What is Business Process Optimization?

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All organizations exist to make an impact.  Whether it is to build wealth for shareholders, make a social difference, or some combination of the two – chances are that the benefits of the organization’s existence could be amplified if all the moving pieces worked in harmony.  More lives could be saved, more resources could be preserved, and more profit could be earned … if we didn’t have to worry about pesky internal conflicts such as:

  • departments blaming one another for missing deadlines,
  • inefficient controls that drag on productivity,
  • team members who do not pull their own weight,
  • bottlenecks in decision-making,
  • multi-tasking and juggling too many things,
  • poor management and prioritization of goals, etc

Realistically, there will always be conflicts.  However, it is possible to minimize the impact of conflicts through Business Process Optimization.  By taking a holistic view of an organization and understanding the dependencies of its inner workings – we can improve communication, eliminate effort that is not adding value, and ensure alignment in decisions.  The result is a “sweet spot” of business performance where – accounting for known and unknown conflicts – an organization can achieve high productivity.

Business Process Optimization is a tool which can expose areas in an organization that are not functioning as well as they should or that may be broken from an operational sense.  We have identified in previous posts how these operational problems can manifest themselves, and such symptoms are more common than many are willing to admit.  Business Process Optimization will systematically uncover the root causes that drive these painful symptoms and provide insight into where to focus efforts on fixing the problem.  The follow-on work of transforming an organization to actually achieve and sustain performance at an optimal state will be left for another entry.

Permanent Bandages

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Have you ever found yourself thinking:

  • “This could be so much easier if… ?”, or
  • “Why was I trained to do this task this way, it doesn’t make any sense?”, or
  • “Who decided it would be a good idea to do things this way?”

Processes are designed and defined to accomplish a task, but, over time, as systems, technologies, and people change, the processes are not updated to reflect new norms.  Thus, workarounds AKA “Band-Aids” are created as a way for people to bridge the old with the new.  Eventually, people get so caught up with workarounds that no real work gets done.  In other words, “Band-Aids” are highly inefficient and can even be detrimental to the operations of an organization.  They are only meant to be a temporary solution that address an acute pain, but never really solve an underlying root cause.  Unfortunately, “Band-Aids” often become part of the process.

As an example, we worked with a client to map and understand tier one supplier spend in an effort to improve the cost cost structure of their supply chain.  Sounds like a simple enough exercise, except for the competing definition of Cost in the engineering, purchasing, and accounting functions.  Over time, each group had figured out different tricks to adjust for other groups’ cost calculations in order reflect each other group’s numbers.  The tricks had become so ingrained that analysts were taught to make the adjustments based on who was asking for the report.

Additionally, the patchwork of “Band-Aids” created huge inefficiencies and confusion in communication.  There was additional paperwork, irrelevant quality controls to validate the numbers, and individuals dedicated to ensure the workaround performed smoothly.  Agreeing on one number required weeks of effort, when it could have just been a simple calculation done in a matter of minutes.

Ideally, one standard definition of Cost could have saved this client time and money, but peeling away the “Band-Aids” was much too painful.  Does your organization tolerate practicing old and costly habits rather than peeling away the workarounds to streamline critical business processes?

 

How do I know if I have inefficient business operations?

“Business as usual” typically means things are running smoothly and there’s nothing new or exciting to report.  But what is considered “business as usual” to one organization or person may be considered a complete wreck to someone else.  I encourage you to take a step back and consider the following points:

  • Do you find that the quality of your organization’s output is poor (things have to be re-worked, re-done, or scrapped more often than you expect)?
  • Are you constantly having to expedite orders for reasons other than special customer requests?
  • Is there always another emergency or fire to tend to, preventing you from focusing on work that will benefit the organization in the long-term?
  • Are you sitting on dead inventory?
  • Are you or your star players overwhelmed?

If you answered “yes” to any of these questions, then there is likely some inefficiency in the operations of your organization.  Notice that each of these questions only reflects a symptom of inefficient operations; fixing the symptom will not necessarily get the organization back on track – the problem will manifest itself in some other way.  Digging further into the root cause of these symptoms and removing those underlying obstacles is the best (and most difficult) way to achieving operational efficiency.

One technique to understanding and getting to the root cause of an issue is to act like a three-year-old.  Ask “why?” to everything.  Here’s an oversimplified example of how such a dialog might play out:

Process Owner: I’m feeling overwhelmed with all the tasks that are on my plate.

Colleague: Why?

Process Owner: Everyone always needs an answer right away and I cannot even do my regular job.

Colleague: Why?

Process Owner: I’m the only person who can do this one thing, and all the inquiries always lead back to me.

Colleague: Why?

Process Owner: We used to have two people who could do this job, but she recently left and I’ve been stuck with all the work.

Colleague: Why?

Process Owner: We haven’t had time to train anyone new.

Colleague: Why?

You get the idea.  The Process Owner is overwhelmed because he is the bottleneck – the point in the system where all things must flow and the system can only move as quickly as its slowest component.  One possible fix for a bottleneck, and perhaps the most applicable in this scenario, is to hire and train an additional resource who can alleviate the work load.

This is just one illustration of an inefficient operation and how to go about resolving the problem.  If you’re interested to understand more or would like some help exploring such issues in your own organization, contact us at info@firebrickadvisory.com.