I am a friend of process optimization. Again and again I look to see where a process might be even better, more efficient. Whether in business or in a private setting, using flawless processes can be super-fast and will be fun.
Everything has its right place, so there is no need to search. A fixed, unchanging sequence of steps leads me to from my desk to the printer, quickly and effortlessly. Even with everything else going on around me, I don’t need to think about things too much. This saves energy and time and is easy on my nerves—and it makes space for other activities. It’s just perfect.
But now this concept has suddenly been shaken, and I have had to learn that it has its limits.
In September of 2018 my daughter was born. She taught me without fail that my beautiful, flawless processes have one very major flaw: They are inflexible. There must be nothing in between, no major changes. Because if there are, then the whole system will collapse.
As soon as I started working on a job, I had to pause again to look after my daughter. I was no longer able to finish things, I had to leave many tasks unfinished, and in the end everything was a total mess. Close to a nervous breakdown, I realized that something had to change.
I made a discovery: Process optimization is useful and important. But just as important are breaking points where an activity can be interrupted without risk and left for a later date. Likewise, some flexibility must be maintained that will allow other paths to be taken quickly and at short notice if the current situation requires it.
These thoughts made me think about business. What about business? There, too, flexibility, speed and time are issues, but important in that context are also effectiveness (effectiveness, achievement of objectives), efficiency (performance), cost, and innovation (Krampf, 2016, p. 7; Dernbach, 1995, p. 187; Waser & Peter, 2016, p. 62).
So how can business processes be kept flexible and at the same time run efficiently in order to achieve a defined goal in the shortest possible time and at the lowest possible cost? What needs to be considered?
Definition of terms:
According the DUDEN dictionary, a process is “an event, a method, a development, a judicial implementation of litigation.” (Scholze-Stubenrecht, et al., 2010)The term derives from the Latin word processus.”
In the business environment as well, a process therefore represents a series of activities that generate prescribed results and outputs from specific inputs and their transformations (see Fig. XX). (Krampf, 2016, p. 2)(Pieske, 1997, p. 74)This corresponds to the definition of process (DUDEN), according to which a business process is a “sequence of individual development steps of a project or the like within a company.”
Also, (Lackes)a business process is a “series of value-added activities . . . with one or more inputs and outputs that create customer benefits. Business processes can be viewed at different aggregation levels, such as for the entire company, individual divisions, or functional areas.”
(SEO united GmbH)describes optimization as “a way to improve the current state or how best to achieve an optimum.” The term is derived from the Latin word optimus, meaning “the best”, which is an irregular superlative for of the word bonus(good).(Moosbach)
Process optimization thus represents the improvement of processes. (Vertical Media GmbH)Thus it includes “the analysis and improvement of all processes that take place in and around a company.”
Business Process Optimization
What is it for?
In business, therefore, process optimization is indispensable. Ever since the onset of industrialization, processes have been constantly improved, their flows adjusted, and innovations have been introduced. The objective was to speed up production and increase customer benefits. (Waser & Peter, 2016, p. 17)
Even in this day and age friction losses are avoided, processes are streamlined, and thus they are much shorter and faster. This saves on resources and time, increases quality and productivity, and ultimately reduces costs. Increased competitiveness for products produced in the market will thus be achieved. This in turn ensures more stable and higher market shares, job security, and overall a better return on investment (Krampf, 2016, p. 5).
For this reason, it is extremely important to uncover and reduce inefficiencies in processes. They have a lasting effect and keep a company healthy, because they have (Dernbach, 1995, p. 190)a cost-reduction potential of 20-40% and a reduction of the throughput and reaction times of up to 70% will be possible. This must, then, always be the first step, rather than short-term cost-cutting measures (Krampf, 2016, pp. 5 ff.).
What are they?
Processes should always be oriented towards customers and customer benefits since repeat purchases generate (Pieske, 1997, pp. 64 ff.)70% of sales. They must therefore be focused on goals and results and be improved and renewed on a regular basis. This brings up three questions (Waser & Peter, 2016, p. 50 ff.):
- “What is the concrete customer benefit or competitive advantage that will result from the process?
- Can the process be made more efficient (such as omitting, merging, splitting, supplementing, parallelizing, overlapping, outsourcing) without creating a disadvantage for the customer or the company?
- Which customer requirements or differentiation potentials are not being considered or are being underestimated?”
In order to answer question 2 sufficiently, additional questions might be useful, such as:(Posluschny, 2016, p. 215)
- “Have all the necessary tasks to achieve the goal of the process been taken into account?
- Are the tasks being done in the right order?
- Are the various tasks optimally distributed to individuals and departments?
- Is the flow of information from one operator to another well thought out?’
But there are also other helpful questions(Riekhof, 1997, p. 15):
- “Can duplication or unnecessary administration be eliminated?
- Can process elements be simplified and standardized?
- Can process elements be automated?
- Can the sequence of activities be optimized?
- Can process elements be made error-proof?
- Is it possible to eliminate elements that do not provide benefits?
- Can the division of labor between customers and suppliers involved with the process be optimized?”
What turns out to be important in all efforts is: “examining key processes in terms of their contribution to strategy and successful market positioning.” Only in this way can the strategy and the customer relationship be precisely coordinated with each other, which is necessary to achieve the company’s goals (Krampf, 2016, p. 10).
To facilitate this selection, further questions are necessary (Riekhof, 1997, p. 15):
- “How much is the customer affected by the business process? For instance, are there many customer complaints or claims?
- Is any action required? Is there, for example, ongoing internal dissatisfaction with the processes or a particularly high failure rate?
- How important is the process for the entire company?
- What opportunities exist to change the process? Are there, for instance, new technologies that could be used?
Are there sufficient resources for process variation?”
These questions describe implicitly the possible tools that can be used for process optimization. (Krampf, 2016, p. 87 ff.).Such as:
- Quality Function Deployment for customer and market-oriented planning and defining products and services,
- Ishikawa Diagram for systemic determining of the causes of problems,
- Gap Analysis for detecting deviations from the planned target path,
- Benchmarking for continuous comparison analysis,
- Quality Circles to promote consciousness of quality,
- Simultaneous Engineering for temporally overlapping of workflows and
- Complaint Management for systematic interventions in the event of articulated customer dissatisfaction.
Finally, for actual optimization, four optimization elements are recommended (Krampf, 2016, pp. 26 ff.). These are:
- Eliminating elements: This applies to single or related activities that do not contribute to value creation and thus do not reduce the customer benefits.
- Simplifying elements: In the remaining process flow, activities will be examined to see how they can be made simpler and more cost-effective.
- Integrating elements: This step summarizes activities that can be more efficient.
- Standardization/Automation: Finally, there should be an examination of how individual process steps or whole processes can be standardized or automated.
The development of these steps will require several consultations with participating groups. In order to maintain an overview and to be able to work purposefully, it is essential to document every decision and every answer to the above questions during meetings.
At this point, we recommend a visual representation of the affected processes. This will show at a glance which areas offer further potential for improvement. These can be digitally prepared so that they can be customized for each meeting, making it easy to see which steps still need to be taken.
The template in Fig. XX can help facilitate this. In the large space provide, you can visualize the process that you want to take a look at. Now go through the points listed above and adjust the visualization of your process accordingly. One Suggestion:Before each new step, save your current version so that you can understand the adjustments later and possibly be able to undo them.
But before processes can be optimized, they need to be defined. Toward this end, process thinking needs to become part of your company’s operation, and a process management system needs to be introduced. For this, there are various approaches.
One is the business process optimization model from Diebold, which requires a holistic management concept. To accomplish this, “all organizational guidelines and resources that are necessary to provide a defined service” need to be coherently designed and optimized as a unit (Dernbach, 1995, p. 189).
Other approaches include Lean Management, Total Quality Management (TQM), and Business Process Management.
Other blog articles on this page explain what underlies these approaches and how they are different. Subscribe to our magazine Visual Selling® and keep up to date.
Here is a question for you.
What experience have you had with business process optimization? Write a comment for us about that.
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Riekhof, H.-C. (1997). The Idea of Business Process: Basis of the Learning Organization. In H.-C. Riekhof, Acceleration of Business Processes: Competitive Advantage through the Ability to Learn(pp. 7-28). Stuttgart: Schaeffer-Poeschel Publishers for Business Tax Law GmbH, Stuttgart
Scholze-Stubenrecht, D. W., Auberle, A., Eickhoff M.A., B., Knoerr, E., Muenzberg, D. F., Osterwinter, R., & Rautmann M .A., K. (2010). Duden: German Orthography.Mannheim: Bibliographical Institute GmbH.
SEO United GmbH. (no date). What is Optimization?Accessed on February 05, 2019 from seo-united.de: https://www.seo-united.de/glossar/optimierung/
Vertical Media GmbH. (no date). Process OptimizationAccessed on February 5, 2019 from GS lexicon: https://www.gruenderszene.de/lexikon/begriffe/prozessoptimierung
Waser, B., & Peter, D. (2016). Process and Operations Management—Strategic and Operational Process Management in Value Networks.Zurich Versus Publishers AG.