business-process-improvement

What is Business Process Improvement? Business Process Improvement In A Nutshell

Business process improvement (BPI) involves the evaluation and subsequent improvement of business processes. Business process improvement seeks to improve business processes, defined as any series of repeated tasks that create value for a customer, sponsor, or stakeholder. During BPI, each process is mapped out to identify inefficiencies. Then, the process undergoes a redesign so that it can meet new standards or performance benchmarks. 

Understanding business process improvement

In the face of a rapidly shifting global marketplace, there has never been more need for business processes to adapt to advances in technology, labor, distribution, or consumer preferences.

Processes ripe for improvement usually fall into three categories:

  1. Operational processes – or those associated with the value stream such as orders, distribution, and manufacturing.
  2. Management processes – including oversight, budgetary, and communicative procedures.
  3. Supporting processes – or those performed by support teams. In other words, technical support, recruitment, customer service, and accounting.

Common goals of business process improvement

Some of the more common process-oriented goals include:

  1. Reducing process time – how can the process be faster or more efficient? This might be achieved through the adoption of new technology or the elimination of superfluous steps.
  2. Improving output quality – given the same input of resources, how can a better quality product be produced? Being able to identify factors that cause errors or defects is a good place to start.
  3. Eliminating waste – what are the most wasteful steps in a process? Removing waste is integral because it can help a business achieve all three process goals at once.

Business process improvement methodologies

There are many BPI methodologies available, with each helping the business to apply a tried and tested framework to their improvement initiative.

The most well-utilized methodologies include:

  • Six Sigma – first developed by Motorola engineers to measure process defects and produce a near-perfect final product. Indeed, a Six Sigma Process is one that produces less than 3.4 defects per one million outputs. The DMAIC framework is a popular process improvement tool that uses Six Sigma principles.
  • Lean management – a process optimization tool that seeks to remove low value-adding steps with little impact on the final product. Lean was popularized by Toyota as a way to shorten the Order to Cash (O2C) cycle in vehicle manufacturing. The focus on lean management is maximizing consumer and business value while minimizing waste.
  • Total Quality Management (TQM) – a process improvement approach with a focus on delivering long-term customer satisfaction. TQM is a more holistic methodology that is customer-focused, process-centric, and advocates continuous improvement. It also favors collaborative communication and fact-based decision-making.
  • Agile – heavily used in the software development industry with a “fail fast” philosophy of iterative product development and delivery. Errors are detected and subsequently removed from agile development early on, leading to improvements in efficiency and customer value.

Key takeaways:

  • Business process improvement is a general term for the evaluation of business processes with the goal of improving them.
  • Business process improvement is primarily focused on reducing process time, improving output quality, and eliminating waste.
  • Business process improvement methodologies include the Six Sigma-based DMAIC framework. Lean management, Agile, and Total Quality Management are also popular.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"