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How inefficient processes are holding back your business

Understanding the significant damage of inefficient processes is essential to developing more agile organisations in future.

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Image credit: iStock/erhui1979

Many organisations have adopted process management programmes in recent years, such as lean, agile, scrum, etc. Each aim to improve the effectiveness and efficiency of your business' processes. However, understanding what are the benefits of these programmes and how organisations will be held back if they don't focus on improving their processes is an important question to answer.

Process improvement programmes always come at a cost. We need to define them, assign people to manage and execute them and more often than not, they require cultural changes, organisational design changes, staffing changes, etc. So with all these costs and energy in mind, why should we do it? Or, perhaps more importantly, what is the damage if we don't?

Overall, process improvement efforts have an impact on the three main aspects of any service: the price, costs or efficiency, overall product/service quality and addressing issues in timing or delivery. Here we explore these three areas in more detail:

 

Pricing or costs of products and services

When targeting efficiency improvements, process management tools often do well. When the teams working in delivery are asked to study their process, they often find many areas where inefficiencies have crept in. Simply put, if we don't study and address this fact, we will continue to see the same levels of efficiency moving forward. So, when our competitors are lowering costs and we don't, how can we keep up?

When asking the team where they can combine tasks or roles, they will always give suggestions. Moreover, when asking the team what the root cause of common mistakes are and subsequently finding solutions, these efforts will save costs by ensuring processes are carried out correctly the first time.

A nice example was given by the city of Venlo (Netherlands). The team working on the complaints process mapped and studied the process. They concluded just eight out of 80 steps were truly customer value-added. It was the first time all roles working on the process met and studied the process from start to end; the findings were staggering.

 

Delivery or timing issues

One of the main targets/results of investment in process management is a reduction in the time needed for the delivery of products or services. With good process management tooling you will be able to explore your processes fully and run calculations through them. Typically, the sum of all activities performed (processing time) and the lead time and waiting time for the total process (lead time) will be calculated and compared.

In processes that have not been looked at as part of a process improvement effort, the processing time is only a small part of the total lead time. The time between the call from the customer to the delivery of products can take several days or even weeks, whereas the total processing time is generally only a few hours, if at all.

If the lead time is much longer than the processing time, process management efforts can assist the team quickly to shorten the lead time, not by working harder, but by working smarter. And if you succeed in doing this, organisations will be able to compete better with aggressive new business initiatives, and be able to satisfy customers without special costs if and when they have an urgent need.

 

Quality of products and services

Finally, quality improvement is integral to any process improvement effort. Normally, improvements are made in ensuring "first time right" and in finding the "root cause" of problems. Teams are therefore encouraged not to only fix problems like deficiencies or mistakes, but they are asked to study in-depth what had led to the situation and make changes so it will never happen again. Should these be classed as efficiencies? Certainly! The time and energy needed to correct mistakes is often great and comes at the expense of customer satisfaction.

Ultimately, organisations that become used to reviewing their way of working (their processes) on a regular basis will grow to be more agile. They will get used to looking for new ways to do their work in a more cost-effective and efficient manner. Such a culture can by itself make the company more agile and give it the capabilities to adjust quickly to market demands without having to incur large restructuring costs.

As the world and our competitors are getting more dynamic, this simple feature may be an overall benefit of process management that is crucial for companies to survive. And so, to give a definitive summation, if you don't work on improving the efficiency of your processes, you will be holding your business back!

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