To some people, business process optimization seems like just a term. But to others who look at it in the context of evolving technology and better business practices, BPO has a lot to tell us, and a lot to show us about improving workflows and everything else that goes into a modern enterprise. These five examples of business process optimization show how operations and businesses can be improved through the strategy.
What Is Business Process Optimization?
Business process optimization, or BPO, is the practice of looking at a particular business process, identifying inefficiencies or opportunities for improvement, and implementing solutions.
As a cousin to another practice commonly called business process reengineering (BPR), business process optimization is less fundamental. It’s more about working around the margins of a process to incrementally refine it and make it better. There’s not a lot of going back to the drawing board to re-create a different way to do something. The structure stays in place, most of the time, but efficiencies get added.
Why Business Process Optimization Matters
Of course, for many people, the key value of BPO is all about productivity.
Efficiencies improve productivity, and you can see that in the bottom line numbers involved in production, sales, marketing or anything else.
But it’s also worth looking a bit beyond this key benefit into other soft benefits of BPO. For instance, when people do things in ways that make more sense, they tend to feel safer on the job. They tend to feel more confident. They may even take more pride in their work!
Then there is the public face of the business, where BPO success can be used for marketing purposes, or to enhance the business reputation.
Those are some of the fundamental benefits of doing the work involved in BPO.
5 Business Process Optimization Examples from Real Companies
Some of America’s most prominent companies have achieved BPO in very specific ways. Let’s look at a few major use cases of this process in today’s high-tech world.
Tesla Uses Business Process Optimization to Ramp Up Production and Meet Market Demands
As the automotive trendsetter over the last two decades, Tesla has proved itself, not only in terms of its company growth, but with its actual production work and company strategy as well. BPO has helped the company to solve problems and stride ahead in a competitive market.
In 2018, the Tesla Model 3 was the best selling luxury electric car of the year. In order to claim that title, Tesla first had to overcome a process obstacle: how to produce enough Model 3s in order to meet demand. Of course, to have the greatest impact on ramping up Model 3 production more factory space, car building robots and car parts were needed. But Tesla’s owner, Elon Musk, also tapped into business process optimization techniques in order to increase efficiency and drive productivity.
Meeting Optimization
In an email to his staff in 2018, Musk laid out how Tesla was going to optimize its business processes in order to achieve its production goals that year. And as you may have suspected, a lot of what needed to be optimized was the way employee’s behaved.
The first process Musk looked to optimize was meetings. In order to increase efficiency and productivity and drive his business process optimization efforts, Musk changed the way meetings were conducted. Large meetings were banned, frequent meetings prohibited and employees were even instructed to drop a call or walk out of a meeting if they weren’t adding value.
Vendor and Contractor Optimization
Musk analyzed the state of contractors Tesla depended on and found that many of their contracts and internal management systems were structured in a way that impeded Tesla’s productivity. Among the contractors were subcontractors and sub-subcontractors, all operating on an open contract that allowed them to extend the life cycle of their project. To optimize this process, Musk announced that he would be evaluating contractors and trimming the ones that weren’t up to snuff.
Communication Channel Optimization
Musk also optimized internal communications, making it easier for employees to get to the information they need faster. This was done by eliminating communication silos and empowering employees to break the chain of command and go directly to the source of the information they needed. By optimizing communication, he removed excessive and unnecessary middle-men and opportunities for communication gaps.
Facility Management Efficiencies
Business process optimization has also helped Tesla to overcome challenges at its new Fremont facility, where according to Paul Harmon writing for BPTrends, process changes made the plant “one of the most automated production lines in the world,” and YouTube videos show the robot/human teams at work.
Some who understand the strides that Tesla has taken point to early efforts that planted the seed for BPO, where Tesla employees could stop a line to institute changes. Now a lot of that change has been codified into an assembly line that has quite a lot of robots involved!
These small but necessary changes optimized the management process of their car production and enabled Tesla to set new production records for their Model 3 in Q3 and Q4 of 2018; the last one also fueled better performance at the new Fremont plant.
IBM Uses BPO for Credit Processes: Automates and Improves Timelines
As a major vendor of today’s BPO tools, you might expect that IBM would also be revolutionizing the idea internally.
And you would be right – many decades after Hollerith cards and other early forays into mainframe computing that helped make IBM famous, the company is bringing the same pioneering to improving business processes.
In evaluating the process of issuing credit to consumers, IBM researchers found that the process was taking, on average, a week. Then, following the workflow from its beginning (application) to its end (approval), and considering all of the different specialists involved, the company found that the core work actually only took around 90 minutes.
Credit Process Optimization
In order to solve this problem, IBM designated people as “deal structurers” to work collaboratively on the process. In addition, the folks at IBM came up with something called IBM® Algo Credit® Manager V5.3, which can automate some aspects of the process: in an internal description, the company contends that the resource promotes “improved decision support and user experience with major enhancements to credit application functionality and workflows.”
Financing Results
When you read about these changes, it starts to sound a lot like the DevOps component of agile software development, where people work across departments in real time instead of pursuing a staged process one step at a time. IBM has definitely shown its thought leadership in modern BPO.
Kraft Foods Manages Plant Migration with Advanced BPO
As a major retail conglomerate in the food production business, Kraft boasts of making business process changes ‘part of the company’s DNA.’
A Big Move
A case study provided by Grantek shows how the company pursued this kind of work in capturing manufacturing data to support an international plant migration.
Kraft was in the process of moving a LifeSavers candy production facility from Holland, Michigan to Mount Royal, Quebec. Documentation shows the company focusing on the decommissioning and redeployment of equipment and infrastructure for a more efficient set of outcomes.
The Work: Migrating for Production
Analyzing items like production capacity and electrical and safety codes in the destination country, Kraft and partners reworked existing processes in order to capture those elusive gains. That started with compiling process documentation from scratch, where Grantek deconstructed production from end to end, in order to see where BPO could be effective. By understanding the manual steps involved, the team began to build in automation opportunities, and other optimizations.
Linking of Multiple Processes
In addition, teams derived a method for combining BPO in production with other improvements in packaging. Standardization was part of the recipe, as was staff planning. In the end, the efficiencies were evident. The improvements allowed for a more efficient move into the Canadian plant.
Uber Brings BPO to Fulfillment and Trips
Part of Uber’s history of business process optimization involves its fulfillment business (Uber insiders define the term ‘fulfillment’ as the “act or process of delivering a product or service to a customer”), and the ability to analyze trips and other components of the company’s service process.
In some ways, Uber’s approach is uniquely data-driven. Detailed guides from internal engineering teams talk about things like “early stopping to… prune redundant iterations” and tuning models involving hyperparameter optimization, strategies unknown at most other companies. In a broader sense, Uber is working with defined timelines, and data on many thousands of rides and trips, in order to apply very precise results to a developing model.
Data Visualization
This post shows metrics like trip entity and supply entity identified, and also shows how Uber uses visual workflows to brainstorm BPO. This example also promotes the use of BPO for scaling, as a company grows and expands. As Uber added new verticals, and rolled out new services, strategic concept plans helped the company to do that more effectively.
The technical details translate into trip optimizations that illustrate the power of BPO to save time and money. An Uber blog on the matter reveals some metrics, noting that “events generated by the platform are used to build hundreds of offline datasets to make critical business decisions” and that the platform has been extended through the work of over 500 developers using “APIs, events, and code” to optimize fulfillment workflows.
All of the above helped the company to make each trip count, and serve customers better in the firm’s various segments.
Accenture Leverages Efficiencies with Data-Driven BPO
The Accenture company has clients who can benefit from a BPO approach to business. In one prominent case, the One Washington leadership entity managing processes for the state of Washington used input from Accenture to redesign its finance, procurement and HR processes.
Finding New Technologies
Here, identifying the scope of the project was important, as was affecting a software-agnostic approach with enterprise resource planning (ERP) that would automate and improve a lot of the financial processes for state offices. The multistep business process redesign came in two distinct stages, which ultimately enhanced One Washington’s efforts to serve taxpayers.
Part of this involved “lean concepts and tools” and multi-step strategies such as “innovate – standardize – optimize” to drive toward goals. Stakeholders also developed a ‘methodology for prioritization’ to target changes.
Cross-Process Optimization
Using these types of concepts, engineers built a rubric including tags for “Function – Process – Potential Improvement Opportunity” and presented ideas accordingly. Researchers using the BPO tools also pursued cross-process initiatives blending more than one of the targeted scopes for additional improvements.
The result had to do with “getting departments ready” for new ERP solutions. That led to measurable results: in strategic sourcing, the state office was able to better leverage its buying power. The office’s procure to pay strategy and category management processes both got a reboot. The overall volume of purchase order processing was reduced, and while applicable reports consider it to be too early to define the results in HR, it’s likely that these will eventually emerge.
Steps To Optimize Business Processes
As you think about these real-world examples of BPO, take a look at some of the common steps in the cycle of business process optimization:
Collect metrics – get the underlying information and data to make those change decisions
Analyze workflow – here, a visual approach like the one in Uber’s BPO example can be important
Identify gaps/redundancies – it’s important to be able to name the opportunities in order to redesign the business processes around them
Optimize – make those process changes, and implement them to see how well they work
Repeat – never stop improving and optimizing business processes
Final Thoughts on BPO
Each of the five real-world cases shown above highlights particular ways that companies can use BPO to their advantage. A lot of this now has to do with new software and technology, so it’s important to know what is available as you plot the course for better business.
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