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Business processes and their optimisation are permanent challenges for companies in competition. Analogous to product innovations, new demands are placed on business processes by changing market requirements and market needs. These must be supported by IT systems and usually also by ERP programmes. This is also often referred to as process innovation or business process innovation.
Business Processes
When existing business processes have to adapt to changing customer requirements or process innovation becomes necessary for reasons of improving competitiveness, both tangible and intangible aspects have to be taken into account.
What Material Business Process Innovations Are There?
New Technical Innovations:
These are used in solutions for the flow of information. New technologies and applications for faster communication within a company, as well as with customers, come into play here. These can be internal communication tools such as Slack, Teams, Google Chat or others. In cooperation with B2B customers, the applications can be in the context of exchanging data in EDI format. In the B2C sector, these could be applications in the context of improvements in contact with customers or to improve the so-called last mile in shipping logistics.
Manufacturing Processes & Production Improvements:
This usually means improvements in machine capabilities and equipment, image pattern recognition for quality assurance, interlinking of production steps and the use of autonomous transport robots. These hardware-supported measures can individually or collectively help to make business processes more efficient and reduce costs.
Which Business Process Innovations are Intangible?
Optimised Organisational Concepts:
For the improvement of value chains (supply chain management), the close integration of all parties involved in value creation is becoming more and more important. Therefore, in the context of strategic purchasing or supply chain management, questions about cooperation with suppliers are becoming enormously important. The focus on "lowest" price will lose importance in favour of improving the interlinking and information exchange of I.T. systems or even ERP software. The holistic view of costs in the supply chain is becoming more and more important.
Improving Internal Communication:
Improving internal corporate communication is another way to optimise business processes. Virtual team rooms, project teams that are formed only for this one project and many other approaches within the framework of New Work are starting points for improving business processes. In the context of the Covid pandemic, many companies have learned to organise themselves in a new and also different way in teams. Team and zoom meetings have become commonplace. Working on common topics or projects at a distance (remote work) has found its way into companies at a speed that was hardly conceivable a short time ago. The use of employee communication channels outside of email forwarding relieves employees of overflowing mailboxes. Solutions such as Slack, Google Meet or even functions from Microsoft Teams are available for this purpose, all of which - used correctly - help employees to increase process efficiency.
What Methods Are Available for Optimising Business Processes?
A variety of well-known methods are available for optimising processes, often referred to as Business Process Improvement (BPI). The decisive point is that there is no "one" solution for improving processes. According to a study by MIT, it was already described in the 1990s that it is more advantageous to try to make individual solutions effective in consistent interaction.
This was also confirmed in the Toyota production methodology used by Toyota, whose success was the sum of all individual solutions. Looking at the parts of the value chain that do not really add value for the customer and then rigorously eliminating them (waste production) also helps to realise the optimisation of business processes. Three process models are to be described as representative of many other successful approaches to process optimisation: 1. Business Process Reengineering (BPR) 2. Continuous Improvement Process (CIP) 3. Six Sigma
Business Process Reengineering
The masterminds of BPR, the two MIT professors Michael Hammer and James Champy defined the BPR approach as "fundamental rethinking and radical redesign of business processes". The goal of business process reengineering was to achieve dramatic improvements in cost and quality, service and speed. The aim is to completely redesign business processes, regardless of existing structures and procedures or processes. Criticism of this radical approach was voiced after a few years of euphoria. It was found that many business process reengineering projects failed to deliver the expected results. The causes included weakness in implementation on the part of those involved or the management and a rapidly changing environment. This is even more true today. The demands for adjustments and the competitive pressure have increased in recent years to an extent that was hardly imaginable 20 years ago. This is mainly due to the use of modern IT tools and ERP systems.
Continuous Improvement Process (CIP)
Its foundation is based on the Japanese Kaizen. The Japanese understand kaizen as a "change for the better", so that this word also expresses the spirit of these initiatives. The aim and the basic idea of CIP is to increase the quality of products or processes through small but permanent improvements. Employees should be involved in suggesting process improvements and thus help to realise competitive advantages in the long term.
Key Points on which the CIP approach is based:
- Avoiding Waste
- Process Focus
- Customer Focus
- Involvement of Employees
- Teamwork
CIP approaches are currently often used with other elements of modern production concepts such as visualisation and standardisation within the framework of concepts for efficient and effective service provision.
What is the Success Factor in the Use of CIP?
Involving employees is mentioned most often as a success factor. Experience and the associated wealth of ideas for improving business processes have the greatest effect. In addition, employee participation lowers the acceptance thresholds for changes and the implementation success is correspondingly higher.
Six Sigma
This method is based on the fundamentals of mathematics and here in particular on the model of the Gaussian normal distribution. The Six Sigma approach is a statistical quality objective. Six Sigma is also used as a quality improvement method. A deviation of six sigma from the mean of a normal distribution means that a maximum of 34 errors on 10 million (10,000,100) processes or parts are permissible as a statistical quality target. This means that 99.99966% processes or parts must be free of defects. Six Sigma was first used in Japan and then adopted by Motorola in the USA. Six Sigma received a lot of attention as a means of improving business processes at GE General Electric under their manager Jack Welch. Six Sigma is implemented by training employees who are responsible for implementing Six Sigma in the company. Role definition is expressed by colours based on skills. Green Belt or Black Belt employees are the most common roles in this context. The approach is done with the classical approach of:
- Define
- Measure
- Analyse
- Improve
- Control
For this purpose, classic tools from quality management are also used, such as Quality Function Deployment (QFD), Failure Mode and Effective Analysis (FMEA) and Values Stream Management.
What is the Strength of Six Sigma?
The strength of the Six Sigma approach lies in the permanent anchoring of continuous business process optimisation.
What Are the Weaknesses of Six Sigma?
The weaknesses of this approach clearly lie in the top-down approach and the strong focus on results. This strong focus tends to ignore medium and long-term considerations regarding strategy, customer orientation, leadership and employees. In this respect, however, Six Sigma has its justification when it comes to strongly process-oriented approaches and manufacturing optimisation within the framework of total quality management approaches.
