Business process improvement

What is a business process?

A business process is any action that occurs in companies with the aim of delivering some value. Processes are performed by people or machines. Every process consists of several steps. The steps of the process are the smallest actions that need to be executed in order to move to the next action or to complete the process.

Examples of processes can be:

  1. From a web order of a product to the delivery of that product to a customer.
  2. From an idea to the realization of a product.
  3. From the entry of goods into the warehouse to the exit of goods from the warehouse.
  4. From receiving an invoice to paying the invoice.
  5. And every other one in your company.

Why should we improve business processes?

Processes are the core of every business. Regardless of what your company deals with, you have one or more processes that together constitute your business.

If we place that business in a market where you face competition, the best company is not the one with the best product, but the one with the best processes surrounding that product. They don’t even have to be the fastest or the shortest processes, but well-coordinated and constantly re-evaluated for potential improvements.

I don’t want to delve into quality management systems, as I neither deal with them nor is this text intended for that topic, but all such systems, from ISO 9000 onwards, aim to control and improve processes. The only thing that differentiates them is the types of processes. Some processes deal with safety, some with standardization, but none of them deal with business improvement. None of them will open up new markets and enable company growth just because you have them.

To improve a process means to invest enough energy to examine whether that process is necessary at all, whether it can be shortened or simplified, whether it can be done in a different way, at a lower cost, with fewer steps, yielding a higher profit, or even if we can do without it altogether.

We improve processes solely to remain competitive in the market or to become better than the competition. We also improve processes so that our employees who do all that work are more satisfied at work. If the employees are satisfied, the customer is too, and that means better business.

What if we don’t improve business processes?

The primary resource in the world isn’t money, oil, gold, bitcoin,…, but time. If we don’t change quickly enough over time, we lag and eventually disappear. This applies to every company, every living organism, every person. If you don’t follow market changes and change quickly enough, you will go bankrupt.

I can cite the automotive industry as an example. Back in 2003, the entire automotive industry was based on internal combustion engines, with a few exceptions in the hybrid world like Toyota. The German part of the automotive industry has been the leader in automotive technology development for the past 100 years. There are also good examples in France and England, but Germany is still bigger than all of them combined in terms of the number of cars produced in Europe.

Although I’m not interested in absolute numbers, it’s good to know that a gasoline engine has over 3,000 connected parts and that the production of these engines has been perfected since 1876 when it was invented by Mr. Otto in Germany. If you asked a German engineer back then if they could make a better car, they probably would have focused on better design, better materials, and a better gasoline or diesel engine.

Why 2003? That year Tesla Motors Inc was launched, working on a small prototype of an electric car. A few years later, Elon Musk bought the company and transformed it into one of the largest electric car manufacturers.

For many long years, the German automotive industry perfected its factory processes, but they never thought about mass-producing electric cars. Why? Well, customers were buying their existing cars in large numbers (and still are) and were demanding better, faster, stronger, more economical, and cheaper cars. Their engineers delivered precisely that.

When Tesla entered the market, it made a car that in terms of its performance was on par with German cruisers, but entirely electric and with a range of over 600 kilometers, offering the same mobility as conventional cars.

Then there was a turning point. Customers began to like electric cars. They are fast, cheap to maintain, and their prices are slowly dropping to an acceptable level. Their sales began to disrupt the plans of the German automotive industry. Should they stick to old processes to make their cars technically better and risk the future? Or accept the trends and change?

By 2020, the entire German automotive industry began to standardly offer electric cars. It took them 18 years to understand market trends and start changing their processes. They did this to be competitive in the market by 2030.

If we apply a similar philosophy to every business and place it in the time domain: if you don’t start changing your business today, you won’t exist in 10 years.

What is needed for me to start changing my processes?

First and foremost, a company’s CEO needs to be aware that regardless of how well the business is currently doing, there will come a time when this will cease and revenues will decline. Therefore, the company must constantly prepare for that moment.

If the CEO acknowledges this, they must allocate resources to begin the analysis. These resources might involve hiring experts, such as DProgres, or forming an internal team tasked with this responsibility.

The analyses can be:

  • Analytics of existing processes and finding ways to improve them.
  • Analyzing the company within the market and defining new levers for business development, such as a new product or entering a new market with an existing product.

Start the change. Now!