Business development is a never-ending process. But developing a business is not always dependent on external factors. Therefore, improving the business process also plays a significant role. Here is a guide on how to improve the business processes with process improvement steps.
How a business process is organized can determine a company’s success. That is why start-ups should take process improvement steps if any problem is discovered. But, they should first understand what a good business process entails.
What is Business Process?
According to economics, the factors of production are the input resources needed to go through a process, and the result is output. The output is a product that earns revenue and generates profit for the business.
So a business has three parts: input, process, and output.
You can improve the process to get the most out of your input. A machine is a part of the process of manufacturing. An engineer is part of a process for software development.
What is SOP?
SOP stands for Standard Operating Process or procedure.
SOP is a standard set by the organization so that the employees understand what to do in which situation of the process.
When you start a new business, you need to define SOP.
What is Business Process Improvement (BPI)?
A business process is a series of related and structured activities that are carried out by workers, managers, or technologies in an organization to produce goods or render services.
On the other hand, business process improvement is a management activity aimed at analyzing procedures through various approaches for identifying weak links—and making improvements where necessary. Of course, this would be in competence, effectiveness, and accuracy.
For example, a business intelligence (BI) software application may not perform as fast as it should. A diagnosis will be performed if the BI engineer notices this. Solutions that may be proffered could be software upgrades, hardware upgrades, a change of the entire system, or others.
Improving Business Processes – Checklist
There are several methods for process improvement. Here is a simple checklist to start with.
The main objective of process improvement is reducing input, increasing output per input, etc. Whatever your goal is, ask these questions and write down the answers.
You can ask these questions to the people directly involved in the process and the owner of the process.
- Can we reduce the number of steps in business operation?
- Can any step be deleted?
- Can any step be automated?
- Can several steps be combined into one?
- Can several actions be taken by one role instead of 2 or more?
- Can customers get all the answers to their FAQ from the website or webchat?
- Can customers purchase without the help of anyone else?
- Is the customer informed on the process of purchasing and consuming the service?
- Can multiple tasks be conducted simultaneously?
- Can you create competitive value in each customer interaction?
- Are you analyzing the perceived value of customer experience in purchasing and availing your service?
- Can you identify the customer journey?
All surveys contain some extreme feedback. Once you have answers to these questions, remove the extreme values. This requires another round of critical thinking.
Summarize your findings and prepare a plan for improving the process.
Benefits of Business Process Improvement
In a 2016 study, it was discovered that almost 70% of businesses had repeatable processes which were documented. A good number, but not great. In the same study, it was revealed that less than 5% of businesses measured and managed those processes.
Now that figure is way too low. It would be a terrible result in the modern business world where technology keeps replacing human effort in some procedures. So it is only logical to think that the findings were partially caused for the lack of knowledge about the importance of improving business processes.
Without further ado, let us look at the benefits of improving processes in an organization. Five have been given below.
- Effective Information Flow
- Boost Employee Motivation, Competence, and Productivity
- Enhanced Product Quality
- Better Competitive Advantage and Faster Market Penetration
- Improved Customer Satisfaction and Loyalty
1. Effective Information Flow
There can be some barriers to communication that will hinder the effectiveness of a process when it comes to the flow of information from top-level managers to low-level managers. If so, problems will arise when employees are given directives.
However, there will be a better information flow from top to bottom and horizontally in a case where communication barriers are tackled (such as in a situation where the workforce is characterized by diversity).
2. Boost Employee Motivation, Competence, and Productivity
Employee morale can be negatively affected by the inaction of managers when it comes to improving business processes. Why have a workforce of frustrated workers whose efficiency and productivity will be significantly affected because of the situation? How would such working conditions benefit the company? The impact can only be adverse for everybody.
Business owners should know that increasing worker motivation, efficiency, and productivity can only be possible when they streamline business processes. The discovery of flaws in the company’s operations and their subsequent elimination will make workers happier and improve their output. This cannot be overemphasized.
3. Enhanced Product Quality
Targeted process improvement steps can lead to an appreciation of product quality. This could partly be due to a boost in employee motivation, competence, and productivity (in relation to the previous point discussed).
An example can be seen in a situation involving implementing proper product testing procedures. The company in question will be able to prevent problems arising in terms of integration, security, and performance. Another scenario that illustrates this point is the repair of machines used to manufacture cars in an automobile company’s factory.
4. Better Competitive Advantage and Faster Market Penetration
A highly competitive industry can push a small business into the shadows if management fails to improve processes. Therefore, entrepreneurs need to make their establishments stand out from the rest.
It is necessary to detect obstacles that should be eliminated and solve issues ASAP. Improving business processes with digital data sourced via business intelligence can give managers the essential information they need to put everything in order.
Branding, manufacturing, and distribution processes have to be unique and fast. That is how you can create an image that resonates with your target customers and quickly win them to your side. This has to be done before other companies beat your business to it. The competition is fierce and always on. In fact, all process improvement steps indirectly boost competitive advantage.
5. Improved Customer Satisfaction and Loyalty
You will surely get positive feedback from your customers when you can improve process management in manufacturing top-quality products and services. Add better and faster delivery services to that, and you will be getting happier buyers. Satisfied customers will return to patronize your company, of course.
What do the above results mean? They mean you have been able to win the loyalty of your customers. Ultimately, business revenue will appreciate.
Apart from the problems mentioned earlier, there are others which one should keep in mind. See them below.
- Customer complaints about poor product and service quality can lead to the loss of regular buyers.
- Wasted resources such as time, production materials, power, human energy, etc.
- Duplication of steps in procedures
- High-stress levels among employees
- Unnecessary production costs
- Unbeaten deadlines
How to Improve Business Processes – 10 Steps
Since we have understood the importance of process improvement steps in a company, the next thing would be to learn how to streamline business processes. Ten stages to improve process management have been given below to tackle the problems mentioned in the last subheading. They are based on the Lean methodology, which has nine steps. See them below.
- Analysis of Processes
- Identification of Issues
- Implementation Planning
- Value Assessment
- Risk Mitigation
- Standard Documentation
- Ensuring Employee Compliance
- Improving Customer Satisfaction
1. Analysis of Processes
This is the first stage of the process improvement steps for a good reason. First, the organization’s processes need to be studied and understood for issues to be exposed. Next, employees should be interviewed, and business intelligence should be utilized.
2. Identification of Issues
The results from your analyses will be used to draft a new model of processes. The new model will show all the proposed improvements and those assigned to implement them.
3. Implementation Planning
Remember the team you formed in the second stage? Now make plans on how to execute the proposed improvements with them.
Team leaders should ensure the proper management of the project. Executing the plan drafted in Step 3 may open the eyes of the team to new needs for improvement.
Steps 5 and 4 are connected in Lean management. It is through monitoring that new needs for improvement will be noticed. Monitoring is also necessary for project optimization.
6. Value Assessment
Monitoring by team leaders will make it possible to ascertain the value of each process activity to the products and services of the company. If the action has little or no value, it should be scrapped. If it does, enhancements should be made to realize its full potential.
7. Risk Mitigation
Some activities may pose risks that can’t be easily managed. If so, then actions should be taken to simplify or scrap them.
8. Standard Documentation
This is a crucial phase when it comes to processing improvement steps. Why? Documentation is necessary for a detailed record of all the processes a company follows. It is highly recommended in cases where a process is repeated from the beginning to the end of the value chain.
9. Ensuring Employee Compliance
This is self-explanatory. The project team should ensure that the new model becomes a part of the company culture. Although specific monitoring metrics have been mandated in many industries. Regulatory bodies monitor the adherence to rules of such metrics.
10. Improving Customer Satisfaction
This is the last stage of the process, but it is of utmost significance. If there is no reasonable improvement in customer experience at the end of the project, then all efforts would be considered vain. It is only suitable that the project’s impact on customers should be assessed.
To learn more about the above, watch this YouTube video:
Best Ways to Improve Business Processes
Business owners and managers have to know the various methodologies that can be implemented to improve processes. Five of them have been given below.
- Six Sigma
- Lean Management
1. Six Sigma
This is an improvement method aimed at boosting employee motivation, efficiency, product/service quality, and revenue through streamlining processes. This is done by discovering defects and inconsistencies, then tracing their roots.
Recommended Course: IASSC Lean Six Sigma Black Belt
2. Lean Management
Lean management is a long-term continuous improvement method employed in an organization to attain small, gradual transformations in processes. The ultimate goal is to boost competence and product quality by discovering factors that cause wastage.
Recommended Course: The Lean Management System
This methodology is ideal for companies that use small processes. The 12 principles of Agile software development are gradually and repeatedly applied in Agile management for the benefit of various processes, especially project management. Flexibility in requirements is necessary for this approach to be effective. For example, it would be favorable if software codes could be refactored cheaply.
Recommended Course: Distributed Agile Success
TQM is an acronym for total quality management. This methodology is implemented to create and maintain a working environment where workers regularly develop their ability to develop top-quality products and services that will satisfy customers. TQM’s eight principles are aimed at transforming organizational culture.
Recommended Course: Total Quality Fundamentals
Kaizen involves continuous improvement. It is a Lean term that originated from Japan, and it means “change for the better.” There are two types—one is Flow Kaizen, while the other is Process Kaizen. The former entails distributing materials and resources through the whole value stream. On the other hand, the latter involves taking small process improvement steps in specific processes.
Recommended Course: Kaizen MicroLessons
This methodology is aimed to build an organizational mentality and encourages the following practices:
- Identifying factors that cause wastage
- Promoting the creation of value in daily business operations
- Developing process flow
A course from Teachable.com has been suggested for each of the above. It will teach how to use one of the above tools to improve process management.
Moreover, explore this free course: Scrum Master: Free Overview Course. Here you will be introduced to Agile methodologies and the Scrum framework.
Example of Process Improvement
An example that can be illustrated is centered on Business Intelligence adoption.
The adoption of new technologies or the upgrading of old ones can be very effective in improving processes. Business intelligence is very instrumental in the modern business world. Start-ups that want to thrive in highly competitive industries need to adopt BI to source Big Data.
Note: Big Data is the large volume of relevant data collections that companies get via their websites, the internet, or the intranets. For example, data about customers and behavior is gotten through eCommerce websites. BI uses technologies (computers and software applications) to bring Big Data.
BI tools can help managers to streamline business processes by replacing human effort in the areas of digital data gathering, analyses, storage, and retrieval. Employee performance metrics can be gotten through BI. The results will be analyzed and used to know the best way to streamline business processes.
The area of business reporting and analytics produces in-depth information that can help to forecast future trends, eliminate factors that cause delays, and improve processes. Big Data analytics helps an organization’s decision-makers to act smartly.
To streamline business processes, simply make use of the method explained under the subheading that discusses 10 process improvement steps.
Our answer is the lean process improvement based on its ten detailed steps which cover every process in an organization.
We hope that you will find the 10 process improvement steps given in this guide useful for implementation in your organization. If not, you can try the other methods (apart from lean process improvement) explained under the section that discusses the best way to improve processes—Six Sigma, Agile, TQM, and Kaizen.
Improving processes comes with much dedication from top-level management right down to low-level management. Every hand has to be on deck. Now you can be on your way to improving process management in your company with the tips given in this guide.