Business Process Improvement (BPI) is an approach that analyzes and improves existing business processes. Business owners are met with hundreds of processes, many of which are not renewed until something goes wrong. Let’s say you’ve been running a successful import/export distribution business. Your loyal warehouse employees of 30 years are soon retiring, and you must train new staff on warehouse operations. During training, you notice that the previous team would manually pick inventory because they memorized the warehouse layout, but that process is simply not working with the new team who doesn’t know the warehouse and product inside out. This wasn’t an issue before because the original team grew with the company. With the accelerated growth the company is experiencing now, it’s impossible for the new staff to keep up with the amount of product.
BPI tends to look at issues exactly like the one above. Issues that don’t seem to be an issue, but if the process was adjusted, it could greatly save time and increase efficiencies while increasing customer value. BPI is conducted using several methodologies, which we discuss later in this post.
Why is BPI important?
Undergoing BPI is similar to finetuning your car. What is the point? Well, the car can run smoother, saves time and money, and prevents future complications. Looking at all organizational processes with the intent to improve them does the same thing:
- Cuts costs
- Reduces errors and eliminates time wasted
- Improves products and services
- Allows you to leverage external opportunities
How to Get Started With a BPI Initiative?
There are a few steps and methodologies when conducting BPI:
Step #1: Identify
Identifying or “Mapping” out your processes gives you a clear view of your business and helps you find any processes that are considered weak. A bird’s eye view of who does what, how, and the time it takes helps you eliminate unnecessary steps. You can use automation tools such a SQL Server Reporting Services displayed on a dashboard of curated reports to give you insights into the employee productivity or sales for example.
Step #2: Analyze
Once processes have been identified and mapped out, it’s time to start analyzing the information. You should be able to see what the main factors are that cause inefficiency within the business. It’s much easier to come up with a solution once you’re able to see the root problem. Let’s say that during the BPI initiative sales analysis, you notice an increase in returns for the products that come from one supplier. During the analysis, you remember that you switched suppliers months ago because your previous supplier increased prices by 3%. Your BPI initiative can give you insight if the switch was really a good move. It’s likely that although costs increased, you can remain more profitable as opposed to switching to a supplier with a lower level of quality goods that result in returns.
Step #3: Design
Now that you know the issues causing inefficiencies in the organization, you can now design the new processes. Define the scope of any changes and include costs, and timeframe and be open to risk. Think about how any changes affect employees and consider asking for their input. Employees are the ones performing the tasks, they’ll likely have some ideas worth exploring.
Step #4: Implement
A successful implementation is critical to the BPI Initiative. Without the right resources in place, undergoing a rushed process usually results in errors and the business doesn’t end up increasing efficiencies at all. It’s easy to think you can do it alone, but it’s worth looking for and investing in technology advisors that can guide you along the way.
Step #5: Evaluate and Control
There’s no point in implementing change unless you track it! It’s important to monitor the change in processes, and how are they affecting your employees and your customers. Are things better or did new issues arise? Remember that BPI is a continuous initiative and you can use a change management strategy to monitor this change.
BPI is often associated with a few methodologies that you may have heard of before. Agile management, TOC, Six Sigma, Lean, and TQM are all used as ways to help business owners implement change successfully.
Agile Management derives from managing software development projects. This approach brings together people from each team involved in a project to work in production circles called sprints to improve business processes. Using Agile Project Management allows you to obtain insight from all players of the project including customer feedback with every iteration.
Theory of Constraints (TOC)
This theory identifies the most limiting factor or constraint that is in the way of achieving goals or undergoing organizational growth. The idea here is that a complex process can become easier to manage because an adjustment or correction to one aspect of the process will impact the whole process.
Six Sigma is a methodology developed by a scientist at Motorola back in the 80s as a way to identify and review data to help avoid inefficiencies and improve processes in the current workflow. According to Six Sigma, using data and statistical information to review defects emphasizes cycle-time (the amount of time a team takes to produce an item) improvements. The standard for Six Sigma identifies that there should be no more than 3.4 defect occurrences per million units. This means that an error occurs with a six-standard deviation event from the mean because only 3.4 out of a million events along a bell curve would fall outside of six standard deviations.
Lean or Lean Six Sigma is cutting out the steps within the processes that don’t have much of an effect on the end result. While Six Sigma works on improving current processes (defect detection), Lean works to remove unnecessary steps that are consuming valuable time (defect prevention).
Total Quality Management (TQM)
The difference between Lean and TQM is that lean looks at improving individual processes while TQM looks to improve the business as a whole with customer value in mind the entire way. TQM is a company-wide initiative meaning all levels of employees should be involved with the alignment of processes. Customer satisfaction is the main goal and every department should have a role in bringing in new customers; under the TQM structure, a happier and more loyal customer equates to a growing company.