Process optimization: Why it is so important and what digital transformation has to do with it
Optimizing processes saves money, makes workflows more efficient and supports workflow. But what exactly is process optimization and how does it differ in different industries?
First of all, it is important to clarify what process optimization actually is. Basically, it is a method by which companies and economically independent decision-makers, but of course also private households, can optimize existing work, business, production and development processes in terms of Efficiency and effectiveness can improve. A more sustainable or cost-effective use of resources can also be one of the goals.
Process optimization: definition and methods
Over time, various approaches and methods have been established to optimize processes - for example, the following three:
- Portfolio Analysis: Normally, a company cannot improve all processes at the same time, so it makes sense to first filter out those areas that are most important. This can be achieved with a portfolio analysis including a process matrix, i.e. a kind of diagram that classifies processes and sub-areas in terms of priority. This involves analyzing the extent to which a particular process contributes to achieving the company's overall goals and what potential for improvement it still holds. This is exactly where a company should start with process optimization.
- SWOT analysisAnother way to find out where improvements are worthwhile is the so-called SWOT analysis. The four letters stand for Strengths, Weaknesses, Opportunities and Threats. All company processes are evaluated with regard to these four aspects, so that at the end it becomes clear where there may still be processes that do not function as desired, waste too many resources or still have some potential.
- Cause and effect diagram: This method is also called fishbone diagram, because the finished analysis resembles a fish skeleton. At the center here is a horizontal axis that represents the totality of all processes and ultimately leads to the desired effect in the optimum case. From there, like individual fish bones, various company aspects are analyzed with regard to five areas, namely man, machine, method, material and milieu, i.e. environment. Are there possibly sources of error that can be traced back precisely to a certain aspect, and where do weak points occur? This is exactly where we need to start.
No matter which method is chosen, every process optimization begins with a comprehensive analysis to create transparency. Through this complete representation and documentation of all processes, sources of error are often already uncovered. This is important, because no workflow improvement is possible without ruthless disclosure of the weak points.
Years ago, the motto of many companies was: the tried and true is always the best. However, growing competitive pressure and a stronger role for digitization have triggered a rethink, so that they are now steadily opening up to the process of change. This is also accompanied by an improvement in existing processes. For good reason, because an optimal workflow helps to save costs, exploit synergies and expand areas of activity.
Different industries, different goals
The goals and approaches of process optimization can vary greatly depending on the industry, as the following two examples illustrate.
Process optimization in industry, for example, is all about:
- Ensure optimal utilization of employee capacity
- to carry out resource-saving material planning
- Reduce production costs
- ensure short execution times
- Meet deadlines and prices
In the field of industry the principles of lean production are often applied in process optimization. Lean Production is part of Lean Management and originated in Japan. In Germany, the term Holistic Production Systems (GPS) has become established for the application of lean production methods. There are a total of eight design principles for this, including Waste avoidance or Continuous improvement process (CIP). The latter is about permanently analyzing not only major weaknesses but also smaller processes and identifying potential for improvement. Lean production includes numerous tools such as Kanban, SMED or Heijunka.
The situation is different when it comes to optimizing an agency's processes. Here, for example, it is a matter of:
- Structure data well and make it available to all
- Visually display the progress of projects
- ensure optimal cooperation between individual teams
- Improve the communication of the employees
- To be able to plan projects more long-term and better
- present the time recording in a more transparent way
In agencies, it is important to make the workflow as simple as possible. Individual areas must be perfectly coordinated. Special software is often introduced as part of digitization and process optimization, which combines planning, management and controlling and thus maps the most important processes of an agency.
Digitization often helps to rethink current processes and make them more efficient. A study by the School of Business at the University of Applied Sciences Northwestern Switzerland FHNW, entitled "Strategy Development in the Digital Age" however, makes it clear that there is still a great need for improvement in terms of digitization. Accordingly, 56 % of SMEs stated that they still need to press ahead with digital transformation.
Conclusion
We live in extremely fast-moving times. What was good and useful yesterday is often outdated today. If you want to stay on the ball as a company, you have to keep an eye on all internal processes. This is the only way to identify and eliminate weaknesses or uncover hidden potential. Comprehensive process optimization with a sound analysis as a basis can help.
To the author:
Martin Seeger is currently in the 4th semester of his marketing studies. Besides his studies, he is a successful blogger in marketing and supports companies and online platforms in product and brand communication.
