Why businesses need continuous process improvement to scale and innovate
Modern workplaces are complex, global networks of transactional enterprises fueled by disruptive technologies. These technologies create new business models, change value streams, and incite change faster than ever before. And as companies innovate and adapt to new digital technologies, their processes need to be adapted too.
To keep up the pace without sacrificing process efficiency and quality requires a technology-enabled approach to continuous process improvement (CPI). While corporate production systems evolve into digital operating systems (DOS), organizations must maintain a foundation of continuous improvement to drive their digital transformation ambitions.
Therefore, the next generation of process improvement programs presents a challenge to design and implement them sustainably in the new economy with the right approach, focus, velocity, agility and simplicity. Leaders need to execute this while eliminating or working within the organization’s realistic constraints and dynamic operating models.
Microsoft founder Bill Gates once said a “lousy process will consume 10 times as many hours as the work itself requires.” Dissatisfied customers, drained employees, missed quotas and increased costs are just some of the problems associated with dysfunctional processes and outdated business practices.
What is process improvement?
Process improvement is a business methodology aimed at optimizing your current processes and ultimately improving the customer’s experience of your product. The practice consists of identifying, analyzing and improving processes through incremental improvement over time or breakthrough improvement all at once.
Also known as continual improvement process (CIP), business process management (BPM) or business process reengineering, process improvement has one common goal: to minimize errors, reduce waste, improve productivity and streamline efficiency. In a nutshell, it’s a way to formalize efforts within your organization to eliminate inefficient processes that don’t add value to the final product.
As mentioned, there are several different methodologies to tackle process improvement. While they all serve the one common goal, each suits a different need. Some focus on lean process improvement techniques, while others aim to embed a company culture first in preparation for process improvement.
While continuous process improvement has its origin in manufacturing, it can be applied to any business environment since every business adheres to some set of processes. An example might be eliminating steps in an order entry process where many of the steps slowed the process without adding real value.
Benefits of process improvement
With continuous business process improvement (BPI), you can better understand which processes are working well for your business and which ones are not.
|The benefits of process improvement for organizations include:|
|1. Transformational and enduring improvements – it becomes the way of work|
|2. United and collaborative workforces – employees become active participants in the betterment of the company|
|3. Reduced operational costs and waste – producing more product or providing a service in less time and with fewer errors, or utilizing raw materials more efficiently, will reduce cost|
|4. Increased end-to-end value chain efficiencies – producing your product in less time results in a shorter lead time for customers|
|5. Improved productivity and revenue growth – improved productivity equals increased profit|
|6. Maximized value to customers – organizations can deliver products and services that customers want, often ahead of competitors|
What are examples of process improvements?
Any point at which a process loses momentum presents an opportunity for improvement. Process improvement examples include:
- Reduce equipment downtime in manufacturing facilities
- Improve inventory management for rapid cycle times
- Streamline and centralize reports and analysis
- Reduce raw material waste
- Improve approval processes
- Eliminate production bottlenecks and redundancies
Although process improvement methodologies can apply to any part of your organization, they’re most often connected to manufacturing processes and their productivity levels. This is usually where you can find the most opportunities for improvement.
How to identify process improvement opportunities
To identify process improvement opportunities, you’ll need to start by selecting an appropriate improvement tool. A tool like process mapping or value stream mapping (VSM) will give you insight into a business process as it visually describes the flow of the entire process or subprocess. Done on paper or with software, its purpose is to communicate how a process works and identify inefficiencies or make improvements. Therefore, to identify opportunities for process improvement, you first need to define and map out the existing processes in your organization using the right tool.
Once you’ve mapped your flowchart, you can analyze the processes and look for problems or improvement opportunities. Although simple problems can often be solved by observation or a basic problem-solving tool such as 5Why, complex workflow problems require a more comprehensive tool such as a problem-solving A3 report. The report is limited to one A3 page and encourages teams to collaborate and be concise by recording only essential information and graphics.
Another helpful tool to determine internal process improvement opportunities is to conduct a loss and waste analysis. The analysis interrogates internal waste and quantifies all losses in financial terms. Such wastes may include downtime, rejects and lost revenue or prospects due to customer complaints and erratic deliveries.
What are the process improvement steps?
Most CI practitioners with some knowledge of Six Sigma will know that the basic DMAIC (Define, Measure, Analyze, Improve and Control) or DMADV (Define, Measure, Analyze, Design and Verify) roadmap forms the backbone of any process improvement initiative. The steps make sense, are easy to understand, and are logical in sequence. The tenets of DMAIC/DMADV provide context for executing continuous improvement with sufficient variability in each application.
Next, let’s look at how to kickstart the process improvement effort:
Start with a comprehensive strategy
Most manufacturing companies use technology to move from mass production to customized production at a rapid pace. However, organizations need to have a clear vision with an elaborate digital transformation strategy to move toward a digital future. It’s a complex process that requires significant investment that comes with risks.
The following five steps will guide you:
|1.||Analyze the market||This step is essential for creating a relevant and up-to-date strategy. You need to be aware of rapid industry changes and technology developments to inform your strategy. It may even require you to go beyond your industry and explore success stories in other verticals.|
|2.||Create a vision||Focus on your long-term business goals rather than only looking at the problems you’re trying to solve with digital or other tech innovations. Concentrate on the experience you want to create for customers and employees alike without losing sight of reality. Build your strategic vision on the short-term objectives and resources you have available while focusing on your competitive advantage. Identify gaps in the current setup and create implementation road maps to optimize it.|
|3.||Design the digital experience||Most business leaders believe that their success depends on customers’ digital experience, so pay special attention to the experience you want to deliver. Consider how employees can do their tasks faster and easier with a new app, software or digital platform. The primary focus is not on the new technology itself but on the experience it can provide.|
|4.||Assess the current state||As a business leader, you need to understand your existing business processes and the new processes you want automation to enable before implementing the technology. Therefore, examine your digital infrastructure and analyze how well these tools address your current and future needs. Identify areas where you’ll need to develop new functionality and the required integration to bring it all together. This evaluation will help you discover what specific technology to update, which process to automate or optimize, and what digital tools you should change.|
|5.||Prepare and adjust your infrastructure||As a first step, it is necessary to identify and surround yourself with a dedicated group of digitally savvy experts to ensure a successful transformation. If you can’t have an in-house team, find a reliable partner to implement the improvement strategy for your company effectively. Next, help your team develop skills needed for future changes with the appropriate training. It’s critical to make digital transformation part of the organization’s DNA by building a new digital culture that would align with the transformed business processes.|
What are process improvement methodologies?
Process improvement methodologies provide the general formulae to identify, analyze and implement improvements in your organization. The five most common process improvement methodologies include:
|1.||Lean||The most widely known and commonly used methodology with a central focus on minimizing waste and overproduction|
|2.||Six Sigma||Similar goals to Lean management, but seeking to prove improvement with statistical measures and evidence|
|3.||Supply chain optimization (SCO)||As its name suggests, SCO focuses on the raw materials, input process goods and finished inventories that constitute the physical ‘‘supplies’’ in the chain|
|4.||Hoshin Kanri||The main focus is to achieve and continuously refine a unified direction so that manufacturing operations align with the organization’s strategic objectives|
|5.||Total quality management (TQM)||Driven by a quest for ongoing quality improvement and customer satisfaction|
Each of these methodologies accommodates a different need, informed by your process improvement strategy.
What are process improvement tools?
Process improvement tools are the concepts and techniques designed to support companies on their improvement journey. In addition to A3 problem-solving and process mapping, other examples of process improvement tools include:
|1.||Kaizen||Meaning ‘‘continuous improvement’’ in Japanese, it aims to improve processes, productivity and profit by eliminating waste|
|2.||Gemba walks||Highly effective management and problem-solving technique that has the actual workplace as the focus for data-gathering|
|3.||Standard work||Involves the sequencing and rate of production to meet demands, standardizes the in-process materials and parts, and minimizes holding inventories to optimize operations|
|4.||Visual management||Displays real-time data in modern manufacturing to enable teams to identify in-control and out-of-control situations quickly|
|5.||5S||A workplace organization method that creates an essential foundation on which all other best practices can prosper|
Gaining the full benefits of continuous improvement initiatives requires a structured and integrated approach: Improvement initiatives need to be aligned across the entire organization’s functions, people, processes and systems to offer a more holistic, sustainable solution.
What is the role of automation in process improvement?
Automation plays a significant role in any process improvement project. It is one of the easiest ways to eliminate manual processes and reduce human error. For example, progressive organizations are embracing robotic process automation (RPA) to streamline operations. With RPA, they can mimic human action for tasks or steps involved in complex processes.
This helps create more efficiency around business processes and frees up workers to focus on more meaningful tasks that automation can’t handle, such as identifying improvement opportunities and carrying out improvement projects. In short, process automation helps organizations understand what’s working as it should and where they need to improve.
Conclusion: Why is process improvement important?
Process improvement helps businesses strengthen their functional architecture across the supply chain by identifying bottlenecks and obstacles across business processes, and providing the methods, tools and techniques needed to chart a roadmap toward operational excellence.
Find out how your organization can benefit from a commitment to process improvement:
Process Improvement Methodologies
In today’s digital era that demands innovation and agility, continuous process improvement tools remain highly relevant – and they are being enhanced by technologies such as predictive analytics, 3D printing and digital dashboards.
Process Improvement Strategy
Once an organization has assessed and determined its stage of performance improvement maturity, it can design a solid and specific continuous process improvement strategy based on that starting point.
Process Improvement in Manufacturing
Manufacturing companies operate in an increasingly uncertain, competitive and interconnected global economy. By embracing a rapid results approach to process improvement, manufacturers can mitigate ongoing uncertainty and benefit from incredibly lucrative opportunities.
Process Improvement Culture
Stopping and starting various approaches to continuous improvement frustrates team members, who eventually step out of the process. Conversely, a simple process improvement methodology helps build a solid CI culture.
Process Improvement Tools
Improvement remains at the heart of lean manufacturing operations, and many tools exist to support companies on this journey. It is therefore essential to know which tool to use – and when.
Process Improvement Steps
Organizations that follow a series of integrative continuous process improvement steps are more agile and sustainable. These improvement techniques enable them to respond to ever-changing customer demands while gradually building positive change into the organization’s DNA.