There was a time when a business could only be two of three things at best: first-to-market, superior in quality, and lowest in price. But in the 1970s and 80s, Japanese companies introduced the concept of kaizen, or continuous improvement, total quality management (TQM), and lean production. This philosophy proved that businesses could be all three, and doing so will make them industry leaders.
‘Kaizen’ is the Sino-Japanese word for improvement. Business process optimization draws from this idea, but it focuses on improving the efficiency of existing workflows rather than initiating brand new ones.
Today’s business environment typically involves automating repetitive tasks through software. Fortunately, there are many available software solutions for most business processes, such as customer relationship management (CRM) and inventory management.
While that might sound simple enough, most businesses deal with many different business processes every day. Without a systematic optimization approach, the chances for wasted resources (whether it’s time, money, or workforce) are high.
Read on to learn all about business process optimization and how to do it right.
What Is Business Process Optimization?
Business process optimization is the focused rethinking of critical processes to improve efficiency. You work to align each process to your business goals and strategies.
While you can target just one function and see significant improvement, applying optimization strategies to all your business processes can give you a much-needed competitive edge.
Business process optimization is cost-effective because you work with resources already in place. It’s a great way for a business of any size to achieve peak efficiency. The goal is to identify all issues in each process, find ways to fix them, and evaluate if you succeeded in streamlining it.
What Are the Principles of Business Process Optimization?
Business process optimization methods grew from the kaizen philosophy’s lean and agile principles, such as:
- Keep customer satisfaction top of mind.
- Involve and empower workers all the way.
- Don’t be afraid of change to challenge the status quo.
- Correct anything wrong.
- Eliminate waste.
- Improve continuously.
- Be economical.
- Find the cause of a problem by asking “why” several times before making a decision.
- There is no excuse for inefficiency.
Methods Used in Business Process Optimization
There are several methodologies for business process optimization, and each one addresses different needs. Some focus on improving the process, while others tackle the company culture to optimize operations.
A few of these methods may sound familiar as they are popular with many businesses today.
Kaizen
As mentioned earlier, kaizen is the concept of continuous improvement by making small changes that make an organization more productive and efficient. It focuses on eliminating waste (muda) and fosters a positive work culture to find and prevent errors.
Kaizen places much importance on being lean and agile. Companies known for using the kaizen method include Ford, Nike, and Pixar Animation Studios.
Lean Management
The Lean Management method relies on three core kaizen ideas: deliver customer value, eliminate waste, and improve continuously.
The method involves five steps:
- Identify value.
- Map the value stream.
- Create the workflow.
- Establish a pull system to address needs.
- Engage workers to improve value continuously.
Top companies using Lean Management include Toyota. Nike, and Intel.
5S
The 5S method follows five kaizen-inspired steps to standardize process optimization: sort (seiri), straighten (seiton), shine (seiso), standardize (seiketsu), and sustain (shitsuke).
It’s an efficient system that businesses can use to reduce clutter, confusion, and waste in the work environment. Top companies using 5S include Hewlett-Packard, Boeing, and Harley Davidson.
PDCA
A variation on kaizen, the PDCA method identifies processes for improvement. The acronym stands for Plan (identify the problem), Do (create a solution), Check (test if the solution works), and Act (implement the solution).
Top companies using PDCA include Toyota, The Mayo Clinic, and Lockheed Martin.
Six Sigma
Six Sigma is a method of finding and fixing issues in business processes by streamlining quality control and assigning karate belts (green to black) to employees to signify rank.
Trademarked by Motorola, the term refers to a Greek symbol of standard deviation. It uses DMAIC (define, measure, analyze, improve, control) and DMADV (define, measure, analyze, design, verify) as ways to improve processes.
Other companies that use Six Sigma include 3M and Apple.
Total Quality Management
You’ve probably heard the term total quality management bandied about quite frequently. Companies like it because it focuses on customer satisfaction to inform their process improvement strategies. This method empowers workers and cultivates a constructive culture.
Some top companies that use TQM include Ford, Toyota, and Philips Semiconductor.
Kanban
Kanban focuses on inventory management and is the basis for just-in-time (JIT) manufacturing. Invented by industrial engineer Taiichi Ohno of Toyota, it’s a visualization tool to prompt management and employees to keep the process flowing.
The goal is to prevent inventory buildup at any stage of the supply chain and manufacturing process. The top companies that use Kanban include Toyota, Ford Motor Company, and Bombardier Aerospace.
These are just some business process optimization methods available, but none are mutually exclusive. Some companies use more than one to address different types of processes. Toyota, for example, uses Kanban, TQM, and PDCA to streamline many different elements of the corporation.
Since each business has very specific needs, it sometimes makes sense to use more than one method to address certain issues.
The goal of business process optimization is to use all the resources available to run a business better, including the many different methods for bringing it about.
Doing Business Process Optimization Right
There is no one “right” method for business process optimization. However, all the potential options share basic steps that can help decide which method or methods might work for particular workflows.
Remember that business process optimization is primarily about taking small and subtle steps to solve big or complex problems.
1. Identify One Issue at a Time
All journeys begin with the first step, and in business process optimization, that means targeting one process at a time. Identify the first issue you want to solve and go from there.
Fixing minor problems representing an obstacle or inefficiency in a workflow can cascade into bigger benefits without becoming overwhelming. The goal is to understand that workflow and resolve issues as they come up.
2. Tap Available Resources
After identifying issues that need fixing, the next step is to use existing resources to provide a solution or find a better way to do things. The goal is to eliminate waste and engage workers to find ways to do so.
This step may require automating repetitive tasks to improve workflows.
3. Implement Solutions
Implementing solutions often means worker buy-in for your new and improved process. It may also involve retraining or upskilling, especially when introducing automated systems to eliminate time-wasting manual tasks.
4. Test
Implementing changes and new solutions must involve testing. The goal is to find out if the tweaks work as expected.
If the changes do not lead to positive results, then recalibrate and move on. Monitor progress consistently to observe your solutions’ short- and long-term effects.
Summary
Business process optimization is not a complicated concept or an expensive undertaking, but it can lead to significant improvements for all businesses, big and small. The trick is to remember the goal: improve continuously by making small changes in specific workflows and eliminating waste.
Some businesses may already be implementing business process optimization without realizing it. But applying these principles and methods consciously and systematically, your organization can dramatically improve your efficiency and productivity.
