8 Steps to Increase Profit through Process Improvement
November 11, 2021
Business process efficiency has never been more critical than now. The COVID-19 pandemic dramatically accelerated the digital transition and put many companies on the brink of survival. The response to the pandemic has prompted companies to rethink their operating models and restructure internal processes to produce better profit and loss (P&L) statement results.
Business change is continuous and at a tremendous rate. The fundamental goal of business process reengineering is to help organizations change their infrastructure to beat the competition and succeed in today’s business environment.
When clients consider SAAS platforms and implementations such as Salesforce, they are looking for a solution to three significant challenges:
- Building effective business processes that will outperform the competition and quickly scale within the organization.
- Selecting and implementing the best and most out-of-the-box IT platform or creating a solution that covers the business’s key automation and digitalization needs.
- Ensuring that the new platform or solution integrates quickly and securely with the existing enterprise architecture.
The first task above is fundamental and requires a holistic approach – considering the organization’s marketing strategy, planned innovation, business scalability, and shareholder plans and ambitions. Let’s discuss the possible first steps needed to begin your business process improvement journey.
Key steps to business process improvement
Examine your company’s current income statement to understand the major cost groups, customer segments, and channels that generate the most sales. This visibility into trends helps identify pain points and areas for improvement. For example, manufacturing or advertising costs are growing faster than sales.
Analyze which processes are lagging and your most significant pain points. Next, pay attention to the operations directly related to the flow of money into the company’s accounts. For most companies, these are sales and marketing, purchasing, production, and service delivery.
3. Make Assumptions
Evaluate the company’s income statement to make assumptions. For example, how much would your bottom line increase if you could theoretically improve one process? Financial modeling and business case preparation can help prioritize potential improvements.
Prioritize the scope of potential project improvements and select those that provide the maximum theoretical increase/decrease in profit and loss. Management can also consider how quickly the improvement can be implemented and what resources will be needed. Most likely, sales and marketing processes goes first, purchasing goes second, and a group of strategies for hiring and managing employee performance (for companies with a high payroll cost structure) will come third. That’s why most of today’s digital automation platforms start with CRM systems, helping businesses build an effective automated sales funnel.
5. Set Aside
At the same time, identify processes that won’t have a noticeable impact on P&L. Usually, these are development and research, document management, administrative procedures, often legal/compliance, and support infrastructure. Finally, set aside and prioritize processes that are important to strategy execution but have the weak potential for profit growth.
6. Describe the AS-IS.
Once three to five priority processes have been identified, the management team must decide how to describe and visualize them as is. The most flexible, time-efficient, and inexpensive modern approach uses business process management (BPM) technologies, BPMN notations, and special software to describe and model processes (most are accessible in the basic version). This process usually involves a senior manager and a business analyst (or other functional BPO specialists).
If your staff has limited experience with BPMN notations, consider less sophisticated tools such as the RACI matrix and the SIPOC approach.
Once you’ve described each priority process AS IS, you need to roughly estimate how much each step/step will cost you. This will help you estimate options for restructuring the process by removing some elements/actions based on estimated numbers. This way, you can approximate the cost and efficiency of the process and see if there is potential to restructure the process and reduce costs.
8. Use the Proper Framework
Consider design thinking and service design approaches if you need to redesign your service processes or significantly improve customer focus. The lean approach is ideal for systematically streamlining processes and reducing waste. Or use common sense and approach each step with a WHY question – to determine the importance of each action and see if there are ways to do it more efficiently.
Bragona Technologies has helped hundreds of clients identify and prioritize the most valuable business process changes with the help of experienced analysts and consultants backed by methodology. We do an excellent job of orchestrating complex discussions among client stakeholders and ensuring that goals, needs, and priorities are aligned.
Let’s talk about how Bragona Technologies can bring clarity to your vision and planning and accelerate your path to more efficient, and streamlined processes.