10 Reasons Why your business needs process improvement

Continuous process improvement is not just merely an option, it is necessary for any type of company and industry nowadays. Organizations, like people, need to stay fit.

Economy, customers, and even employees are changing so often that your business needs to be agile enough to ride the wave of success.

A study by the Center for Economic and Business Growth states every $1 spent on a process improvement and quality management program returned 6$ in revenue, $16 in cost reduction and $3 in profit.

process improvement

No matter if you sell a product or a service, installing in your company a system for process improvement like Lean, Six Sigma or ISO helps your business work smarter (Every company needs that, right?). It basically helps to minimize waste within any area of the company: the manufacturing floor, the shop floor, the office, you name it. Process improvement looks forward to defining what value according to the customer is, and organizing processes to deliver what is needed, when it is needed, at the lower costs. In the end, your total costs go down and you are able to offer a better price to bit the competition or get a better margin to sustain your growth.

Knowing where and when to improve processes is critical so here are some reasons why your business may need process improvement right away:

1) Grow

Some businesses are growing so fast that need to do process improvement in order to make their processes more efficient. Growth comes with not only more customers, but usually more employees, more steps and more controls. If that is the case, processes need to be improved, either to get steps automated, eliminated or standardized. Success is harder to deal with than failure.

2) Launch new products or services

Who says that innovative companies don’t apply process improvement techniques? Pixar has adapted continuous improvement techniques from Toyota to review and assure the quality of its films as they are developed.

4) Comply to new regulations

Safety regulations, industry or governmental changes may add a lot of bureaucratic burden to your current process, or may make it totally useless. Every time new regulations appear, make sure your processes are reviewed. New controls usually add new steps that make your process super slow and inefficient, and it is always a good reason to re-analyze if it could be done in a different way.

5) Start a new business

Startups need to sell their product, I know. But there are two options: if they do get to sell the product well, they will need a standardized process to be able to serve the customer efficiently and consistently. At the very beginning of every startup, sales move fast: duplicate or triplicate sales only in a few weeks. Rarely, the same process that supported a certain amount of sales is able to work at the same level with 10 times more sales. Process improvement is needed. If their sales are not doing well, go to the sales reason #9.

6) Reduce Cost

Companies that are well known for being low cost, in order to provide to their customers consistent, reliable, and low-cost products and services need to continually improve a wide range of operational processes. Other companies, even though not focused on the cost, sometimes are called by clients to lower cost to in order to keep doing business with them. If that is your case, streamlining your process through lean management and 5S to reduce waste is one of the best ways to reduce unneeded cost and improve processes.

7) New technology

Manufacturing companies have new equipment, offices have new ERP systems, services have new tools that help people being more efficient. Nevertheless, processes are still in place and need to be updated accordingly. Sometimes is not your process that is being affected, but your customer or your supplier process changes, so that may open the window for errors that is better to prevent.

8) New employees

When you are growing and therefore hiring new employees, having a planning methodology that takes strategic priorities from the top and works them through the company to the bottom like Hoshin Kanri can be really useful. It is a methodology for objectives and tasks deployment that really improve your delegation process and the effectiveness of the work being done.

9) Increase Sales

if you want to increase your sales, but you don’t know what is preventing you from doing it, you may analyze your sales process to look for missing steps, procedures not being followed, underutilized sales channels or incorrect approach to leads. DuPont, for example, created a sales and marketing process improvement methodology called “Top Line Growth” to boost revenue.

10) After mergers or acquisitions

When a merge occurs, processes from different companies and different cultures need to be aligned, combined or at least flow flawlessly from one to the other. To avoid duplications and extra work, process improvement is the answer. Take the example of the Great Plains Coca-Cola Bottling Company. In the late 1980s, the company acquired several neighboring Coca-Cola territories. What seemed like a “logical” consolidation strategy turned out to be counterproductive. The production facility was stressed, the distribution system became clogged, and profits were reduced. They decided to do implement Kaizen and Deming teachings to train their management and the employees to improve continually becoming better through gradual change. They changed their culture. Now their net sales to net asset ratio that is two times the industry average.

My motto is that that there is always room for improvement. Probably you are thinking that you cannot have people looking at processes as a full-time job, and let me tell you are right. That’s Old methodologies like Lean Six Sigma, Deming and 5S, as well as New methodologies like design thinking, help companies instilling a built-in process improvement culture. That means that well-trained employees can be your process improvement ambassadors, anytime anywhere at the minimal cost.  All they need to start is your blessing. Remember, there is always room for improvement.

How is your company doing process improvement? Are employees being involved?

 

 

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