Process Optimization - A How To Guide for Businesses
While every business wishes to increase its output, it often comes at the price of another valuable element, such as quality or service level. This can counteract the savings from improving operational efficiency, negatively impacting the bottom line.
On the other hand, process optimization eliminates inefficiencies while ensuring that operations meet company quality standards. In fact, optimization can be used to improve a process's timeliness, resource usage, and wastage.
By reducing unnecessary costs, such as material waste and excessive labor, businesses can increase their productivity and profitability.
However, companies can only achieve process optimization through routine check-ins, diagnostics, and active improvements.
What is Process Optimization?
Firstly, a process is several combined tasks managed by a person or piece of equipment. Each event contributes to the finalized product, but the focus remains on the individual task at hand.
For example, a machine that assembles components of a product is performing one process. While the task may have several sequential steps, it is still considered one process.
Therefore, process optimization is the practice of improving a process's efficiency. When a process is optimized, businesses reduce risks, streamline operations, increase productivity, improve product quality, and enhance resource allocation.
When optimizing a process, it is essential to understand how one operation affects sequential tasks. By breaking down communication barriers, companies can eliminate data silos to improve collaboration between departments.
Steps to Process Optimization
In order to optimize processes, businesses need to pinpoint inefficiencies, bottlenecks, and resource wastage.
Most importantly, companies should only focus on areas that need improvement or where an error exists. Otherwise, organizations can spend an unnecessary amount of time and money trying to fix a system that isn't broken.
To start, businesses must-
1. Identify Optimization Needs
To identify weaknesses, project managers need to conduct research on processes that are not meeting company standards. Management can do this by-
- Interviewing employees
- Referencing past reports
- Reading customer complaints
- Checking key performance indicators (KPIs)
- Finding which process costs the most to perform
Once the process is identified, managers need to determine the sole purpose and unchangeable functions of the task before creating a plan of action, by asking-
- What is the outcome and purpose of the process?
- Where does the process begin and end?
- What are the stages?
- Which departments are involved in the process?
- What information is needed to complete each step?
2. Map Out the Processes
By mapping out processes using a workflow chart, managers can define-
- Involved employees
Identifying these elements helps managers better understand what is needed to streamline the processes. When combined with the workflow charts of other processes, management can gain a micro and macro view of their operations.
3. Organize the Processes
Documenting the workflow of the process prior to changes enables management to reorganize stages based on the steps that need the most improvement. This way, managers can add in additional tasks, dependencies, and resources as needed without disrupting other processes.
At this stage, managers can also add visuals to illustrate improvements, ensuring that stakeholders understand the optimization process and how it will improve the company's value.
4. Implement the Strategy
Once all of the details are outlined, it is time to apply the changes. This is the most delicate stage of the optimization project, as one mistake can affect all sequential steps.
After the implementation is complete, management should train employees on how to properly use the new system. If not all workers embrace the new process, the optimization project will not be successful. By ensuring staff is onboard, management can gather data on how the new process is performing.
This is also the time where managers can determine if the process meets their predictions and performance targets. If not, the business must decide if they need to alter their strategy or lower expectations.
5. Automate Processes
After the process has been finetuned and meets benchmarks, companies should consider workflow automation. By automating processes, businesses can improve outcome consistency, eliminate errors, and increase production. Organizations may also experience-
- Improved cost reduction
- Decreased resource waste
- Increased error prevention
Automation also enables businesses to improve data exchange throughout departments, creating a transparent work environment.
For example, inventory management software enables managers throughout a company to track production, shipments, and stock levels at any given time.
6. Monitor Performance
Even after the new process is implemented and automated, managers must actively monitor performance to detect bottlenecks and errors in real-time and avoid snowballing.
With management software, companies can generate daily, weekly, and monthly detailed analytics that illustrates a process's strengths and weaknesses.
Process Optimization Methods
Every company will have a different optimization method, depending on their operations. However, businesses should consider the best optimization practices.
The DMAIC strategy consists of five different processes, meant to be used alongside automation-
- Define customers, goals, involved departments, resources, and milestones to develop a workflow map.
- Measure the cost of defects and performance through data collection to identify opportunities for improvement.
- Analyze issues and trace them back to the root cause to determine interdependencies.
- Improve processes by developing hypotheses and several design experiments to determine the most effective model.
- Control the improved process by standardizing new techniques through training, documentation, and maintenance.
This method takes a collaborative, data-driven approach to process optimization to eliminate guesswork and involve all relevant parties. The primary goals of the DMAIC strategy are to-
- Define output defects
- Pinpoint core process issues
- Create preventative systems
While process mining is not a complete method in and of itself, it is a critical step to every optimization strategy.
Process mining, also known as automated business process discovery, gives companies a well-rounded perspective of their processes and how they operate through analytics. Many businesses use management systems to create an activity log that organizes historical and real-time data. This enables management to determine-
- The order of processes
- Employee responsibilities
- Operation scheduling
- What resources are needed for each stage
Creating a template from the data enables management to cross-examine ideal and actual outcomes to determine if employees are following the new process.
Software can also map out processes to run diagnostics and necessary tests on optimization strategies before implementation. This reduces the risk of wasting time, money, and resources on a method that may not work.
To ensure process mining gathers useful information, companies must-
- Make processes actionable for employees.
- Enforce process adherence.
- Implement changes slowly to avoid overwhelming the staff.
- Automate as many tasks within the process as possible.
The PDSA, also referred to as the Deming Cycle, is a four-stage process that was created by Edward W. Deming in an effort to marry scientific inquiry and business improvement.
This method is centered around finding and improving the output quality of business operations through four stages-
The planning stage is when managers need to outline their current quality standards and future goals of the process at hand. Management must list what exactly requires quality improvement and how it can be measured.
For example, a product that receives customer complaints on quality can be measured by customer inquiries after the implementation.
Managers should also take the time to make predictions and hypotheses on the process for future reference. This shows how well the project management team understands the operations.
The do stage is when businesses can implement their changes in a controlled environment. This means management should use control groups or standards to cross-examine data sets to pinpoint dependent and independent variables.
By understanding these values, companies will know how to manipulate individual variables to get the desired outcome.
The study stage is what makes the PDSA method different from PDCA. In the PDCA strategy, managers must check the performance metrics to measure the change in-
However, Deming preferred the study stage over checking, as it aligns better with the scientific approach. Therefore, management should collect as much relevant data from the process as possible in order to see the bigger picture.
The act stage is where companies can finally implement the new process in full. By testing the control groups first, businesses already have experience on what changes are effective.
Benefits of Process Optimization
Organizations that regularly monitor and improve their internal processes typically experience-
With an optimized process, employees are able to complete tasks quicker and yield more significant outputs.
For example, optimizing inventory tracking processes with management software enables employees to complete cycle counts and order in a fraction of the time it took with manual methods. Traditional tracking techniques required staff to go through each unit individually and record quantities by hand on a spreadsheet.
With inventory management software, companies can automate counts with tools, such as barcodes and scanners, to streamline standard control procedures. This also saves businesses time, resources, and labor costs.
With automation, optimized processes can guarantee consistent, error-free results. It also enables businesses to actively monitor methods to determine if there are more efficient ways to perform operations.
This requires management to consistently review processes to pinpoint emerging risks, inefficiencies, and inaccuracies for prompt resolution.
Especially in today's fast-paced work environment, businesses must have the agility and responsiveness to adapt processes quickly. Companies that lack agility are often left behind and are unable to compete with organizations that can react to issues in real-time.
By continuously optimizing processes, companies can improve their agility to ensure they can respond to market and internal changes.
Establish a Culture of Efficiency
Establishing a work culture focused on optimizing processes ensures that operations are appropriately documented, monitored, and performed. This creates a healthy, sustainable environment for current and future employees.
A process's efficiency directly impacts a company's bottom line, whether they realize it or not. An operation that produces a lot of waste or requires an excessive amount of labor means the business should be investing their time in optimization strategies.
For example, Motorola saved over $16 billion when they optimized their internal processes.
Inefficient processes can even cause damages, requiring even more capital to fix machinery and resolve issues.
However, process optimization ensures companies are completing operations in the most efficient fashion, using minimal capital, labor, and resources without sacrificing quality.
- What is Cycle Counting? 3 Methods and Best Practices
- 5 Tips to Instantly Boost Business Efficiency
- Bottleneck in Business Operations- 9 Types to Avoid
- What Automated Inventory Control Can Do For Your Business
- 9 Common Project Management Issues and How to Solve Them
- Warehouse Optimization- 9 Tips to Cut Costs and Increase Efficiency
- Process Optimization - A How To Guide for Businesses
- Process Optimization- A How To Guide for Businesses