Business Process Improvement: Ramp Up Accuracy & Efficiency, Through Better Processes

Over time, even the best business processes become inefficient and outdated. Inflexible legacy systems hamper the introduction of technological innovations. In addition, shifts in consumer preferences, changes in market forces, new regulatory policies, and long-established processes affect efficiency, competitiveness, and even your bottom line. Business Process Improvement is the antidote to this. 

What is Business Process Improvement?

Business Process Improvement (BPI) is an operational practice involving tweaking and fine-tuning existing processes to improve and streamline them. This practice comes with a host of business benefits, including: 

• Increased productivity.
• Reduced operating expenses. 
• Fewer errors and less wastage.
• Shortened production time.
• Increased flexibility. 
• Competitiveness. 
• Improved product/service quality.
• Happier employees. 
• More satisfied customers.
• Value-add. 
• Reduced risk.

Implementing Business Process Improvement

Business process improvement usually starts with an onsite audit where the BPI team documents the business processes through interviews with key people. The team then analyses and identifies inefficiencies and performance gaps. 

Next, the process improvements are outlined on a value-stream map to identify the solutions that will provide the greatest potential ROI. Finally, these are documented, reported, and some or all of them will be implemented.

Business Process Improvement Examples

Invoicing Process Improvement

An inefficient invoicing process can result in delays in your accounts receivable and even missed opportunities to invoice your clients. This hurts your cash flow, which hurts your bottom line and hinders your growth.  

Here are some areas where the invoicing process can be improved:

1. The approval process – Introducing robust billing procedures and policies and reducing the number of touchpoints can significantly shorten the invoicing process while increasing accuracy and reducing the risk of invoice disputes. 
2. Data errors – The invoicing process begins with data entry – which may be completed by humans. Human error in data entry is inevitable – and can be costly and time-consuming. Automating this part of the process can improve accuracy and efficiency.
3. Late payments – Identifying the bottlenecks that cause late payments is crucial for invoice management.

Product Development Improvement

Companies that improve their time-to-market gain a critical edge over competitors. They might achieve this through:

1. Workflow management – Product development always requires interdepartmental collaboration (from R&D to Purchasing, Manufacturing to Customer Support). Workflow management tools that organise and prioritise tasks, monitor progress and deadlines, pinpoint accountabilities, streamline communication, and prompt feedback can provide an edge.
2. Product engineering challenges – Business process improvement in product development often focuses on identifying tasks that can be done concurrently. Instead of waiting for each step to be completed (which can result in long delays), tasks are completed in an order that improves efficiency.  

Operating Cost Improvement

While invoice processing improvements can positively impact a company’s cash flow, improvements in operating costs can translate to more competitive pricing or increased revenue.

Methods to manage or reduce your operating costs include:

1. Outsourcing – Hiring a third party can cut costs, reduce your risk, and improve efficiency. Functions that are often outsourced include Accounting, bookkeeping, advertising and marketing, and even IT. There’s also an increasing reliance on virtual executives, including virtual CMOs and virtual CFOs. Outsourcing to specialists often saves money compared to building the expertise in-house.
2. Circular manufacturing or reducing wastage – Breaking down each step of the manufacturing process makes it easier to identify the source of downtime, bottlenecks, and wastage. Some businesses create incentive systems for employees who can point out wasteful processes. Others are focusing on eliminating waste and creating a circular system. 
3. Bulk purchasing – Your business can access significant savings by bulk purchasing to take advantage of any available volume discounts.

Inventory Management Improvement

Managing inventory is one of the most challenging tasks in business. Overordering results in higher warehouse costs and an increased risk of stock going ‘stale’. Conversely, not ordering enough could result in your business running out of raw materials, which would halt production. Similarly, inadequate stock of a popular item could spell lost revenue.

These improvements may help manage inventory challenges:

1. Minimising overstocking – Understanding lead times in the supply chain and regularly analysing sales can allow you to maintain just enough stock to meet demand. Technology innovations in this area are helping businesses better manage their ordering, and they’re worthwhile considering if you’re facing challenges in predicting demand. 
2. Minimising shrinkage – You should be able to accurately account for all inventory losses from breakage, damage, loss, and theft. If you cannot, you should consider more regular stocktakes, staff training, and/or improving the technology you have managing your inventory. 

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