Optimizing processes in a business: things to remember when optimizing your business

Optimization of processes: what it really means


A business process is a chain of standard actions aimed to achieve a particular result. Good examples would be claims management, driving new customers, and creating advertising materials. Ideally, all actions in a chain like this are useful, however that may not always be the case. Activities may cease altogether due to endless chains of approvals, never-ending returns for additional work, lack of reporting, or, alternatively, over-reporting, along with the necessity keep generating task reminders.

Let us imagine an ideal process as follows: a manager gets an order for a sofa of certain model and color, sends the data to the manufacturing facility, receives information on how long the manufacturing will take, and gets back to the client with the information.
A process which needs optimization may look like this: a manager gets an order for a sofa of certain model and color, however inputs the data incorrectly; another employee takes this incorrect data to the manufacturing facility, and either makes a wrong order, or does not contact the manufacturer at all, since the order is lost. As a result, many confirmations will be required, the time to delivery and company cost will increase, while the client will be unhappy about the service, and may not return altogether.

Documents being sent to unknown destinations, employees, who have no idea what they should do, who is responsible for what, excessive senior management involvement are all the signs that work must be put to order, which calls for optimization.

When optimization is necessary

Let us take a closer look at some basic situations requiring optimization.
 — Communication failures between various departments. For instance, when consignments are lost, even though the driver had brought them along and handed them over to a manager, but no one knows which manager it was and why the documents were given to that manager specifically, and where they were lost.

 — Adverse effect on service quality. Example: The information is transferred incorrectly from one department to another, which results in client’s inability to receive the relevant parcel because the bill of lading has been wrongly made.

 — Decision making takes too long. This may happen for multiple reasons, due to many unnecessary and useless actions, or to incorrect communication.

 — Employees actions are not coordinated. For instance, the sales department generates more orders than other departments can handle.

Initial steps for optimization


In order to approach optimization, it is necessary to review the processes depending on optimization complexity and potential profit from optimizing a particular process. It is worth noting that it is just a preliminary setup, which will likely change based on your findings after you study them.

Since the processes are usually interconnected, it is worth changing them gradually, closely following the results to see that optimizing one process does not adversely affect the other processes. Optimization will look differently for each individual company; however, it will still be useful to divide business processes into several groups to define those that require immediate change.

These groups are as follows:
 — Main group includes everything related to company income, such as production or sales.
 — Auxiliary group includes everything not directly related to company income, yet is necessary to keep the business running, such as logistics.
 — Management: strategic, tactical, and operational.
 — Improvement: Increasing company efficiency and optimization in itself, i. e. implementing FAST (focused, agile, simplified, and technology driven) methodology, process engineering and re-engineering, benchmarking, and redesigning.

Business processes optimization tools

The first and the main tool for optimization is analysis. As you construct your business model, a SWOT analysis is necessary. It includes analyzing its strengths, weaknesses, opportunities and outside threats. This enables development strategy that would be most effective in using your business opportunities while minimizing external factors that could affect it adversely.

Design your business processes based on this strategy, or reform them when you are optimizing the existing ones. In order to do that, describe them the way they look today, for better insight into the weaknesses currently in place: moments when all operations come to a dead end, or get locked in a circle, or are taking too much time for everything. When you are at this stage, use the Ishikawa chart (the cause and effect method), along with benchmarking (comparing your processes with similar ones your competitors have). It would not hurt to make the SWOT analysis as well.

Finally, it is necessary to analyze the logic behind business processes, how fragmented they are, and research your opportunities for automation.

Optimizing processes in a business: a step by step guide

1. Define your optimization targets.
This is probably the easiest stage. If you have looked into ways for improvement, then it is likely there is an obvious problem requiring a solution. For instance, you may need to do the following:
 — Lower your costs;
 — Improve communications between your employees and departments;
 — Improve manufacturing speed and/or speed of delivery, etc.

2. Describe the existing business processes.
At this stage, your goal is to understand your entry and exit points for a process, which steps it includes, who is responsible for performing these steps, and what the result shall be. Describe your regular workflow without going into too much detail, yet avoiding generalizing too much.
For better understanding of how your business processes operate, talk to your employees who play a role in these processes. This may be done using outside consulting service experts.

3. Define the problematic areas.
Analyze the information obtained in the previous step and define what the problems are. It is possible that recurring problems disrupting company operations do exist.

4. Define which improvements are needed, and describe a renewed business process.
This is the stage for describing your optimization action plan, and what the results must look like. For instance, you can automate the way you accept your orders. You need to create a form to be filled out by your clients, which would be the source of table data your managers will use.

5. Introduce changes as your plan dictates.
This must be done steadily, in a step-by-step way. Your employees need to understand well why the changes are being made, why they are necessary, and how they will affect them personally (for instance, collecting information will become easier, or they are going to have more time for further learning and improving their competencies).

What one should remember when optimizing a business process?


Changes must be steady. This will let you account for the associated risks, when improvement of one process produces a negative impact on another process.

Your regular employees must be interested in making these changes, not just the management staff. The word ‘optimization' is often associated with ‘laying the staff off', while changes in work processes are rejected when they are unexpected and have no defined purpose. Employee involvement greatly simplifies improvement activities, making the whole process more effective.

Processes must be implemented in fact, not just remain on paper. Otherwise, all optimization effort will be performed in vain, while operations within the company will still contain many unnecessary stages.

Do not exert excessive control: you do not need to control everything, yet still you have to be attentive to activities. The CEO needs to have good evaluation data for company opportunities, and invite optimization effort from outsourced experts in order not to sacrifice one’s own duties.

Optimization errors

There are several typical errors, which may interfere with the optimization.
The first one is lack of proper analysis. When someone throws one’s efforts to improve without having obtained proper analytics for what is causing the problems, it may result in unnecessary obstacles.

The second one is failure to appoint a proper responsible person. There always should be someone responsible for the optimization process altogether, as well as for certain tasks which are part of optimization of processes, or implementation of improvements.

The third one is excessive formalization. If all processes are meticulously described within company documents, while making your staff follow the procedures to the letter, it may only slow the work down and make it irrationally complex. It is from practical observation that such a thing as ‘rulebook slowdown' exists, when company staff follows their instructions to the letter of what is written making the company operate slowly and ineffectively. There is no need of enforcing it in your company. An optimum number of stages to a business process is 5−7, while the maximum steps is 12.

The fourth one is either insufficient or an overly attention to what your employees think. It is important, without loosing sight of company goals, organize operations in the most rational and effective way. It is necessary to find out what causes the most difficulty for your employees, what can be improved and what training they might need.

The fifth one is lack of attention to detail. If in reality your work is not going in the same direction as it has been planned, you need to go back to analyzing things and find out what is happening, what can be corrected and whether such correction is necessary at all. Lack of flexibility in this area may slow the work down and lead to downtime, while optimization will serve the purpose opposite to what it should be.

Conclusions

In order to optimize a business well, one must have high awareness of the market and of company situation down to individual processes. Analysis is necessary on every stage, from setting a purpose to its implementation. Only an elaborate analysis can help you establish the causes for problems which have emerged, as well as correct your optimization process on time.

Someone must be responsible for optimization, the same way it is for any task out there. It may be an executive officer, a consultant, or a work group. Employees who are affected by the improvement activities must also be involved in them, while their opinions must be considered. It is them who are always involved in specific business processes, they will likely be able to point out the things which require improvement.

Improvements serve better when implemented slowly, in accordance with the pre-arranged plan, so that improvements in certain areas do not negatively affect other areas of work. A step-by-step introduction will help your employees better accept the change, while the executive staff can evaluate the result better and introduce corrections when necessary.
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