How Improving Business Processes Can Improve Your Company’s Bottom Line

Your first step is to create a map of all your existing processes. This will help you document how your business works so you can use that data to guide your improvement efforts.

To create the first map, you need to interview and observe staff as they complete a process, then translate that into a process map.

The resulting picture should include the entire business process from start to finish.

Improving business processes is integral to Business Process Management (BPM), but there’s a problem: BPM is under threat. If a business can’t justify the money it spends on process management — that is, show a profit — BPM is toast.

How can you tell that improving your processes will make a difference?

In this article, I confront the elephant in the room and show you how improving your processes means more profit for your business.

Signs your business processes need improvement

How you deliver on your value proposition and remain competitive is determined by your processes. When there are cracks in your processes — say, your supply chain — you incur avoidable losses, and this shrinks your bottom line.

Here are some pointers to know when your processes will throw you under the bus:

1. Personnel or partner-dependent processes

If the absence of a staffer slows down operations in any department, it means your company still has some personnel-dependent processes. If you have to pause operations because of a change in supplier or partner, your processes are flawed.

Take, for instance, KFC‘s troubles with many of its 900 UK branches when it brought on a new delivery partner. The new guys found the process of getting the fresh chicken out too complex, so the restaurants had no chicken, couldn’t supply what their customers wanted, and had to close.

According to some estimates, KFC lost one million pounds in sales revenue per day. That’s a classic example of faulty due diligence in the supplier change process.

2. Non-repeatable successes and repeat errors

Does your revenue skyrocket one month and nosedive the next — making your successes accidental? Do you have a “how to” and “how not to” process for both scenarios?

That is, if your processes are not able to guarantee a repeat success and avoid errors, that’s a sign of a need for improvement.

When improved, your processes will be able to give you an average success range, from month to month.

3. Low operational efficiency or the absence of accurate and timely information

When your company’s operations are not on a par with set efficiency KPIs, your business processes are likely culpable.

For instance, Exelon, a leading energy company, wanted to reduce costs by improving efficiency, but they had an inefficient employee-to-device ratio and time-consuming business processes. According to the case study, they transformed their business processes to become more efficient and recorded a 48% reduction in enterprise-wide cost per employee.

4. Need for sustainable business growth

If you’ve been seeing repeat successes but can’t seem to outperform your best result, your business is in need of process improvement.

For instance, a study of one multinational bank’s successful credit card department showed that the company considered eight to nine days normal for processing a new card application. However, process analysis revealed ways to redesign the system and cut the delay in half, meaning the bank could onboard twice as many new customers in the same time, clearing the way to long-term growth.

This brings us to the point that continuous process review is a business process improvement need that will ultimately supercharge your company’s bottom line.

However, despite the clear potential for business improvement to increase your revenue, there are a few challenges you may need to overcome.

Challenges of improving business processes

Adamance to think and act differently

Many companies have accepted the need to streamline and improve their inter-company processes but too often ignore their internal processes.

One common reason is that employees and other stakeholders are often reluctant to change. Sometimes it’s the desire to stay in their comfort zone: They’ve been doing their job for years and they’ve “always done it this way.” Why change?

To address the fear of new things and the difficulty of breaking old habits, show employees and other stakeholders that process improvement is about helping them do their jobs better and faster, and making them look smarter.

Lack of willingness to spend more on something perceived irrelevant and expensive

Improving business processes is not necessarily cheap which is why BPM managers are under pressure to justify the spend. When you are faced with this challenge, be sure to relate the four signs discussed earlier and how improvement can make a drastic difference.

Getting end-user buy-in

Some companies fail to collaborate with end-users during requirements gathering and process mapping. They find it hard to get to employee buy-in.

Again, it is because employees love their comfort zone and fear new processes could mean job losses. Management needs to make it clear that it’s about productivity and efficiency — and that staff is an essential part of the improvement.

Defining clear, concise and measurable performance metrics

There are so many moving parts to improving business processes that it sometimes proves difficult to set a clear success or failure metric.

However, this is a critical aspect as executive leaders and end-users alike need to know when the process succeeds or fails.

Your failure or success depends on how you overcome these challenges. With the right attitude and following the step-by-step guide below, you can improve your processes and come out on top.

Steps to improving business processes and how this can Supercharge the Bottom-line Revenue of Your Company

Different methodologies exist for business process improvement. From Lean tools to Six Sigma tools, or a combination of those and Business Process Modeling Notation (BPMN) maps, you will adopt choices depending on your company needs. Necessarily, each stage of the process should have a direct impact on your bottom line.

Step 1: Map existing processes

You could bring on key team leaders to validate your process and give you a precise picture of how the business currently works, not an idealized version.

By implication, you can immediately see where your revenue sources are and what you need to change to grow your bottom line. And, importantly, you see where you’re wasting time, money, and resources.

Step 2: Spot company process difficulties and opportunities

Mapping existing processes as-is from step one will give you a bird’s-eye view of where things aren’t working. From that, you can spot issues and identify all the places where opportunities exist to improve.

To do this, make a list of all the issues you can immediately see and try to pick out the root causes of these issues using the five whys technique. As you do, identify recurring themes.

For instance, you may find that clients are not billed accurately and on time because of the information gap. This may be a recurring theme affecting other business processes and the root cause may be a non-existent or disjointed communication channel.

Your analysis should also show you areas of opportunities such as where a spend on an additional skilled employee can double output and increase sales.

At the end of this step, you should have compiled a detailed list of issues and opportunities, stating their importance and priority.

Step 3. Implement a “keep or improve” strategy

Looking at your existing process map and your list of issues and opportunities, document the processes to keep or improve.

Separate your list into two: one for processes that don’t need changing, and the second for those that need improvement.

Then you also want to make a list of major issues and quick fixes. Quick fixes are a great way to show results for upper management and justifying the spend. Major issues often need more time, and if quick fixes can affect the bottom line, do them!

It is true that business process improvements take time to show results but if you go by the strategy of addressing pressing small issues and one large one, you’ll see a quick impact.

Step 4: Design, implement and automate

At this point, it’s time to work backward, defining the goals of the improvement for each process that needs change. Also, note what the constraining issues are. Then redesign the means to overcome each of those issues.

Bear in mind this will affect people and may also involve implementing some new technology.

Put the new process on a map for stakeholder buy-in, and show, where possible, the direct impact to the bottom-line. This way, business process managers can show executive leaders that while only costing X, each process that needs improvement will boost a business objective by Y percent, adding Z dollars to the bottom-line.

These steps will immediately make your revenue successes repeatable and massively minimize errors. You will cut costs and reduce the waste of time, money, and resources while helping you rake in more revenue in less time with less cost.

On top of that, it gives you a much needed competitive edge as it helps you fix your areas of weakness and explore more opportunities in your areas of strength.

Conclusion

Improving business processes supercharges your bottom line by helping your company see areas to improve productivity and efficiency, cut costs, and guarantee sustainable improvement.

With a collaborative and result-driven approach, companies can ease into change, get staff and executive buy-in, set KPIs, grow their bottom line, and justify their BPM spend.

Owen McGab Enaohwo

Owen McGab Enaohwo is the CEO and Co-Founder of SweetProcess; an easy-to-use and intuitive business process management software that makes it possible for company executives and their employees to collaborate together to quickly document standard operating procedures, processes, and policies. As CEO, Owen helps SweetProcess's growing customer base of companies and their executives with strategies on how to get consistent performance from their employees, scale and outsourcing firm that provided entrepreneurs with outsourced staff from the systematize their operations. From 2009 to 2013, he ran a business proceses Philippines.

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