Process Optimization is a methodology for removing waste from business processes, reducing costs, improving productivity, and adding cash to the balance sheet. It is a series of tools designed to provide both short and long term benefits by institutionalizing consistency and a focus on continuous process improvement. It is a mindset, a way of doing business. To be successful, it must become ingrained into the culture and fully supported by management at all levels.
Many business leaders, from all types of businesses, healthcare to manufacturing, instinctively know there are opportunities for improvement buried within many of the company’s processes. The question is how to define these opportunities and then make lasting improvements.
Some examples of waste and poor productivity include: excessive time processing orders, invoices, or claims, employees waiting, too many administrative errors, transactions or paperwork gets lost, too many transactions, too much inventory, procedures are not clearly understood by all nor consistently applied and followed, or time is wasted looking for tools or documents that should be readily available. If the organization is experiencing any of these, or countless other issues, valuable time and money are being wasted.
Implementing Process Optimization requires following a series of steps designed to maintain control as well as deliver benefits. First there must be senior management commitment to success. This is followed by education and training to ensure consistent understanding and application of the business philosophy. Senior management establishes a plan with defined milestones and ensures metrics reinforce the new way of doing business. Senior management also selects one or two teams of subject matter experts to execute the plan.
A set of processes, target area, are selected. The target area must provide measurable improvement in a reasonable time to ensure continued success. The time frame should be measured in weeks, not months.
Once the target area is selected, begin by establishing a benchmark; define the current metrics without which it will be difficult to identify improvement. Create a process flow diagram of the processes as they currently are and measure each step. DO NOT redesign at this point. If you don’t know where you are, it will be difficult defining where you are going and impossible to define when you arrive.
Collect all the measurements. The team analyzes the process flows and steps within the processes to identify waste and improvement opportunities. All steps are thoroughly examined to identify waste. Some of the waste can be immediately reduced or eliminated; some will take more time and study to effect lasting reduction or elimination. The team defines strategies for making improvements and develops the future process flow diagram. Measurable improvements are quantified. The team consults with process owners and management to gain agreement and funding, if necessary, to implement the redesigned processes.
Define the resources required and a timeframe to implement the new process flow. An important ingredient to success is training and cross training those working in the process the new standard work steps that have been designed. Standard work instructions must be updated.
During implementation, it is important not to interrupt serving the customers. In a manufacturing environment, this might require building finished goods inventory. In a healthcare facility, this might mean working over the weekend or scheduling resources to minimize disruption.
Once the new process flow is in place and tested, it must be formalized. If not already complete, as would be required in a controlled environment like a healthcare facility, procedures must be updated to support the new processes. Metrics must reinforce the new ways, not be a disincentive. Lastly, celebrate success and move onto the next opportunity.
The following example of a sales order process identifies the waste associated with batching the sales orders. An individual order that has less than 10 minutes of value added work content is taking 4 to 6 hours to process. This impacts not only sales order entry but all downstream processes and most importantly customer response time.
Example: Sales Order Process Flow – Before (batch order processing)
Order waiting Code Orders await Orders wait Highlight Order
on fax order printing on batch print specific into “IN”
instructions tray
Customer Retrieve Enter Print Remove Separate Order
Sends Fax Batch Order pack slips printed slips slips awaits
batch separation
4 – 6 hours
After the current sales order process was mapped, several areas of waste were identified. By redefining the process and the standard work within the process, several of the non-value added steps were eliminated. Orders were processed one at a time. The resources needed to process the orders were re-arranged to be closer and in sight of one another.
Example: Sales Order Process Flow – After (individual order processing)
Order waiting Enter Place order
on fax order into ”IN” tray
Customer Get Print
sends Fax order pack slip
10 minutes
Work flows need to be balanced as well optimized. Process Optimization has series of tools and techniques used to design processes so work can be performed with minimal or no interruptions, bottlenecks, wait, or wasted time. Imbalances, or bottlenecks, in the work flows need to be addressed to ensure optimum flows.
As processes are redefined and realigned, 5S+1 is implemented to ensure there is a place for everything and everything is in its place with rules and procedures developed to ensure long term success. Team members from the area being addressed are asked to sort the needed from the unneeded and assist in straightening and identifying. They establish sweeping rules to keep the area organized and standardize the procedures. Management helps sustain the gains with support and audits. The +1 is for Safety, a top priority in any environment. The following are before and after examples of two 5S+1 efforts, one in the office and one in a manufacturing environment.
In The Office
Before 5S+1 After 5S+1
On the Production Floor
Before 5S+1 After 5S+1
Implementing Process Optimization is rarely as easy as it might sound here but the benefits can be impressive. The processes are more predictable and easier to measure. Work is more consistent resulting in improved quality. It is a management by sight technology that makes it easier to identify and resolve problems. Whenever a process is subjected to the tools of Process Optimization it improves and costs are reduced, how much will vary process to process.
All organizations, profit or non-profit, from banking to healthcare to manufacturing, have processes with potential cost savings and productivity improvement. Consider implementing the tools of Process Optimization within you organization, you will build the path to excellence for your Company.
