How to Improve Process Efficiency
In the wake of COVID-19, organizations in every industry are accelerating their digital transformation initiatives to increase operational flexibility and boost their bottom lines. But achieving these objectives involves more than having a well-designed business process or implementing innovative automation technologies. Organizations must have a plan for improving process efficiency.
What is Process Efficiency?
Process efficiency is the amount of effort required to achieve a business objective. For example, producing a product or providing a service. In this sense, process efficiency is a measure of performance that accounts for the time and costs of executing a business process. To measure process efficiency, organizations typically use some variation of the following formula:
(Value of Outputs/Value of Inputs) x 100
Any result over 100% is considered to add value to the organization. For example, suppose an auto manufacturer employs 20 workers that are capable of producing a total of 1 car each day. The value of the car is $30,000 and the cost of production is $50,000. The manufacturer’s production process is operating at 60% efficiency ($30,000/$50,000 x 100). This process is not efficient.
But what if the 20 workers could produce 20 cars per day with costs of production at $150,000? In this case the production process is operating at 400% efficiency ($600,000/$150,000 x 100) and it is an efficient business process.
This is obviously a very simplified example of a complicated process. Depending on the complexity of a business process there may be many other metrics that are relevant to measuring process efficiency. For instance, it may be necessary to account for quality, resource efficiency, production time, or throughput.
The Benefits of Efficient Processes
Efficient processes are a common characteristic of successful organizations. Organizations that achieve process efficiency experience the following benefits:
- Increased productivity. With both people and machines operating at peak efficiency throughput is increased.
- Improved customer experiences. Inefficient processes lead to fragmented and frustrating customer journeys. Providing seamless transitions between channels and freeing up employees to spend more time assisting customers leads to superior experiences.
- Increased profitability. Organizations boost their bottom lines by increasing output while slashing costs.
- Reduced errors and improved compliance. Efficient processes leverage automation technologies to replace manual tasks. This reduces the occurrence of costly errors. Moreover, when errors do occur organizations have processes in place to remedy them.
- Increased flexibility. The pandemic has further emphasized the need for operational flexibility. With efficient processes organizations can adapt quickly with minimal disruptions to their operations.
Improving Process Efficiency
While the process for improving efficiency can vary among organizations depending on their unique needs and challenges, it typically includes 4 general steps:
1. Mapping Out Existing Processes
Process mapping is a highly effective management tool used to visually depict the flow of work and participants involved in a business process. There are many different variations of process maps that you can use. Some commonly used ones include flowcharts, swimlane diagrams, value stream maps, and BPMN diagrams. Stakeholders can prepare process maps manually by sketching out diagrams by hand or leverage an easy to use low-code business process management (BPM) software solution with process mapping capability.
A BPMN 2.0 compliant BPM platform offers additional benefits beyond basic process mapping. BPMN 2.0 is an open standard notation system that is widely recognized and used in the world of business process management. Users can create BPMN diagrams that can be graphically defined, interpreted, and executed with a BPMN engine. This makes it easier for organizations to implement process improvements and orchestrate their business processes.
2. Identify Bottlenecks and Areas for Improvement
Using your process map, identify what is working well and what is not working with your existing business process. Look for bottlenecks in the process and discuss potential fixes with key stakeholders. Identify time-consuming and error prone manual tasks and consider how you can implement automation technologies to improve process efficiency.
3. Plan Out Your New Process
Create a new process map that depicts the improved process. Share the map with key stakeholders and collaborate to see if there are any alternative and more efficient approaches. Process efficiency is an ongoing process that involves trial and error. You may find that the improvements do not work well in practice or that there are more efficient and cost-effective solutions. Continue to implement incremental improvements building on what you learn along the way.
4. Share the New Process at the Organizational Level
Achieving process efficiency involves more than diagramming a process. The changes must be communicated throughout the rest of the organization so that management and employees understand their roles and responsibilities. Through standardization, organizations achieve consistency in their business processes and boost efficiency since there is little variation in the performance of tasks.
Research suggests that organizations that prioritize communication across the organization are more successful, especially when it comes to implementing automation-related changes. For example, business leaders from organizations with successful automation initiatives are 7x more likely than others to report that they communicate the changes when implementing automation efforts.
Improving process efficiency offers a broad range of benefits that go beyond just improving your bottom line. Process efficiency supports organizational health and empowers both management and employees to do their best work. Countless organizations located around the world rely on ProcessMaker’s award winning BPMN 2.0 compliant low-code BPM software to improve the efficiency of their business processes and transform their businesses.