Business process optimization is Methods, steps and mistakes

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Optimization of business processes is a rather popular topic. It is rare that anyone can apply it correctly the first time, because beginners make mistakes that are ultimately reflected in practice. To avoid them, read our article. Let's start the educational program with a definition.

Concept

Optimization of business processes are activities aimed at improving business efficiency.

There are many optimization methods, each with its own advantages and disadvantages.

We'll look at them below, but first we'll figure out if optimization is really necessary.

Is there a need?

We have already said that business process optimization is a set of activities aimed at improving business efficiency. And it really is.

Any enterprise is based on certain business processes, which are performed by the employees of the organization. These include sales, production and management processes, procurement, office work, and so on. As soon as the enterprise begins to automate existing processes, itwork becomes much more efficient.

Large organizations operate on a management system of a certain standard (ISO 9001), which indicates a high business culture. The system is built in such a way as to organize as many processes as possible, while highlighting and scheduling them.

Since the optimization of business processes is a complex of certain measures, then, in theory, a specialist should do this. That's how it is in big companies. But no matter how the process is built, it periodically needs to be reorganized, because working conditions change, new vacancies and processes appear. If optimization is not carried out, then conflicts arise that prevent the normal functioning of parts of the organization. And this, as you understand, is ultimately reflected in profits.

To understand whether the company's business processes need to be optimized, you need to check for problems. Below is a list and if at least one item is reflected in the activities of the organization, you should think about optimization.

Optimization will help

So, over time, problems can arise in any organization. They are a litmus test by which it is easy to determine the need to optimize the company's business processes. What problems can there be?

1. Job responsibilities are repetitive. If not only employees are forced to do the same thing, but also entire departments, then this definitely indicates the need for reorganization. This cannot last forever, which means that the result will be chaos, unnecessary financial injections andunjustified competition between employees and departments.
2. Leaders can only manage. These bosses are mostly useless, because they know nothing about marketing, economics and management.
3. The company does not have a system for improving the skills of employees. This is a serious omission that throws the enterprise back. After all, if an employee does not receive new knowledge, then he does not seek to change anything and is marking time.
4. Perfect is the enemy of good. People work in one mode and suddenly decide to increase the level of activity. To do this, they introduce an IT system for managing employees, sales or finances. It sounds good, but often employees do this without regard to the current processes of the organization or simply copy someone else's. As a result, huge sums were spent for no clear reason, and the economic effect was not achieved.

What does business process optimization help to achieve in an organization?

1. Improve customer experience.
2. Reduces time and operating costs.
3. Allows you to achieve new goals.
4. Increases the manageability of the company.

All these items affect the final cost of products or services in the direction of its reduction. In addition, an optimized company attracts much more new customers, which means that profits become higher and competitiveness increases.

Any use of materials is allowed only if there is a hyperlink.

It is important to understand that all business processes are interconnected. That is, the optimization of business processes inorganization will affect the operation of the entire enterprise in one way or another. To make it less noticeable, the company's management begins to optimize small processes first, without spending too much time and money. Gradually, modeling and optimization of business processes is transferred to other departments.

Attempts to change everything at once usually end very sadly, and in the future, the desire to change something in the work of the company will be met negatively.

Where to start?

Modeling and optimization of business processes begins with the fact that the methods of the old work become obsolete. Optimization is necessary for every firm, with the exception of state corporations. The faster a business adopts new ways of working and implements them into its processes, the more successful it will be.

Those firms that are constantly evolving have a whole department that is engaged in optimizing the business processes of small businesses or large organizations. After all, only generous financing of modern technologies is the key to a successful business.

Evaluation criteria

In order to properly optimize, you need to prioritize. The latter are selected according to certain criteria. They are listed below:

1. The importance of the process. Before optimizing work, it is necessary to identify the main processes, the improvement of which will lead to high results. To determine such a process, it is enough to know what role it plays in all the activities of the organization. There is a downside: if the process is already in the foreground and effectivelyworks, then the optimization will be useless. Of course, you can try to improve the process already, but this will be a waste of funds that would be useful for someone else. It is better to spend time and money on problematic business processes.
2. Problem of the process. Sounds familiar, but what does it mean? In this context, the difference between what is obtained as a result and the desired actions is implied. That is, if some process does not work at all as it should, then this is a clear reason to optimize.
3. Ability to implement process changes. Optimization of business processes of a small business or a large one begins with the fact that the simplest option is chosen to start the process. For example, they choose exactly the one that will require the least possible funds for improvement, personal time and labor resources. It is also important to pay attention to the negative factors that will inevitably appear and take them into account.

So it turns out that you need to take into account all the criteria and factors for a successful reorganization. As a rule, the largest processes are subject to optimization, because it is at the expense of them that the enterprise works.

Principles

Methods for optimizing business processes are different, but before choosing one, you need to know the principles of improvement. Without following them, you will not achieve the desired effect. Consider the principles below:

1. Foundation. Before you start optimizing processes, you need to understand which process is responsible for what. That is, first of all, you need to understand the structure of the business and only then take up optimization. If this is not done, thenit is not clear what needs to be reorganized, which means that there will be no effect.
2. First you need to fix the bugs. Before reorganizing the enterprise, it is necessary to eliminate small errors that will interfere with optimization.
3. Ambiguous decisions. This is the name of the situation when the optimization of one process negatively affects another. For this reason, before improving any process, it is necessary to calculate all the positive and negative sides and only then make the right decision.
4. Rejection of change. Often the employees of the organization are not enthusiastic about change, which means that they resist with all their might. Moreover, resistance can be unconscious or expressed.

Optimization levels

Optimization of business processes in logistics or other areas is divided into several levels, each of which affects the result in its own way. For example, administrative and management processes are responsible for making the right decisions and actions of the management team. Thanks to them, information is collected about the workflow of the organization involved in the main business process.

Efficiency of business process optimization can be different, but in any case it will lead to a reduction in financial costs. Which level a company chooses depends on many factors. For example, if management wants to save money, then the choice will fall on one level, and when the goal is to achieve a strategic result, the choice will fall on another.

Consider all levels of business automation and optimizationprocesses:

1. First level. This stage is associated with financial costs. Each department of the enterprise creates expenses for its own needs. But this level can be called the fastest if the goal is to reduce costs. This is due to the fact that the level does not affect the interests of other departments of the company, which means that no additional approvals are needed. The disadvantage of the level is considered a small savings. As a rule, it does not exceed 20%. It is important to understand that not all expenses are attributed to one department, some arise during the execution of the task. For example, one department orders information on the organization's analytics to another, in this situation the contractor will bear all the costs.
2. Second level. Examples of business process optimization of the second level make sure that costs are reduced to a joint process between customers and contractors. The level implies the activity of both parties, one-sided work is simply unacceptable. Cost reduction occurs only when all participants in the optimization have discussed and come to a consensus about how the processes and collaboration will go. The second level provides savings of more than 20%, it can be used to optimize various functions of the enterprise. The main condition is that all functions must have the same result and be aimed at achieving the result.
3. Third level. This approach to business process optimization provides up to 30% savings. True, there are certain difficulties: in order to work with expenses, you need to understand the entire system of businessorganization processes. This is due to the fact that the optimization of this level provides for a large number of activities.

Optimization methods

Business processes in each organization proceed in their own way, but this does not prevent experts from highlighting the main optimization methods. Consider them in more detail:

1. SWOT analysis. The essence of the method is to study the strengths and weaknesses of the business process. This is the name of the method of strategic planning, which is used to evaluate the phenomena and factors affecting the enterprise or business project. There are several parameters specific to the method: strengths, opportunities, weaknesses, threats. The goals of optimizing business processes using this method are to find and fix vulnerabilities, as well as reduce risks and possible threats.
2. Causes - consequences. The method is characterized by the Ishikawa diagram, or cause-and-effect diagram. It is one of the seven most well-known tools for assessing, controlling, measuring and improving the quality of production processes. The method allows you to find the relationship between the parameters, which helps to conduct accurate studies of the required business process. The diagram makes it much easier to identify the main factors that affect the production process.
3. Benchmarking. A method of evaluating the advantages and analyzing the advantages of competitors and partners to identify the most productive factors. Benchmarking has something in common with industrial espionage, but not completely. To implement the method, superficial observation is sufficient, and not introduction tocompetitors.
4. Optimization and analysis of business processes based on indicators. The principle of setting business process goals is used, after reaching which the goal is either increased, or, if it was not possible to approach it, methods for its implementation are analyzed. The technology for optimizing business processes is such that, first of all, performance is analyzed.
5. Brainstorming. The method is an active discussion of tasks, voicing different options. Of all the proposals, the most successful offer is chosen as a result.
6. 6 Sigma. By reducing the number of production errors, an increase in productivity indicators is achieved.
7. Changing and calculating the fragmentation of processes. The method lies in the fact that the components of the business process are increased or reduced.
8. Analysis of business logic. The goal is to eliminate inefficient procedures, link parallel activities, share responsibility for processes and share decision-making powers, capture information at the source and process it in the actual activities of the company.
9. Functional cost analysis. The method is aimed at achieving the highest functionality of the object at the expense of minimum costs for both the buyer and the seller.
10. Simulation of business processes. The optimization of logistics business processes allows you to represent the actions of people and the use of technologies using a computer model. During the simulation, four stages must be observed: building the model, running the model, analyzing the resultingperformance indicators, evaluation of other possible scenarios. The method is effective only if actual and accurate values are used to build the model.
11. Analysis and calculation of the complexity and duration of the process. The method allows you to calculate the required number of workers and the load to which they are exposed.
12. Analysis of the responsibility distribution matrix. This is a functional visual table that distributes the organization into links, units, and so on. that is, the method allows you to assign tasks to structural units.

Optimization steps

Work on business process optimization is divided into five stages. Let's talk more about each of them:

1. Description of the organization's processes. Analysis and optimization of business processes are inextricably linked. Without defining the functions of each department and employee, it is impossible to start effective optimization. It seems that this step seems to be taken for granted, but in fact, most companies forget about it, and this is a big mistake. It is better to start learning processes through the value chain. There are companies that provide resources or products to your organization or perform additional functions that your client needs. Understand at what stage and how the value added of the final product is formed. The use of such a strategy allows you to quickly calculate the exit and entry points to the company. Thus, you will be able to study the entire workflow of the enterprise, explain to the staff who is doing what,to separate work processes that need priority optimization, to decide on ways to improve the quality of a service or product. During the research, you will understand that in addition to the key processes, there are also supporting ones. As a rule, they do not need to be financed, because they form the infrastructure of the enterprise and help the continuous functioning of the main processes. There are also development processes responsible for future profits.
2. Appointment of responsible persons. The business process optimization system is built in such a way that it cannot function without control. Therefore, a person responsible for its implementation is appointed. Moreover, one person should carry out general management, while others should control each stage. The manager must not only be obligatory, but also be able to coordinate the work of subordinates. Such leaders can be compared to an eternal battery, because they must constantly work and optimize production. For this reason, job responsibilities should be clearly stated, for this it is enough to prescribe duties in the internal regulations of the enterprise.
3. Implementation of optimization. So we came to the optimization of business processes of the enterprise. For her, only the third stage is reserved, because first you need to prepare. Do not think that every organization is in perfect order. At any enterprise, you can find dozens of problems. And after the discovery, you need to act in accordance with the plan. First, you need to evaluate all the processes of the company, as well as eliminate the repetition of job responsibilities. next stepwill be the calculation of time for each of the business processes, a comparative analysis with average indicators, adjustment to real indicators. Next, you need to organize an operational analysis of production resources. You need to trace the movement of values and information in the company and eradicate areas where there is a loss of both. The final step will be to analyze the efficiency of resource use in each process.
4. Automation of the main processes of the enterprise. No wonder this step is spelled out in the fourth paragraph, because before proceeding with it, you need to clearly understand how the optimization will take place. If there is complete confusion at the enterprise, then no matter how you optimize the process, there will be zero sense from this. The only thing that can be achieved is big financial expenses and loss of time.
5. Evaluation of the results. The optimization of business process management has been overcome, as has the reorganization itself. It's time to take stock. If the operation was carried out correctly, the result will be the elimination of repetitive positions and duties of employees, supervising the performance of work by workers, reducing the number of errors and reducing the influence of the human factor in production, introducing a system of efficiency factors that motivate employees, a formed knowledge base about the organization's processes, reducing violations in production due to lack of personnel or lack of resources, finding finances that are not involved in circulation and their liquidation, minimizing the purchase of unnecessary products.

Common mistakes

Tooptimization has yielded results, we must try not to make the mistakes that other entrepreneurs make. Here are some of them.

The first mistake is the wrong statement of the problem. If the manager does not know what exactly needs to be done to improve the work of the enterprise, then he will not succeed. The initial step is to understand what result you expect from optimization. For example, it is useless to draw up the characteristics of the accounting department if the organization has no direct income. Lack of profit is the job of the sales department, not the accountant. That is, in this situation, it is necessary to change the work of this particular department, and the bonus will be a change in the work of other services. In short, it is worth starting optimization with a description of the enterprise processes, we have already talked about this above.

The second mistake is the disproportion between efforts and tasks. Often you can see the description of processes that are absolutely not related to the main goal of the enterprise. An exaggerated example, but clearly reflecting the essence, is the communication between the head and the secretary in order to call the deputy. It is clear that the process has no meaning and it does not carry any value. It turns out that the organization is wasting money on this process.

The third mistake is the wrong choice of means of description. In order to characterize the processes, various means are used, including programs of different capacities. The cost of such programs is quite high, it starts at $100 and has no upper limit. It is clear that the capacity of the program should correspond to the size of the company. Turns out it's uselessa small firm to acquire a large-scale program. The tool must be chosen according to the tasks and goals of the enterprise, which the management is trying to solve through optimization. But one should not think that software is the main tool. This is just an auxiliary tool. Optimization is most affected by its proper organization.

Supplementary Literature

In addition to information on the Internet, company leaders should also read books that will help in this complex process. Here are some books:

1. “Business processes. Modeling, implementation, management” by Vladimir Repin. If you decide to change business processes and try a new approach, then this book is for you. It cannot be said that it is easy to read, but nevertheless, a lot of important information is hidden in it. Each chapter will have to comprehend and work through. The publication includes a lot of drawings, tables and diagrams that help to reveal the process. It is also noteworthy that there is not a word about this in other open sources.
2. “A systematic approach to continuous improvement. Goldratt Constraint Theory by William Detmer. All the author's books are being swept off the shelves like hot cakes. And all because it helps to solve many problems, such as the contradiction between the timing of services and quality, between financial costs and price. Previously, it was impossible to find complete information from the author, but now a book has been released that reveals all the secrets.
3. “Business process management. Practical guideon the successful implementation of projects” by Johan Nelis, John Jeston. The book talks about the basic principles of business process management, their benefits and positive features. The publication is also rich in examples of how to manage. The book is suitable as a reference for enterprises implementing process control projects. This is due to the fact that the described material tells about the tools that can be applied in practice, and also helps to effectively implement business projects.
4. "Goal. A process of continuous improvement by Eliyahu Goldratt. The publication explains that a person who sees some kind of problem in a business project is obliged to build cause-and-effect relationships between outcomes and processes. The individual needs to understand the basic principles of achieving organizational workflow efficiency.
5. Lean Software: From Idea to Profit by Tom and Mary Poppendyck. Management will provide assistance in situations where it is necessary to form the most effective processes. Top managers should read this book, as well as managers, developers of the company. That is, the information will be useful precisely to those involved in the software.

Conclusion

As you can see, in order to properly optimize, you need to know a lot and understand a lot. Reorganization will not help if the manager does not understand what he is working with. Often there are many such bosses, which is the reason for the collapse of many companies.

Even if the founder does not understand the issue himself, his task is to find competent employees whowill work not out of self-interest, but because they are dedicated to their work. There are very few such selfless workers left, which means that if you are lucky and you found them, then try not to let go. It is the competence of the state that determines how much the organization will flourish. Even the most talented leader will not be able to pull out the company alone, and therefore one should not neglect the professionalism of the staff. After all, it's about your money and time.