Business processes go well beyond how your products are made; it includes the processing of financial transactions and incorporates the entire sales process, from order processing to product shipment to the return of items. These processes are the way your business operates.
They’re the tasks your team members must master if they’re going to be effective or do things the right way. That’s why improving core processes can dramatically improve quality, efficiency, and profitability.
Here are 8 things you can do to improve your business processes.
1. Understand the Difference Between Processes and Procedures
There are two types of processes. Some are formal, and other informal. Informal processes are simply called processes and are implicit. They are part of your employees’ day to day activities, but they are not formally documented. Not much emphasis is put on improving them either.
Formal processes, on the other hand, are referred to as procedures. Unlike regular processes, procedures are strictly regulated and documented. Your employees are given a strict set of rules to be followed to make sure it is done in the most efficient way possible.
The goal is to try to turn as many of your processes and procedures as possible. Some of your employees might protest against it, but it’s eventually for the greater good of the company, and you have to make that clear to them. Some of the benefits include:
- More accountability
- Employees will have clearly defined roles and tasks
- Everyone will know who’s in charge of what
- Increased productivity
- More free time for your employees to work on crucial tasks
2. Understand the Importance of Improving Your Business Processes
If you want your efforts to be consistent, you want to realise the actual benefits of improving your business’s processes and procedures. Unless you do, and everyone else down the chain understands it as well, you’ll lose focus and adoption.
“Not managing process governance through business process management technologies and disciplines can have serious repercussions for any business,” says a well-known CEO. “This could ultimately result in not only different people doing things in different ways in your organisation, but could also cause certain tasks to be duplicated or even triplicated, which drives up costs and missed deadlines,” he added.
Ultimately, the goal of process management is to make your operations more fluid and your workflow more productive. When processes are inefficient or dysfunctional, they can cause all sorts of issues for your organisation. They can affect your employees’ satisfaction, and put their health at risk. They will end up hurting the service you provide to customers. Resources are wasted and costs shoot up.
The three main goals of process management and improvement are better efficiency, effectiveness, and flexibility. Processes are often ineffective because of manual effort or because progress is not properly monitored. Improving processes allows less time and resources to be wasted.
Your processes will then become more effective. Better decisions will be made, necessary tasks will be performed more adequately, and customer satisfaction will increase. Process improvement should also make your business as flexible as possible to deal with contingencies, new regulations, and new technologies.
If you need more information on the benefits of process management, Aston University Online published a piece that highlights its value and why you should implement it in your business. Furthermore, Aston has an MS in business and management that can be taken entirely online. This could give you the qualifications needed to perform process management yourself while you keep running your current business.
3. Simplify and Streamline
One of the best ways to improve business processes is to simplify and streamline them. In fact, this is the essence of the “lean” movement. The fewer process steps you have, the fewer your new hires have to learn and the faster they’re up to speed. The fewer steps your process has, the fewer opportunities there are for defects to occur. Eliminate duplicate data entry, and you’ll save time and money while reducing error rates.
Here are a few tips for streamlining your workflow:
- Map the current workflow
- Analyse it based on its actual current state
- Identify areas to focus on for improvement
- Create a plan to improve one area
- Implement the plan
- Analyse the new process to ensure it is working as expected
Don’t begin planning your next improvement project until you’ve verified that the newly completed one had the intended effect. Be certain everything is running smoothly before you implement another change. Recognise that there will be times you need to tweak your process to get it right before you can move on. And give yourself time in the schedule to resolve problems, whether you need to give more training or fix production problems.
4. Remember the End Goal – Serving the Customer and Generating Revenue
Nearly every process should tie to the end goal, generating revenue or improving the customer experience. Determine how every process accomplishes this goal in some way. If you can’t, you might be better off without it.
Once you have a streamlined process focused on selling, building and delivering products or services, you can begin to analyse each one. How much does each process cost, and how much value does it bring to the customer? Eliminate products that cost more to deliver than they generate in profits, or find ways to bring their cost down.
5. Look for Ways to Reduce Risk
Risk shouldn’t be thought of as an abstract process. There are costs tied to various risks. Defective products either cost money in repairs and returns, or you lose customers who no longer give you their money. The risk of late product deliveries comes with the danger of late orders, unhappy customers, expensive refunds or empty shelves that cost you potential sales.
Look for defects and errors in your processes and products. Then review these processes to look for ways to reduce the opportunity for error. Switching to a more reliable supplier or one who makes components with less variability is one approach. Applying more rigorous controls to your own processes is another. Increased inspections, closer monitoring of production equipment or regular preventative maintenance could reduce unexpected defects reaching the end-user.
How can you reduce risk when trying to improve business processes?
- Get feedback as soon as you have a proposal. Listen to concerns others may have
- Have meetings as the project progresses, and let everyone have a say
- Monitor the process after you make changes. Check in at 30, 60 and 90 days
- Be flexible. Be willing to roll back failed projects, and make changes if problems arise
- Document what you did to change the process and the results. The lessons learned might be applicable elsewhere
Reducing risk during process improvement projects reduces the odds that they fail. It is the high rate of project failures that makes so many people sceptical when someone suggests a new process improvement project.
6. Set Key Metrics and Manage Based on Them
What we measure, we manage. Unfortunately, too many businesses manage based on vanity metrics that don’t aid the business or use metrics like profit that don’t necessarily improve the long-term health of the company. Better metrics include work-in-process rates, production rates, cycle time, and customer satisfaction.
The benefit of metrics like these is that they allow people on the shop floor to understand the state of current operations and their contribution to the company. Furthermore, they allow employees to understand their goals. They also allow managers to know when a metric is going in the wrong direction, but before the situation is critical. More importantly, when you relate any process improvement project to these metrics and related business goals, you’re more likely to get buy-in.
7. Have a Process for Everything – Including Process Improvement
Have a standard process for everything from shipping a package to processing a payment. Have a formally controlled process for building a product or upgrading software on the server. These formal systems reduce risk and increase the odds it is done right.
Have a formal system for collecting proposals for changing the process or updating documentation. Have the priorities for the business department formalised, so you can decide which projects are first on the list and which aren’t worth the time. Follow the process when making changes to production lines and business processes. These processes should include updating documentation and user training and formally educating employees regarding the changes.
8. Document Everything
Documentation should not be an afterthought; it should be a priority. Document every process in your business. This allows anyone who steps into a role to know how to do it right the first time. Make sure that you update your documentation when you make changes to the business process. Furthermore, these changes need to be communicated to the team. Otherwise, you risk people doing work the way they’ve always done it, though you’ve officially rolled out a more efficient one.
Your business processes are how business gets done in your business. Understanding and documenting them is the first step to improving them, and this eventually leads to a more agile, profitable firm.