What is business process improvement (BPI)?
Business process improvement is an approach used to identify inefficiencies, and analyze, redesign and improve existing business processes to optimize performance, enhance workflows, conform to best practices and improve the user experience.
Why is BPI essential to ERP success?
Forward-looking manufacturers and distributors understand that to realize the full value of their ERP investment, they need to analyze and optimize their core business processes and then select and implement a solution to automate and accelerate those processes. And they believe, correctly, that it makes no sense to throw money, people, time and technology at incorrect, bad or broken processes.
At the most basic level, the primary function of an ERP solution is to help your organization efficiently and effectively execute core business processes. And when you concentrate on streamlining and integrating your processes, you virtually ensure that you will realize improved productivity, accelerated workflows and lower operational costs – benefits that drive higher business performance.
A Roadmap for Business Performance Improvement Guide
This guide provides a roadmap for implementing process improvement to drive business performance improvement.
Why start with BPI?
Imagine your business as a well-oiled machine, where every cog and gear work in perfect harmony to achieve desired outcomes. That’s precisely what business process improvement aims to achieve. BPI involves identifying, analyzing, and enhancing your business processes to eliminate unnecessary steps, reduce errors, and optimize resources. By fine-tuning these existing processes, you can significantly improve productivity, customer satisfaction, and your bottom line. BPI is the critical first step on your business transformation journey. A detailed analysis of your business processes, practices and technical environment pinpoints areas for process improvement, accelerates time-to-benefit, and informs the software selection process.
Or, as our expert consultants say, you can’t know where you’re going if you don’t know where you are.
It’s important to start your ERP project with BPI because you need to determine how your business operates today so you can then define how you want it to operate tomorrow. When you have that information, you can decide which new processes, practices and tools are required to make more efficient and optimized processes possible.
What is the BPI process?
Business process improvement refers to streamlining and automating processes within a manufacturing organization to reduce costs, increase efficiency, and improve customer satisfaction. This can include introducing new technologies, such as automation tools, to optimize production or creating more efficient procedures for the management and tracking of materials, products, and other resources.
BPI is not to be confused with continuous business process improvement. Continuous improvement, also known as Kaizen (a Japanese term meaning “change for the better”), is a lean manufacturing ideology that revolves around constantly enhancing processes, skills, and attitudes to achieve better outcomes. It’s all about taking small, incremental steps towards improving business processes, rather than seeking overnight transformations. It is a proactive approach that encourages all team members, from the shop floor to the boardroom, to constantly question and challenge existing practices in order to find better ways of doing things.
While continuous improvement is an important philosophy to incorporate into your manufacturing operations, BPI takes it to the next level, laying the groundwork for your digital transformation. Using our Ultra business process improvement methodology, we believe that to truly change how your business works, your organization needs to answer these three questions:
Where are we now?
The efficiency of most business processes declines over time unless a conscious and continuous effort is made to reexamine, re-imagine, re-engineer and improve them. An ERP implementation is the perfect opportunity to take a close look at how your organization currently performs each existing process, to document the current state through business process mapping, to determine the opportunities to apply best practices, and to streamline and improve these processes.
A view of your current state clearly exposes any problems that exist. While many executives are aware of inefficiencies in their business, they are often surprised by the extent of those inefficiencies, waste or problems in core processes. Reviewing each current process can provide valuable insights on areas for business process improvement. Understanding where you are now can provide opportunities to reduce waste, improve quality, streamline workflows and improve efficiency, while ensuring you’re ready to embark on a digital transformation project.
What is possible?
Once the current state is reviewed (and inefficiencies revealed), your business process owners probably need to be shown what can be changed, enabled and accelerated using today’s technologies.
As you would expect, most managers and users are not up to date on the capabilities of modern ERP solutions and current best practices for core processes. They know your system, and they may have some insight from a past position and solution, but that is not the in-depth knowledge required.
Through a shared understanding of the possibilities and problem areas, your entire organization can develop an appreciation of effective business process improvement and opportunities for new efficiencies.
Where do we want to be?
With the current state determined and documented, and with possibilities and best practices known, a vision for improved processes and workflows – the future state – can be developed.
This effort starts with a review of your current processes and their inefficiencies, applicable best practices, future requirements and technological capabilities – and ends with your desired significant improvements and future plans to improve processes.
What is the ROI on BPI?
Faster, better processes – wherever they are in your organization – can deliver significant new efficiencies. While the benefits of business process improvement are many, the focus here lies on the ROI it can deliver. Let’s delve into a few areas where BPI initiatives can yield tangible returns:
1. Streamlined Operations:
Inefficient processes often breed bottlenecks and unnecessary delays, leading to increased costs and frustrated customers. By identifying and rectifying these process inefficiencies, BPI initiatives can significantly streamline operations. This, in turn, translates into time savings, reduced waste, and enhanced productivity. The ROI is evident through improved customer satisfaction, increased throughput, and lower operational expenses.
2. Enhanced Quality:
Quality is the foundation of any successful business. Implementing BPI methodologies enables organizations to identify and rectify quality-related issues in their processes. By eliminating defects, reducing errors, and improving consistency, BPI helps businesses deliver high-quality products and services. This commitment to quality boosts customer loyalty, reduces rework costs, and ultimately drives profitability.
3. Increased Employee Engagement:
When employees find themselves trapped in convoluted and inefficient processes, frustration can quickly set in. By involving employees in BPI initiatives and empowering them to contribute ideas for improvement, businesses can foster a culture of continuous improvement. Engaged employees are more motivated, productive, and loyal, resulting in reduced turnover rates and increased customer satisfaction.
4. Cost Reduction:
Cost-cutting is often at the forefront of every business owner’s mind. BPI provides a structured approach to identifying and eliminating non-value-added activities, reducing waste, and optimizing resource utilization. Through BPI, businesses can identify cost-saving opportunities such as business process automation, improved inventory management, or renegotiating vendor contracts. The result is a healthier bottom line and improved ROI.
Most of the return on BPI—and a new ERP solution—comes from more efficient production and the resulting reductions in operating, inventory and labor costs. And optimized processes streamline ordering, eliminate physical inventory, improve production quality and enable more efficient scheduling, among other things.
There also are other important efficiencies that are the result of improved access to operational data, including more accurate materials planning, streamlined reporting, new dashboards and better, data-supported decisions. And when companies increase customer satisfaction, enhance supply chain communication and add visibility to delivery performance metrics, significant ROI is achieved.
Where will BPI have the most impact?
Here are 11 business process functions that, when optimized, are ripe for ROI realization:
- E-commerce
- Financial Management
- Forecasting
- Inventory Management
- Pricing and Margin Management
- Product Management
- Production Management
- Quality Management
- Sales Management
- Supply Chain Management
- Warehouse Management
Learn more about BPI
While the benefits of a business process improvement initiative extend far beyond ROI, it’s the tangible return on investment that often captures the attention of business leaders. By streamlining operations, enhancing total quality management, engaging employees, and reducing costs, BPI initiatives can yield significant returns for organizations of all sizes. Whether you’re a startup or an established enterprise, embracing continuous process improvement can unlock hidden potential, create a competitive edge, and pave the way for sustainable growth.
So, why not embark on this journey of improvement and harness the power of BPI to boost your business’s bottom line? Contact the experienced Ultra team to learn more about what is business process improvement and how intelligent, optimized processes deliver bottom-line benefits and competitive advantage. Contact us for your free discovery call.
