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 operations. 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—significant benefits that drive long term business success.
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 changing business operations to eliminate inefficiencies, reduce errors, and optimize resources. By fine-tuning these existing processes, you can significantly improve productivity, customer satisfaction, and your bottom line. In the case of ERP implementation, business process improvement helps to realize the business benefits of your digital transformation:
BPI aligns business processes with the ERP system. This integration eliminates manual and redundant tasks, reduces errors, and improves overall operational efficiency.
BPI ensures that data flows seamlessly between different departments and modules within the ERP system. This integration eliminates data silos and ensures that accurate and consistent information is available across the organization, enabling better decision-making.
BPI facilitates collaboration between different teams and departments by providing a unified platform for sharing information. This sets the stage for better communication, coordination, and cooperation, leading to improved productivity and outcomes.
BPI enables real-time visibility into business processes and activities. This allows organizations to generate accurate reports, dashboards and analytics, providing insights into key performance indicators and enabling data-driven decision-making.
BPI ensures that business processes can be adapted and scaled as the company grows or changes. This allows for seamless integration of new modules, functionalities, or other systems, ensuring that the ERP system remains aligned with the evolving needs of the business.
Business process improvement 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 enhanced processes, practices and tools are required to make more efficient and optimized workflows possible.
What are the Business Process Improvement methodologies?
Business process improvement refers to streamlining and automating processes within a manufacturing company 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.
Business process improvement 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 analyzing processes, skills, and attitudes to achieve better outcomes.
A similiar methodology, Six Sigma, is concerned with improving business processes by reducing defects and errors, minimizing variation, and increasing quality and efficiency. Again, Six Sigma focuses on incremental improvement, rather then the process redesign involved through business process improvement.
It’s all about taking small, incremental steps to improve 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, business process improvements take 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 existing processes, to document the current state through business process mapping, to determine the opportunities to apply best practices, and to streamline and improve each existing process.
When you have a clear view of your current state, it means that you have a comprehensive understanding of the current state of affairs in your business. This includes all the processes, systems, and operations that are currently in place. By having this view, you are able to identify any problems or inefficiencies that may exist within your organization.
Managers may have a general awareness of certain inefficiencies or issues within their business, but they may not fully grasp the extent of these problems until they have a clear view of the current state. This view allows them to see the bigger picture and understand the impact that these problems have on your overall operations.
Having a clear view of the current state helps to identify areas of waste, bottlenecks, or other issues that may be hindering your business’s performance. It allows you to pinpoint the root causes of these problems and take appropriate actions to address them.
Overall, having a clear view of your current state is crucial for identifying and addressing any problems or inefficiencies in your business. It provides a foundation for making informed decisions and implementing changes that can lead to improved performance and success.
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.
Process improvement efforts start 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 business goals to improve ineffective processes.
Between the current state and the future state is, of course, a “gap” which must be analyzed to understand that discrepancy.
Gap analysis is a widely-used methodology in business process improvement that aids in identifying and implementing improvements and changes in existing processes. It encompasses two main types of analysis.
The first type is centered on comparing the current state of business processes to the desired future state. This involves thoroughly examining and cataloging the existing processes to determine the deficiencies and opportunities for improvement. By conducting this analysis, organizations can identify the gaps between their current operations and the desired objectives.
This analysis is crucial as it enables companies to clearly articulate, prioritize, and communicate the necessary changes to their business processes. It provides a structured approach to define the specific areas that need enhancement, thereby guiding the implementation of targeted changes.
The second type of gap analysis is technology or software-focused. It refers to evaluating the future state of business processes and identifying the technology requirements to support these processes.
This analysis aims to understand the desired functionality and capabilities that the software or technology solution must possess to effectively align with the organization’s operational needs. By comparing the anticipated business requirements to potential software options, companies can assess if the technology solution adequately meets their operational goals.
This type of gap analysis ensures that the chosen software aligns with the future state of business processes, resulting in enhanced efficiency and effectiveness. Overall, gap analysis is a powerful tool that assists in understanding the discrepancies between the current and desired states of business processes.
Through this analysis, organizations can outline areas that require improvement, prioritize changes, and align technology solutions accordingly. By undertaking a systematic and comprehensive gap analysis, companies can ensure the successful implementation of improvements and changes that contribute to business growth and success.
What is the ROI on Business Process Improvement?
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 business process improvement 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 business process improvement 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 business process improvement, 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 key performance indicators, significant ROI is achieved.
Where will Business Process Improvement have the most impact?
Here are 8 business process functions that, when optimized, are ripe for ROI realization:
Financial Management – BPI can identify and eliminate unnecessary steps, bottlenecks, and inefficiencies in processes, leading to cost savings. By optimizing resource allocation and reducing waste, organizations can achieve higher profitability.
Inventory Management – Business process improvement can automate processes such as tracking and managing stock levels, creating purchase orders, and generating invoices. Automation can also provide real-time inventory visibility, allowing users to make better decisions about inventory needs.
Product Management – By streamlining processes, eliminating unnecessary steps, and improving coordination between teams, companies can accelerate their time-to-market.
Production Management – BPI lets you identify bottlenecks, address repetitive tasks, and improve process efficiency, leading to reduced operational costs, minimized waste, and optimized resource utilization. This leads to improved productivity, increased output, and enhanced quality control.
Quality & Compliance Management – BPI can help identify and address quality issues, ensuring that products or services lead to satisfied customers. It can also help organizations comply with industry regulations and standards, reducing the risk of non-compliance and associated penalties.
Sales Management – Business process improvement helps identify and eliminate inefficiencies in the sales process, resulting in streamlined workflows. This lets sales teams focus more on selling and less on administrative tasks, ultimately improving productivity and sales performance.
Supply Chain Management – Process automation through business process improvement can help streamline communication between suppliers and buyers, resulting in more accurate and timely orders and deliveries.
Warehouse Management – Business Process Improvement can help streamline warehouse management by allowing for better tracking and organization of inventory, improved customer service, faster order processing, and more efficient workflow.
Learn more about Business Process Improvement
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 (TQM), 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.
If you’re considering an ERP selection or implementation project, don’t neglect business process improvement! While it’s tempting to consider your ERP initiative as a pure technology project led by your IT team, that perspective often results in an implementation that fails to meet expectations. When the focus is on process changes, and not just technology, the project team has a better chance of conducting a successful implementation that achieves ROI goals and sets your business up for future success.
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 about what is business process improvement and how it can make a difference for your company.
FAQs about Business Process Improvement
Business process mining software is a valuable tool that enhances the understanding and improvement of current business processes. It encompasses innovative technology designed specifically to delve into the intricacies of an organization’s existing systems, uncovering vital insights into the operations and procedures employed.
By utilizing process mining software, businesses can gain comprehensive insights into their processes, such as the duration of specific tasks, the various paths taken during the step-by-step processes, and areas where bottlenecks and breakdowns occur. This software acts as a bridge between qualitative knowledge of day-to-day operations and quantitative data derived directly from the organization’s actual business processes.
A bottleneck in a business process refers to a point in the workflow where it slows down or gets stuck. This can occur due to various reasons such as insufficient capacity, lack of automation, or process breakdowns and confusion.
Bottlenecks are not limited to physical machines. They can also occur due to human factors. For example, a bottleneck may arise if there are insufficient staff members or if they lack the necessary tools to perform their tasks efficiently. In such cases, the lack of capacity or inefficiency becomes the bottleneck that hampers the overall process. Identifying and addressing bottlenecks is crucial during a business process improvement initiative. By doing so, businesses can enhance throughput, efficiency, and productivity.
The timeline for seeing the benefits of business process improvement can vary depending on the complexity of your operations and the changes being implemented. In some cases, you may start seeing improvements within weeks or months. However, for more extensive transformations, it could take several months or even years.