BUSINESS

PROCESS

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Business Process Improvement Slashes Inefficiencies

Your business process is how you get from Point A to Point B to create and deliver what you’ve promised your customers. Is the path your company takes as streamlined as possible, or do your employees unnecessarily add steps or duplicate their efforts along the way?

We can help you streamline your business process by analyzing your path from beginning to end, preparing process maps and a report, and meeting with your team to review our findings and come up with solutions that optimize the overall process.

Is local optimization hurting your business process?

Every business sells, produces, and delivers a product or service to its clients, and each company’s business process includes the unique steps taken to do this. Even if two businesses are selling exactly the same product or service, their business processes won’t be exactly the same.

Processes are developed in response to demands imposed by clients, internal management, or government and other oversight agencies. Within these overall processes, the company’s divisions and departments have sub-processes that are part of the overall path to the endpoint.

Most employees complete their part of the process to the best of their abilities. This is called local optimization, and it often contributes to inefficiencies in the overall process.

How can doing your best cause inefficiency?

Inefficiencies are introduced because employees may not be aware of how their actions impact downstream processes. Each person may do the best possible job within their area of responsibility without understanding what happened before and what needs to happen after work leaves their hands.

Here are two examples of how doing your best can cause process problems.

Case One: Wrong Rewards

Problem:  Sales reported at the weekly management meetings always exceeded sales reported from the system at month end.  We verified that the month end reports from the system were correct. Why the mis-match?

What was happening?  During our process improvement project interviews, we learned that the company rewarded its employees for the number of sales as counted at the end of the month.

Sales meetings were held weekly, and assumption was that if 10 new sales were reported each week, there would be 40 new sales at the end of the month.

When we asked how managers got the number they reported in the weekly sales meetings, we found out that some were not using system reports; they were talking to the salespeople. 

When salespeople provided managers with their weekly counts, sometimes they included sales that were not in the system yet.

Why weren’t sales entered into the system?  It took over an hour, and about 50% of the sales fell through. Some salespeople felt it was a waste of time to enter a sale that they would later have to cancel.  Because of this, some sales verbally reported to a manager for the weekly meeting were never entered into the system.

Other salespeople were anxious to get every one of their sales into the system, so they entered them as the sale was complete, but they did not always enter cancellations promptly; salespeople are optimistic, so they hoped they could turn the sale around. 

Because everyone knew that employees were rewarded for sales at month end, the day before the end of the month, new sales were entered into the system, and when applicable, they cancelled sales previously entered. 

The end of the month numbers were correct, and the weekly ones were overly optimistic. With the current process, sales reported in weekly meetings were never going to sum to the total sales at the end of the month.

Solution:  When we reviewed the process maps and our findings with the team (all interviewees), it became clear that with the reward system, employees were highly motivated to enter sales at the end of the month; however, there was little incentive to enter sales or cancellations throughout the month. The system was accurately reporting the information entered, but the information in the system didn’t match what was happening in real life.

Based on recommendations from the process improvement team, the company made changes.
  • Rewards and reporting were moved to the same cycle.
  • In weekly sales meetings, everyone reviewed system data, including the number of sales and cancellations.
  • The system was updated to track the date sales and cancellations were entered (in addition to the actual sale and cancellation dates) to allow management to reconcile differences between counts from week to week.
  • Requirements for adding a sale to the system were simplified to encourage immediate entry.
  • Reasons for cancellation were categorized and reported in the system to allow the company to better understand what was happening and reduce the cancellation rate.

What looked like a report problem was really a process issue.  Investing in an analysis of the process and focusing on improving it resulted in more accurate information about actual sales and ultimately reduced the cancellation rate.

Case Two: No One Owns the Overall Process

Problem:  A manufacturer took 90+ days to provide clients with an estimate to build a new product. By taking so long to create a price quote, the company was losing orders for existing products along with new opportunities, as frustrated customers selected new manufacturers for all their items.

What was happening?  Before DragonPoint began conducting interviews with the employees involved in the process, management provided an overview of how requests for new product pricing were handled. Here are the steps they defined.

  • Client requested a price for the manufacturer to produce a new product.
  • Sales completed a new product pricing request form by filling in customer and product information.
  • Engineering reviewed the request and created a spreadsheet identifying the technical requirements for building the product.
  • Based on engineering’s input, purchasing sourced the raw materials required to build the product and provided the cost.
  • Production figured out the steps required to produce the product and calculated the associated cost.
  • Packing identified the best packing method and associated cost.
  • Shipping determined the cost for various alternatives for delivering the product to the client.
  • Accounting calculated the final cost and sales price for the new product.
  • Sales, engineering, purchasing, production, packing, shipping, accounting, and the management team met to discuss the new product request and finalize the sales price to produce the new product.
  • Sales provided client with a price.

While management was accurate about the steps followed, during our process improvement project interviews, we found new information that wasn’t common knowledge.

  • Questions throughout the process frequently required communication with the customer, so every department was authorized to contact the customer directly.
  • When a department got new or clarified information from the customer, it was documented, and the new product request was sent back to all previous departments to determine whether an update was required. If an update was required, the process started over again.
  • Responsibility for the new product quote was handed off as it routed to each department.
  • Departments were sometimes generating unnecessary information. For example, engineering spent up to 4 hours over a number of days creating a new product spreadsheet because they thought purchasing and production needed the information, but while it was useful if the company won the job, neither department used it to prepare the quote.
  • Questions that came up during the management review meeting at the end of the process frequently required a complete rework of the quote.
  • The employees who completed the new product quote request in each department also had production responsibilities, which took precedence over the new product work.

After conducting interviews, our DragonPoint team prepared process maps showing what was happening, documented our findings, and facilitated a team meeting to review our results.

Once everyone had a shared understanding of how the process was (or was not!) working, the team identified solutions.

  • Management delegated authority for the new product estimation process to one team, and team members did not have (conflicting) production responsibilities.
  • Engineering was happy to stop spending time producing the unnecessary spreadsheet.
  • A cross-functional team review of the request was added to the beginning of the process, so fewer questions came up for the first time at the end. The early team review also provided the benefit of identifying products the company could not produce before departments wasted time responding to the request.
  • All questions for the customer were routed through the new estimation team. The team decided whether the customer’s answers impacted the estimate, and if so, broadcasted the update to all involved parties concurrently and incorporated each group’s changes into the quote.

With the changes implemented, the new product process was immediately reduced to 30 days or less, and the person who now owns the process continues to make improvements.

What’s the Problem?

Often business problems are not caused by a lack of employee motivation, knowledge, or data. Sometimes each department is doing outstanding work within their own silo without understanding how they fit into the overall process.

Maybe your business has accurate sales numbers and doesn’t take 90 days to price a new product, but every business has processes that can be improved.

WARNING! Fix process issues before investing in software

Sometimes people will try to convince you that software solves business process issues. Don’t listen to them. The best software in the world can’t fix broken processes, and the wrong software makes bad processes worse.

Business process improvement is independent of computer software. If you analyze and improve your business processes before you buy software, you’ll have a clearer picture of your requirements, and you’ll end up with a solution that fits your company’s needs.

At DragonPoint, we have used our business process improvement methodology to facilitate more than 50 process improvement projects here in Florida, throughout the country, and around the world. We’ve worked with a variety of transportation, manufacturing, construction, medical, and service clients to streamline and optimize their business processes.

At DragonPoint, we love solving problems. Call us at 321-631-0657 to find out more about how your company can use DragonPoint’s process improvement expertise to solve your business problems.

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