8 process optimization techniques: How to get started
A process is understood to refer to a series of steps designed to lead to a particular end or goal, in the common language sense of the term.
In an organization, ‘process’ is used in almost identical fashion, and collectively signifies the sequence that needs to be gone through, or actions that need to be performed, to move from the starting point to the ending point, of that process, not necessarily of the entire product or service.
An organization is perpetually in the throes of trying to achieve something, because that something or the many somethings give it the reason for its existence. As an artificial entity, if it is not delivering or doing what it was created for, there would be no point in it existing. At any given point of time there are numerous processes in motion simultaneously.
Need to set up a meeting with the Finance Head? You need to reach out. Either offer your available slots or ask the Finance Head for the same? The other person then checks and confirms one. It is a process.
A new employee has been hired and needs to be onboarded. The identified HR resource will take the new hire through the onboarding process that will familiarize her with the company and enable her to function better. It is a process.
One of the clients has called in to report an issue being faced with your company’s SaaS solution that they had purchased. You will be logging it with the technical team. Based on priority allocated, they will take it up for investigation and resolution. They will implement the change that is required, through a process, and confirm to you. You will confirm to the client. It is a process.
In a way everything is a process.
But how did they come about? Who set them up?
The answer to this lies in the reason for the existence of the business that is being served by these processes. The big goal is well defined, that of making money, by engaging in a certain kind of work or activity. However, making money is not something that can be done. It is an outcome or resultant. Effort of various kinds needs to be put in so that the end goals might be realized. By breaking down objectives into distinct steps that need to be performed, we end up with processes. When referred to in the context of a business, they are also referred to as business processes.
Method, system, procedure, workflow are some of the other terms that are used in place of process.
What is optimization?
Optimization is the term used for the action of making the best or most effective use of a situation or resource.
Read together, process optimization is the action that seeks to run a process in the most effective manner possible to equip the organization such that it has a better chance of achieving its goals. It is also often referred to as improvement or continuous improvement in different organizations. A slightly broader term used in a similar context is quality or total quality.
Despite providing best in class pricing and services, like the ability to ramp by a hundred resources in 48 hours, like pricing that enables clients to shave off almost 80% of their pre-outsourcing costs, oWorkers comes packed with a slew of resources adept at identifying and delivering improvement initiatives for client projects.
Process optimization techniques
We just learned that all planned activities in a company are processes that exist with the objective of facilitating the achievement of its goals.
If all work in a company is done through processes, then even process optimization, a process that seeks to make other processes more efficient, must be managed as a process.
Ideas and inspiration can come from anywhere. But merely an idea is not enough until it is implemented. The process of implementation requires discipline and acceptance. While an individual or solo entrepreneur might go about bringing about change in her own defined way, larger organizations place their trust in time-trusted processes that have been built through the effort of many before them.
Man’s need for striving and doing better has resulted in the evolution of many standards and process optimization techniques that are now widely used around the world. Most of them evolved with manufacturing, which is where most business processes were run, and have only in the last few decades begun to be applied to processes in service industries as they have continued to acquire scale. An overview of some of the more common ones is provided here:
1. Customer Operation Performance Center (COPC)
Another adherent to the elimination of waste philosophy. It is a collection of many standards governing performance of different types of organizations, like Vendor Management, Outsourced Service Provider, Healthcare Service Provider, etc.
It is almost like an overarching management philosophy that seeks to guide operations every step of the way, with a lot of emphasis on data collection. For OSPs, the framework evaluates benefits in terms of cost savings, revenue gains, performance gains and intangible benefits.
2. Six Sigma
Six Sigma has come to represent the philosophy of continuous improvement and is widely followed in service industries around the world.
Six Sigma is a statistical concept originally used in manufacturing. A process was said to be operating at six sigma levels of quality if it kept defects to under 3.4 for every million units produced. It is a data-driven technique that seeks to drive out variations in the process so that customers get a predictable experience.
3. International Standards Organization (ISO)
ISO is a private non-profit headquartered in Geneva whose mission is to promote the development of standardization. In order to keep pace with changing times they have introduced a number of quality management systems like ISO 9000:2005, ISO 9000:2008, ISO 9004:2009
It seeks to document elements needed to operate a quality system and follow the documentation. It focuses on customer satisfaction, meeting regulatory requirements and achieving improvement.
It can be applied to any industry. More than 160 nations are members of ISO.
A number of quality standards and improvement methodologies developed in Japan during the period after the second world war when it was trying to come out of the devastation of that war. Kaizen is one such. ‘Kai’ stands for change and ‘Zen’ for good. The Kaizen philosophy seeks to bring about change for the better.
The core beliefs of the philosophy are:
- Good processes bring good results
- Manage with data and facts
- Big results come from small changes, over time
- Correct the root cause, the rest will follow
The Lean methodology seeks to promote a culture of continuous improvement. Its focus is the elimination of all non-value-adding activities throughout the entire process chain.
Some common examples of waste that Lean might focus on: Overproduction, Waiting time, Transportation, Scrap, Rework and Inspection.
It promotes techniques for running a process such that waste can be eliminated.
6. People Capability Maturity Model (PCMM)
PCMM, modelled on CMM (Capability Maturity Model) has become a useful tool in the services world, with its focus on people and their development. With a battle raging for attracting the best resources, PCMM establishes a program for continuous development of the workforce, with integrated process improvement, and enables adopting organizations to become preferred employers. It focuses on institutionalization of change and introduces practices that are repeatable and measurable, eventually leading to a virtuous cycle of continuous improvement. It covers a wide variety of process areas, Training and Development, Compensation, Career Development, to name a few.
DMAIC stands for the Define, Measure, Analyse, Improve and Control sequence of steps that this technique proposes.
It continues to be one of the most popular techniques adopted by organizations for their optimization initiatives. It does not need linkages with any steps in the past or future. It can be implemented as an independent set of steps for any change the organization seeks to bring about.
It can be used as a standalone or in conjunction with other standards like Six Sigma.
PDCA stands for Plan, Do, Check, Act and is another popular technique used in many companies for process optimization. The process takes followers through the following sequence:
Establish objectives and method to be followed
Implement the plan. Collect data before and after implementation.
Study data and review results.
Bake the new method into the regular processes or initiate another PDCA cycle till you reach goals.
One can do repeated cycles of PDCA and keep modifying the methodology as one learns more.
With the support of an independent Quality team, oWorkers stands shoulder to shoulder with its clients in the quality journey, constantly searching for areas where process optimization techniques could be implemented to achieve improvement. It consists of people adept at several of the techniques and are goaled on the improvement they are able to bring about.
The starting point
Whatever be the methodology adopted by the company to achieve its goals, the starting point is always a challenge.
Is it more valuable to improve customer satisfaction or should we focus on bringing down the cost of delivery?
Would reduction of cycle time deliver great benefits to the client or should we first work on reducing our training period?
While benchmarks can be used, like comparison against competitors on key parameters, or financial performance of the company over several years, it eventually boils down to the understanding of the business by the leadership team. They may need to take a call on the focus area so that real work can begin.
With a leadership that has 20 years of hands-on experience in the industry, our senior management is well placed to identify areas that could do with some improvement.
Process optimization techniques – measuring benefits
The primary goal of a company being to make money for its owners is well known and understood. That it is sought to be achieved through a specific area of work is also well known and understood. It, therefore, follows that the primary benefit that is to be delivered through the application of process optimization techniques should be to improve the bottomline.
Different companies operate at different scales and levels of complexity. There could be an entrepreneur who provides fresh food to migrant workers who might be working alone. There could be a global financial institution operating in 50 countries with a workforce of over 100,000 employees. Process optimization holds value for both.
In the case of the entrepreneur, at this stage of her business, it is likely that complexity is limited and the impact of any single action is visible on the Income Statement. If she hires a person to deliver the food, she can immediately see the profit reducing. But, in a few days, if her orders have gone up as a result, she can also conclude that it was perhaps due to the additional service she is now offering. Hence, for a small business, it might be possible to quantify the benefit in terms of the impact on the bottomline.
In case of global behemoths like global financial institutions or technology companies or car makers, it becomes more difficult to trace each impact to the bottomline. How does a person who sells mutual funds to target customers in a branch in Accra in Ghana, see the impact of his actions on the Income Statement of the company? His contribution perhaps passes through so many levels of consolidation that it loses its color by the time it gets vomited on an Income Statement. Besides, even if visible, it will be lost on the rounding off that invariably must happen in consolidating numbers. Similarly, the process of Credit Card collections in Buenos Aires in Argentina cannot realistically see the impact of their actions on the Balance Sheet.
So, are these contributions not important? Should they be ignored?
Quite to the contrary, if the institution is big today it is only because of the combined result of thousands of such people and processes. They are the pillars on which its success stands.
This is where surrogate variables become useful; variables that can be used as interim measures as a representative of the real or final variable. Surrogate variables are what Key Performance Indicators (KPIs) of a vast number of people are based on and similar KPIs can be used as surrogate variables to measure the benefits of the impact of the application of process optimization techniques.
To ensure that we are always looking for opportunities to do things better, oWorkers works with clients in identifying a bunch of different such surrogate variables that add value to either the client or oWorker business, or both. Some of the improvement areas we have targeted are listed below:
- Higher customer satisfaction score
- Reduction in cycle time
- Enhancement of output
- Higher revenue realization per customer
- Employing fewer resources
- Shorter training duration
- Faster turnaround time
- Reduction of manpower attrition
- Reduction in customer complaints
- Lower number of cases opened for rework
‘Everything else remaining the same’ is the principle that should never be disregarded, whatever the area being targeted for optimization. A shorter training duration resulting in more errors is always possible, but cannot be called optimization or improvement. If we can reduce the training duration without increasing the number of errors, or without impacting adversely on customer satisfaction, is what can be called improvement.
Enhancement of output can be easily done by ‘throwing people at it’ if it is a manual process or buying more equipment. It does not require a genius to do it. However, it does require a genius to increase output without increasing headcount or without buying more equipment. That is optimization.
Hence, while embarking on an optimization exercise, it is equally important to understand the surrounding variables and parameters and ensure that they stay with acceptable ranges while you strive to optimize in a particular area.
Implementation of process optimization techniques is no longer a choice for organizations, it is a necessity, to keep themselves ahead of the curve.
With its focus on data based BPO work, and its selection as one of the top three providers of data services in the world, oWorkers remains a partner of choice for outsourcing your work to. We are GDPR compliant and ISO (27001:2013 & 9001:2015) certified and have an independent Quality team that can guide the improvement project regardless of the framework adopted.