Business process optimization is ... Methods, steps and errors

Optimization of business processes is a pretty popular topic. It’s rare that anyone can correctly apply it the first time, because beginners make mistakes that ultimately are reflected in practice. To avoid them, read our article. Let's start the educational program with the definition.

The concept

Optimization of business processes - these are measures aimed at improving business efficiency.

There are many optimization techniques, and each has its own advantages and disadvantages.

We will consider them below, but first we’ll figure out if optimization is really needed.

There is a need?

We have already said that the optimization of business processes is a set of measures aimed at improving business efficiency. And indeed it is.

Any enterprise is based on certain business processes that employees of the organization carry out. These include sales, production and management processes, procurement, paperwork and more. As soon as the company begins to automate existing processes, its work becomes much more efficient.

Large organizations operate on a management system of a certain standard (ISO 9001), which indicates a high business culture. The system is built in such a way as to organize as many processes as possible, while highlighting and scheduling them.

Since optimization of business processes is a complex of certain measures, then in theory a specialist should deal with this. In large companies it is. But no matter how the process is built, it periodically needs to be reorganized, because working conditions change, new vacancies and processes appear. If optimization is not carried out, then conflicts arise that impede the normal functioning of parts of the organization. And this, as you know, ultimately affects profit.

To understand whether it is necessary to optimize a company's business processes, one needs to check for problems. Below is a list and if at least one item is reflected in the organization’s activities, it’s worth considering optimization.

Optimization will help

So, over time, problems can arise in any organization. They are a litmus test by which it is easy to determine the need to optimize the company's business processes. What problems can be?

1. Job responsibilities are repeated. If not only employees are forced to do the same, but entire departments, then this definitely indicates the need for reorganization. This cannot last forever, which means that the result will be chaos, unnecessary financial injections and unjustified competition between employees and departments.
2. Leaders can only manage. These bosses are largely useless, because they know nothing about marketing, economics, and management.
3. The company does not have a staff development system. This is a serious omission that throws the company back. Indeed, if an employee does not receive new knowledge, then he does not seek to change anything and treads place.
4. Best the enemy of the good. People work in the same mode and suddenly decide to increase the level of activity. To do this, they introduce an IT system for managing employees, sales or finances. It sounds good, but often employees do it without regard to the current processes of the organization or simply copy someone else's. As a result, huge amounts were spent incomprehensibly on what, and the economic effect has not been achieved.

What does the optimization of business processes in an organization help to achieve?

1. Improves customer service.
2. Reduces time and operational costs.
3. Allows you to achieve new goals.
4. Increases company manageability.

All these points affect the final cost of production or services in the direction of its reduction. In addition, an optimized company attracts many more new customers, which means that the profit becomes higher and the competitiveness increases.

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It is important to understand that all business processes are interconnected. That is, the optimization of business processes in the organization will affect the work of the entire enterprise in one way or another. In order not to be so tangible, the company management begins to optimize small processes first, without spending too much time and money. Gradually, the modeling and optimization of business processes moves to other departments.

Attempts to change everything at once usually end very sadly, and in the future the desire to change something in the company's work will be met negatively.

Where to start?

Modeling and optimization of business processes begins with the fact that the methods of the previous work are morally obsolete. Optimization is necessary for every company, with the exception of state-owned corporations. The faster the company adopts new working methods and implements them in its processes, the more successful it will be.

Those companies that are constantly developing have a whole department that is engaged in optimizing the business processes of small businesses or large organizations. After all, only generous financing of modern technologies is the key to a successful business.

Criteria for evaluation

To correctly carry out optimization, you need to highlight priorities. The latter are selected according to certain criteria. They are listed below in a list:

1. The importance of the process. Before optimizing the work, it is necessary to identify the main processes, the improvement of which will lead to high results. To determine such a process, it is enough to find out what role it plays in all the activities of the organization. There is a downside: if the process is already taking the main place and working efficiently, then optimization will be useless. Of course, you can already try to improve the process, but it will be an extra waste of money that would be useful for another. It is better to spend time and money on problematic business processes.
2. The problem of the process. Sounds familiar, but what does it mean? In this context, the difference between what results from the outcome and the desired actions is implied. That is, if some process does not work as it should, then this is a clear reason to optimize.
3. The ability to implement process changes. Optimization of the business processes of a small business or a large one begins with the fact that the simplest option is chosen to start the process. For example, they choose the one that will require the least possible means for improvement, personal time and labor resources. It is important to pay attention also to the negative factors that will inevitably appear, and to take them into account.

So it turns out that you need to consider all the criteria and factors for a successful reorganization. As a rule, the largest processes are optimized, because it is through them that the enterprise operates.

Principles

The methods for optimizing business processes are different, but before choosing one, you need to learn the principles of improvement. Without compliance, you will not achieve the desired effect. Consider the principles below:

1. Base. Before you start optimizing processes, you need to understand which process is responsible for what. That is, first of all, you need to understand the structure of the business and only then take up optimization. If this is not done, then it is not clear what needs to be reorganized, which means that there will be no effect.
2. First you need to fix the errors. Before reorganizing the enterprise, it is necessary to eliminate minor errors that will interfere with optimization.
3. Ambiguous decisions. This is the situation when the optimization of one process adversely affects another. For this reason, before improving any process, it is necessary to calculate all the positive and negative sides and only then make the right decision.
4. Rejection of change. Often, employees of an organization are not enthusiastic about changes, which means that they resist by all means. Moreover, the resistance may be unconscious or pronounced.

Optimization levels

Optimization of business processes in logistics or another area is divided into several levels, each of which in its own way affects the outcome. For example, administrative and managerial processes are responsible for making the right decisions and actions of the management team. Thanks to them, information is collected about the organization’s workflow involved in the main business process.

The efficiency of optimizing business processes can be different, but in any case, it will lead to a reduction in financial costs. Which of the levels the company chooses depends on many factors. For example, if management wants to save, then the choice will fall on one level, and when the goal is to achieve a strategic result, the choice will fall on another.

Consider all levels of automation and optimization of business processes:

1. First level. This stage is associated with financial costs. Each department of the enterprise creates expenses for its own needs. But this level can be called the fastest, if the goal is to reduce costs. This is due to the fact that the level does not affect the interests of other departments of the company, which means that no additional approvals are needed. The disadvantage of the level is a small savings. As a rule, it does not happen more than 20%. It is important to understand that not all expenses are attributed to one department, some arise during the execution of the task. For example, one department orders another information on the analytics of the organization, in this situation the contractor will bear all the costs.
2. Second level. Examples of optimization of second-level business processes make sure that costs are reduced to a joint process between customers and contractors. The level implies the activity of both parties, one-sided work is simply unacceptable. Cost reduction occurs only when all optimization participants have discussed and agreed on how the processes and joint work will go. The second level provides for savings of more than 20%, it can achieve optimization of various functions of the enterprise. The main condition is that all functions should have the same result and be aimed at achieving the result.
3. Third level. This approach to optimizing business processes provides up to 30% savings. True, there are certain difficulties: in order to work with expenses, you need to understand the entire system of business processes of the organization. This is due to the fact that the optimization of this level involves a large number of activities.

Optimization methods

Business processes in each organization proceed in their own way, but this does not prevent experts from identifying the main optimization methods. Let's consider them in more detail:

1. SWOT analysis. The essence of the method is to study the strengths and weaknesses of the business process. This is the name of the strategic planning method, which is used to assess the phenomena and factors affecting the enterprise or business project. There are several parameters specific to the method: strengths, opportunities, weaknesses, threats. The goals of optimizing business processes using this method are searching and fixing vulnerabilities, as well as reducing risks and possible threats.
2. Causes are consequences. The method is characterized by an Ishikawa diagram, or a causal diagram. It is one of the seven most famous tools for evaluating, monitoring, measuring and improving the quality of production processes. The method allows you to find the relationship between the parameters, which helps to conduct accurate research of the necessary business process. Using a chart is much easier to identify the main factors affecting the manufacturing process.
3. Benchmarking. A method of assessing the benefits and analyzing the advantages of competitors and partners to identify the most productive factors. Benchmarking has something in common with industrial espionage, but not completely. For the implementation of the method, superficial observation is sufficient, and not introduction to competitors.
4. Optimization and analysis of business processes based on indicators. The principle of setting goals for the business process is used, after which the goal is either increased, or if it was not possible to approach it, methods for its implementation are analyzed. The technology for optimizing business processes is such that performance is primarily analyzed.
5. Brainstorm. The method is an active discussion of tasks, scoring different options. From all the proposed results, the most successful offer is selected.
6. "6 Sigma." By reducing the number of manufacturing errors, an increase in performance is achieved.
7. Change and calculation of fragmentation of processes. The method is that the components of the business process increase or decrease.
8. Business logic analysis. The goal is to eliminate ineffective procedures, linking parallel work, sharing responsibility for processes and sharing decision-making powers, capturing information at the source and processing it in the company's real operations.
9. Functional cost analysis. The method is aimed at achieving the highest functionality of the object at the expense of minimum costs for both the buyer and the seller.
10. Simulation of business processes. Optimization of logistic business processes allows us to represent the actions of people and the use of technology using a computer model. During the simulation, four steps must be observed: building a model, launching a model, analyzing the resulting performance indicators, and evaluating other possible scenarios. The method is effective only if relevant and accurate quantities are used to build the model.
11. Analysis and calculation of the complexity and duration of the process. The method allows you to calculate the desired number of workers and the load to which they are exposed.
12. Analysis of the matrix of responsibility distribution. This is a functional visual table that distributes the organization by links, units, and so on. that is, the method allows you to assign tasks to structural units.

Optimization steps

Work on optimizing business processes is divided into five stages. Let's talk more about each of them:

1. Description of organization processes. Analysis and optimization of business processes are inextricably linked. Without defining the functions of each department and employee, it is impossible to start effective optimization. It seems that the step seems to be taken for granted, but in reality most companies forget about it, and this is a big mistake. It’s better to start learning processes through a value chain. There are companies that supply resources or products to your organization or perform additional functions that your client needs. Understand at what stage and how the formation of added value of the final product. Using this strategy allows you to quickly calculate the exit and entry points into the company. Thus, you can study the entire enterprise’s workflow, explain to the personnel who and what they are doing, separate work processes that need top-priority optimization, and decide how to improve the quality of the service or goods. During the research you will understand that in addition to key processes, there are also supporting ones. As a rule, they do not need to be financed, because they form the infrastructure of the enterprise and help the continuous functioning of the main processes. There are still development processes responsible for future profit.
2. Appointment of responsible persons. The business process optimization system is designed in such a way that it cannot function without control. Therefore, a person responsible for its implementation is appointed. Moreover, one person should exercise overall leadership, while others should control each stage. The manager must be not only obligatory, but also able to coordinate the work of subordinates. Such leaders can be compared to a perpetual battery, because they must constantly work and optimize production. For this reason, the duties should be clearly stated, for this it is enough to register the duties in the internal regulations of the enterprise.
3. Implementation of optimization. So we came to the optimization of the business processes of the enterprise. Only the third stage is reserved for her, because first you need to prepare. Do not think that every organization has a complete order. At any enterprise, you can find several dozen problems. And after detection, you must act in accordance with the plan. First, you need to evaluate all the processes of the company, as well as to exclude the repetition of duties. The next step will be to calculate the time for each of the business processes, conduct a comparative analysis with average indicators, and adjust to real indicators. . , , . .
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5. Evaluation of the results. Business process management optimization has been overcome, as has the reorganization itself. It's time to take stock. If the operation was carried out correctly, the result will be the elimination of repetitive posts and responsibilities of employees, overseeing the work of workers, reducing the number of errors and reducing the influence of the human factor in production, introducing a system of utilization factors that motivates employees, an established knowledge base about organization processes, reducing violations at work due to lack of personnel or lack of resources, finding finances that are not involved in the turnover, and their kvidatsiya, minimizing unnecessary purchases products.

Common mistakes

In order for optimization to produce results, you must try not to make the mistakes that other entrepreneurs make. Here are some of them.

The first mistake is an incorrect statement of the problem. If the manager does not know what exactly needs to be done to improve the work of the enterprise, then he will not succeed. The initial step will be to understand what result you expect from optimization. For example, it is useless to draw up the characteristics of the accounting department if the organization does not have direct revenues. Lack of profit is the work of the sales department, not the accountant. That is, in this situation, it is necessary to change the work of this particular department, and the bonus will be a change in the work of other services. In short, it’s worth starting the optimization with a description of the enterprise’s processes, as we already discussed above.

The second mistake is the disproportion of efforts and tasks. Often you can see a description of processes that are absolutely not related to the main goal of the enterprise. An exaggerated example, but clearly reflecting the essence, is the communication of the leader and secretary in order to call the deputy. It is clear that the process has no meaning and does not bear any value. It turns out that the organization is wasting money on this process.

The third mistake is the wrong choice of description tools. In order to characterize the processes, they use various means, including programs of different capacities. The cost of such programs is quite high, it starts at $ 100 and has no upper limit. It is clear that the power of the program must be consistent with the size of the company. It turns out that it is useless for a small company to acquire a large-scale program. The tool should be selected according to the tasks and goals of the enterprise, which the management is trying to solve through optimization. But you do not need to think that the main tool is software. This is just an auxiliary tool. Optimization is most affected by its proper organization.

Supporting literature

In addition to information on the Internet, company leaders should read books that will help in this complex process. Below are a few books:

1. "Business processes. Modeling, implementation, management ”by Vladimir Repin. If you decide to change business processes and try a new approach, then this book is for you. It cannot be said that it is easy to read, but nevertheless a lot of important information is hidden in it. Each chapter will have to be comprehended and worked through. The publication includes a lot of drawings, tables and diagrams that help to reveal the process. It is also noteworthy that in other open sources there is not a word about this.
2. “A systematic approach to continuous improvement. Goldratt's Theory of Constraints ”by William Detmer. All the author’s books are swept from the shelves like hot cakes. And all because it helps to solve many problems, such as the contradiction between the timing of services and quality, between financial costs and price. Previously, it was not possible to find complete information from the author, but now a book has been released that reveals all the secrets.
3. “Management of business processes. Practical Guide to Successful Project Implementation ”by Johan Nelis, John Jeston. The book talks about the basic principles of managing business processes, their benefits and positive features. The publication is rich in examples of how to carry out management. The book is suitable as a reference for enterprises implementing process control projects. This is due to the fact that the described material talks about the tools that can be applied in practice, and also helps to effectively implement business projects.
4. "Goal. The Process of Continuous Excellence ”by Eliyahu Goldratt. The publication explains that a person who saw some kind of problem in a business project is obliged to build a causal relationship between the results and processes. A person needs to understand the basic principles of achieving the effectiveness of an organization's workflow.
5. “Lean Software Production: From Idea to Profit,” by Tom and Mary Poppendik. Management will assist in situations where it is necessary to formulate the most effective processes. Top managers should read this book, as well as managers, developers of the company. That is, the information will be useful to those who are engaged in software.

Conclusion

As you can see, in order to correctly conduct optimization, you need to know a lot and understand a lot. Reorganization will not help if the manager does not understand what he is working with. Often there are many such bosses, which is the reason for the collapse of many companies.

Even if the founder does not understand the issue himself, his task is to find competent employees who will work not out of self-interest, but because they are dedicated to their work. There are very few dedicated workers left, which means that if you are lucky and you find them, then try not to let go. It depends on the competence of the state how the organization will flourish. Even the most talented leader will not be able to pull out the company alone, and therefore you should not neglect the professionalism of the staff. In the end, it is about your money and time.