Business process optimization isn’t a novel concept. In many ways, it’s as old as business itself, as forward-thinking leaders and entrepreneurs have always sought to perform better work more efficiently and effectively.
However, the concept has taken on renewed importance as companies grapple with a rapidly changing business environment impacted by shifting consumer trends, unique hiring challenges, technological innovation, and other industry-specific changes.
Of course, there is a significant difference between wanting to streamline business processes and having the capacity to make meaningful changes.
Keep reading to learn more about business process optimization and the best practices for actually making your business more efficient and effective moving forward.
What is Business Process Optimization?
Business process optimization is the systematic examination and redesign of business processes to improve efficiency, effectiveness, and overall performance. This can involve identifying bottlenecks and inefficiencies, streamlining processes, automating tasks, and using data and technology to make better decisions.
Business process optimization strives to increase productivity, reduce costs, and improve customer satisfaction. It can be applied to a wide range of business functions, including manufacturing, supply chain management, customer service, and human resources.
Critically, business process optimization makes better use of existing resources across the entire organization, allowing companies, teams, and individuals to best utilize their assets. It doesn’t require additional investment, training, or operational capacity to improve bottom-line performance.
When organizations effectively engage in business process optimization, they can:
- Identify ineffective or wasteful work processes: Workflows can become ineffective or inefficient over time. Regularly reviewing relevant data can determine what operations and processes are creating unnecessary actions or unnecessarily overtaxing employees.
- Discover process gaps and redundancies: Companies, teams, and employees are being asked to do more with less, making it critical to discover and eliminate redundant or repetitive work tasks.
- Elevate best practices: The business process optimization process also identifies people and workflows making the most profound organizational impact, allowing leaders to replicate best practices.
In other words, business process optimization radically redesigns existing processes and workflows, helping eliminate waste and elevate best practices.
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Why Optimizing Processes Matters
Today’s companies are continually trying to do more with less. This is especially true in recent years as companies grapple with comprehensive change across numerous operational touchpoints, including:
- Making remote or hybrid work a long-term business strategy: Even as some companies force employees back to the office, many companies are making remote and hybrid work a part of their long-term business strategy. As a recent Los Angeles Times article explained, workers have “surprisingly deep feelings” about keeping some flexibility in their work arrangements. As they evaluate current processes, companies need to help employees thrive, regardless of location.
- Integrating new automation technologies: Robotic process automation (RPA) and Generative AI continue to move into businesses. In 2024, customized chatbots, text-to-video, and complex task automation will help efficient companies reduce costs and streamline processes. However, companies still struggle to evaluate existing processes and identify potential use cases for AI-powered solutions. This will be an ongoing challenge as AI technology evolves, becoming increasingly useful for replacing time-consuming tasks.
- Simplifying business operations in a post-pandemic world: As more established organizations work toward business process improvement, they can learn from the many new businesses that came along during the pandemic. To maintain a competitive advantage, some longstanding companies have to try to adapt their complex processes to a new way of working. Businesses that effectively prioritize productivity have an edge over the competition.
- Engaging and exciting workers: While the Society for Human Resource Management reports that the Great Resignation is over, employers now deal with another ongoing issue: quiet quitting. The number of team members doing the minimum amount necessary is higher than ever. When employees are forced to spend time on inefficient processes without understanding their value to a company’s business goals, they tend to become disconnected. To combat this, employers must look at ways to streamline operations to help employees feel more connected to their core processes.
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Additionally, business process optimization can help companies discover gaps and redundancies, identify and eliminate unnecessary work tasks, and elevate best practices throughout their organization. This can enable companies to be more agile and responsive to changing market conditions and to better compete with other organizations.
Perhaps most importantly, while many companies focus on cutting costs, investing in business process optimization can improve efficiency and bottom-line results, boosting profitability and output to position companies to thrive in the years ahead.
Successful business process optimization benefits businesses by increasing revenue, streamlining operations, and maximizing productivity.
How to Optimize A Business Process, Step by Step
Optimizing a business process can seem daunting, but it can be broken down into manageable pieces. Here is a step-by-step guide to optimize a business process that any leader can use to get started today.
1. Pick a Process
The first step in optimizing a process is identifying which processes need improvement. Whether a business identifies individual processes or a dozen, it is best to choose just one. Once that optimization effort is complete, teams will have the experience necessary to tackle each of the other inefficient processes that need attention quickly.
Here are a few steps that can help determine which process to tackle first:
- Objectively review overall processes: Before choosing a business area to improve, identify potential areas of improvement. When reviewing business operations, consider factors like cycle time, error rate, and employee idle time. Identify specific processes that need a closer look before moving to the next stage.
- Pull profit-and-loss statements: One of the best ways to identify the current processes needing improvement quickly is to look at the business’s finances. What areas of operations bring in the most money? What are some areas that drag down profits? Pricing increases are only one way to improve a business’s profit-loss statement. Cutting waste is also a great way to boost profits.
- Gather employee feedback: Employees can be a business’s most valuable resource regarding process efficiency. If they tend to spend hours each day on manual tasks like data entry, for instance, they’ll be the first to point out where improvements can be made.
- Listen to customers: Customers are another great gauge of where a business could improve. Making changes in response to customer complaints and service KPIs helps ensure customer needs are being met. When gathering feedback from various sources, keep an eye out for the issues mentioned most often.
2. Collect Data
Business process optimization is a data-driven initiative requiring the right metrics to empower informed analysis and decision-making. While these metrics will vary depending on company, industry, and sector, consider collecting information on process outcomes, operational functions, and financial performance.
Data collection methods include:
- Behavior analysis: Evaluating behavior analysis data can provide insights into patterns and processes ready for review and enhancement.
- Surveys: Surveying employees, customers, and other stakeholders can provide valuable insights into the current state of a company’s processes.
- Interviews: Conducting interviews with key stakeholders can provide more in-depth information and allow for follow-up questions to be asked.
- Process mapping: Creating visual representations of existing processes can help identify bottlenecks, inefficiencies, and areas where workflow automation may be beneficial.
- Observation: Observing processes in action can provide a firsthand understanding of how they are currently being carried out and where improvements can be made.
Teramind’s business process optimization software can support these efforts, allowing companies to leverage accurate and actionable user behavior data to support business process optimization.
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3. Analyze Trends
With the right data, companies can analyze emerging trends, identifying opportunities to streamline, enhance, or replace existing processes. With results in hand, go through these steps to make the most of them:
- Rely on software: The right business process optimization tools can identify critical connections, helping root out operations and processes creating unnecessary actions or time-consuming work. Instead of making assumptions, use business intelligence and reporting to generate visual illustrations of exactly how efficient your current process is. This will create a baseline for later comparison.
- Identify common obstacles: If something slows processes down each time, that something is an ongoing obstacle. An important part of business process management is looking for bottlenecks and implementing them in your continuous improvement efforts.
- Find employees’ strengths and weaknesses: An organization’s employees are its lifeblood. Sometimes, though, one team may be less efficient than another. Always involve human resources teams in BPM discussions. Using solutions like BPO software and ERP tools, businesses can identify issues within their teams and address them.
4. Optimize Processes
Identifying what needs to be changed is a good start, but it’s only the beginning. Once it’s time to get to work, here are some steps to take.
- Generate buy-in: Stakeholder buy-in is an important first step in project management, and it applies here. The leadership team and the team members involved in the process must be sold on the updated processes. Focus on the benefits, such as easing employee workload and boosting profits, and allow stakeholders to offer feedback and suggestions on upcoming changes.
- Devise a plan: Allow time to implement any new process, and carefully plan the path to make the changes. This planning process should build in plenty of time for teams to test the new methods before they completely replace previous processes.
- Line up resources: As valuable as employees are, automation software can augment their work. Take time to test various solutions and try them in real-world situations before settling on a tool.
- Eliminate redundancies, gaps, and cumbersome processes: Ultimately, data analysis is only as effective as the solutions it enables. Take action and develop steps to eliminate redundancies, gaps, and cumbersome processes. This helps businesses avoid processes that consume valuable time and resources without adding value to the final product or service.
- Measure results: It’s important to have measurable goals in place while onboarding new systems. Using the benchmarks set during the data collection phase, routinely pull reports and compare results from the entire process to previous measurements.
5. Implement Controls
After implementing improvements, it’s important to implement controls to ensure the process continues running smoothly. Moving forward, businesses should devise a plan to collect and analyze efficiency data regularly while setting up new systems. On an ongoing basis, businesses should evaluate the efficacy of new solutions and identify new opportunities to streamline processes.
One helpful business process optimization technique that can help is Six Sigma, also known as DMAIC (define, measure, analyze, improve, and control). The final four steps in the process will help identify errors in any new or revised system:
- Define: In this step, businesses identify areas where processes can be improved. Current processes are measured to create benchmarks for tracking later efforts. A Six Sigma expert typically leads this effort, but the same principles can be applied without an outside party’s help.
- Measure: As processes are implemented, take measurements as often as possible, in real-time, to get an accurate baseline. Set up error notifications to avoid delays when a failure occurs.
- Analyze: This step isolates each failure for further investigation. The team looks for ways that each failure contributes to the overall slowdown of the process. The goal is to repair each error so that things sail smoothly moving forward.
- Improve: Gathering information only works if teams apply the data. Over time, businesses should adjust systems based on the information they’ve gained over the weeks and months of testing and analyzing.
- Control: Besides making changes to systems, teams should put controls in place to avoid future bottlenecks.
6. Continually Improve
Optimizing a process is not a one-time event but an ongoing effort. It’s not uncommon to find that slowdowns occur elsewhere in the process long after making changes. Therefore, it’s important to monitor operations regularly to highlight ideal areas for improvement.
In cases where business process automation is implemented, employee feedback is crucial.
The workers using the tools daily will likely see where software is incompatible with a business’s environment.
For example, a business with a new CRM may find that sales teams spend more time inputting information into the system than before the tool was in place.
Fixing one system may not boost a business’s bottom line at first. Managers will likely need to move on to the next low productivity area and apply the process audit to improve each process.
Moving forward, businesses should consider optimization efforts when creating new processes. Will this new task pass a future process audit, or will it have to be tweaked? Continue to monitor new processes to identify any issues and address them quickly. This will help keep productivity and morale high.
7. Repeat
Businesses have countless processes ripe for revision. After identifying and improving one business process, repeat this formula, illuminating new problems and better solutions that continually empower agile organizations to improve their products, processes, and services.
In other words, it isn’t a one-off occurrence. Systems and processes must be regularly analyzed and adjusted for businesses to operate at optimum efficiency continually.
Technologies are always changing. To keep systems running as efficiently as possible, business process optimization must be a regular part of an organization’s methodology.
Lastly, business optimization is a continuous process. It might help to build templates for conducting process audits. This will save time and ensure team members don’t skip any steps when searching for bottlenecks and errors.
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Business Process Optimization FAQs
How do you optimize business processes?
To optimize business processes, businesses should regularly monitor operations, seek employee feedback, identify areas of low productivity, apply process audits to improve each process, and continuously review and adjust processes.
What is an example of process optimization?
An example of process optimization is streamlining the accounts payable process by implementing automated invoice management software. This reduces manual data entry, eliminates paper invoices, and improves accuracy and efficiency in the payment process.
How does AI automate business processes?
AI automates business processes using advanced algorithms and machine learning techniques to analyze and streamline repetitive tasks, reducing manual errors and improving overall efficiency. AI-powered automation tools can perform tasks such as data entry, customer support, inventory management, and decision-making, allowing businesses to optimize their processes and allocate resources more effectively. This helps businesses save time, reduce costs, and improve productivity.
Conclusion
Business process optimization doesn’t have to be a daunting task. For companies looking to thrive in the year ahead, it’s a vital and strategic step in any organization’s journey to improving its performance, customer satisfaction, and competitiveness.
Business process optimization is a crucial aspect of running an efficient and effective business. With the rapidly changing business environment, companies need to streamline their operations and better use existing resources. Business process optimization allows companies to identify bottlenecks and inefficiencies, streamline processes, automate tasks, and use data and technology to make better decisions.
By implementing business process optimization, organizations can increase productivity, reduce costs, and improve customer satisfaction. This is especially important in today’s business environment, as companies are being asked to do more with less, and new technologies and automation solutions are emerging.
