Process Optimization is a necessary practice in all organizations.
Efficiency, cost reduction and customer satisfaction are some of the common goals. The misconception of long and expensive analysis and high investments, prevent managers of putting this in practice. However, there are basic concepts that can help us to identify problems in the business process and select them for optimization.
Identifying a problem -and its cause- can feel as a ‘mission impossible’ when having different departments, people and systems involved. Together with colleague Nico van der Meersch, Business Analyst at Dynatos, we wrote a whitepaper where we discuss how to optimize business processes. In this blog, we’ll provide you some of the key takeaways to identify process bottlenecks.
1. Make use of the Lean Management Methodology
Take the best practice of the “Lean Management” methodology, including the concept of “waste”. Every resource you spent (time, labor, material) to deliver a service or product, but doesn’t add value to the process, is considered as waste. There are 7 types of waste according to this methodology: Movements, Stock, Transport, Defects, Waiting, Unnecessary steps & Over production.”
2. Investment in technology is not the only answer
Process automation via software is a good option of course, however, it is just one of the three key components: software, process and people. It’s a matter of common sense. Change the process itself, change the order of the tasks or change the people. You have to take them all into account. In some cases, by adapting the people and the process you can optimize without investing in technology.”
3. Measure, measure, measure
“There are different factors to measure. Time, on-time delivery and customer satisfaction are examples. We normally use time.” Check all the steps and milestones (outcomes) in the process and measure the cycle time of the whole process but also of the intermediate steps.
For example, in an Accounts Payable process you can measure the following indicators:
• Average time for invoice registration from receipt
• Average time for invoice approval from receipt
• Average time for invoice payment from receipt
In a more detailed analysis, you can also measure the payment behavior, for instance:
• Average time/volume/amount of invoices that are paid too early (before due date)
• Average time/volume/amount of invoices that are paid too late (after due date)
4. When are the results negative or positive?
It depends on your strategy. By paying late, you might be missing payment discounts with your suppliers, but maybe you prefer to avoid cash flow problems. You can do this business process scan regularly and identify bottle-necks, Learning curves effects due to changes in the organization or new software, high-seasons in your sector, etc.
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