The emphasis on a company’s functional areas that used to dominate has been replaced by a process-oriented approach, with new requirements such as flexibility, increased product complexity and shortened product life cycles. Owing to the new focus on business processes, it is now more important than ever to identify, analyse and continuously improve processes that are critical to success. However, these processes are often inadequately structured, documented or standardised. Various process optimisation methods are available. The aim of this blog post is to introduce you to the top 5 of these methods and to provide practical tips for the identification, evaluation, analysis and optimisation of business processes.
In most companies, multiple processes run simultaneously, and they are often interlinked or interdependent. It is therefore neither possible nor sensible to optimise all processes at once. In a first step, the most important processes with the greatest impact on the company thus have to be identified. This is where portfolio analysis comes in.
This method involves recording the selected business processes using a matrix and then classifying them according to the following criteria:
• Strategic importance: To what extent does the process contribute to the achievement of a company’s corporate goals?
• Potential for improvement: What measures (in terms of type, scope and feasibility) can be taken to improve this process?
The following example illustrates what such a process matrix might look like:
SWOT stands for strengths, weaknesses, opportunities and threats, which form the basis for evaluating the relevant processes. In this context, it is useful to ask yourself the following questions.
• What are the strengths of the process?
• What are the special features of the process?
• What makes this a well-functioning core process of the company?
• What are the weaknesses of the process?
• How can costs, lead times and quality be improved?
• Why doesn't the process work as required?
• What opportunities for improvement does the process offer?
• What is the remaining potential of the process?
• Can process strengths be converted into additional process improvements?
• What factors pose a threat or risk to the process flow?
• What threats may arise as a result of the process?
SWOT analysis can be used to generate process improvements and ideas for reducing or completely eliminating the weaknesses of a process and to exploit existing opportunities for further enhancing its strengths.
Ishikawa diagrams are also known as fishbone diagrams, herringbone diagrams, cause-and-effect diagrams or Fishikawa. They resemble the skeleton of a fish, where the "ribs" represent the causes of an event and the head its final outcome. The purpose of Ishikawa diagrams is to analyse a process in light of the possible sources of error: machine, man, material, method and environment.
• Machine: What are the factors that cause undesirable machine behaviour?
• Man: What are the factors that cause employees to perform the assigned tasks incorrectly?
• Method: Is the process aligned with the business objectives and has it been designed correctly?
• Material: Are the materials used complete and appropriate for the purpose?
• Milieu (environment): Which environmental causes have adverse effects on the process?
By using the Ishikawa method, the shortcomings of a process can be analysed in greater detail and then recorded in a diagram.
The Six Sigma method provides companies with tools for improving the performance of their business processes. It also helps to reduce process variation, thereby minimising errors and improving profits, employee morale and the quality of products or services. While Six Sigma focuses on reducing variation and improving process control, lean management is aimed at reducing waste (non-value-added processes and procedures) and promoting standardisation and improved workflows. As process improvements require aspects of both approaches, the distinction between Six Sigma and lean management has become blurred, and the term "Lean Six Sigma" has thus become increasingly common.
Lean Six Sigma is a fact-based, data-driven improvement approach that emphasises error prevention over error detection. By reducing variation, waste and cycle times, it increases customer satisfaction and bottom-line results while promoting the use of standardised workflows to create competitive advantages. This method can be applied wherever variations and waste occur and needs to involve every single employee.
One widely used method is the "DMAIC" cycle. This abbreviation stands for the five phases that make up a process, including the tools used to complete these phases: "define", "measure", "analyse", "improve" and "control". DMAIC is thus a data-driven quality strategy for process improvement.
• Define: Defining the problem, the action required for improvement, the improvement opportunity, the project goals and the customer requirements (internal and external)
• Measure: Measuring the process performance
• Analyse: Analysing the process to determine the causes of variation and poor performance (defects)
• Improve: Improving process performance by addressing and eliminating the root causes
• Control: Controlling the improved processes and future process performance
Yet another method is Kaizen, which is made up of the Japanese words "kai" (change) and "zen" (improvement). The aim of this method is continuous process improvement. Kaizen is therefore less a one-off method than a management concept that needs to be practised continuously. It focuses on employees and teams who need to continuously analyse company processes and procedures to identify the potential for improvement.
The Kaizen process can be summarised in just four steps: PDCA – plan-do-check-act:
Plan – define your goal and how you want to achieve it
• Plan – define your goal and how you want to achieve it
• Do – implement your plan and the necessary changes to ensure that it works
• Check – evaluate the results and identify opportunities for improvement
• Act – adjust your plan based on the results of the previous step
Business process re-engineering or BPR is focused on the analysis and redesign of core business processes in order to achieve significant performance, productivity and quality improvements. In this context, "business process" refers to the sum of the interrelated tasks and activities that a company performs to achieve a specific result.
Simply put, redesigning business processes means changing the way people perform their work to achieve better results. The purpose of business process re-engineering is to redesign workflows to dramatically improve customer service, achieve higher levels of efficiency, reduce operating costs and become a world-class competitor.
Irrespective of the larger goal that you're pursuing, you first need to identify the process that you want to analyse, typically business-critical processes and their models. These include processes that have a direct impact on end products, revenues, expenses and other critical components or that perform poorly. Similarly, newly implemented processes can also be analysed to ensure that they function as intended. For information on the available methods for identifying business-critical processes, see the section entitled "What process optimisation methods are there?".
Once you have defined a specific process, you need to collect as much information as possible in order to analyse it. The main goal of this step is to go through all the available sources of information about the process, be it by skimming the documentation or by interviewing the people involved.
In order to continue with the analysis, you need to organise your results into a structured form. When mapping the process, the aim is to filter all the relevant information that you have collected and present it in a clear and structured form. Once you have clearly visualised a process, you can quickly determine which sub-steps work well and which ones don't. Moreover, you also need to document the roles of the various participants and thus the dependencies between them.
Defining the process "to be"
After you've mapped the process as is, you can subject it to closer analysis, including the individual sub-steps and all the data you've collected, with the aim of identifying meaningful process improvements. In this regard, it may be helpful to ask yourself the following questions:
• What are the main components of the process?
• What positive effects do they have?
• Would it be enough just to improve these components?
• Is the process subject to systematic delays or problems?
• How big is their impact on the output?
Each step is about gaining a better understanding of how a business process can be improved. You can use the knowledge gained in the previous steps to identify weaknesses and opportunities for improvement.
The type of improvements that a company will ultimately be able to introduce depends on its specific situation, meaning there is no one-size-fits-all solution.
There are various tools for capturing the process as is and the process to be. While it is also possible to record a process in plain text or bullet point format, graphic representation offers many advantages, such as a quick overview of the process as well as easy recognition of errors or problems. Various options and digital tools are available for graphic representation.
The process flow diagram, which depicts a process step by step, is one of the simplest and most widely used BPM methods. Rather than defining a procedure in detail, the diagram should be kept simple enough to be understood at a glance. The following example illustrates what such a process flow diagram might look like:
Yet another presentation option is the event-controlled process chain (EPC), which models business processes based on three basic elements. These consist of events (the occurrence of a state that triggers an activity), functions (activities that follow from an event) and connectors that link these events and activities.
BPMN 2.0 has become the de facto standard for business process diagrams. BPMN makes it possible to capture and document an organisation's business processes in a clear and consistent way while ensuring that relevant stakeholders, such as process owners and managers, are involved in the process and can subsequently decipher it. This allows the respective team to respond more effectively to any issues identified in its processes. BPMN delivers comprehensive yet rich notations that can be easily understood by both technical and non-technical stakeholders, making it one of the most popular presentation methods.
Today, more than ever before, companies need to focus on their own processes. It is therefore important to know your own processes, to document them and to improve them continuously in order to ensure a competitive advantage in a fast-moving market. In this blog post, we have outlined various methods to help you identify, analyse and model your business processes.