Process optimization – how continuous improvement works

Background: What is process optimization?

Process optimization is a broad area that can help companies position themselves more successfully. To put it metaphorically: if we understand running a road race as a process, process optimization can remove potholes, downed branches and angry dogs. It makes the route easier and faster to complete.

“Better footwear” (analogous to new technologies) may also be available, making the route more comfortable and increasing the runner’s speed. They can now cover distances better, saving time and effort and reaching the goal before their competitors.

Process optimization: Definition

Process optimization is the discipline used by companies to improve their workflows and business processes. Businesses examine existing processes, using suitable methods, to make them more profitable and efficient or to optimize customer friendliness or to maximize the use of resources.

Process optimization vs. process management

Optimizing processes is a sub-area of process management. Whereas process management is concerned with the management of workflows and business processes broadly speaking, process optimization specifically focuses on the continuous improve of these.

Goals of process optimization

In principle, there is a broad spectrum of goals for process optimization. Increases in efficiency, profitability and customer satisfaction are among them. Optimized processes are needed so that companies remain profitable and can adapt to changing conditions.

Below are some of the objectives of working on process optimization.

Cost reduction

Although lower costs are not synonymous with more efficient processes, this is a very common goal of process optimization. Many companies invest a lot of effort into processes, especially at the beginning.

Once their processes and workflows have been designed, it is important to make them more cost-effective. Cost savings are often necessary in order to survive on the market and to be able to offer products and services at competitive prices.

For example, this can be done by looking for ways to:

• reduce waste,
• spend fewer working hours working through a process or
• use available resources more effectively.

Flexibility

This factor often appears to be merely a “nice-to-have”, but it is rather of immense importance. As environments and conditions change rapidly these days, companies must be prepared to adapt immediately.

It is a decisive advantage to be able to flexibly change operational processes – especially in the event of a changing market situation or impending outages. Automation of various activities within a business process or workflow make it simpler to adapt to such changes “behind the scenes” with the need for extensive retraining of employees.

Saving time

“Time is money” – an empty phrase, but one that certainly sets the tone for process optimization. Time is a scarce resource that should be used and allocated in a targeted manner.

For processes, this means generating maximum output from the time input. In other words, the effort put in should lead to adequate results. Solutions lie, for example, in:

• stopping unnecessary processes,
• leveraging automation options,
• streamlining existing workflows and
• linking processes directly to objectives.

Intelligent and sustainable use of resources

Companies are striving to use resources, such as materials, machines and IT, as efficiently as possible. Examining their management and limiting consumption come into play here.

If, for example, there are repeated signs of wear and tear and machine breakdowns, this can threaten a company’s profitability. In this scenario, it would be advisable to reduce machine loads as much as possible and modify a process to allow the business to carry out detailed maintenance.

Avoid errors and risks

Mistakes are part of life – they only become a problem if we make them repeatedly. The core of process optimization lies in continuous improvement, so it is essential for a business to learn from mistakes and adapt processes accordingly.

If this is successful, the risks of future errors are logically reduced. This is particularly important in the area of safety, but also for the quality of products and the reliability of a process.

Optimization often means reducing the likelihood of errors. In this sense, a process is good when it runs smoothly over the long term.

What does a process improvement manager do?

A process improvement manager has the task of analyzing and continuously improving business processes. The objectives of this role include cost reductions, increased efficiency, clearly defined responsibilities, greater security and better service.

In contrast to the project manager, who oversees a set of tasks with a defined start and end goal a process improvement manager focuses on overseeing continuously running work. This means that process optimization is never really complete; rather, the aim is for continuous improvement.

Complementary to process redesign, the work is about evolution – existing processes receive “upgrades” in order to better achieve the respective goal.

In general, a process improvement manager is entrusted with the following tasks:

• Analyze business processes by using data of existing processes.
• Identify optimization opportunities by looking for bottlenecks, places where work is repeated or done too slowly, or where quality starts to slip. Figure out why these things are happening.
• Develop strategies for optimization such as opportunities to reduce the number of process activities or ways to use automation.
• Implement improvements after you’ve had a chance to review the strategies with all stakeholders.
• Monitor processes and evaluate measures taken.
• Continuous improvement means repeating all the above steps again so that the process gets better and better over time.

How can a process be optimized in concrete terms?

The above steps seem quite logical and simple in theory, but in fact process optimization is by no means easy. Sometimes process improvement managers encounter great resistance from other business leaders. Whether hard or simple, implementing improvements requires careful organization.

These steps can prove useful:

• Analyze purposefully: Before the concrete implementation of improvements begins, it is important to analyze the status quo: How are the existing processes running? Where is there potential for improvement? Where is it worth introducing innovations?
• Set goals: If you don’t know a goal, you can hardly achieve it. Precise goals set the direction for the necessary optimization and define the criteria for success. For example, a targeted increase in efficiency can be measured in concrete percentages. Companies can also define metrics and target values for areas such as customer satisfaction.
• Create awareness: Those involved and affected should know why the optimizations should take place and what the company expects to gain from them. For example, it helps a great deal during implementation if others perceive it as a clear improvement.
• Create responsibilities: Optimizations cannot succeed without clear responsibilities. It must, therefore, be clear who is responsible for which areas. The person with overall responsibility is responsible for assigning and delegating tasks. Furthermore, the more people who are involved – even indirectly – the better the chances of success.
• Consider automation. When looking to improve workflows and processes, check for ways in which process automation can help speed up tasks.
• Document consistently: The mistake of neglecting documentation is relatively common. However, documentation is actually a key factor, as sufficient records are crucial, especially for evaluation purposes. Consistent documentation is also important for reviewing progress, taking the right action at the right time and identifying any difficulties.
• Implement and monitor changes: This is the core of process optimization. Once improvements or adjustments have been recommended, the effort put in is only worthwhile if they are implemented appropriately. It is important to observe exactly how the respective improvements work.
• Make adaptations: Once optimizations have been made and initial conclusions have been drawn, adjustments can be made. It is generally advisable to implement optimizations at an early stage (but by no means prematurely) in order to collect as much valid data as possible. On this basis, processes can then be further improved until they produce the desired results.

Overview of process optimization methods

When it comes to process optimization, the most important thing is to apply the right methods in a targeted manner. Above all, it must be clear which steps need to be taken. Structure and repeatability (iterations) prove to be useful for continuously optimizing business processes.

Here we briefly present four proven methods as examples.

Method #1: PDCA cycle – the iterative process

The PDCA (Plan-Do-Check-Act) cycle is an interactive strategy for solving problems. Originally designed as a method for economic quality control, the PDCA cycle is now also being used to optimize processes.

It is composed as follows:

• P (plan): The actual state is analyzed in order to identify potentials and problems. Goals and the planning of measures are based on this.
• D (Do): In this phase, the implementation of the plan begins. New insights are gained through experimentation and trial and error.
• C (Check): The business evaluates the measures taken and corresponding data. It is also about checking the targets.
• A (Act): The improvements should now either be implemented or discarded and the progress documented.

The steps are repeated until the problem is solved or a significant improvement is achieved, creating an iterative process.

Method #2: Six Sigma – procedure for error prevention

As a lean management method, Six Sigma is used to improve business processes. The aim is to standardize processes as much as possible in order to avoid (product) errors.

Six Sigma is based on the DMAIC method:

• D – Define
• M – Measure
• A – Analyze
• I – Improve
• C – Control

Statistical tools are used, whereby all processes are assigned inputs (actions) and outputs (effects). The focus is on controlling the actions as far as possible in order to achieve error-free results (products).

Method #3: Kaizen – continuous improvement

Kaizen comes from the Japanese language and is made up of “Kai” (change) and “Zen” (for the better). This method is commonly known as the continuous improvement process (CIP).

The following points act as cornerstones:

• Accurately record the current situation
• Eliminate problems based on their causes
• Involve all relevant employees
• Rely on teamwork
• Establish good long-term processes

Method #4: Total Quality Management – the holistic approach

Total Quality Management (TQM) is designed for the continuous and holistic optimization of a company’s business areas. The concept pursues a long-term strategy and goes beyond conventional quality controls.

A special feature of TQM is that the focus is on customer satisfaction and not on competition. The aim is to offer the best possible quality by taking a holistic view and improving processes.

In concrete terms, total quality management consists of these four steps:

1. Project preparation – Staking out the framework conditions of the project in order to define the scope and process.
2. Analysis of the current situation – The business reviews data on the requirements of the market, customers and employees and carries out an analysis of weak points.
3. Concept development – The next step is to develop a company-specific concept including recommendations for action and automation.
4. Implementation of the concept – Implementation is successful if the business in question continuously follows up the measures decided upon and monitors progress.

Conclusion

Process optimization is essential for companies to be successful long term. When embarking on process optimization, be clear about exactly what the goals are and what steps are needed to achieve these. The actions of all those involved must also be well coordinated.

As you get started, work with a known process improvement methodology. The methods mentioned above are all industry-standard starting points. It may also be helpful to work with an external process improvement specialist who is able to bring independent perspective to your projects.

Consider the use of business process management solutions to support your efforts. They allow you to document, orchestrate and automate your processes, which makes them easier to change and adapt over time.

Contact our experts to learn more about the OTRS business process management solution.