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The Five Basic Steps of Process Optimisation

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By Mark Atterby

processImproved efficiency leading to reduced costs is the main reason for optimising business processes. Most companies’ efforts to optimise are relatively short-lived and not part of an ongoing process in itself. There’s the belief that such efforts reach a point of diminishing returns. That maybe true if we lived in a static world where things never change.

Change due to evolving technology, new business and sourcing models and competitive threats, is the only constant in this complex world. Enterprises looking to stay ahead of the game need to be agile and flexible, with highly optimised processes to respond to dynamic and complex market conditions.

Wikipedia defines process optimisation as:

Process optimisation is the discipline of adjusting a process so as to optimize some specified set of parameters without violating some constraint. The most common goals are minimizing cost, maximizing throughput, and/or efficiency. This is one of the major quantitative tools in industrial decision making.

According to IBM the optimisation of business processes is about implementing a system approach to innovation and managing

Change due to evolving technology, new business and sourcing models and competitive threats, is the only constant in this complex world.

change[i]. It’s about comprehensive change and re-engineering the business to realise gains through exploiting emerging technology. It’s a constant drive for innovation and improved business outcomes.

Process optimisation is becoming a vital component of most outsourcing and shared services projects. In fact, a recent survey by the SSON (Shared Services and Outsourcing Network) has identified it as the most important trend within the sector[ii].

Step One: Establish a process for optimisation itself

There are plenty of methodologies and associated terms used to identify waste and optimise business processes, such ISO, Lean Manufacturing, Six Sigma, BPM, TQM, Kanban, Kaizen,and so on.

Regardless of what you put in place it’s about establishing a process for optimisation. It’s important not to treat this as a one-off project otherwise the benefits attained will likely be limited and short-lived.

A process to improve processes should adapt to change and allow you to quickly modify your process as necessary[iii].

Step Two: Identify business outcomes and goals

Understanding and defining desired business outcomes provides clear direction for the optimisation process[iv]. It enables all stakeholders to fully engage and cooperate with agreed upon and clearly understood objectives. Measurable business outcomes become the central focal point rather than requirements.

Step three: Measure the performance of existing processes

Business performance is typically measured by a comparison of track record with existing scorecards, balance sheets, or key performance indicators (KPIs). To understand the benefits delivered by the optimisation process you need to fully understand things as they are and the associated costs and inputs in relation to the current business outcomes being delivered.

Step four: Map and redesign the processes

Identify and map out all the steps, tasks and activities associated with the process or processes you are looking to optimise. You need to assess the processes from an end-to-end perspective and how it crosses different job roles and departments within the organisation. How will the proposed changes impact current job roles and departmental functions? What conflicts or misalignments exist between different processes and their associated activities and goals (these have the greatest impact on the overall efficiency of the organisation)?

Step five: Automate with technology

Finally assess how much of the redeveloped processes can be enabled and automated through technology.

[i] http://www.ibm.com/developerworks/websphere/library/techarticles/1204_arsanjani/1204_arsanjani.html

[ii] http://www.sharedservicesweek.com.au/redForms.aspx?eventid=8186&id=389080&FormID=11&frmType=1&m=40648&

[iii] http://www.ingenuus.com/collateral/positionpapers/PP-ProcessOptimization.pdf

[iv] http://www.ibm.com/developerworks/websphere/library/techarticles/1204_arsanjani/1204_arsanjani.html
March 10, 2015
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