Efficiency, cost reduction, and customer satisfaction are common goals. However, managers often avoid implementing these goals because they fear lengthy and expensive analyses and high investments. Some basic concepts can help us identify problems in the business process and select them for optimization.
Identifying a problem—and its cause—can feel like a ‘mission impossible’ when different departments, people, and systems are involved. With colleague Nico van der Meersch, a Business Analyst at Dynatos, we wrote a whitepaper discussing optimizing business processes. In this blog, we’ll provide some key takeaways for identifying process bottlenecks.
Four bottlenecks for identification for business process optimization:
- Make use of the Lean Management Methodology.
- Investment in technology is not the only answer.
- Measure, measure, measure.
- When are the results negative or positive?
1. Make use of the Lean Management Methodology
Take the best practice of the “Lean Management” methodology, including the concept of “waste.” Every resource you spend (time, labor, material) to deliver a service or product, that doesn’t add value to the process, is considered a waste. According to this methodology, there are seven types of waste: Movements, Stock, Transport, Defects, Waiting, Unnecessary steps & Overproduction.”
2. Investment in technology is not the only answer
Process automation via software is a good option, of course. However, it is just one of the three key components: software, process, and people. It’s a matter of common sense. Change the process, the order of the tasks, or the people. You have to take them all into account. In some cases, you can optimize without investing in technology by adapting the people and the process.”
3. Measure, measure, measure
“There are different factors to measure. Time, on-time delivery, and customer satisfaction are examples. We normally use time.” Check all the steps and milestones (outcomes) in the process and measure the cycle time of the whole process and the intermediate steps.
For example, in an Accounts Payable process, you can measure the following indicators:
- Average time for invoice registration from receipt
- Average time for invoice approval from receipt
- Average time for invoice payment from receipt
In a more detailed analysis, you can also measure the payment behavior, for instance:
- Average time/volume/amount of invoices that are paid too early (before the due date)
- Average time/volume/amount of invoices that are paid too late (after the due date)
4. When are the results negative or positive?
It depends on your strategy. You might miss payment discounts with your suppliers by paying late, but maybe you prefer to avoid cash flow problems. You can do this business process scan regularly and identify bottlenecks, Learning curve effects due to changes in the organization or new software, high seasons in your sector, etc.
Interested in more information? Get in touch.
