Whether they realize it or not, all businesses operate via process. Even when two companies run a specific process, it’s highly likely that they get different outcomes. The specifics of your company influences the outcomes of business process optimization. In other words, companies encounter peculiar challenges when they adopt business processes. What do they do when that happens?
The cure for problems in processes is business process optimization. It’s an essential part of any modern enterprise’s operations arsenal because processes should consistently function at peak efficiency. At the bare minimum, efficiency is proportional to employee productivity concerning the process in use.
For example, would an employee still be able to deliver a specific output if their device goes faulty and IT takes three days to respond?
Many well-established companies use processes that may have taken decades to hone and refine. As a result, it’s not feasible for them to dismantle and rebuild their processes in a bid to iron out clunky system elements. The solution, therefore, is to make use of continuous process optimization. This concept might sound new to even the most seasoned businesses.
This article discusses business process optimization beginning with a comprehensive definition, reviewing its benefits, and introducing implementation best practices. Then, we’ll take a deep dive into no less than eight process optimization methods and provide tips to ensure you complete them successfully.
What is Business Process Optimization (BPO)?
Definitions help to shed an objective light on things, so let’s begin by saying what precisely BPO is. Business Process Optimization refers to implementing methods, strategies, disciplines, and tactics to improve a specific process.
You’ve probably read that Microsoft Azure experienced a downtime of 4.46 billion hours because it didn’t follow a standard deployment process. Even with the capacity to cushion a loss of billions of dollars, Microsoft would surely prefer to fix the process that ended up costing so much.
Let’s break all this down by illustrating a hypothetical business you own, X Enterprises.
As X Enterprises grows and evolves, your business processes will evolve in tandem. Your company’s size determines how many business processes stakeholders inside and outside your organization are involved in daily. There could be scores or hundreds of them, depending on what you do and the scope of it.
Each business process is, therefore, a specific order of known steps that culminate in some desired outcome.
Processes in your business may specifically target an activity. For example, it could be marketing and sales, onboarding new clients, customer support requests, order fulfillment, accounting, and people and processes (HR).
These individual processes evolve at varying degrees, making it necessary to evaluate, improve, and optimize them continuously. Where this doesn’t happen, it’s reasonable to expect employee and customer dissatisfaction. Costly operational inefficiencies are also possible. There could also be a drop in market share. Unfortunately, it’s usually hard to undo these bad outcomes of outdated processes.
Therefore, business process improvement and optimization is at the core of business process management or BPM. It’s the operational practice to identify, evaluate, and resolve business process issues and concerns.
BPO ensures that your company’s detailed and thorough plan addresses the continuous need for process definition, implementation, evaluation, and iteration. It’s generally a series of steps consisting of:
The identification stage picks out the process that requires optimization. Where a process is too costly or leads to customer dissatisfaction, it becomes a priority to determine the root cause of those concerns in order to ensure the success of the chosen optimization method.
Identifying a process for optimization naturally leads to critically examining its purpose within the workflow. For instance, the length of completion time and the availability of a better process are common reasons to reconsider the designated process.
The next critical step is to apply the process in a new and more effective manner. After completing the implementation of this new and modified process, the results are analyzed and necessary adjustments made to ensure the process is as effective as expected.
Here, you’ll automate the process across the workflow to assess it for expected outcomes such as lower costs, higher production levels, or fewer errors. It’s essential to ensure that the process works first before automation.
After implementation and successful integration, it’s an urgent matter to monitor the process. Monitoring allows you to identify new areas where improvement is desirable or determine where critical issues are present and deserving of attention or workflow to continue proper automation.
How to Implement Business Process Optimization?
Haphazardly approaching business process optimization is a recipe for failure. Planning is essential for the successful implementation of your BPO strategy. Here are some steps to implement BPO in your business regardless of the size:
1. Observe the process under scrutiny
So, how exactly do you begin? Of course, observing the process’s faults is the inevitable first step in business process optimization.
These faults manifest as a cluttered, slow, non-functional, or bottleneck-laden process. Having these characteristics in any of your processes means those processes are the ones your optimization should target.
2. Locate the problems
The next thing to do is to find every problem in the process, no matter how big or seemingly small. The ease of solving these problems will vary, and you can detail that as part of your outline.
3. Outline the solution to each problem
After listing out the possible solutions to the problems you noted in step #2 above, you need to work out all possible solutions to the problems.
In working out your solutions, note that you may not be able to control everything. For instance, can you tell the precise length of time a developer takes to write a line of code? People are only as flexible as they can be. Pushing them further could end badly.
4. Implement the solution
Now that you have a detailed outline of the problem(s) with the process and their solutions, it’s time to fix the process.
It’s the crucial point where you get the buy-in of all stakeholders in the process optimization to implement the solution effectively.
5. Keep the process on your radar
With the new process optimization in place, you need to analyze the performance of the process immediately. Begin by comparing the quantitative and qualitative factors with the former process. It’ll help you understand how processes work in your business. It would help your organization optimize its business process over the long haul.
Tips for Successful Completion of Process Optimization
Regardless of your approach to business process optimization, some tips will help your organization successfully carry out process optimization initiatives. These include:
- Defining your business goals as clearly as possible. Doing this is important because your goals are your reference points when you work through your optimization efforts.
- Designing your optimization strategy thoroughly and use the same depth to improve definitive outcomes.
- It’s often helpful to predict the outcomes and results of your chosen optimization method before you begin.
- Starting small by studying the new process design in controlled circumstances. That way, you’ll be better prepared to implement it over a wider operational surface area and then analyze the outcomes.
- Implementing the new, improved process and ensure the implementation of necessary changes.
- Tracking and monitor the optimization outcomes.
- Working towards automating process components without reducing their overall quality.
- Documenting all efforts, so you have records to review as and when due.
A Business Process Optimization Example
It’s only fitting that we take a deep dive that helps you see business process optimization in practice.
Imagine that your company X Enterprises employed 15 people, including you. You operate as a full-service copywriting agency with eight copywriters, four editors, and two people in Human Resources. The clients are coming, and things look like they’re going well. But that’s the view from the outside. When you start paying attention to the processes, it looks like there are gaping holes to plug in the HR process.
Suppose you decide to optimize the processes within the Human Resources department. In that case, your first step will be identifying the processes with problems within the Human Resources system.
For instance, you may discover that new writers take more than a few weeks to produce acceptable articles for clients. You probe and discover that one of the HR staff (we’ll call her Cindy) may be taking too long to onboard new writers and making them take longer to become productive within the company. You need to optimize this process. You’ll naturally become curious about Cindy’s onboarding process to optimize it for quicker and better results from new writers.
Carefully looking into what Cindy does provides excellent insight into her process. You’ll even have a few ideas on how to fix some of the issues immediately. For example, two problems could be her initial evaluation of new writers she meets on different job portals and what factors carry the most weight in her hiring decisions.
As you uncover these problems, you should make a list of solutions to implement. These may include:
- Approaching writers who have a few years of writing experience under their belt or have worked at a writing agency before for at least six months in the last two years.
- Getting prospective writers on a Zoom call to discuss their writing process and share the company’s perspective in-depth.
- Including paid writing assignments as part of the evaluation process.
- Providing feedback on the paid writing assignments and see how quickly the candidate catches on and implements them.
- Reviewing the workplace culture to evaluate whether it helps writers hit the ground running quickly or if they’re intimidated by it.
Of course, these are only a few possible solutions. You know what’s most feasible and should immediately begin to implement it. Doing any of these would result in some level of optimization in onboarding new writers.
Regardless of what aspect of the business you decide to focus on and optimize, much of your business optimization strategy will follow this pattern.
However, the scenario painted here might be rather simplistic depending on the business or what aspect of this writing agency you try to optimize. The raw truth remains that there might be problems with the process that you may need to escalate to resolve. In such cases, you’ll need to engage business process optimization experts or invest in BPO automation tools to enable you to come up with multiple processes within minutes.
What are the Challenges of Business Process Optimization?
As you may have guessed, process optimization is not immune to significant challenges. There are many, chief of which may be that it’s resource-intensive. Besides time and effort, the more common business process optimization techniques comprise numerous steps that need to implement and require data analysis.
However, one of the more significant objectives of process optimization is to maximize project resources. Therefore, one could argue that if all hands were on deck at your company to optimize processes, plenty of time would be saved over the long term.
Leadership is another critical challenge in process optimization. For example, how do you lead a team that successfully lands a rocket on Mars? Chances are there’ll be multiple teams with multiple sub-goals for this momentous project. But, leadership makes the difference.
Leadership matters when you begin allocating and executing project tasks, whether your company is SpaceX or yet another fintech startup. Without the right leadership, the team quickly veers from the original direction and purpose.
Besides, leadership influences your team’s commitment, engagement, and willingness. Leadership can also help to foster the communication and transparency necessary to advance the agile business process. This is the central focus of the Kanban Maturity Model.
Another drawback of process optimization is the reluctance of a few team members. Since process optimization can’t be successful in isolation, it becomes crucial that all team members are on board with the imminent changes. Change may be inevitable, but it isn’t as easy for people to embrace it. Much creativity is involved in getting people to alter regular practices even if in favor of better ones.
Adequate training is a necessary complement to excellent team collaboration and a fantastic implementation plan. But without consistent project and process training, you’ll be lacking an essential ingredient of professional execution on projects.
Training is vital to familiarize the team with the process and tools needed for the project. It prepares the team for better process adaptability.
Besides getting people to take up new ways to do things, there’s also a typical preparatory period where people adapt to doing things differently. Productivity could suffer a bit during that time. Therefore your project managers need to actively share the vision with the team(s) early enough to prepare them mentally for the road ahead. In communicating with the latter, it’s crucial to highlight the various advantages of process optimization. It’s one way to ensure everyone is aware and on board with the coming development.
What are the Benefits Process Optimization?
A well-managed process incorporating continuous improvement can lower errors, shorten process completion times, and enhance workloads. It can also identify waste, eliminate duplication, and enhance overall business performance.
Optimizing a business process can also grow consistency, quality, and compliance, lowering risks and providing greater visibility for customers and executives.
One of the first reasons the brightest minds in business swear by business process optimization is that it reduces redundancy. Little redundancies and process gaps can affect otherwise efficient systems that can weaken a company’s ability to compete. Process optimization helps move the needle and helps the business thrive seamlessly.
Businesses that adopt process optimization also enjoy the benefit of greater adaptability. Therefore, as the customer evolves, these organizations can adapt quickly to the rapidly changing customer demand dynamics in a competitive ecosystem. In short, BPO helps businesses appreciate the customer’s point of view and deliver their offerings accordingly.
Optimizing business processes helps to ensure strong foundations that guarantee the smooth running of the business. Once that is achieved, it’s easier to explore new initiatives. In addition, the solid optimized structure will help cushion the fallout if the new initiative fails.
Old processes only improve through process optimization. But, the collateral benefit of this is that you’ll discover new processes that you can also standardize. Therefore, you’ll grow your understanding of your own business and be able to handle so-called shadow processes that clutter your workflow and slow down the entire process. For example, task approval and stamping of documents are two examples of bottlenecks in the average business process.
Then, there’s that word that’s a turn-on for every organization – “efficiency.” Business leaders are paranoid about improving their company, department, or team’s efficiency on many levels. Optimization prevents inefficient processes from consuming budgets and vital resources while minimizing the waste of resources, time, and materials.
With efficiency should come improved “quality,” and process optimization makes this happen. However, sacrificing efficiency for better quality isn’t sustainable either. BPO helps to balance quality and inefficiency without compromising either.
Organizations also put much premium on “agility.” It refers to your ability to change quickly, that is, be nimble. For example, at the height of the pandemic, global supply chains experienced disruption. Like other automotive manufacturers, Tesla had to deal with this scenario. Ensuing shortages in the semiconductor industry impacted the electric vehicle industry. As a result, Tesla had no option but to innovate as it always has.
The company pivoted its manufacturing process to leverage micro-controllers and new firmware. This move helped it to negotiate the disruption from the semiconductor shortage. The result? Tesla continued production when other vehicle manufacturers struggled to keep their plants operating. In other words, Tesla’s business processes had agility baked in so they could switch lanes during crunch time.
The quantitative feedback you receive from implementing business process optimization helps you to analyze your business processes. In addition, regular feedback provides an accurate picture of the health of your business, enabling you to make reasonable data-backed decisions.
Process Optimization Methods and Techniques
There are nine crucial process optimization methods we should cover.
1. Kanban Method
Productivity is crucial in the modern competitive business environment. For instance, you may be seeking a way to efficiently manage excessive inventory. Or, you may decide that a lean workflow management system will help you define, manage, and improve services that deliver knowledge work. In such cases, the Kanban method works perfectly.
Kanban is efficient; it provides teams with the necessary information to prioritize work, pull work, and finish tasks with minimal oversight. It also limits repetitive status updates and progress reports, allowing everyone to focus on what they do excellently.
Teams have the advantage of spotting roadblocks early and with transparency, thus gaining time and resources to build solutions and avoid delivery problems.
The flexibility and adaptability of Kanban ensures solutions can be implemented without the requirement of an entirely new system.
The four foundational principles of Kanban include:
- Begin with what you’re currently doing.
- Choose to make incremental, evolutionary change your goal
- Respect current roles, responsibilities, and job titles at the onset.
- Encourage acts of leadership on every level.
On the other hand, the six core practices of the Kanban method are:
Visualize the flow of work
Use a board – electronic or physical – to outline the process steps you currently use to deliver services.
Limit work-in-progress (WIP)
Here, you ensure that teams finish one task before taking up another one.
Highlight the various stages of the workflow and the status of work in each one.
Make process policies explicit
You’ll be helping all participants to understand how to do any type of work in the system when you explicitly define and visualize policies for how to do each type of work.
Implement feedback loops
Feedback loops are an excellent tracking system that reveal when you’re not measuring up to expectations and need to quickly make a detour.
Improve collaboratively & evolve experimentally
Small and gradual changes aimed at improvement helps your team bite precisely what they can chew at all times. You’ll end up testing hypotheses (per the scientific method) and making changes based on test outcomes.
2. PDSA Method
Suppose you desire a two-pronged technique that lets you improve process quality while achieving business optimization. In that case, the PDSA method comes to mind. It’s also a cyclical model with four stages. The stages of the PDSA method include:
Planning is the first step of the PDSA method, and its primary goal is to clearly define what you want to accomplish and remove any ambiguities.
This step comes after planning and involves testing the potential changes on a small and controlled scale.
Then you need to study the results of the method to learn how useful they were.
Finally, you expand the scope by implementing the change on a larger scale.
3. Process Mining Method
The process mining optimization method is really a collection of techniques that leverage key aspects of data science.
This method involves these steps:
- Taking data from an event log.
- Analyzing the actions of your team members within the business.
- Reviewing the steps the team members perform to complete a task.
The data collected is then probed to unearth valuable insights, helping other related professionals identify issues and optimize critical processes.
4. DMAIC Method
The DMAIC optimization method is a Six Sigma-derived BPO strategy that relies on data to improve processes. It works as a cycle of steps, including:
You begin by defining what processes need optimization.
Then, you measure and identify the performance of the process.
The analysis offers insights into how best to optimize the process.
Improvement is the fundamental step in making the process better than before.
The final control step takes care of the future performance of the new or improved process.
5. BPO Project Management Method
This method includes steps such as:
You begin BPO project management optimization by authorizing the process (also phase or project) as part of the entire initiative.
The second step is to define and redefine the project objectives before selecting the best actions to enable you to achieve them.
In this third step, you ensure that you meet every objective by monitoring and regularly measuring the progress and results, implementing corrective action as needed.
The fourth step is coordinating and collaborating with those who will help you execute your plan or strategy.
Finally, you need to formally close the project as soon as optimization fulfills your objectives.
6. Value Stream Mapping Method
This business optimization approach requires you to have a value stream map. It’s a graphic visualization of the materials, data, and information flow throughout a project pipeline.
The main objective of value stream mapping is to ensure your services and products reach clients, customers, and end-users. The method is recommended if your target results include any of the following:
- Identifying and eliminating resource waste.
- Gaining valuable insight into process flows and decision making.
- Specifying measurable and realistic goals for process improvement.
- Learning what areas need improvement.
7. The Kaizen Method
Toyota is a Japanese automaker. Besides its vehicle technology, Toyota created another important global export in process optimization. Therefore, you can use the Kaizen optimization method along with the PDCA method.
“Kaizen” stands for “continuous improvement,” and for business process improvement. It offers several benefits, including the following:
- Faster deliverables and safety measures.
- Greater job satisfaction and team productivity.
- Improvement of all business processes.
- Product quality enhancement and improvement of customer approval ratings.
8. DMADV Method
The DMADV business process optimization approach focuses on increasing quality levels even after a prior optimization initiative.
DMADV is a radical BPO technique that completely replaces an obsolete process with a superior one. Key benefits of the method for your organization include:
- Higher revenues and profits.
- Better ratings and satisfaction for clients and customers.
- Fewer operational errors.
- The development of complete novel processes and products.
9. SIPOC Analysis Method
The SIPOC analysis optimization method works best when you aim to organize the collected data on customers and products involved in the processes. This method is helpful for various scenarios such as:
- Identifying crucial aspects that need improvement.
- Defining complex projects and finding a purpose for them.
- Appreciating how a process should work.
IT has refined how businesses operate over the last half-century. Instead of tasking manual effort, businesses now lean towards automation by default. This approach works because 90 percent of employees feel boring and repetitive tasks are burdensome.
Automating rote tasks allows human employees to pay attention to work that adds a higher value. This type of work demands creativity, human intelligence, and innovation. Therefore automation helps manage time better.
McKinsey reports that two-thirds of businesses have started to automate at least one business unit. That’s a positive trend compared to only a few years prior. Moreover, the companies that meet their automation targets make it a strategic priority, besides people and technology. Fifty-seven percent of IT leaders say that process automation in their organizations saves ten to 50 percent on costs for departments.
Automation makes for efficient use of time and money and goes a long way to support business process optimization efforts. However, it’s not the only efficient technique to save time and money. Every move that streamlines a process, eliminating repetitive or unnecessary work, translates to savings.
To promote efficiency within organizational workflows, reviewing technology platforms that your processes can use is advisable. Efficiency matters in business process optimization, but an effective automation tool makes it more valuable. Robust business process automation tools include, Airtable, Fasproc, Kissflow, and ProProfs Project.
Business process optimization applies to every business. But unfortunately, starting a business involves a fair share of problems, bottlenecks, and issues. It happens that ridding your business of these ugly spots is a daily exercise that makes learning about process optimization a necessity instead of an option.
There’s no single point in the lifespan of a business where you can say goodbye to process optimization. Processes are always subject to improvement because the business environment itself is always in a state of flux. Your best bet is to approximate a perfect process.
In conclusion, a critical kink in the road of process optimization is that it’s easy to optimize merely for optimization’s sake. Then, it’s necessary to identify areas needing improvement and go for higher objectives. However, all of those can introduce unwanted disruption from a less-than-thorough process optimization design. The effect on business can be detrimental.
Those overseeing your business process optimization initiatives should be project managers with ample enthusiasm to conduct extensive research before implementing any process improvement. However, they also need to be confident that the potential for an improved outcome is strong enough. Therefore, instead of doing business process optimization without concrete grounds or preparation, it might be best to leave things as they are.
A good project manager will research the various optimization methods to decide the most suitable one for the business. Then, they’re willing to take calculated risks to improve processes to know if they’ll succeed or learn from them.
In the face of unending competition from other companies and disrupting technologies, business process optimization is the key to thriving in the modern marketplace.