Designing and Building the Right Operational Processes
Are you a business owner who is on the cusp of growth but struggling to make it to the next level? What is preventing you from getting to the next level? Are you depending on people to make your operational processes more efficient and productive to be successful, and despite their best efforts, your operations are not scalable to support continued business growth? Are your current processes driving efficiencies to bolster your bottom line? Our experience in working with companies is that most have manufacturing cost that are 5 to 10% too high. What would it mean to your organization to realize an additional 5 to 10% EBITDA?
Business process management is defined as the discipline in which people use various methods to discover, model, analyze, measure, improve, optimize, and automate business processes by Jeston and Nelis in their 2014 title “Business Process Management”. In short, it means you must have some basic standardization around what it is your business does to streamline and scale it. Ideally, you want to have a set of systems and processes, backed up by supporting policies and procedures, that, following the Pareto principle, cover the 80% of the routine work that takes 20% of your time so that you and your team have 80% of your time available to attack the most difficult 20% of the work.
As business are founded and have initial growth, they often rely on knowledgeable employees who through experience know what to do. That works for a while. The challenge comes when the work exceeds the time or skill available to do it. Additionally, you want your most experienced team members working on the issues that can’t be easily predicted and automated.
So you may be among the fortunate leaders that recognize this issue ahead of it impeding your growth. What do you do about it? This is often an opportune time to go get some help from outside the organization to work with your team to identify key processes, map out their current state, decide what needs to be fixed, define a future state, and implement improvements, including automation whenever possible. It’s very important to get to one standard way of executing a process so that you have a baseline for improvements that you can measure against. If you don’t have a standard, it’s impossible to see what is really going on and where issues like defects and bottlenecks arise from.
We often find that implementing standard processes can result in 3-8% reduction in operating costs due to removal of wide variation swings that drive direct costs, creation of standard methodologies for troubleshooting and training that reduce indirect costs, and in manufacturing environments, reduction of maintenance costs as your equipment operates in a more stable manner.