Boosting Performance with Process Redesign: Three Principles You Need to Know

Introduction

The efficiency and effectiveness of business processes can significantly impact overall performance. Redesigning these processes to enhance their effectiveness is crucial for achieving operational excellence. There are seven key principles for optimizing business processes, and in this article, we will delve into three foundational principles that can drive substantial improvements in any business process. By examining these principles and their application, you'll gain valuable insights into how they can be utilized to refine your supply chain processes, ultimately enhancing performance and achieving strategic goals.

Principles Defined

Principle 1: What?

The first principle addresses whether a step in the process is necessary at all. The core question here is: Could the step be completely removed from the process? This principle encourages organizations to critically assess each step in their workflows to determine if it adds value. If a step does not contribute to the desired outcome or can be deemed redundant, removing it can streamline the process and reduce complexity.

Principle 2: Who?

The second principle focuses on who performs each step in the process. The question to consider is: Is the step performed by the correct person, or would it be more efficient or effective for someone else to perform the step? This principle involves evaluating whether tasks are assigned to individuals best suited for them or if reallocating responsibilities could enhance efficiency and effectiveness. Assigning tasks to those with the right skills and authority can optimize process performance.

Principle 3: How Precisely?

The third principle revolves around the precision with which tasks are executed. The guiding question is: Should it be done more precisely, or less? This principle recognizes that precision impacts the amount of work required. If a task can be completed with less precision without compromising the outcome, this can reduce effort and costs. Conversely, if higher precision is justified by the benefits it brings, then it should be pursued.

Examples

Principle 1: What?

In a supply chain organization, reducing the approval requirements for purchase orders (POs) can streamline processes. For instance, by allowing only one person to approve POs needed for the production plan, rather than multiple approvals, unnecessary steps are eliminated, speeding up the workflow and reducing administrative overhead.

Principle 2: Who?

Consider a scenario where buyers were ordering bulky cardboard boxes based on inaccurate Material Requirements Planning (MRP) data, resulting in excess inventory. By shifting the responsibility for requesting deliveries to material handlers, who have real-time visibility of inventory levels, the process became more responsive and accurate. This change led to a reduction in inventory from 60 days on hand to less than a week.

Principle 3: How Precisely?

A client struggling with detailed capacity planning faced challenges due to complex data requirements and inaccuracies. Implementing Rough Cut Capacity Planning (RCCP) simplified the process by focusing on key resources and using average production data. This approach improved their ability to meet customer order dates more reliably and reduced inaccuracies.

Conclusion

Effective business process redesign is essential for achieving superior supply chain results. By applying these three principles—evaluating what can be removed, determining the optimal person for each task, and adjusting precision levels—organizations can significantly enhance their operational efficiency and effectiveness.