Process Improvement: The Profitability Dark Horse Explained in 8 Steps

Process Improvement: The Profitability Dark Horse Explained in 8 Steps

When your business is focused on generating sales and increasing revenue, it can be a hard task to stop and think about business process improvement. Can’t you just push the sales team harder, increase your marketing or try to find more clients? Of course you can. But that all incurs cost and effort to increase revenue, which in turn reduces profit.

Business Process Improvement (BPI) can increase your profit without putting on additional permanent staff or cutting costs internally. It’s the dark horse of profitability that’s often overlooked. It’s all about reviewing business processes and making improvements that increase productivity and efficiency.

Not only can process improvement benefit your bottom line, but it can also free up your employees to focus on income-generating tasks. And, when everything is working well from a process perspective, it can create a positive atmosphere of continual improvement.

Jump on board the dark horse and see what you need to think about when considering Business Process Improvement as a part of your ongoing business growth strategy.

Do you need Business Process Improvement?

While every company is different and faces its own unique set of challenges, many will identify with these common issues:

  • Staff are double-entering data in multiple systems
  • Mistakes are being found as a result of double-entering and manually entering data
  • Different parts of the business don’t have any visibility of what the other is doing
  • Getting an accurate picture of business performance relies on several reports being run and then combined – all taking a lot of time
  • Delivering a noticeably great customer experience is the exception instead of the norm
  • Sales forecasts often don’t match the results
  • Employees feel like they don’t have enough time to get important work done

If some of the scenarios sound familiar, Business Process Improvement has the potential to make a significant impact on our business.

The road to Business Process Improvement success 

 1. Setting the right goals

20180124-Business-process-improvement-SMART-goals.jpgBefore kicking off, make sure you have some SMART goals in place: Specific, Measurable, Achievable, Realistic and Timely. For example, you may want to cut down order entry time by 30% within the next 3 months to leave those resources free for more customer service activities.

When you’re setting your goals, take a moment to think about the benefit to your customers. Do you want to make it easier for them to engage with your company? Do you want to offer faster service? Or perhaps you want to offer a better customer experience. The impact you have on your customers will have an impact on your business success, so think carefully about how improvements can tie back to those customers.

2. Identify problems with existing processes

To get things underway, start with talking to the employees who are running your day-to-day operations. Get an idea of what’s taking them a lot of time or resources. Talk openly about their biggest pain points. Here are some of the important areas to cover:

  • Where is the process broken or inefficient? Could those roadblocks be either removed or simplified?
  • Which steps take the most time to complete?
  • Are there delays between different steps, for example if one task replies on a prior task to be completed first?
  • Are there staff duplicating or working separately on very similar tasks?
  • Are processes documented to give a reference of what should be happening and when?

"When you’re setting your goals, take a moment to think about the benefit to your customers. Do you want to make it easier for them to engage with your company? Do you want to offer faster service? Or perhaps you want to offer a better customer experience."


3. Prioritise

Once you have a clear view of your current state, prioritise your desired outcomes in terms of:

  • Effectiveness: Does the process meet both operational needs and customer needs?
  • Efficiency: Set realistic goals for the cost and resource reductions you’d like to see. What kind of speed or increased output would be ideal?
  • Adaptability: Will any new processes be flexible enough to change as the business grows?

4. Understand how your business processes relate to each other

While some processes will stand alone, they may also be part of a larger function.

Drawing up a process map and visually documenting how each process works and interacts with each other can provide a much clearer picture.

Speak to the people who use, or are affected by, each process that’s been documented. The key here is to find out what else might be affected by changing a process.

5. Redesign with customers in mind

20180124-Business-process-improvement-keep-customers-in-mind.jpgThis is the perfect time to take a step back and see things through your customers’ eyes. How will any new processes benefit or add value to customers? Businesses exist because of the customers who buy their products or services, so your customers should remain at the heart of all improvements.

You’ll have already identified in step 1 any problematic processes that currently exist, so pay close attention to any of these that involve customer interactions. For example, if customers need to supply a purchase order number to place an order with you, could you make it an optional field? Not all customers will have a system that generates PO numbers for them.

Look at where customers may be hindered with current processes and how they could benefit from new ones. And if there isn’t a direct benefit to your customer, is there an indirect benefit? For example, will a better internal process free up your employees’ time, which can then be spent providing even more amazing customer service or working on new customer initiatives?

6. Can technology help?

For many small businesses, there are a significant amount of business process improvements to be achieved through technology and automation. If you could replace manual data entry processes and tracking information through spreadsheets with automation and real-time reporting, how much time could you save?

There are a lot of software options available to manage specific parts of the business, but ERP (Enterprise Resource Planning) is business management software that focuses on bringing all core functions of the business together. Accounting and financials, inventory, sales, CRM, marketing and more all utilise single-source data within the same platform.

If you’re looking at a serious redesign of business processes to simplify, streamline, and automate your business processes, ERP is worth investigating.

When you decided on the right technology solution for your business, be sure to use that technology to redesign and improve inefficient processes, rather than trying to fit technology in with your existing processes, and any existing problems. This is the time to challenge how things are done today and set your business up for scalability through process efficiency.

Consider:

  • How can technology be used to improve what you are doing?
  • Can it be used do things you’re not already doing?
  • Is it flexible or comprehensive enough to solve other problems that may arise down the track?

"If you’re looking at a serious redesign of business processes to simplify, streamline, and automate your business processes, ERP is worth investigating."


7. Implementing the improvements

The key to a successful implementation is a structured approach that includes planning, thorough documentation, training and communication. Make sure your team are involved in the process to get their buy-in and keep them informed. There will always be members of your team who are resistant to change, so the more involved you make them, the easier it will be for them to adopt your new processes.

Plan ahead and allocate enough time for the total project. Factor in time for dealing with teething problems. Consider running a pilot first to catch potential issues and make amendments prior to go-live.

If you’re using a new technology solution to drive your process improvements, factor in time to implement the technology and train users properly.

8. Monitor and measure success

20180124-Business-process-improvement-monitor-and-measure-success.jpgOnce the process improvements have been rolled out, be sure to compare performance to before you started and measure the success. If you started out with your SMART goals well-defined, you can refer back to them and confirm whether your original objectives have been met.

Share your findings with your team, discuss further opportunities for improvements and identify where any processes need to be adapted to increase output.

You’ll also want to set up an on-going mechanism for future improvements to be made. After all, process improvement should be a continuous activity. Once the current project is completed, re-evaluate, reanalyse, and re-focus on other areas for improvement.

Lastly, celebrate the successes you’ve achieved so far. Recognise the members of your team who really got behind the project or spent their time making it happen.


"You’ll also want to set up an on-going mechanism for future improvements to be made. After all, process improvement should be a continuous activity."


Business Process Improvement is always the first thing that springs to mind when you’re looking to increase profitability. But it can certainly be your ticket to an efficient business model that keeps your costs down, frees up staff to work on more revenue-generating tasks, and help provide a better customer experience that will keep them coming back.

In a digital economy that relies on speed and agility, focusing on lean, efficient operations can make your business more adaptable and more capable of continued growth. Business Process Improvement can be your key to unlocking the profitability and performance you need to see real business growth.

If you think it’s time to take the reins of this profitability dark horse, get in touch or call us directly on 1800 528 783 to find out how ERP business management software can be the right technology to support it.

 

Comparing ERP solutions to accounting packages? It can be like comparing apples to oranges. Find out what you need to know when deciding on the right technology solution for your business with your free fuide - SMB Accounting Software vs an ERP System.

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