Demands often come fast and furious from multiple sources. Consumers want new products. Retailers expect shorter product life cycles. Head office wants more processes to be automated. There are new safety regulations to meet.
Every manufacturer is under pressure to improve products, reduce time-to-market, and offer better pricing, making business process improvement (BPI) all the more essential to protecting the bottom line. Like its name, business process improvement, also known as business process enhancement/modelling/optimization, is about making one or more processes within a company and its supply chain more effective and efficient.
BPI’s value comes from being proactive. Many companies today expend huge effort, time and expense addressing problems that arise each day. As a result, processes throughout the supply chain – from procurement, through production, to delivery – often fall out of alignment, and sometimes break down completely. Crisis mode ensues. Performance suffers.
Business process improvement focuses on achieving well-defined and designed processes that complete work more cost effectively, quickly and easily. Given their competitive significance, inventory and procurement are often the focus of improvement projects for manufacturers. Results typically include time and cost savings, improved quality, happier customers and higher profitability. One company, for example, used business process improvement to update a file management process, streamlining a six-employee department to one staff member, while producing faster, more accurate and complete reports.
Approaches to business process improvement will vary, but they will include the following steps:
• Identify future vision and obstacles. Management needs to create a clear picture of the ideal future state and the obstacles in the way. What are the company’s goals, priorities and needs? In which area of the business is progress restricted by wasting money, time, resources or opportunities? What outcomes are expected from the improvement process?
• Define the scope of the project. Since processes are linked and changes to one affect others, it’s necessary to specify the parameters of the project. Target processes, start and end points and identify the stakeholders involved.
• Develop a case for change to ensure buy-in. This requires identifying the stakeholders who would be most impacted by the change and those who are most likely to resist. Address the reasons why processes require improvement and the value this will deliver to the company and to these people.
• Map and assess the current state. This will help you fully understand each process and to establish a baseline for what’s working well and what isn’t. Identify the objectives for each process, inputs and outputs, the sequence of steps required to execute each process, the resources required to execute each step, the speed or effort expended to perform each one, and the decision points and options along the way. Acquiring these details may involve reviewing documents, shadowing personnel as they perform processes, and by conducting interviews. Map the details and interrelationships then map in a pictorial representation of workflow and functions.
• Analyze gaps. Identify the barriers and success factors critical to reaching the desired future state. Where are the inefficiencies, bottlenecks, unused deliverables and repeated activities? Where are the opportunities? Where are best practices underutilized?
• Devise recommendations and prioritize. Base them on the company’s goals and needs. Urgency, probability of success, potential impact, financial value and available resources may influence what is implemented first.
• Develop an implementation plan. This plan, which may be phased in according to project priorities, sets out next steps including targets, required resources and metrics to measure progress.
• Assess progress. Once improvements are underway, they need to be tracked and measured against performance metrics to ensure they’re delivering the expected results.
While improvement initiatives can be unsettling, one success often leads to another. When a company succeeds with one project, business performance improvement often becomes addictive. Managers and employees alike crave the challenge of striving for goals, the triumph of meeting them and the resulting rewards.
How do you know if it’s time to begin improving your business processes? Change to policies, resources, products, technology, competitors, markets or performance is a catalyst. When it becomes more cost effective to adapt than to hang onto the status quo, it’s time to act.
Glenn Fraser is the leader of the GTA region Food & Ag manufacturing practice of MNP LLP, a Calgary-based accounting and advisory firm. Caroline Copeman is a senior manager in the consulting practice. E-mail firstname.lastname@example.org or email@example.com. Visit www.mnp.ca.