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Process improvement in business: Part 1

Process improvement in business_ Part 1

This article has been written to establish the power and importance of process improvement in business. Spanning over a 2 part series, this article will cover the wide spectrum of process improvement in business including what it is, how to do it, tools you can use, key concepts, considerations, examples and much more. Delivering process improvement in business is an extremely helpful and powerful activity that can be conducted by anyone, at any level, in any industry and for any motivation.

Process improvement in business

When it comes to delivering process improvement in business, even though there are tried and tested methods and tools which work, there is definitely not a one-size-fits-all approach. You must tailor your approach to the needs of your organization, based on its size, its needs, its industry, its desired outcomes etc. A key tip to remember with process improvement in business is that the desired output will always drive the way in which you seek to realize these outputs.

The fundamentals of process improvement

The fundamentals of process improvement: Process improvement in business: Part 1

What is process improvement?

Process improvement is, at its heart, a way for you to take a process and move it from one state to another. The direction in which you move this process is, of course, in the right direction. The state you want to end up with is a more streamlined, efficient, effective, productive, less wasteful, less costly process. Often the phase people will use when it comes to process improvement is – “I want to be able to do the same, but for less”, or “I want to be able to produce more outputs for the same or less”. You ultimately want to be able to achieve your stated outcome in less time and with better quality outputs.

You can approach this topic at its most basic level, identifying that we are looking at “improving” our “process”. Process improvement is ultimately the output we want to see at the end of our work, but it is not necessarily what gets us there. How we achieve an improved process can come in many forms, using many tools and various approaches, all for the same aim. You can achieve process improvement in stages, so run process improvement projects one after the other, or you can seek to continually improve your processes, embarking on a continuous improvement mindset to achieve this.

Examples of process improvement

To help frame how to deliver process improvement in business, I will provide you with some examples.

Example 1: Within your payroll process, you have a series of activities which explain the manual, human checking that occurs on the data. These activities take around 3 hours to complete each and every payroll run. To improve the process, we remove all of these activities from the manual and the human and develop a bot to conduct the checks instead. This means the checking activities can now take less than 1 minute, as the steps have now all been automated. This is an example of a process improvement which sees the process completed in less time, risk is vastly reduced as the potential for human error has now been removed and time freed up for those who would have completed these tasks to now do more value-adding activities in this or other processes.

Example 2: Within our benefits process, we have a handful of steps that we have to hand over to our Talent Acquisition Team who need to check, validate and approve data linked to new starters and their benefits selections. As we have to hand this part of the process over, wait and then see it handed back, there is substantial waiting time built into the process. Indeed, because of this handoff, the process takes around 2 hours longer to be completed than is necessary, as the Benefits Team have to wait for Talent Acquisition to check, validate and approve the data. To improve this process, we want to remove this handoff and therefore the waiting time altogether. If we change access to the system so the Benefits Team can access, validate and approve the data themselves, this removes the need for any handoff. By merging this process into one singular swim lane, you remove the handover waste altogether, saving a lot of time.

Example 3: Our billings process, sitting within the Finance Team, is producing many errors on a monthly basis. These errors are coming from the system (technical errors), the team (human errors) and the information being processed (data errors). With such errors comes the need to check, the root cause and fix the errors, each one of them. This is causing significant amounts of time to be wasted each and every process run having to check, root cause and fix. It is also leading to an increase in complaints from wider stakeholders and clients. To address this, a new system is brought in to remove the technical errors being seen, the team is better trained and upskilled to deliver the process better, and a data validation check is added to the process to ensure the data is correct. All of these changes ensure the process can run as anticipated and the errors seen do not reoccur in the future.

These examples should give you a flavour of what process improvement in business is and what it aims to achieve. You identify something that needs addressing, you identify how you plan to address it and then… you address it.

The importance of process improvement

There are many benefits to deploying process improvement within your organization, and if done correctly, the rewards can ripple out across your organization. This is important to remember – not only will what you do or change impact the immediate process, product or person, but that impact is likely to be felt more widely, especially if the process in question is cross-functional. This is why it is so important you deliver good, positive process improvement, and deliver it well. Just as those positive impacts can be felt across the wider organization, so can any negative, wrong or mistaken changes. This is why it is so important when delivering process improvement, you deliver it with all affected stakeholders in mind.

If we acknowledge the benefits and the importance of process improvement, the list includes:

Improved efficiency, effectiveness, quality, output, responsiveness and productivity.

Reduced waste, errors, complaints, costs, waiting time and staff turnover.

Better turnaround times, capacity, workflow, systems, working practices and transparency.

No need to hire new staff, no issues caused, no poor team culture, no employee burnout, no backlogs of work and no complicated decisions to be made.

Now, of course, not every process improvement will lead to all of these benefits, each and every time. However, you will realize many of them with each and every process improvement you deliver. It is important, if you are looking to realize benefits across many departments, you communicate effectively what is being done, why it is being done and how this is going to impact those involved, positively.

Triggers of process improvement – how to spot when it is needed

When it comes to identifying the need for and delivering process improvement, it is not as simple as realizing something is wrong and a process improvement is needed. Indeed, it can be the case that process improvement is not the way to go, but you need business or continuous improvement, for example. Noticing you need to improve a process is often done by identifying there is a trigger – something is wrong or there is a need to do so. For example, some organizations will say “We want to reduce the number of steps in these processes by 20%”, as part of a wider efficiency drive. This is absolutely fine to do, if not sometimes a little tricky.

However, there are also going to be instances where there are some obvious signs process improvement is needed. Let’s look at some of those triggers now.

Trigger 1: The process in question is taking longer than usual to deliver its output (product or service). You have noticed where the process once took an average of 4 hours to complete, it now takes 6 and this has been consistent over recent times. This would indicate waste has been built into the process somewhere and somehow, and this needs to be addressed.

Trigger 2: We are seeing a number of repeat errors each time the process is run. These errors are consistent each time in terms of nature, volume and their impact on the wider process. There is also quite a bit of waste being produced because we have to go and fix the errors, deal with any complaints that have come from them and identify the right root causes.

Trigger 3: The quality of the final output (product) of the process is now consistently lower than it once was. This decline has been gradual but consistent over recent months, indicating something has gone wrong in the process and needs fixing.

Anytime there is an indication that your process is no longer performing as it once was, it not performing as you expect it to (including new processes) or the product/service is being negatively impacted in some way (quality, time to deliver etc.) this indicates a process improvement could very well be needed. Even though there could be problems with people, policies, procedures or the products themselves, you must investigate to see whether or not this is a trigger for a process improvement approach.

Additional triggers to call out here include an audit review, where a recommendation has been submitted. A continuous process review, where a process owner has identified the need. A directive from management, who want to reduce time taken or number of people involved. Market pressures mean you now require your processes to evolve due to changing needs and expectations. A company merger, meaning a whole array of processes needs to be amalgamated and improved as part of this work. And, finally, cost reduction. If businesses are looking to reduce costs, improving processes can be a great way to find efficiencies which can ultimately be turned into hard cash savings.

Finding the value, and the non-value

Finding the value, and the non-value Process improvement in business: Part 1

Value add

One of the key aspects of process improvement is to find and increase value in your process. This is done by finding and increasing the number of value-adding steps in your process. For context, value add can be defined as a step or activity that adds value to the process or final product, and is something a customer would be willing to pay/be charged for.

Process improvement seeks to identify where these steps are in a process, sure them up with good controls to ensure they remain value-adding and find a way to embed more value-adding activities into your process. This increases the overall value of the process, makes employees happier that their work is adding value to the wider organization and increases the likelihood of more profit and a great ability to charge more as there is so much value provided.

Generic examples of value-adding activities would include the development of the product, the shipping and packaging of the product, and improving the quality of service or additional items/modules.

Non-value add

As we have value-adding activities, we of course have to have the opposite, those activities which do not add value to a process. These are referred to as non-value-adding activities. For context, non-value add can be defined as a step or activity that does not add value to the process or final product and is something a customer would not be willing to pay/be charged for.

In process improvement, these steps or activities would be deemed wasteful and unnecessary, and therefore the act of process improvement would be to reduce or remove as many of these steps as possible. There will always be times were processes may include steps that do not add value, but are needed to bridge the gap between two steps or two sections of a process. However, within process improvement, wherever you find steps which do not add value to the process, the aim is to remove them or find alternative ways to achieve the same outcome.

Generic examples of non-value-adding activities would include the moving of raw materials, the sending of data and information, building internal reports, peer review and checking.

Non-value added but necessary

There is also a 3rd type of step or activity from a value perspective, and that is those steps or activities that do not add any value, but are necessary or required steps. These are referred to as steps which are non-value-adding activities but are necessary. For content, non-value adding but necessary can be defined as a step or activity which does not add value to the process, but is necessary to ensure the process can run and deliver its final output as anticipated.

In process improvement, these steps or activities are acknowledged but are not the focus of the work that needs to be done. Where the impact of these steps can be reduced, the time taken to complete them lessened and their numbers shrunk (through things like amalgamation). If, for any reason, you seek to change or indeed remove them, you would need to conduct a full risk assessment to ensure that doing so does not lead to big issues in terms of the performance of the process or governance / legal issues. Indeed, when we find non-value-adding but necessary process steps, these are often related to something legal or something regarding governance.

Generic examples of non-value-adding but necessary activities would include sign-off and approvals by legal or senior leaders accountable for the outputs, tax or compliance, and providing personal information for medical or application purposes.

Types of Process in Process Improvement

Types of Process in Process Improvement: Process improvement in business: Part 1

When working through your process improvement initiative, your process in question will go through a series of iterations to get to that final, future state. As you do this, you will need to map out your process in a process mapping style, such as a swim lane map or flowchart. To do this, there are 3 stages you will need to map to get you from where you are today, to where you want to be tomorrow. Let’s explore these.

As-is process

When you first look to improve or reform a process, you need to map out (or analyze one if already created) the process as it currently stands. This is what we mean when we refer to something being “as-is” – how does the process run currently, as of today? When mapping out your as-is process or conducting your analysis, you need to map the process as you actually complete the process, not what you think people want to see, or indeed best practice. This can often occur when someone is asked to map out their process – they map out what they think others want to see. This misses a huge trick.

When mapping out your as-is process, ensure your map includes the following: All hand-offs, bottlenecks, rework loops, involved departments, and activities. If you want to make your map more advanced, you can include issues, problems, areas which create errors, times taken, cost of activities etc. The aim of mapping out your as-is process is so you can now make informed, insightful decisions based on fact. That is why it is so important you map out the actual process, as-is. 

To-be process

The to-be process is the way in which your want your process to be delivered in the future. This is the ideal process, the process that can deliver your products and service error, issue and waste-free. When we seek to map out our to-be process, we want to map it with no restrictions, this is our perfect state, no holes barred, perfect delivery. With this, some blue sky thinking is required, some ambition and imagination.

When mapping out your to-be process, you need to remember the aim of the process improvement work you are doing. If you are seeking to reduce waste and increase the effectiveness of your process, you need to ensure you remove all unnecessary handoffs, rework loops, bottlenecks and non-value-adding activities. You need to reduce the number of departments involved, have better systems and technology in place and see the time taken to complete the process reduce, as much as possible. That is why, at this stage, you need to be ambitious and think – “If we could deliver the most effective, efficient and productive process possible, what would this look like?” Even if you do not end up getting to that process as your final, delivered process, it is a really good goal to keep you ambitious and focused.

Realized process

Sometimes referred to as realized process, delivered process or actual process, when it comes to this stage, here we are mapping out the process as it actually will be. The reason for the previous two steps and why we do not just jump to the realized state is twofold: 1) You need to understand exactly what the current situation is so you can effectively identify what steps need to be removed, where there is risk and what improvements could be made and 2) so you can map the ideal state to set real ambition into your team, so even if you can’t achieve this state, you will endeavour to get there by any means possible.

To map out your realized process, you would have first, conducted a gap analysis. This gap analysis is conducted to identify what gap exists between where you are today, and where you want to be tomorrow. It won’t be as simple as just saying – “we want to be here, so we are”. There is a lot more work involved. During the gap analysis, you will establish which process steps can be removed or reformed, and which ones cannot. You will test the future state process to see if the product or service output is delivered as expected, in the time expected and with the level of quality you expect. Through this testing, you will be able to identify where there are gaps and challenges, address them, and establish what you are actually able to achieve.

At the end of this effort will be your actual realized process, the process you are able to deliver. It will often be the case that this looks different to the process you mapped at the to-be state, as realism has set in that certain steps/activities simply cannot be removed or reformed. Decisions may have been made which means there is no budget for certain technologies that would have removed many steps, and therefore they will remain or you need to approach them in a different way. Regardless of all of this, at the end of the realized process step, you will have a process which can deliver your products and services quicker, more effectively and with increased quality.

Lets Recap

Conclusion

By looking at the types, triggers and examples of process improvement in business, hopefully, you have seen the incredible value there is within it. In part 2 of this series, we will look more closely at the process you need to follow in order to determine process improvement in business and the types of waste you may see, triggering your improvement efforts. That article can be found here.

Read: Process improvement in business: Part 2

Robert Chapman

Robert Chapman

Director and Author of Leading Business Improvement and passionate about all things Process, Continuous and Business Improvement. Over a decade of experience in delivering projects for my clients in these areas, as well as root cause analysis and the reduction of business costs.

Robert Chapman

Robert Chapman

Director and Author of Leading Business Improvement and passionate about all things Process, Continuous and Business Improvement. Over a decade of experience in delivering projects for my clients in these areas, as well as root cause analysis and the reduction of business costs.

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