What are business improvement techniques?
Being able to answer the question, what are business improvement techniques, is not something super simple. However, this blog will aim to make the complex a little easier to understand. Reducing costs, increasing sales, launching products or services, and complying with new regulations are some of the reasons why companies embark on process improvements. There are many methodologies, techniques, and improvement tools for this, but there is no generic process improvement methodology that works for all situations. It’s important to clearly understand each methodology in order to know which one to apply to your business.
An early example of process improvement is Henry Ford’s establishment of the assembly line. This brilliant move shortened the time it took to manufacture a car from 12 hours to 2 hours and 30 minutes. Central to business process improvement (BPI) is ongoing improvement for long-term change. Business process improvement enables organizations to identify inefficiencies that hamper workflows and production.
Basic BPI steps
- Analyze the existing process: Analyze each phase of the process in detail and pinpoint any existing inefficiencies, bottlenecks, wastefulness, and other problems through all available means, including visualization tools.
- Conduct a root cause analysis: This step helps to determine what is causing the problem and points to a possible solution.
- Redesign the process: This could entail excluding certain steps or redesigning the process from scratch. It could even entail the introduction of robotic process automation (RPA). Whatever the team decides, the new process should be tested to ensure that it has the desired effect.
- Implement the new process: Implement the new process on a small scale to test if it works and deal with initial problems that may surface. Be prepared for resistance from stakeholders, especially if they e new process to ensure that it solves the problems for which it was implemented and that it’s not causing other problems. You may find that you need to make regular small adjustments to ensure that the new process stays relevant and efficient.
In addition to the basic BPI steps, there are seven business process improvement methodologies that businesses typically make use of. The method you choose depends on your particular circumstances and the problems you need to solve.
Six Sigma is a process improvement methodology developed by Motorola employee, Bill Smith, in 1986. The method leverages data to eliminate defects and waste in manufacturing in order to improve efficiency and quality. Although it originated in the manufacturing industry, the method has been adopted across many other industries.
Business leaders use Six Sigma to identify errors that lead to defects and implement new management systems to avoid future defects. The term “sigma” is a measurement of how far from perfect a system should reasonably be allowed to get. In this case, companies should aim for less than 3.4 manufacturing defects per 1 million units.
Six Sigma helps to minimize defects and inconsistencies. The method is useful when a company experiences quality issues, product inconsistencies, complex process problems, or other technical issues.
Six Sigma encompasses two main processes: DMAIC for existing processes and DMADV for new processes.
DMAIC stands for define, measure, analyze, improve, and control.
- Define the problem: This involves defining the problem and how it’s affecting the entire process.
- Measure the current process: Collect data on current performance and issues to identify the problem. Check the data for accuracy and note it in the project charter.
- Analyze the cause of issues: Analyze the collected data to understand what caused the problem and update the project charter accordingly.
- Improve the process: Develop solutions to the identified issues and create process maps for them. Start implementing the new process or other solution and measure the result.
- Control: Monitor the improvements and continue improving the new process if necessary.
The key phase of DMAIC is the analysis phase. During this phase, the team uses fishbone diagrams, also called a cause and effect diagram, or an Ishikawa diagram, to clearly see all the possible factors that might have contributed to the product defect(s).
DMADV stands for define, measure, analyze, design, and verify.
This method also uses a cause and effect analysis or a fishbone diagram to visualize the causes of defects, and it’s applied when existing processes do not meet the required quality standards even after improvements have been made.
Total Quality Management (TQM)
Total quality management (TQM) is a process of continual and comprehensive improvements that aims to detect, reduce and or eliminate manufacturing errors, and supply chain problems in order to ensure positive customer experience. In fact, TQM is a customer-focused method that employs continuous improvement over time. This technique is used in manufacturing, supply chain management, and customer satisfaction improvement projects.
The focus is to improve the quality of an organization’s processes, products and services, with the understanding that workers at all levels are responsible for the overall quality of deliverables.
Key elements of TQM
- Customer-focused. The end goal of TQM is customer satisfaction. The question that must be answered is always – what can we do to improve customer satisfaction, or how will what we are doing now ultimately affect customer satisfaction?
- Broad-based: All employees are expected to work toward optimizing quality for the end-user. That means, not only manufacturing or programming, but administration, marketing, and employee skills training must be optimized.
- Continuous improvement: Here, continuous improvement means making small changes to ensure improvements and agility. Continuous improvement helps companies adapt to new developments, like sudden changes in customer demands.
- Data-driven decision-making: All decisions related to improvement must be based on data and data analysis. Collected data can help to pinpoint inefficiencies and how to make improvements.
- Decrease inefficiencies: The team must stay focused on the primary goal of TQM, namely to improve customer satisfaction by decreasing inefficiencies.
Continuous improvement (kaizen)
The Japanese philosophy of kaizen is a continuous improvement model. The word means “improvement.” In business, the term means incremental, ongoing improvements.
The thought behind kaizen is that as long as you keep improving, your business will become more successful.
Kaizen aims to get rid of or reduce three kinds of waste:
- Muda (processes or activities that do not add value)
- Muri (overburden of workers or equipment)
- Mura (inconsistent or uneven production levels)
Lean thinking or Lean manufacturing
Lean is a concept that originated from the Toyota Production System (TPS) in the middle of the 20th century. The methodology aims to continually improve value for the customer by eliminating every source of waste or anything that doesn’t enhance value for the customer.
Implementing Lean principles helps companies to streamline manufacturing and production processes. The aim is to eliminate unnecessary steps in the manufacturing process that don’t add value to the product.
Lean addresses areas of waste in production systems, including overproduction, delays, poor workflow habits that waste time, and redundancies or unnecessary human input that lead to errors.
The business problems are solved by simplifying processes, increasing productivity, optimizing workflows, and minimizing inventories. Bloated inventories waste space and can cause delays.
This method was developed by Walter Shewhart, who applied the PDCA methodology to economic quality control. Later, W. Edwards Deming expanded it and used it to improve productivity. The PDCA cycle involves four logical stages:
- Plan – identify the problem and devise a plan to solve it.
- Do – implement the plan on a small scale.
- Check – see if the plan worked by analyzing data-driven metrics.
- Act – take steps based on the outcome. If the small-scale implementation was successful, expand it. If it failed, make adjustments and try again until you achieve the desired result.
5 Whys analysis
The 5 Whys is a simple, but analytical way to get to the root of a problem. It involves asking five questions, each based on the answer to a previous question. The questions are discussed among people who witnessed the failure and go something like this:
Problem: visitors to the website stopped placing orders.
- Why did this happen? There is a problem with navigating the sales page.
- Why is there a problem with navigating the sales page? The page loads too slowly.
- Why does it load so slowly? The software needs to be updated.
- Why has the software not been updated? We may be changing to another e-commerce platform.
- Why is there uncertainty around this issue? The management team is still evaluating new options.
This line of questioning pinpoints the problem and points to a solution: getting the management team to decide on a new e-commerce platform.
Digital twin and simulation of business process improvement
Digital process twin is a virtual representation of a real business process. A digital twin of the business creates the opportunity for simulation. Just as in engineering today, where advanced engineering is performed on a simulated digital-twin model first before a prototype is built, new business processes can be simulated before they are implemented. This creates the ideal opportunity for business leaders to identify points of failure and test new solutions.
Presently, only a few companies are trialing digital process twins, but virtual representations of the real world are expected to take on a bigger role in the future. According to Gartner, “Digital twins of people, processes, organizations and environments will be used for strategic and operational decision-making and advanced simulation.”
General business improvement principles
- Adopt the ISO management system: ISO management system standards (MSS) are the ultimate in ensuring that an organization continually improves its performance. It involves repeatable steps that organizations consciously implement to foster an organizational culture that values and works toward continuous evaluation and improvement of operations and processes. Organizations that adopt the ISO management system display heightened employee awareness and stellar management leadership. The benefits of a superior management system include:
- Improved financial performance
- Continuously improved products and services
- Efficient use of resources
- Improved risk management
- Respectful treatment of people and the environment
- A dedicated task force: If nobody is assigned to take charge of a business initiative, it tends not to get done. Once you assign a task to a specific person or a team, it becomes their responsibility. Setting up a specific task force is key to driving a business improvement project.
- Stakeholder buy-in: Any investigation of procedures and ways to do things will cause upheaval. Even if people can see the benefits, they are likely to resist change. For any business improvement initiative to work, management must first get the support of the entire company. What it comes down to is everyone involved must buy into the idea of continual improvement. The company’s ability to improve continuously relies on the willingness of employees to get on board with the new program and consistently implement the new changes.
- Communicate improvement plans: In order to get everyone throughout the organization on board, the plans for business improvement must be communicated multiple times and in multiple formats. All employees must know what they need to do and why, and they won’t get the message from just one email or meeting.Companies that have launched successful business improvement initiatives used launch events, training days, competitions, lunches, and outings to communicate their business improvement projects.
- Prioritize a simple process mapping methodology: For ongoing improvement throughout the organization, it’s best to use a business improvement methodology that is easy for most people to understand. Implementing a complex improvement methodology may end up excluding a large number of employees who then might be reluctant to commit to the continuous improvement efforts.
- Aim for continuous improvement: Successful companies aim for continuous improvement. This can involve small and large changes that don’t just happen once in a while. According to McKinsey, companies that excel at continuous improvement engage all employees in sharing knowledge and generating improvement ideas. For business improvement to make an impact, it can’t be a once-off incident – it must become part of the DNA of an organization. After all, continuous business improvement is the secret sauce to long-term success and profitability.
Since every business is unique, solving the question of what are business improvement techniques that will help my business will take some trial and error. However, there are many different techniques that can get you started.