product.
Six Sigma is also used as an indicator for the level of efficiency for a process. A “Six Sigma Process” is a process that, out of a million output, doesn’t produce more than 3.4 defects.
- Define – Find the opportunity for improvement.
- Measure – Identify the metrics you’re going to benchmark new processes to.
- Analyze – Uncover any defects or inconsistencies in the process.
- Improve – Get rid of the aforementioned problems
- Control – Monitor the new process, making sure that there aren’t any new problems.
While Six Sigma focuses on eliminating defects to better the product quality, Lean aims at optimizing the process itself as much as possible. It means, for example, finding a low-value step in a process and cutting it out completely – something that would improve employee productivity, but not have much of an effect on the end-product.
The system was developed by Toyota as a means of shortening the order-to-cash cycle. Typically, the steps for lean process improvement would include…
- Defining what value is for the end-customer
- Mapping out the process and identifying which steps aren’t creating any value
- Cutting out the steps that don’t add value, or modify them in a way that they do
- Repeat the steps 1 through 3 for other business processes, repeat until the organization is sufficiently more efficient
Total Quality Management (TQM)
Total Quality Management (TQM) is a methodology that originated in the 1950s, but only becoming popular in the early 1980s.
As with the Lean methodology, it’s main priority is delivering value to the end-customer. The difference is, however, that TQM focuses on the organization as a whole, rather than individual processes. The key idea here is that every department (anything from engineering to marketing) within the company should be optimized with customer values in mind.
What really makes TQM shine, however, is that it involves the alignment of an entire organization. It’s not just the responsibility of the senior management to carry out change – rather, it’s a company-wide initiative, all the way down to the lowest level employees.
Now that you have a good grip on how BPI works, it might be time to start carrying it out. Theorizing, after all, doesn’t have much of an impact on your company’s bottom line.
To help you get a good start, you might want to give Tallyfy a try. Business process improvement and workflow management software tend to go hand-in-hand, after all.
Map, optimize, and streamline your processes with Tallyfy – simply by adopting software, you’re already taking the first step in making your processes more efficient. Or, learn why everyone else loves Tallyfy here.