Benefits and Proposed Approach to Process Improvement

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Process Improvement
Process Improvement

 

Process Improvement. The overall goal of a company is to take a concept/idea and transform it into a commercially profitable product or service. This is possible with the formation of specialist functional departments such as marketing, finance, procurement, etc… that take specific responsibilities and perform specific processes in order to add value to a company.

Value is then added by those defined activities that take place at the strategic, operational, and tactical levels. These activities are supported by an organisational structure that defines the line of reporting and segregation of duties to achieve the best possible outcomes in the shortest amount of time and effort.

“Visibility of business processes allow for efficient cost management and revenue management.”

Similar to the image of the bridge above, each activity is carefully linked to another step in the process designed to support and facilitate decision-making – crossing the bridge.

Those activities, when inter-linked, add value to an organisation. Activities performed must be clear to all employees, and when linked together, form a business process.

Business processes can lead to a reduction in cost and/or an increase in revenue. Bottlenecks can also occur because of:

  • Rapid Growth: When rapid growth occurs, the business units often are not prepared to support specific activities or do not have the resources or skills bandwidth;
  • New Product Development/Introduction: As new products are added to a portfolio, the business operations are not optimised to deal with the added business requirements which may negatively impact other products and/or services;
  • Change in Technology Capabilities: When new technologies replace human skills, jobs must be redefined;
  • Market Competition: Added market competition requires clients to excel in adapting its workforce to the ever changing requirements.

The above points are extremely relevant when the internal business processes are not documented and costed on a regular basis. Without the visibility of processes the organisation is often seen scrambling to get the job done. Without sight, organisations may not have the overall process perspective (beginning-to-end) necessary to successful management operations, and management decisions. This results in functional paralysis.

What Are Some Examples of Non-Efficient Business Processes?

Here is one example of how BvW Global generated additional revenue from improved business process. A telecommunication organisation wanted to improve the cycle time from the time a sale was made to receiving the money from its customers. The result was a net $7 million profit improvement.

BvW Global accomplished this by mapping the processes from sales to the profit & loss statement and by identifying the bottleneck (people / process / technologies / communication). Bottlenecks such as cross-functional hand over, technology integration, people, lack of communication standards were identified. We reduced the cycle days by almost 70%. That reduction allowed our client to “bank the money” earlier, resulting in a net $7 million profit improvement earned from interest revenue alone.

“Customers are attracted to your organisation if you render the same or better services at the same r higher quality than your competitor; such an approach also builds loyalty.”

The above example shows how, with process improvements, revenue that lies dormant within an organisation can be uncovered. Improving your revenue turns will ensure that a company receive the revenue quicker, but it also means that your customers will receive their products / services earlier… a recipe for customer satisfaction.

Customers are attracted to your organisation if you can render the same services at the same or higher quality than your competitor; such an approach also builds loyalty.

Another example of business process improvement was centered on cost reduction. BvW Global recently mapped and costed (via Activity Based Costing) the entire source to payment processes for a government agency. Our exercise uncovered many non-optimised functions and great candidates for process improvement. Employees learned from osmosis (other employees) as opposed to following clear business process guidelines. Because some of the current processes were not working fast enough, new “personal” processes were created. While this resulted in greater employee efficiency, it created long-term problems to the overall organisation.

Some of the issues uncovered were caused by the wrong segregation of roles, delegation of duties, lines of approvals, lack of technology support for escalation procedures, and organisational structure.  While the business “did function” it was not a healthy system.

A Proposed Approach for Process Improvement

Much like seeing a Doctor for an overall health check up, BvW Global approaches organisations much like a Doctor approaching his patients. Our approach looks for process improvements and uncover “non-efficient” areas using 12 cornerstone tools:

  1. Bureaucracy elimination: Removing unnecessary administrative tasks, approvals, and paperwork;
  2. Duplication elimination: Removing identical activities that are performed at different parts of the process;
  3. Value-added assessment: Evaluating every activity in the business process to determine its contribution to meeting customer requirements;
  4. Simplification: Reducing the complexity of the process;
  5. Process cycle-time reduction: Determining ways to compress cycle time to meet or exceed internal Post stakeholders and external customer requirements;
  6. Error proofing: Identifying where activities ‘can be’ performed incorrectly;
  7. Upgrading: Presenting ways to use capital equipment effectively (i.e. software);
  8. Simple language: Reducing the complexity of communication channels;
  9. Standardisation: Selecting limited and streamlined ways to perform an activity for employees;
  10. Supplier relationships: Reviewing the quality and types of partnership with suppliers. The output of the process is highly dependent on this relationship that is set up at the contract phase;
  11. Big picture improvement: Looking for creative ways to drastically change a process based on its strategic nature;
  12. Automation: Applying tools and technology that relieve employees of non-value add activities.

Each of the above cornerstone is then measured as followed:

  • Effectiveness – We follow a three step approach; the (1) first step will be to determine what customer needs and expectations are, the (2) second step is to specifically describe those needs and expectations in quantifiable terms; the (3) third step is to define the way measurement data is/will be collected and used within an organisation.
  • Efficiency – Organisations must look for ways to minimise the resources required and eliminate waste and non-value added activities to achieve efficiency. Requirement for efficiency must rely on the use of money, time, and other resources. Measurements are processing time, resources expended, value added cost and activities, poor quality cost, and process idle time.
  • Adaptability – Adaptable processes have the capacity to adjust, not only to meet the average customer expectation but to design better human ‘intelligence’ from data and learning from the processes so that they accommodate special customer needs and expectations. During our reviews, we assess the current organisation process adaptability and make specific recommendations on improving some functions to meet specific customer needs without upsetting the entire process, while at the same time reducing processing costs.

Finally, BvW Global will identify areas of quantifiable and actionable quick win improvements and deliver the following:

  • Develop Unified Modeling Language (UML) process maps that establish common understanding and language of the end-to-end process at stake;
  • Identify the bottlenecks (People, Process, Technology, Communication) and the associated “non-performance based” costs to the organisation;
  • List the sources of quick and easy wins.

BvW Global can perform a quick and high level assessment of your organisation at the functional level, the department level or across all the entire enterprise. Once the areas of improvements have been identified, the dependencies mapped, process redundancies documented and the potential improvements quantified — BvW Global can assist your internal team(s) or implement a complete and measurable business process re-engineering project including change management on your behalf — down to the activity and task level if required.

Contact us to discuss your requirements and/or internal challenges.

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