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How a focus on process optimization can help you reach your organizational goals
IT leaders share what they’ve learned from their Agile transformation experiences
May 14, 2021
Process optimization helps food manufacturer increase productivity and generate more revenue
August 9, 2021When an organization carefully plans and executes their primary business processes, it can reap competitive advantages. Unfortunately, not all processes are well planned. Some initiatives are cobbled together without a plan. Some plans are inherently flawed. Some are simply outdated. And some exist only in the memories of long-time employees.
Underperforming or undocumented processes exert considerable drag on an organization. When anyone in the organization identifies a business process like this, it’s ripe for optimization.
Process optimization will reduce wasted time, save money, and use resources more efficiently. You’ll achieve process goals that pave the way to organizational goals.
For example…say customer call center employees find a way to improve call flow to reduce average time per call from 3 minutes to 2.5 minutes. Over the course of a typical day, where a call center employee is on the phone for 7 hours, that would increase their capacity from 140 calls/day to 168 calls/day.
If the size of an average order is $350, that extra bandwidth could result in $9800 in additional revenue per day per call center employee. Those are just round numbers for example purposes only, but you see how even a small change can result in significantly improved KPIs over time.
Regardless of the process you want to optimize, follow these six, crucial steps for a successful process optimization project.
Step 1: Set your goal
A strong, measurable goal increases your chance for a successful process optimization project. Optimization goals usually fall into one of three initiatives:
- Increase revenue
- Reduce costs
- Improve customer/employee relationships
A true goal is specific and measurable. “Develop a more efficient process” isn’t a goal. It’s an observable quality of a process. The term doesn’t capture a legitimate goal for your optimization project.
Similarly, it’s not a good goal to say you want to “increase marketing spending behind a poorly performing product”. That’s pursuing a solution before you analyze the situation. Your optimization goal should be to increase sales of the product. Increasing marketing spending might be one of the tactics, but it’s not the goal.
Be sure your goal has an objectively measurable base value tied to a specific metric. For example, you may know your Net Promoter Score(R) (NPS) is currently 50. This is a good starting point for a customer satisfaction improvement project targeted at increasing your NPS to 75.
Finally, limit yourself to no more than three related goals. It’s easier to manage the overall project and see clear results.
Step 2: Select a project owner
The project owner can’t be a department or business function. The owner is an individual directly responsible for activities surrounding the process improvement initiative. This is typically a manager in the area where the improvement will take place or the area most impacted by the optimized process.
For instance, if the goal involves customer satisfaction, the goal owner should be someone in the customer success management function. They control the decisions and activities with direct impact on customer satisfaction.
The goal owner is the final decision maker for process changes.
When there are disagreements about changes to be made, the process owner must have a deciding vote. After all, the owner will have to implement the decision and support it.
The goal owner must work to ensure process changes are followed.
After any project-mandated behavior change, employees often revert to what they’ve always done. The goal owner has some responsibility to help employees follow the new process.
Implementing new processes can be done through training, mentoring programs, addressing issues and providing reinforcement via daily stand-up meetings, or using a board to track process adoption. There are many ways to reinforce desired new behaviors.
The Kübler-Ross Change Curve is a valuable communication framework to help overcome workplace relationship tension during times of change. This model provides a canvas for open, honest, and consistent conversations.
Step 3: Understand the current state
Once a goal is established and an owner selected, it’s tempting to dive in and start to modify the process before you fully understand the current state. This is a mistake. Skipping ahead could result in creation of another underperforming process that fails to meet the organization’s objectives.
Create a process map or flowchart to illustrate the current process. Take the time necessary to add enough detail to the description. Your final document will help everyone involved understand the overall process.
Current state process mapping is also where you should determine your baseline measurements. Again, a measurable goal must start with an objective baseline value to compare with the project outcome.
Step 4: Determine possible issues and identify potential solutions
The effort to create the process map pays off here because issues typically emerge in this step. Understanding the issues helps the overall optimization process.
Once you verify the issues, devise potential solutions. Think creatively. This is the blue-sky time to come up with new ways to reach a desired solution.
But stay focused during this step. It’s easy to stray off the path and waste time on things that won’t move you any closer to reaching your target outcome. For example, a production group can probably come up with lots of ideas about what the sales staff should be doing, but those actions may not have an impact on customer satisfaction.
If the solution-identification step validates the original goal, proceed to Step 5. If it doesn’t, start again at Step 1 to identify a different valid goal.
Step 5: Evaluate and prioritize your solutions
If the process is mapped out as described in Step 3, this step should go smoothly. It’s time for you to evaluate and prioritize the potential solutions that came out of the work completed in Step 4. The process map will help show which problems will be solved and how they’ll be solved.
The project team, which includes the project owner, team members, and key stakeholders, should perform cost/benefit analysis as part of this step. Clearly, if the process optimization cost outweighs the benefits likely to be realized, the project should be scrapped.
After you’ve evaluated the solutions, prioritize the actions necessary to implement the chosen solution. It’s a good idea to identify quick wins and accomplish them early in the project. This encourages the team and provides observable evidence the solution you picked is the right one.
Step 6: Create an improved future state
You’ve established the goal and selected an owner. You mapped the current state, evaluated possible solutions and prioritized them. Now, it’s time to create the desired future state. This is the implementation phase.
For your implementation to succeed, you need buy-in from the people who will use the newly optimized process. This is where definite actions to create the proposed improved state take place.
Always keep an eye out for risks that threaten to interfere with the project. You’ll need to mitigate those risks in order to complete the optimization project successfully.
See how a process optimization project played out in real life
Process optimization is more than an academic exercise. Here’s an example of a recent process optimization project FarWell helped with and how it delivered tangible results.
During the pandemic, to minimize personal contact, a food pantry distributed food in boxes that could be placed in vehicle trunks. Their existing boxes needed to be formed, taped, and a logo sticker applied. This took time. Since the demand for food was high, (Step 1: set goal) the food pantry wanted to find ways to increase the amount of food distributed with limited volunteers and space.
The VP of Operations selected the production manager to be the project owner. (Step 2: select project owner) This individual was responsible to manage the resources and output for the food assembly operation. The production manager worked with the team and observed that the food boxes were filled with either produce, cooler foods, or dry items. And since it took time to form the boxes, it had to be handled as a separate operation to be completed before the start of the box-filling process.
It took four people two hours to assemble enough boxes for one three-hour packing shift (800 boxes.) There were other problems too. The formed boxes took up valuable space. The boxes also trapped moisture, which weakened the cardboard and limited the number of boxes that could be stacked on a pallet. Finally, volunteers had to write a P, C or D on the box to indicate if it contained produce (P), cooler items (C), or dry items (D.) (Step 3: understand current state.)
While process mapping is a commonly used and successful technique, there are other ways to identify a solution. In this case, the team conducted a benchmark study to see what other technologies were available to remedy the identified problems. They found the solution (Step 4 and Step 5: identify solutions and prioritize them) was to work with a box manufacturer to source a pop-up box with a glued bottom and a fold-and-close top.
This eliminated the previous manual box forming and taping operation. Boxes could now be formed on the fly simply by pressing on the corners. This saved labor (four people working two-hour shifts) and saved space (they no longer had to store 800 preassembled boxes).
(Step 6: create an improved future state) The new boxes were pre-printed with P, C or D check boxes. This eliminated having to write the contents of each box. Handholes were added for easier lifting and to improve ventilation, which increased box strength. The box optimization overall resulted in a 30% increase in food-packaging output per shift. The customer was extremely happy, and so were the teams who had the task of assembling boxes.
Leadership Takeaway
Build a culture of continuous improvement, one where all employees seek ways to improve efficiency and productivity. This will benefit your organization across multiple fronts, build significant competitive advantage, and create a path toward consistent positive evolution.
Read more about this customer story.
Want to start your own process optimization initiative?
First, start with the end in mind. The act of determining specifically what to improve is often a project in itself. It’s helpful to have a partner to work with your team to determine the right processes to focus on and how best to improve them.
FarWell helps its customers successfully plan and implement strategic changes that help their organizations evolve. We want you to realize the greatest return on your optimization investment.
We help organizations identify important processes, evaluate and map current performance, establish optimization goals aligned with your organizational goals, supervise and direct activities necessary to carry out the project.
Advisor teams use a teach and coach method to guide communications and help employees embrace new process changes across the organization.