Inefficient Business Processes In My Company? How Come?

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Business Process

If you have ever undertaken the task of redesign inefficient processes, you have probably, in some point in time, asked yourself why they are inefficient in the first place. In this post, I’ll touch on some of the common reasons inefficient processes are introduced in the companies.

So, how do companies end up with inefficient processes? Three of the most common reasons are listed below:

• Improvisation
• Status quo
• Control mechanisms

Let’s cover each one of the items above, starting with improvisation. How does improvisation create inefficient business processes? Well, sometimes companies don’t have time, capital, or will, to proper model their processes. So, they use the approach I like to call “TAYGO (Tweak As You Go)”. In this approach, employees tweak business processes to meet their needs based on daily feedback from the business without overtaking major analysis.

There’s nothing wrong about updating business processes as long as the update is done with the full business picture in mind. The team redesigning the process must have a complete understanding on how the changes will impact other processes in the organization, and whether or not the changes will actually increase process efficiency. Sometimes these little tweaks are done by employees without any vision of the business beyond their department, which more than likely will affect other departments or processes.

The second item on the list is the status quo, which  is a clear reason for inefficient processes. It’s not unusual for employees to not know the reason they must perform their tasks the way they do. Basically, when an employee C is hired, he/she is trained by employee B, who in turn, has been trained by employee A, who retired from the company years ago. If asked why a task is performed in a specific way, the answer is usually “because it has always been done this way.” In order to really improve a process, companies must be willing to tackle status quo as needed. If there’s no valid business reason for performing a task in a specific way, there’s a good chance that the main process can be improved if redesigned. Remember, processes must be constantly evaluated to ensure they maintain their efficiency over the years; failing to do so increases the chances that the business would be maintaining processes or tasks that could be improved or eliminated altogether.

And finally, control mechanisms, the third item on the list, are usually put in place to ensure processes are consistent and deviations are caught in time to be addressed. Even though control mechanisms are sometimes necessary, companies have to be careful to not overuse them. Too much control can actually affect efficiency, introducing bureaucracy in your processes, and increasing the time it takes to perform them.

For instance, let’s take a process that, in the past, was performed by just one person, from start to finish without any control mechanisms. As the business grows and new employees are hired to help in the process, control mechanisms are introduced to ensure that, within the process, the output of task A, which is performed by employee A, is a valid input that can be used by employee B to perform task B, and so on. By introducing the control mechanisms above, the company has definitely increase the quality of task outputs, but at the same time, it has also increased the time needed to finish the whole process due to the extra time required by the control mechanisms.

Another good example of a control mechanism would be the introduction of manager authorization requirement for specific tasks, such as purchase orders. Even though the authorization requirement gives managers control over what is being purchased and by how much, it also increases the time it takes to purchase the item, mainly due to the non-value-added task of having to wait for the manager to evaluate and authorize the request. A better approach would be to require management authorization only for purchases above a specified dollar amount, eliminating the bureaucracy on less expensive items.

In summary, improvisation, status quo, and control mechanisms are just a few of the common reasons inefficient processes are introduced in businesses. Regardless of the reason, one thing is certain, if inefficient processes are found in your business, these processes had probably not been designed properly, but just put together over the years to overcome business challenges.

Do you have a task or process in your company that could be improved? How?

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What's a Business Process?

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Business Process

Why talk about business processes? For our particular needs, the answer is simple: processes are the basis of any automation, BPR (Business Process Reengineering), software development, and approaches to understand and improve businesses. The only way to deliver quality results is by truly understanding how processes work and how they interact with each other to accomplish the final goal.

So, what’s a process? In plain terms, a process can be considered as any task or group of tasks that produces output from input received. The keyword here is “produces”; in other words, a task can be considered a process if it generates an output that is different from the input received. A process might be as simple as receiving a paper document and creating a digital copy from it using a scanner, or as complex as creating electronic devices from its components. First figure below illustrates a process from this point of view.

Now, from a business perspective, all processes should work together to support company goals. The best way to understand business processes at your company is to start from a 10,000 feet view of the company and break down the main processes into smaller ones. But, for illustration purposes, we’ll start from a simple department: the warehouse. Consider the main process within the warehouse department for retail Company X (figure below). At high level, the warehouse process receives purchased products, and ships them to customers.

Once we understand the main goals of the warehouse process, it’s easier to focus on these goals while we break the main process down. We know the warehouse process receives and ships products, but how does it do it?

Well, now it’s time to break the process down in smaller pieces in order to better understand it. The next figure illustrates what happens within the warehouse process. Basically, the main warehouse process has been broken down into two smaller processes: receiving and shipping process. In our illustration, the goal of the receiving process is to receive and store the product in the right location within the warehouse, while the shipping process focuses on retrieving and shipping the stored product to customers.

If we break down the shipping process, we might find several smaller tasks such as find product location, retrieve product, pack product, print shipping label, ship product, and so on. The same holds true for the receiving process, but with different tasks. Just remember, this is a very narrow view of the warehouse process, which ignores interactions with processes outside of the warehouse as well as other warehouse internal processes. For instance, a wider view of the process would also include the purchasing process output, the purchase order, that would be sent as input to the receiving process, enabling the warehouse to receive products. On the same hand, a sales order would be sent by the sales process as input to the shipping process, triggering the shipping of a product to a customer.

Basically, the breakdown process continues until we have a complete understanding on how all the pieces fit together. It’s usually necessary to interview users at several levels in the organization to obtain the full picture we’re looking for. Top executives are usually concerned about the big picture and they can give you a nice view of the company and all major processes from 10,000 feet. Once you start to break down the processes, you’ll have to step down to lower managerial levels for better quality input. And don’t forget those who actually perform the work as they’ll provide you with the best input at the lowest level.

Now more than ever, companies are looking for people who are able to help they achieve their goals and make their business more competitive. Truly understanding how business processes fit together and being able to provide effective business solutions are key factors in helping not only businesses, but also yourself, succeed.