Maintaining and Improving Business Processes
In the previous articles, I have explored why so many companies have not been able to invest in a comprehensive set of business processes and provided a guideline on how this can be achieved cost effectively. In this article, I will cover how to make the processes sustainable and how to maximise the value-add from a set of comprehensive business processes.
From my experience of introducing comprehensive business process maps in several companies, gaining full adoption of the system requires some effort. There will be departments and certain employees who become the early adopters. Some employees just like the graphical interface and can logically follow the steps. Where attention must be paid are those departments or processes where activities continue to run without reference to the published process. Overall success of the project can only come if all processes are adopted and followed. There are several approaches to ensure that all employees are on-board and able to follow the published processes. These include:
· Hold process reviews with the Process Owner and “process actors”.
· Ensure that the system records training on the new process and each process is only available to individuals once training has been completed.
· Using the Process KPIs, as the process improves, share the successes with staff.
· Always ask for improvement suggestions from the people running the daily processes.
Each Process Owner plays a critical role in observing the process and working with the team to find additional improvements. Quite often this can be combined within a LEAN or 6-sigma program and using tools such as Kaizen, to continue to enhance the processes. Setting metrics for a process is an essential way to see how it is developing. Often the duration of the activities is a measure of how efficient the team can convert the inputs into the outputs. This can be monetarised if appropriate, factoring hourly rates of the players involved in the process. Other metrics that maybe useful are how many times the process requires an escalation to management to complete the process.
The Executive team, and particularly the Process Sponsor, will want to see the larger benefits, that provided the incentive to achieve a comprehensive set of business processes. These will come from several directions, each of them can be quantified, if some data was collected prior to starting the exercise. The following list is not an exhaustive list, but provides some indications of where the major gains come from:
· A comprehensive set of the Financial Processes reduce exceptions, increase accuracy of cash flow, simplify month and year end processes, reduce audit durations, address fiscal requirements and simplify financial forecasting.
· Driving a Quality Management System (QMS) from the operational business processes reduces the size of the QMS document stack, SOPs significantly reduce in size, in-house audits are simplified, and external audits run efficiently.
· The set of HR Processes reduces time to process staff on-boarding, staff appraisals, reduces time for employees to find stuff, reduces training time for all staff and simplifies job descriptions based on the published processes.
· The set of Operational Processes reduces exception handling, material costs minimised, stock levels controlled, temporary labour trained up more efficiently and supplier communication optimised.
· Product and Service development is one of the more complex processes and often the most inefficient. Mapping the Development Processes reduces the inefficiency but probably more significantly, enables a company to enhance the value-added by creating better products and services.
Leaving you with one final anecdote from a previous role, capturing processes may not be on your company’s agenda today, but gaining agreement to do it tomorrow will pay handsomely. Mapping out all the HR processes for a large multinational company, accrued savings of over £450k simply from the time saved by HR staff and line managers knowing how to get things done. The investment in time was about 12 staff running a number of workshops across a 3 month period.
Introduction to Business Process Mapping
Reflecting back on the numerous companies I have worked for over the last 30 years, by far the majority of them have not invested the time to create a comprehensive library of their business processes. With this Post, I am going to try to shed some light on why this may be and to consider the benefits of doing so. In 2 further articles, I will take a deeper look at how to achieve that set of processes and how to maintain them so that maximum value is created.
Firstly, what is a “comprehensive library of business processes”? To some, it may represent an historical archive of the processes written as Standard Operating Procedures. Documents that are held in some filing system, difficult to access and only rolled out when the auditors wish to see them. Ideally it should be something much more useful and accessible than that. It can be described as “an on-line tool that contains all business processes in a graphical format that enables employees to accurately follow the processes and process owners to continuously improve them”. In the second article, I will dive deeper into the more powerful functions of the mapping tools available.
Across most businesses, the work that is done across the variety of departments falls into one of two types of processes: transactional and non-transactional. Examples of transactional activities are those that are repeated multiple times each day – processing invoices, manufacturing products, taking customer orders, month end reconciliation etc. Generally, these activities, once known by the staff are easy to memorise and can be repeated effectively time after time. Issues may arise are when there are changes in staff and training is insufficient, otherwise they tend to work smoothly. What I have observed is that many companies have problems with the non-transactional activities. These are the processes that are no less important but less frequently followed. Examples are approval of a new supplier, development of a new product, changing a major IT system (CRM, ERP) etc. The consequence of not having the processes clarified is inefficiency – major inefficiency that slows everything down.
Addressing the question as to why almost all companies don’t invest time to capture their processes, I believe that it stems from the way businesses evolve. During those heady days of a new start-up, the priority is to develop a product or service and to introduce it to the market. Resources are scarce, employees multi-task, funds are limited, and all eyes are on securing the launch and acquiring customers. The second stage of business evolution is where departments are created, the organisation chart starts to fill out and the product / services are beginning to mature. Again, resources are short, funds still tight and investing in mapping the processes would not feature on the CEO’s priority list. The third stage is where market expansions occur, the product/service starts to evolve for new markets and regulatory and quality compliance become essentials to expand. It becomes easy to see that during this 5 to 15-year journey for a new company, they have not had time to invest in their processes. Invariably, business process mapping has been limited to much larger companies where efficiency of all their processes is critical, often linked with LEAN or 6-sigma programs in operations. At this stage there are often hundreds of staff involved and the training and roll-out of a new system becomes a large project. When is the right time to make a start and map those processes? There’s a strong argument to do it during Stage 2; capture the processes as the organisation is growing and use them to as precursors for any systems that will require audits, for example the Quality Management System (QMS).
Now to bust a large myth: how much time is required to map out a set of business processes? The exercise is not as costly as many would believe and the benefits by far out weigh the investment. The benefits for a company are on 3 levels:
· the Executive get to see where processes are running well and where they need support or redesign,
· middle-management generally own the processes and can use the tool to ensure that changes can be implemented efficiently and
· all employees get a cool-tool that shows them how to do stuff.
Finishing with an anecdote from a few years ago: the company I was working for had 2 significant projects – one to introduce a new ERP system and the other was to achieve ISO9000 certification. Senior management supported the simultaneous mapping of the processes as a precursor for going live for the 2 main projects. This reduced the time taken to implement both projects and the ISO9000 auditor was able to complete the audit in almost a day less than expected.
The next article will take a deeper dive into the process to capture those business processes.
Business Process Capture Methods
In the previous Post, I examined some of the reasons why so many companies have not been able to find the time to invest in the business processes. This Post is focussed on what needs to happen to achieve a comprehensive set of business processes. It is surprisingly straightforward if the following guideline is followed.
Getting things done in business requires someone with authority to sponsor the change. Often this is an Executive Director who both sees the benefit of the change and will personally benefit from the change. Business processes are essential for all members of the executive, any one of them can become that sponsor. In fact, the CEO will be the most significant benefactor, and nominating themselves as sponsor for the comprehensive Business Process mapping is the gold standard.
The next step is to agree on a strategy with the Executive. All businesses have multiple activities running at any one time and they need to be put into context considering available resources. Doing everything all at once is generally not an available option and choices have to be made what to tackle first. A recommendation is to consider a combination of a quick-win process and a larger process that will provide substantial benefits in the medium term. Examples of quick-wins can be those basic employee processes that glue the organisation together; on-boarding staff, booking holidays, managing staff reviews, invoice management etc. Tackling some of these early processes will provide exposure to all employees about how processes are mapped and how to follow them. Two good examples of larger processes that provide substantial benefits are the Sales and Operations Planning (S&OP) process or the Quality Management System (QMS). In both cases, the benefits are substantial and will smooth out many issues that can occur with these processes.
The final preparation before we can start mapping the processes, is to identify a manager who may already be the process owner, or who can become that process owner. They need to have a thorough understanding of the process from end to end and an appreciation of where the issues are before mapping starts.
In preparation for a Process Mapping Sessions, it helps to brief the team beforehand and ask them to bring any materials, forms, information about the process with them. The team need to be a representative group of all the “actors” in the processes, including internal suppliers, internal customers and all the roles in between. The session is best facilitated by an external to that process, skilled in capturing processes. The starting point is to focus on the “As-Is” process from where that process starts and where it finishes. Often the first session reveals many holes in the process and areas that need extensive clarification. A second session, typically within a week, picks up from the “As-Is” process and focusses on the “To-Be” process. The objective of the second session is to complete a comprehensive description of the process and gain agreement from the mapping team that it is implementable.
The mapping sessions are frequently run with large numbers of “Sticky Notes” on a large brown paper. It’s also possible to use an electronic tool to capture the sequence of activities live in the session. As part of the overall mapping project, it must be decided what software is going to be used to publish the final versions. The most critical feature of whichever solution is chosen, is ensuring that employees can access what they need, when they need it. The following is a list of some of the key features of the software:
· Job role specific log on.
· Clear consistent and simple diagrams, supplemented by notes as required.
· Version control – only approved processes available.
· Process dashboards and metrics.
· Hyperlinks to other IT Systems e.g. ERP, CRM
· Training records.
· Sandbox to explore and model revised processes.
There are many software solutions available for the purpose, starting with simple drawing tools to those systems that capture all the data in a systematic way. Contact trevor@480Processes.co.uk for more information about available tools.
Irrespective of the software that is used to capture the processes, there are some fundamentals to what makes a good process diagram and what doesn’t. Is each activity described unambiguously and is it clear what the output looks like? As a rule of thumb, it is best to test each process before publishing it with the team of people who will run the process day-in-day-out. If they can easily and accurately follow it, then the process will run smoothly.
A final thought for those of you who have had to read long SOPs as part of your training. In my experience, SOPs are long and wordy and although they may include a flow diagram as an appendix, the linear nature of the text makes them difficult documents to follow. Consider turning them upside down! Start with a process map showing the steps and decisions in a graphical format. If the map is well drawn and clearly labelled, the process should be very clear. As required, supplement this with some additional notes to explain the process. The end result is a much shorter SOP where the training can be managed within the Business Process Mapping tool.
The final article in this series will investigate how to maintain the captured processes and ensure that the business maximises the value from that comprehensive set of business processes.