Business process improvement

Business process improvement (BPI) is a systematic approach to help an organization optimize its underlying processes to achieve more efficient results.

Overview

The organization may be a for-profit business, a non-profit organization, a government agency, or any other ongoing concern. Most BPI techniques were developed and refined in the manufacturing era, though many of the methodologies (like Six Sigma) have been successfully adapted to work in the predominantly service-based economy of today. While there are differences in the challenges that each type of industry poses, the fact remains that the core principles of BPI and how they apply to business improvement remain portable across industries and functions.

It should be noted that BPI focuses on "doing things right" more than it does on "doing the right thing". In essence, BPI attempts to reduce variation and/or waste in processes, so that the desired outcome can be achieved with better utilisation of resources.

he goal of BPI is a radical change in the performance of an organization, rather than a series of incremental changes (compare TQM). Michael Hammer and James Champy popularized this radical model in their book ‘’Reengineering the Corporation: A Manifesto for Business Revolution’’ (1993). Hammer and Champy stated that the process was not meant to impose trivial changes, such as 10 percent improvements or 20 percent cost reductions, but was meant to be revolutionary (see breakthrough solution).

Many businesses in the 1990s used the phrase "reengineering" as a euphemism for layoffs. Other organizations did not make radical changes in their business processes and did not make significant gains, and, therefore, wrote the process off as a failure. Yet, others have found that BPI is a valuable tool in a process of gradual change to a business.

Roles

There are four roles within a business Management system: Business Leader, Process Owner, Operational Manager, and Process Operator. The responsibilities of each of these roles are unique, but work together as a system. Some employees in an organization may perform as many as all four of these roles over the course of a day, week, month, or year.

Business leaders

Business leaders are responsible for creating the business plans (including strategic plans created during the strategic planning process) and associated resourcing plans necessary to cause the organization to be successful.

Senior leaders (corporate) are responsible to define the customer and business objectives the organization needs to achieve in order to be successful. This process includes overseeing the development of the organization’s mission, vision, and values.

Lower leader levels (business unit and functional) are responsible for translating senior leaders' business objectives into business objectives that make sense for their level and that support the accomplishment of the senior leaders' business objectives.

The responsibilities of the business leaders follow the PDCA (plan, do, check, and act) cycle.

Plan: The business leaders create and own the business performance objectives of the organization. Senior leaders need to first understand the requirements of their customers, stockholders, workforce, suppliers, and communities. They need to understand their competition. They need to understand the environmental, economic, technological, social, legal, and political environments that they do business within. Senior leaders need to consider all of these elements as they design a Business model and business Strategy map that will meet the customer and business requirements. Business Leaders then translate these requirements and business environment issues into business performance objectives. Business Leaders then create business plans and associated resourcing plans that will cause the organization to achieve these business objectives. The Business Leaders establish business performance metrics to measure the business’s capability to meet these business objectives. Many organizations create a Balanced scorecard to organize and communicate business performance metrics.

Do: The Business Leaders are responsible to communicate to the organization their business plans. As the organization conducts business, the Business Leaders are responsible to build bridges and remove barriers that will allow the business performance objectives to be met. The business performance metric data is produced and collected as business is performed by the organization.

Check: The Business Leaders periodically analyze the business performance data and use it to visualize the business’s capability to meet business objectives over time (performance trends), compare actual performance against performance targets, and identify performance issues.

Act: The Business Leaders are responsible to create improvement actions to address the performance issues that are identified during their analysis of the business performance data. These improvement actions are created to ensure the organization is able to achieve their business plans.

Process owner

The process owner is the person who is responsible to design the processes necessary to achieve the objectives of the business plans that are created by the Business Leaders. The process owner is responsible for the creation, update and approval of documents (procedures, work instructions/protocols) to support the process. Many process owners are supported by a process improvement team. The process owner uses this team as a mechanism to help create a high performance process. The process owner is the only person who has authority to make changes in the process and manages the entire process improvement cycle to ensure performance effectiveness. This person is the contact person for all information related to the process.

The responsibilities of the process owner follow the PDCA (plan, do, check, and act) cycle.

Plan: The process owners create and own the process performance objectives of the organization. The process owner first needs to understand the external and internal customer requirements for the process. This person uses the business plans as a source to help understand the long term and short term customer and business requirements. This person then translates these requirements into process performance objectives and establishes product (includes service) specifications. This person establishes process performance metrics to measure the process’s capability to meet the product specifications and overall process objectives. The set of metrics that are to be reviewed by operational managers and process operators are called key performance indicators (KPIs). The process owner then designs process steps to describe work that when performed will have the capability to produce product that meets the customer and business requirements.

Do: The process owner is responsible to communicate to the operational managers the details of the processes that the operational managers are responsible to execute. As the operational managers and process operators perform the processes, the process owner is responsible to build bridges and remove barriers that will allow the process performance objectives to be met. The process performance metric data is produced and collected as the process is performed by process operators. The process owner is continually involved with the operational managers and process operators as they use kaizen to continually improve the process as they are performing the work.

Check: The Process Owner periodically analyzes the process performance data and use it to visualize the process’s capability to operate within control limits over time (performance trends), compare actual performance against performance targets, and identify performance issues.

Act: The Process Owner is responsible to create improvement actions to address the performance issues that are identified during their analysis of the process performance data. Improvement actions may include the initiation of Lean projects to reduce waste from the process or include the initiation of Six Sigma projects to reduce variation in the process. Improvement actions may include the use of problem solving tools that would include risk assessment and root-cause analysis. Risk assessment is used to identify and reduce, eliminate, or mitigate risk within the process. This is the proactive approach to avoid problems being created from the process. Root-cause analysis is the reactive way to respond to problems that occur from the process. Root-cause analysis is used to identify the causes of problems within the process and identify and implement improvement actions that will ensure these problems do not occur again.

Operational manager

The operational Manager is responsible to bring the resources and processes together to achieve the objectives of the business plans that are created by the business leaders.

The responsibilities of the operational manager follow the PDCA (plan, do, check, and act) cycle.

Plan: The operational managers - in collaboration with each Process Operator, create Process Operator performance objectives for the employees they supervise. The Operational Manager needs to understand the performance requirements of the process. They match employees (Process Operators) with the competency and skill requirements of the process to be performed. They ensure that the Process Operators have the budget, facilities, and technology available to them that is necessary to achieve the performance objectives of the processes.

Do: The operational manager is responsible to teach process operators how to perform the processes (work). Process Operator instruction usually consists of classroom and on-the-job training. The Operational Manager oversees the work and ensures Process Operators receive ongoing informal feedback as to their performance. As the Process Operators perform the processes, the Operational Managers are responsible to build bridges and remove barriers that will allow the process and Process Operator performance objectives to be met. Process and Process Operator performance metric data is produced and collected as the process is performed. The Operational Manager ensures that Process Operators are using Kaizen to continually improve the process as they are performing the work.

Check: The operational manager periodically analyzes the key performance indicators (KPIs) during the production cycle to evaluate the work group’s ability to achieve the process and process operator performance objectives. This data is used to visualize the process and process operator capability to meet business plan objectives over time (performance trends), compare actual performance against performance targets, and identify performance issues. They review this performance data and sort out process operator performance issues from process performance issues. Many organizations use a war room concept to post performance data. Within the war room, the operational manager conducts periodic review and analysis of this performance data.

Act: The operational manager is responsible to create improvement actions to address the performance issues that are identified during their analysis of the process and Process Operator performance data. They address Process Operator performance with ongoing feedback to the Process Operator and/or by using an employee performance management review process. They communicate process performance issues to the Process Operator and the Process Owner.