Sustainably increasing profits is the core goal of any business. While there are lots of short-term ways to build revenue, like promotional deals, discount offers, and marketing campaigns, the easiest way to guarantee greater profits in the long-term is simply improving your business processes. Process improvement leads you to waste fewer resources and work more efficiently.
As well as cost reduction, business process improvements allow you to handle more customers and produce higher quantities. Process improvements can be very small changes, but they can have far-reaching impacts. And there’s no shortage of processes you can optimize.
Table of contents
What is business process improvement?
Business process improvement is when a company redesigns one or more of its operations in order to continuously improve performance. There are 3 main goals of business process improvement:
- Cost reduction
- Save time
- Focus on customer value
A process can be anything related to helping an area of your business function smoothly. Business functions you can optimize include:
- Product development
- Customer service
Business processes are collections of smaller processes that work together to achieve a desired result. For example, in a manufacturing process, materials need to be ordered and delivered, equipment needs to be maintained, and employees need to be trained to operate that equipment. By breaking responsibilities down into their individual sub-tasks, you’ll see there’s no shortage of process improvement opportunities.
Given that the goal of business process improvement is to ensure you can cut costs and drive profit sustainably, you need to know what makes a process unsustainable. Signs that it’s time to optimize the way your business runs include:
- Are you relying on manual processes that involve lots of wasteful movement?
- Are your employees held up waiting for approval before executing key functions?
- Are you using lots of different software or systems that don’t communicate with one another?
- Do your employees regularly ask for information which could be provided automatically?
- Are you reacting to problems more often than proactively preventing them?
Answering yes to any of these questions means your business needs to change the way it operates. The most effective way to quickly revamp any business process is by introducing workflow automation software. Instead of relying on manual processes, which are prone to inconsistencies, errors, and unnecessary lost time, automated tasks are performed consistently and quickly.
Workflow automation fixes communication issues by allowing you to assign and track tasks virtually and eliminate any confusion. When a step is completed, the next step triggers automatically. This way, there’s no downtime blocking progress.
4 process improvement examples that increase revenue
As stated, process improvements opportunities are everywhere. Depending on your business, you will have a lot of things to optimize, and the first step is to decide where to start. When prioritizing improvements, the important factors to consider are:
- Cost of changing your process
- Time required to implement new measures
- How much quality will improve after the change
- How many resources the process uses
- The overall impact of this process on your business
You can also prioritize process improvements based on something called the 80-20 rule. This is the idea that 80% of the work in any business results from 20% of the activities in that business. This helps narrow your focus, and you can use a Pareto chart to visualize which of your processes fall into that 20%.
To illustrate how process improvement can boost your profits and lower operating costs, it’s helpful to look at some examples.
Bill of materials
A bill of materials is an exhaustive list of the elements required to create products, including materials, components, assembly protocols, and documentation. Having an accurate bill of materials before you enter production is essential for cost reduction and maximizes your productivity by:
- Reducing your inventory so that you stock what is needed to meet customer demand, but don’t overstock. Better inventory management means lower storage and handling costs.
- Reducing the waste you create during production, since an accurate bill of materials specifies exact amounts of needed materials. It also helps make sure materials and components are used correctly.
- Streamlining the manufacturing process, outlining all the items and steps involved in production to save time and improve efficiency
- Helping you identify products by maintaining a history of materials ordered, as well as the reason for each order
A manual bill of materials can be time-consuming to create, and it’s easy to overlook something. Instead, using software to generate these lists ensures that the formatting is consistent, all the data is entered correctly, and most importantly, that your bill of materials is documented. This means you’ll have visibility into your production requirements for the future.
Supply chain management
Similarly to your bill of materials, optimizing your supply chain management cuts costs by reducing waste and excessive ordering. Streamlined supply chain management is one of the most vital business process improvements to make, since a sustainable supply chain:
- Reduces the amount of production delays since you’ll be in constant contact with suppliers. Managing material shortages means you can avoid missing deadlines.
- Increases collaboration with stakeholders by improving supply chain visibility. That means every team involved in a project is able to adapt to changes and work faster, since there’s no more waiting for key information.
- Optimizes scheduling, since communication with suppliers and real-time supply chain data help you estimate deadlines. A comprehensive supply chain coordinates material deliveries and ensures there is a backup in place if one supplier is delayed, so you can always complete projects on time.
Supply chain management is a combination of different responsibilities like emailing suppliers, recording inventory, re-ordering materials, and managing product orders. Instead of manually doing all of these things, it’s much less stressful to rely on workflow automation software to automatically set these steps in motion as soon as conditions are met.
Lean manufacturing covers a set of business processes designed to reduce waste during manufacturing. However, you can apply lean manufacturing principles to most businesses. Those principles are:
- Eliminating waste
- Avoiding overburdening your workers
- Continuously improving
- Mapping the value stream, or the journey from raw materials to finished products
- Preventing mistakes, either by training workers or automation
- Identifying lost value
- Detecting defects if mistakes can’t be avoided
When you apply these to your business, they lead to more efficient work, fewer errors, and money saved. Lean manufacturing principles give several of the same benefits that effective supply chain management does, but focus explicitly on internal process improvements.
Sales and marketing
Sales and marketing processes involve countless tiny responsibilities like sending welcome emails, following up on leads, processing orders, and grouping customers into segments. Process improvement would mean automating these tasks where possible, so that you’re free to focus on higher-level tasks.
Automation makes it easier for you to personalize your marketing and sales approach based on customer data. You can sort prospective leads into groups based on their purchasing behavior, site visits, and other interactions with your business. More accurate targeting keeps you from wasting resources on customers that are less likely to be interested in your product.
Automation can also help you process customer orders faster. When a sales order comes in, direct to the appropriate sales rep for approval by assigning the task in one click. Then, once the order is approved, confirmation will be sent automatically. That way, you respond to customers much faster and ensure you’re communicating effectively.
You can improve business processes easily with Lumiform. The workflow automation platform provides templates you can use to implement every process improvement example above, and it’s easy to create your own custom templates. It’s also simple to measure the impact of your changes, since Lumiform sends you automatic reports analyzing performance.