Businesses by definition are incorporated to generate value for their stakeholders and maximize profits for their owners. However their ability to generate profits are predicated on both internal and market factors. External market forces, such as new competitor, advent of new technologies, changes in the prices of raw materials etc. are largely decided by factors out of the business’ control. What the business owners do control are the productivity and efficiency of the organizations internal business processes. Higher business process efficiency equates to a better utilization of the organizations limited resources. This article focuses on helping the owner identify the areas of improvement within their organizations to become Lean and therefore more productive.
Before we begin, we must define a Utopian Business Process. At Ozone Consulting a business process that can create accurate outputs that the customer cares about, on time, every time,without any rework at the lowest cost is considered to be ideal.
A business process can be proposed as work completed on Inputs provided by Suppliers to the process to effect a specific Output for Customers. A business process can thus be represented as Pipes shown in Fig.1. As in the case of any pipeline there are possibility of leaks at joint and bends. These Joints represent handoff between two entities within the process. The fluid flowing through the pipes represents conversion of resources necessary for the success of the process and the Droplets represent the losses within the system. A droplet here and there may not be noticed by the owner but over time these droplets tend to form a puddle under the system. . It is said “It is difficult to recognize the forest when you are standing within the trees”. However these Puddles are the lost profitability of the entire system.
Fig. 1 – Representation of the business process
Any business owner must strive to reduce the puddles from forming under his system. Additionally a business owner who is involved with the day-to-day activities of the organization is inherently unable to recognize the “Low Hanging Fruit” (areas of improvement). At Ozone Consulting we assist business leaders in identifying such opportunities within their organizations. By fixing the leaks within the system or by improving the processes that are critical to the organization, we assure improvement in efficiency of the overall system and therefore profitability of the entire business.
I propose a four step process to improve business processes. I have suggested a representative tools in parenthesis that could be used to effect improvement. We at Ozone Consulting are equipped with a large array of tools, which we employ as per the needs of each individual business.
- Improve the business process by Maximizing Flow through the pipes. (Lean Six Sigma)
- Better Process Design by Eliminating Joints and Bends in the System to reduce Points of Failure (Value Stream Mapping)
- Reduce Leaks through better training and linking of Human Resources within the organization (Standard Work, ISO)
- Spreading the Puddles across the value stream (Supplier Development Activities)
Finally as a business leader it is your responsibility to constantly scan the organization for high impact opportunities. At Ozone Consulting, we follow our time-tested, systematic approach to identify areas of opportunity for the organization.
- We start out by quantifying the undesirable condition in terms of cost or defects.
- We then define the customers affected by the undesirable condition and what they care about.
- A high level process map is created and a Cause and Effect analysis on the “puddle” is performed. The next step is to vote down the potential causes to identify strong suspects.
- Finally, we identify the business process that contains the causes of the puddle by performing a Pareto analysis on the primary causes and arrive at a descending list of critical processes.
- Our deliverable to the business leader is a project plan that answers the following,
- What is the Issue/Measure of Success?
- How will be tasked to complete the project?
- When will the project be completed?
Business Process improvement is extremely essential for the long-term health of the organization. There are experienced facilitators’ such as ourselves, who can deliver positive results to the organizations bottom line.
(Rohit Ogale is a proven Business Process Improvement expert and an entrepreneur, who is a founder of Ozone Consultancy and has been associated with many companies as a prime consultant providing Six sigma & Lean strategies to avert costs and facilitate cost efficiency in processes.)