Process Improvement

A deep dive into processes, methodologies, and benefits.

Written by: Casey Jenkins, MSCM, MPM, LSSBB , Owner & CEO of Eight Twenty-Eight Consulting LLC

Before even reading this, I want you to pause and think. Think about your business or role within your company. Now, make a mental note of all of the tasks or activities you do on a daily basis. Consider how your tasks impact other colleagues, tasks/activities, or processes within your organization. Okay, now consider how your colleagues have tasks/activities and how those impact other colleagues, tasks/activities, and processes within your organization. Think about how all of that internally works together, and then impacts processes externally with your partners or customers.

When you stop and think about it, an organization can be seen as one, giant complex process that can be broken down level by level into smaller processes. In other words, there are multiple processes within other processes that work in tandem to achieve organizational goals. A common way to look at this is from a system thinking point of view, where the organization and all of the processes driving it act as a system. This system performs these processes as a means to keep products, services, and information flowing both internally and externally.??????

(Side Note: A correlation can be drawn here between a business and a manufacturing production line, and vice versa. This concept of systems thinking applies broadly and abstractly.)

The process or systems structure within an organization can really be seen when you take a top-down approach. An example to liken this concept to would be your org chart with the roles and people within your organization. The same concept can be applied to your processes. With this systems process perspective, a driver at the top of the business leads all of the processes, and activities within them. In other words, your mission, goals, or vision of your organization will be what the executional components are working to achieve. Beneath the mission, goals, and vision comes the strategy. This is the who, what, when, where, why, and how you’re going to achieve your goals. The overarching business strategy also sets the framework for what functional areas are needed within your organization, and the processes, people, and systems that are needed to execute those functional areas. The functional areas themselves are the departments required in order to fulfill the business strategy. This can be things like marketing, sales, manufacturing, procurement, transportation, inventory, warehousing, finance, IT/tech.

Within the functional areas comes the individual tasks, activities, and requirements to keep the business operational. These executional components don’t just remain isolated to the functional area either. Clearly, they are the cogs that make the entire business machine function properly. To piece that all together, and display how interconnected this all is, your executional components work together to feed into your functional areas; your functional areas work together to feed into your overall business strategy; your strategy works to achieve your mission, goals, and vision to keep your business moving forward.

When taking this perspective and seeing a business as an interconnected set of processes, it’s easy to see how gaps, inefficiencies, errors, disruption, or risks can infiltrate into various aspects of the operations by way of processes. This is the reason that knowing your processes, their interconnectivities both internally and externally, and improving them is key for successful execution and business growth.

How do you identify processes within your business? “A process is a collection of tasks, steps, or activities that are performed, usually in a specific order, and result in an end product such as a tangible good or provision of a service (CSSC, 94).” In other words, a process is an aggregation of the components that produce an output; either a product or a service. While this seems like a simple definition, there are deeper layers of what comprises the conceptual theory of the word “process.” Who would have thought that the word “process” has a process (components) to comprise it?

The pillars that make up the term “process” include steps, processing time, interdependencies, and resources/assignment. Since the term is defined by the steps needed to complete, steps are obviously a pillar. The steps identify the “instructions” on how to perform the process. This is commonly seen in the form of standard operating procedures, process maps, flow charts, or other visual tools and identify what actions need performed to achieve the desired output. When completing these steps, time is another factor or pillar. Every process takes time to perform. Whether that’s looking at the entire process as a whole, or the time it takes to execute an individual component, the element of time will be a factor. It’s important to recognize that the time pillar can vary based upon a variety of factors; resource allocation, capabilities and competencies, product, service, industry, etc. When attempting to apply time to a process, the recommendation is to view real-time observation. As mentioned, the time pillar can be impacted by resource allocation, but it can also be impacted by other interdependencies (other processes or external activities). Almost any process will be dependent upon one or more other processes. This means that flow of products, information, resources, or the process itself will be impacted by something else within the organizational operations. Dependencies can also extend outside of organizational walls. Because processes are dependent, resource utilization and assignment come in to play in that in order to effectively execute a process, the assignment of tasks, steps, or activities must be carefully considered to ensure the correct resources are being utilized.

When identifying processes within your organization, an often-missed component is the action that is triggering the process to occur. Another way to look at this? Why is a process being performed? While the pillars of the term “process” help to define what the term means and what comprises it, the major process components are the executional aspects that drive the process from a deeper level. The major process components include inputs, outputs, events, tasks/activities, and decisions. Here is a math equation to help understand how this all works together:

Event Occurs ?? INPUTS + TASKS & DECISIONS + VALUE = OUTPUT

An event occurs that causes inputs, tasks, and decisions to be performed where value is added (or should be) to then equal an output.

• Events are specific actions or predefined criteria that triggers a process to occur. Understanding events allows an insight into why a process is occurring or if the process is needed. Briefly mentioned above, with as complex and interconnected as business operations have become, dependencies can often be the events signaling another action or process to occur.
• Inputs are anything that enters or is required to enter a process in order to produce the output. Inputs are usually causal factors and are often identifiers of process errors. Inputs can be outputs from the preceding process.
• Tasks are the foundation to keeping a process running. These are the executional actions being performed within the process to make it work.
• Decisions are actions that are based upon a set of rules. These actions can dictate the output, which is why formal identification of decisions should be made to decrease variance in process outputs.
• Outputs are either valuable products or services that a customer utilizes from the resulting process. The customer can be internal, external, or even another process. In other words, outputs can be inputs into a subsequent process.

All of the above components are connected not only in a single process but also into dependent processes. Within each process, value should be added.

With seeing a business as a system of processes, the correlation is now more evident of how the business system is like a manufacturing or production line. The same connection can be drawn to a supply chain as well. Once again, a process is an aggregation of sequential tasks/activities/steps to produce an output. As processes work together and have a relationship or connection to one another, it creates the system or overall process; in other words, a production type system. A production system includes internal and external factors (environment, strategy, inputs, transformation activities, outputs, and control mechanisms) that operate simultaneously to produce an output. If you notice, a production system and a process have the same components. This should sound familiar because that is exactly what a supply chain is.

The systems perspective supports the notion that process improvement and a mindset of continuous improvement are important. Through improving gaps within your various processes, the potential risks that your business faces get reduced. This isn’t to say that errors, disruption, or variation over time will not occur. However, identifying gaps or inefficiencies, and determining if they are consistent or outliers, acts as a risk management strategy.

Process improvement also seeks to increase efficiency in that processes that eliminate gaps, also eliminate waste. Therefore, value is increased and flowing throughout the rest of your processes. Along with that, having your processes documented, or creating standard operating procedures, will allow for quick identification of where process breakdowns occur, or identify where future areas to improve are. Standardization also creates consistency and efficiency among the various processes thereby reducing variation or deviation.

Closing the gaps and reducing waste translates to cost reduction. Let’s think about that using an example. First of all, waste can be directly translated to cost. Let’s say that you are inefficiently and wastefully performing a process at the start of any execution. That waste can include poor resource utilization, extra materials, bad data, etc. It’s adding something to the process that isn’t needed. With the systems mindset, the output of that process will hold waste. As that output feeds into the next process, waste goes along with it. Waste is then carried process by process until the final output. Until the waste is reduced or removed, the process will be inefficient. This is another reason that process improvement must be approached from a holistic, or end-to-end perspective.

There are a lot of ways that the process or continuous improvement mindset can be implemented. Often times, the mindset starts with a single project, but then permeates (much like a process) as the benefits are received.

The two well known ways of process improvement are Lean or Six Sigma (or a combination of the two). Both methodologies used to be more specific to manufacturing, but have since expanded to be able to improve various business processes, as the concept is applied more broadly and abstractly. While both are improvement initiatives, they have distinct improvements they focus on.

• Six Sigma is primarily used within manufacturing settings as the goal of Six Sigma is to reduce variation and errors within production processes. As a data-driven approach, Six Sigma seeks to enhance the quality of a process by removing defects, errors, or deviations.
• Lean focuses on maximizing value, while minimizing waste within a process. It approaches processes with identifying value-add and non-value add activities, and then reducing, transforming, or removing the activities that are non-value add.

The two methodologies can be combined as variation and errors when applied more broadly can be considered waste. But both methodologies have tools that can supplement the other.

Interconnectivity and complexity can be reasons that process improvement appears more daunting than it actually is. Often times the perspective is that to achieve a desired state, a massive undertaking is needed. Any sort of advancement or improvement doesn’t need to be all at once. As a matter of fact, more success is found in taking incremental steps as it’s a more realistic approach that will achieve longer lasting results.

What process stands out as needing improvement within your organization?

References:

1. Meredith, J. R. & Shafer, S. M. (2016). Operations and Supply Chain Management for MBAs. Chapter 7: Monitoring & Controlling the Processes. Pages 200-224. John Wiley & Sons, Inc.
2. The Council for Six Sigma Certification (2018). Six Sigma: A Complete Step-By-Step Guide. Chapter 7: What is a Process? Pages 94-112.

Casey Jenkins, owner and CEO of Eight Twenty-Eight Consulting LLC, is a supply chain and process improvement advisor and educator. Offering advisory, educational, and project-based services, she adeptly combines education and experience to solve complex supply chain problems. Reach out today to find out how to Take Your Company to the Summit.