Process Improvement – How To Make Your Business More Efficient
Process improvement will change your business life for the better. No, you’re not reading a mantra-life-coach-change-your-destiny article. This will be pure business. You should run efficient processes. It doesn’t matter if your organization is big or small, whether you use nails and hammers or exquisite consulting techniques.
You may have already faced some of the visible consequences of lagging processes:
- Frequent downtime
- Inter-departmental conflicts
- Long on-boarding for newcomers
- High dependence on personnel remaining in the same role
- Hard times understanding the status of ongoing projects
- All kinds of unpleasant surprises happening within the organization
- The necessity of detailed control over routine operations by the Management
Whenever a business owner faces these types of issues, they usually understand that it’s high time to focus on process improvement. Unfortunately, in some cases, they may be too busy to initiate the change.
The other important aspect is that process improvement is vital in many situations, not only to fix the business flow when it’s broken. You may enjoy the benefits by reducing a bit of waste in your production, saving a bit of your consultants’ time or improving your own decision-making algorithm. All of those translate easily into cash savings or additional revenues.
The need for process improvement and the emergence of the first school of thought in this area dates back to the 1980s. In the modern economy, this need is ever-growing. The competition is getting harder, the consumer is getting used to customizations, new systems emerge every year and require smart integration. The business world is becoming complex and it’s the duty of every business owner to counter it with simplicity and efficiency within the organization.
In this article, we will talk about methods and tools for process improvement. You will get the sense on where to start if you’re ready for the journey and “not too busy”.
Process improvement project example
A large call center in California had a smooth and well-documented process of accepting calls. The IT systems were well integrated, and personnel trained to perfection. There were instructions for every possible situation an operator may face. Further examination and mapping of the processes revealed that a significant chunk of operators’ activities was not bringing value. In simple terms, those were the tasks related to documenting the outcomes of the call. Documentation is essential but not something the customers are willing to pay for.
The solution was straightforward. The documentation activities were deconstructed to find repeating patterns. Then engineers automated those patterns. As a result, the company achieved the reduction of time spent on documenting from an average of 22 sec to 2 sec. Now imagine this task takes place after each call the operator makes (answered and unanswered). The organization employs more than 1,000 operators. This process improvement displayed a whopping annual saving of $5.5 million if translated into numbers.
The investments into this type of results is more than reasonable. All it took the organization was to hire a process improvement consultant for three months. He was working with the dedicated team of operators, so there was a temporary productivity decrease for ten operators out of 1,000.
While working on the project, the team used some methods, and we will review the main ones of them in the following section.
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Process improvement methodologies
The major schools of process improvement are Lean and Six Sigma. They both originate from mass production sphere, and both quickly went far beyond factories. Both schools seek efficiency. The core difference between the two is the way they interpret inefficiencies.
Lean followers talk about the removal of unnecessary steps in the process. They believe the organization should focus only on the steps that bring value. In other words – on actions that the customer is willing to pay for. Six Sigma adopters pay attention to the removal of variations within specific steps. According to them, the consistency of operations significantly improves quality and reduces waste.
Unlike other “holy wars” (Android vs iOS, German vs Japanese cars, etc.) this one has a very peaceful resolution: Lean Six Sigma. It’s the modern school combining the approaches of both originals. The good thing is that they don’t contradict each other. Moreover, they offer different perspectives on the same business issue.
Going forward, we will review some of the most popular tools that Lean Six Sigma has to offer.
Process Improvement Tools
I’m sure you wouldn’t be surprised that there’s no such thing as the best tool for process improvement. It all depends on the type of organization, available data, type of the issue and many other factors. Let’s take a look at the most well-known tools used by process improvement specialists.
DMAIC and DMADV
The acronyms stand for Define – Measure – Analyze – Improve / Design – Control / Verify. This process improvement tool is one of the simplest to start with. It may be especially useful for project-oriented organizations. The tool can help in finding ways to improve existing product or service or develop the new one. The team goes through five clear steps:
- Define the problem or opportunity. The outcome of this step is the definitive list of goals the project is aiming to achieve.
- Measure the existing process. As a result, the team comes up with a list of agreed CTQ (critical-to-success) factors. Obvious from the name of the step, these factors should be easily measurable.
- Analyze the available information on current performance. How and why the current state is different from the desired state? This step is about understanding the gap you need to overcome and the root cause of this gap.
- Improve / Design stage is the step when the team stops strategizing and starts acting. The idea is to assess the possible ways to overcome the gap defined in the previous step. Cost-benefit analysis should help to find the options that work best. Then the team should run an experiment or a pilot project to test the approach. Measuring the CTQs of the pilot is uber-important.
- Control / Verify is the step most frequently overlooked. This is about making sure that the new process is cascaded throughout the relevant part of the organization. It implies a lot of communication to assure that the staff not involved in the development is embracing the process improvement. In case of development of the new process or product this stage is used to verify with the client that the outcome meets their needs.
Also known as Ishikawa diagram, it is a famous process improvement tool that helps to find the cause for a defined problem. It’s handy for facilitation of brainstorming when a cross-functional team has to think of reasons why the particular business problem emerged. In most cases there will be multiple factors and the team will map them on the “bones” of the fish.
The process starts with a precise definition of the process improvement objective, and the whole team needs to align on that. As a next step, the moderator is guiding the group through various factors do dig on the possibility of each one becoming the cause of the problem. The classic approach to the tool uses 6 or 8M factor list: Measurement, Material, Machine, Mother nature, Manpower, Method, Management, Maintenance.
You can expand the list of factors to adjust the model to your organization. Alternatively, you can change the list of the factors all together to work on projects not related to production. One of the great alternatives is the marketing 7Ps: product, price, place, promotion, people, processes, physical evidence.
Value Stream Mapping
Value stream mapping is an advanced process improvement tool requiring a deep understanding of the methodology. One session can last up to a week. It best suits large organizations with complex processes involving different departments. The idea is to write down every smallest action within the process and assess if it can be optimized or removed. To get a better overview of the tool, you may want to read this article or this book.
The following case is a very descriptive example from FMCG (fast moving consumer goods) market. Tactical initiatives of Marketing department often mean urgent requests for the additional volume of product that Factory cannot meet. All the parties involved in the process improvement gathered to see the communication and production flows. The Marketing person was surprised to learn that based on their promotion plans a large chain was activated:
- Sales Planning is changing the shipments forecast
- Production Planning is changing the production forecast
- Procurement Analyst is adjusting purchase orders for raw materials
- A similar process is launched on the raw materials supplier side
The Supply Chain representative learnt that Marketing is unable to plan the promotions eight months in advance as they are often prepared in response to competitors’ actions or opportunities arising in retail chains.
In result, some of the steps were removed and the monthly Marketing – Supply Chain alignment meeting was established. This allowed shortening of lead time by three months.
Completed process improvement projects often create the false impression of a done job. However, one useful habit of successful business owners and managers that guarantees better results is to put in place the continuous process improvement practices.
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Continuous process improvement
The concept of continuous process improvement is straightforward. There’s always a place for improvement. The markets keep changing, the product keeps evolving, the organization keeps generating data. You should be targeting your efficiency improvement pace to be higher than the pace of complexity increase.
The key factors of continuous process improvement are the ability to run PI (process improvement) projects and the availability of infrastructure. We talked about the projects before. The infrastructure stands for the following elements:
- Purpose: buy-in of the team that the organization needs to improve.
- Process: a set of standardized approaches to running process improvement projects.
- People: personnel with the right set of competencies to run the initiatives.
The more you think about ways to improve your business processes, the more possibilities you will come up with. At some point, you will need to make decisions, which improvement project to start next. The classical solution to this problem is the Pareto priority index calculated by the simple formula:
This index will help you prioritize the process improvement initiatives. Obviously, the higher the probability of success and the lower the time to complete – the better. There are two ways to improve these parameters over time. One is learning through trial and error. The other one is using the services of third party process improvement specialists.
Process improvement specialists and their role
Working with third-party process improvement consultants can save your nerves and time. They will ensure that your process improvement initiatives will end up with successful projects, and not just bravado speeches in front of your staff.
Here are the core benefits of working with our process improvement specialists:
- Many years of experience working in different business spheres. Integrating into new companies is part of our job. We will quickly learn the nature of your business problems and will be able to suggest the optimal methodologies to run process improvement projects.
- Proficiency in technologies. Our process improvement engineers will handpick the right tools built to facilitate the classical process improvement methodologies. We will be using them to ensure our workshops are efficient and your team is not getting any additional paperwork.
- Over 1’000 projects completed. We will definitely improve your probability of success.
- Process improvement plan tailored to your business problem. It will be going far beyond the standard Plan – Do – Check – Act cycle. The plan will help you maintain positive results and drive for improvement within your team even after the finish of the active part of the project.