Business Process Improvement: Definition and Examples

Quixy Editorial Team

August 16, 2024

The practice of business process improvement (BPI) involves discovering, mapping, documenting, analyzing, and redesigning a business process to enhance efficiency and effectiveness.

Every business owner has to deal with hundreds of business processes. Many of them are repetitive, such as demo calls, marketing campaigns, and reports on sales activities. Millions of dollars in revenue can be lost due to any bottleneck in a repetitive process. 

Every function, department, team, or person has its processes, and sometimes the efficiency of a process is overlooked. Business growth and performance can be seriously affected by this.

Continuous Business Process Improvement involves taking measures to maintain and increase the efficiency and effectiveness of all your business processes.

Learn how to improve your business processes by diving deeper into the concept of Business Process Improvement.

What is Business Process Improvement?

A business process improvement (BPI) approach identifies and evaluates inefficiencies within an organization. Redesigning existing business tasks improves effectiveness, enhances workflows, and optimizes performance. 

You can supercharge your business operations by continuously improving your processes. By incrementally improving your business processes, you will experience better operations and a better quality of life.

Also Read: What is Process Mining? All You Need to Know

Real-Life Business Process Improvement example

Let us use making pancakes as an example of how process improvement works.

Sunday mornings are for fluffy, melt-in-your-mouth pancakes, right? That’s for sure. Don’t you feel frustrated when you spend so much time and effort making pancakes that turn out to be dense and chewy? It’s edible and tastes fine with syrup, but the texture isn’t right.

Next Sunday, you are determined to improve your pancake-making process. When you sit down, you compare a perfect pancake recipe with your own. As a result, you determine the following differences.

• There is an extra egg yolk in your recipe
• The pancakes are pressed onto the pan (for a crisper edge).
• Your pancakes are being flipped too soon (you can’t wait to eat them, can’t you?)

Based on your observations, you did all the right things this time and got the following results:

• One egg is saved by you
• You make delicious, fluffy, and soft pancakes
• Your Sunday was more enjoyable because you were happy!

Making pancakes is similar to business processes but much more complex. Evaluate the scope for Business Process Improvement and constraints as it requires time, effort, and dedication before it reaps the rewards of cost-savings, better outcomes, and better operating efficiency.

Also Read: Exploring Business Process Modeling: 9 Powerful Use Cases You Need to Know

The Cost of Inefficient Processes

Imagine a leaky faucet. A small drip might not seem like a big deal at first, but over time, that constant drip can waste a significant amount of water. Similarly, inefficient business processes can lead to hidden costs that erode your bottom line.

Here’s how inefficient processes can impact your business:

• Wasted Resources: Inefficient processes often involve unnecessary steps, redundant tasks, or wasted materials. This translates to wasted resources like employee time, energy, and supplies.
• Lost Productivity: When employees are bogged down with inefficient processes, it takes them longer to complete tasks. This leads to lost productivity and missed deadlines.
• Increased Errors: Complex or poorly defined processes can lead to errors, mistakes, and rework. This can result in wasted time, unhappy customers, and potential financial losses.
• Reduced Customer Satisfaction: When customers experience delays, errors, or inconsistencies due to inefficient processes, their satisfaction suffers. This can lead to lost business and negative word-of-mouth marketing.

Also Read: What is Business Process Optimization? Proven Techniques & Insights

Quantifying the Cost

It can be difficult to pinpoint the exact cost of inefficient processes. However, research suggests that inefficiencies can cost businesses anywhere from 20% to 30% of their revenue annually.

Here are some ways to estimate the cost of inefficiency in your organization:

• Track employee time: See how much time is spent on repetitive or unnecessary tasks.
• Analyze rework rates: Calculate the cost of errors and rework caused by inefficient processes.
• Monitor customer complaints: Identify areas where process inefficiencies are leading to customer dissatisfaction.

Addressing process inefficiencies can free up resources, improve productivity, reduce errors, and, ultimately, boost your bottom line.

Process improvement benefits

1. Increased Efficiency: Process improvement streamlines workflows, reducing unnecessary steps and bottlenecks to make operations more efficient.
2. Cost Reduction: Optimization of processes can lead to cost savings by identifying and eliminating waste.
3. Improved Quality: Enhanced processes result in higher-quality products or services and consistent customer satisfaction.
4. Faster Delivery: Process improvements reduce lead times, enabling quicker product or service delivery.
5. Enhanced Customer Satisfaction: Better processes lead to higher customer satisfaction and loyalty.
6. Greater Employee Satisfaction: Streamlined processes make employees’ jobs easier, increasing job satisfaction.

How do you identify processes in need of improvement?

Identifying processes in need of improvement involves a systematic approach to evaluate current workflows, performance metrics, and feedback from stakeholders. Here’s a step-by-step guide:

1. Understand Business Goals: Begin by aligning process improvement efforts with your organization’s overarching goals. Determine which processes directly impact key objectives, customer satisfaction, cost reduction, or other critical areas.
2. Collect Data: Gather quantitative and qualitative data related to the process in question. This can include cycle times, error rates, customer complaints, employee feedback, and any other relevant metrics.
3. Map the Process: Create a visual representation of the current process flow using flowcharts or process maps. This helps you understand the sequence of activities, decision points, handoffs, and potential bottlenecks.
4. Analyze Performance: Evaluate the collected data and process map to identify areas of inefficiency, delays, redundancies, or inconsistencies. Look for patterns that indicate recurring problems or opportunities for improvement.
5. Benchmarking: Compare your process performance with industry best practices or similar organizations. This can provide insights into where your process stands relative to others and highlight potential gaps.
6. Engage Stakeholders: Involve employees who work directly with the process, as well as managers and customers, to gather their insights and perspectives. They can provide valuable input on pain points and areas for improvement.
7. Root Cause Analysis: Investigate the root causes behind identified issues. Use techniques like the “5 Whys” to dig deeper and uncover the underlying reasons for problems.
8. Set Clear Goals: Define specific, measurable, achievable, relevant, and time-bound (SMART) goals for process improvement. These goals will serve as the guiding principles for your efforts.
9. Prioritize Improvements: Not all process issues are equal. Prioritize improvements based on their potential impact and alignment with your goals. Focus on changes that yield the most significant benefits.
10. Brainstorm Solutions: Engage a cross-functional team to brainstorm potential solutions. Encourage innovative ideas that address the identified issues while considering resource constraints.
11. Quantify Benefits: Estimate the potential benefits of each proposed improvement. This could include projected time savings, cost reductions, increased quality, or enhanced customer satisfaction.
12. Create an Improvement Plan: Develop a comprehensive plan outlining the recommended changes, their implementation steps, responsibilities, timelines, and expected outcomes.
13. Implement Changes: Put the approved improvements into action. Ensure proper communication, training, and monitoring to ensure smooth implementation.
14. Monitor and Measure: Continuously track the impact of the implemented changes. Measure performance against the set goals and gather feedback from stakeholders.
15. Iterate and Fine-Tune: Based on feedback and results, make necessary adjustments to the process improvements. Continuous refinement ensures that the process remains aligned with changing needs.

By following these steps, you’ll be well-equipped to identify processes that require improvement and embark on a journey of enhancing operational efficiency and effectiveness.

Also Read: Top Business Process Management Stats to help you add efficiency

Business Process Improvement Methodologies

Let’s examine the popular BPI methodologies that have proven effective across various industries.

1. Six Sigma

Developed by Motorola engineers, Six Sigma measures defects or inconsistencies in a process. As a result, the end product can be improved.

Six Sigma can also determine process efficiency. A “Six Sigma Process” produces no more than 3.4 defects out of a million outputs.

Six Sigma includes DMAIC as one of its core tools for process improvement. Each part consists of 5 parts.

• Define – Identify opportunities for improvement.
• Measure – Determine the metrics you will use to benchmark newly implemented processes.
• Analyze – Identify any defects or inconsistencies.
• Improve – Eliminate the problems mentioned above.
• Control – Make sure there are no new problems with the updated process.

• Strengths: Data-driven, rigorous, minimizes variation and defects, ideal for quantifiable problems.
• Use Cases: Reducing product defects, streamlining manufacturing processes, improving financial performance with a focus on measurable outcomes.

2. Lean

While Six Sigma aims to eliminate defects to improve product quality, Lean aims to optimize the process. Cutting out a low-value step in a process would, for example, result in higher employee productivity but would have little impact on the end product.

Toyota developed the system to shorten the order-to-cash cycle. Lean process improvement typically involves the following steps.

1. Defining what value means to the end-user
2. Analyzing the process and identifying non-value-adding steps
3. Remove or modify steps that don’t add value
4. If other business processes need to be optimized, repeat steps 1 through 3 until the organization becomes sufficiently efficient

• Strengths: Eliminates waste, focuses on continuous improvement, enhances value for customers.
• Use Cases: Reducing waste and bottlenecks in production lines, optimizing workflows for faster turnaround times, improving customer service experiences.

3. Total Quality Management (TQM)

Originally developed in the 1950s, total quality management (TQM) became popular in the early 1980s.

The main priority of the Lean methodology is delivering value to the end customer. TQM, on the other hand, focuses on an organization as a whole instead of individual processes. Each department within the company (from engineering to marketing) should be optimized with customer values in mind.

The real strength of TQM lies in the alignment of the entire organization. Implementing change, it’s not just up to senior management – it’s a company-wide initiative.

• Strengths: Customer-centric, continuous improvement, focuses on employee engagement for long-term quality.
• Use Cases: Implementing a company-wide culture of quality improvement, enhancing customer satisfaction, fostering employee ownership of processes.

4. Theory of Constraints (TOC)

Inefficiency is solved by TOC BPI methodology as follows:

• Find out what constraint is causing the bottleneck 
• The constraint should be improved until its negative effects are eliminated

With the successful implementation of this approach, the company’s productivity increases, the product flow is streamlined, and the workflow is optimized, eliminating inefficient bottlenecks.

TOC is generally based on the Five Focusing Steps methodology, which includes the following steps:

• Bottleneck identification 
• The removal of this constraint
• The constraint’s correction should be synchronized with all other activities 
• Identifying additional options for eliminating the bottleneck
• The emergence of an era of inefficiency

It is important to keep in mind that the TOC is continuous. When one constraint is eliminated, the second bottleneck comes to TOC’s attention.

• Strengths: Identifies and eliminates bottlenecks, focuses on optimizing the entire system, and improves throughput.
• Use Cases: Identifying and addressing core constraints limiting overall process efficiency, optimizing production flow, and increasing overall system capacity.

Also Read: 5 ways to drive Process Improvement in your Organization

How to Improve a Process

1. Define objectives and goals: Clearly articulate what you aim to achieve through process improvement, including specific targets for efficiency, quality, or cost reduction.
2. Analyze the current process: Thoroughly examine the existing process, identify bottlenecks, and understand how it currently functions from start to finish.
3. Gather and assess data: Collect relevant data such as time, costs, and error rates to evaluate the current process’s performance quantitatively.
4. Generate improvement ideas: Encourage brainstorming and collaboration to generate a wide range of innovative solutions to address the identified issues.
5. Prioritize and plan changes: Evaluate each improvement idea’s feasibility and potential impact, then create a detailed plan that outlines the steps, responsibilities, and timelines for implementation.
6. Implement and monitor improvements: Put the plan into action, closely monitor progress, and compare results to the initial data to determine if the improvements align with your objectives.
7. Standardize and document the process: Update process documentation, including flowcharts or manuals, to reflect the enhanced process, ensuring that everyone follows standardized procedures.
8. Foster a culture of continuous improvement: Encourage ongoing feedback, adaptability, and a commitment to seeking further enhancements, promoting a culture where improvement is ingrained in the organization’s DNA.

8 tips for Mastering Process Improvements

Start Small, Focus on Priorities

• Overcoming the challenge of feeling overwhelmed is crucial. Begin with a limited number of improvement initiatives, starting at a smaller scale.
• Identify high-priority areas within your processes that require immediate attention and focus your efforts there.

Create a Detailed Improvement Plan

• A clear and documented plan is essential for successful implementation.
• Ensure the plan includes specifics such as due dates, deliverables, roles, and accountability for each improvement initiative.

Utilize the Right Technology

• Choose the appropriate technology to assist in tracking and managing process improvements.
• Consider using low-code business process automation solutions with a visual interface, making it easier to create and optimize processes without heavy reliance on IT.
• Look for tools that can integrate seamlessly with your existing technology stack for enhanced control and visibility.

Establish Standards and Procedures

• Once improvements are documented, create standards and procedures to manage them effectively.
• Regularly update these standards and procedures as improvements are implemented and inform all involved parties of any changes.

Automate for Efficiency

• Embrace business process automation to increase efficiency by standardizing and automating recurring tasks associated with managing process improvements.
• Automation not only reduces manual work but also enhances accuracy, speed, and precision by using rules to streamline workflows and consolidate data.

Measure and Track Progress

• Implement key performance indicators (KPIs) to measure the impact of your process improvements.
• Continuously track and analyze data to assess the effectiveness of the changes. Adjust your strategy as needed based on these insights.

Seek Employee Feedback and Involvement

• Engage your team members in the improvement process. They often have valuable insights and firsthand knowledge of the challenges.
• Encourage a culture where employees feel empowered to suggest improvements and participate in the implementation of changes.

Celebrate Achievements and Learn from Setbacks

• Recognize and celebrate the successful implementation of process improvements. This boosts morale and reinforces the value of continuous improvement.
• Acknowledge that setbacks may occur. Use them as opportunities for learning and refining your approach for future improvements.

Adding these steps to your process improvement strategy can create a more comprehensive and effective framework for achieving continuous enhancement and excellence in your organization.

Examples Of Business Process Improvement Projects

1. Streamlining Inventory Management

Situation

The Company: A retail chain with multiple stores

A retail chain is facing issues with its inventory management system. Some of its stores have excess inventory, while others are stocked out. It resulted in lost opportunities and increased cost of carrying the goods.

The Business Process Improvement

Implementing an inventory management system with a real-time data tracking system that tracks inventory across all the stores. The system should automatically generate replenishment orders for stores with low stock levels and provide insights into slow-moving or excess inventory. Regularly analyze sales data and adjust reorder points and quantities accordingly. This system helps you automatically order more products for stores that are running low and provides insights into which products are not selling well and are piling up.

Also read: 23 Must-Have Features of a BPM Platform that you definitely need!

2. Automating Invoice Processing

Situation

The Company: An accounting firm

The accounting firm deals with a large volume of invoices from various clients on a daily basis. The manual processing of invoices is time-consuming and prone to errors, leading to delays in payments and unhappy clients.

The Business Process Improvement

The business adopts an automated invoice processing software that uses Optical Character Recognition (OCR) technology to extract data from invoices and match them with existing records. It can even send invoices for approval, identify mistakes, and instantly update the accounting systems. This way, the business saves time, reduces mistakes, and keeps the clients happy.

Also Read: All you need to know about Business Process Maturity Model

3. Enhancing Customer Service with Chatbots

Situation

The Company: An e-commerce platform

The e-commerce platform receives a high volume of customer inquiries and support requests daily. The customer service team struggles to respond promptly to every query, causing frustration among your customers and your support team.

The Business Process Improvement

Integrate a chatbot technology into the website and customer support channels. These chatbots can handle frequently asked questions, provide order status updates, and even initiate the returns process. Automating repetitive tasks allows the customer service team to focus on more complex issues, leading to improved response times and overall customer satisfaction.

4. Optimizing Employee Onboarding

Situation

The Company: A growing technology startup

The startup frequently hires new employees to meet the demands of its expansion. However, the onboarding process is ad-hoc and inconsistent, leading to a lack of proper training and integration for new hires.

The Business Process Improvement

Developing a standardized onboarding process that includes orientation, job-specific training, and mentorship for new employees. Creating a comprehensive onboarding checklist to ensure that all necessary tasks are completed. Implement feedback mechanisms to continuously improve the onboarding experience based on the insights from new hires.

5. Implementing Remote Work Policies

Situation

The Company: A traditional office-based company

The company’s productivity and employee morale have suffered due to the rigid in-office work model, especially during unforeseen events like extreme weather conditions or public health emergencies. It affects productivity and employee morale.

The Business Process Improvement

Develop and implement remote work policies that allow employees to work from home or other remote locations when needed. Ensure that employees have access to the necessary tools and technology for remote work. Set clear expectations for communication and performance while working remotely.

Also Read: Business Process Reengineering: Is it the perfect solution for your problems?

6. Streamlining Project Management

Situation

The Company: A marketing agency

The marketing agency struggles to keep projects on track, leading to missed deadlines, budget overruns, and dissatisfied clients.

The Business Process Improvement

Adopting a project management software that enables efficient task assignment, collaboration, and progress tracking. You can manage projects more effectively with features like Gantt charts, time tracking, and milestone tracking. Regular project status meetings help address any issues early on and keep everyone on the same page.

7. Improving Supplier Relationship Management

Situation

The Company: A manufacturing company

The manufacturing company faces disruptions in the supply chain due to unreliable suppliers and lack of communication.

The Business Process Improvement

Implementing a supplier relationship management system that evaluates supplier performance regularly. Key performance indicators (KPIs) such as delivery timelines, product quality, and responsiveness are used to measure and rank suppliers. Fostering open communication with suppliers and collaborating on continuous improvement initiatives.

Also Read: The Role of Process Standardization in Modern Organizations

8. Enhancing Data Security

Situation

The Company: A financial services firm

The financial services firm is concerned about the risk of data breaches and cyber-attacks, given the sensitive information they handle.

The Business Process Improvement

Strengthen data security measures by implementing encryption protocols, multi-factor authentication, and access controls. Conduct regular security audits and employee training on data security best practices. Create an incident response plan to handle data breaches effectively and minimize damage.

9. Reducing Production Waste

Situation

The Company: A manufacturing plant

The manufacturing plant generates significant waste during production, leading to increased disposal costs and environmental concerns.

The Business Process Improvement

Conducting a waste audit to identify areas of waste generation in the production process. Implement lean manufacturing principles to optimize processes and minimize waste. Introduce recycling and waste reduction initiatives to promote sustainability and cost savings.

10. Enhancing Employee Training and Development

Situation

The Company: A mid-sized company

The company values its employees and wants to help them grow both personally and professionally. However, the current employee training and development program is lacking, and employees feel uncertain about their career growth within the organization.

The Business Process Improvement

Developing a structured employee training and development program that includes personalized training plans, skill-based workshops, mentorship programs, and access to learning resources. Tie performance-based incentives to skill improvement and achieving learning milestones. Recognize and provide opportunities for career growth based on the acquired skills. Regularly collect feedback and evaluate the impact of training to continuously improve the program.

Process improvement with No-Code Automation Software

The question arising is, won’t process improvement require a lot of IT involvement? Fortunately, the answer is no, thanks to the advancements in no-code automation software. In the past, process improvement initiatives often relied heavily on IT departments, resulting in longer timelines and increased complexity. However, with no-code automation tools, you can transform your processes without the need for extensive coding or IT expertise.

No-code platforms are designed to be user-friendly and accessible to business professionals, allowing subject matter experts and process owners to take the lead. You can build, optimize, and automate workflows, data, process management, and tasks with ease, reducing your reliance on IT resources.

This not only accelerates the pace of process improvement but also empowers your team to adapt quickly to changing business needs. No-code process automation bridges the gap between business and technology, making it a powerful tool for achieving process efficiency without extensive IT involvement. So, whether you’re streamlining operations or enhancing customer experiences, no-code automation software offers a dynamic solution for your process improvement endeavors.

Conclusion

The right time to start using BPI is now that you understand how it works. Your company’s bottom line doesn’t benefit much from theorizing.

It might be smart to give Quixy a try to help you get off to a smooth start. Workflow management software tends to go hand-in-hand with business process improvement services.

Take the first step towards making your processes more efficient by mapping, optimizing, and streamlining them with Quixy. Get started with our platform and experience the ease of automated processes and personalized app building. 

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