Process improvement Featured

8:00pm EDT August 26, 2009

Process improvement has traditionally been associated with manufacturing. Yet, most, if not all, businesses can benefit from looking at how they operate and finding new ways to increase productivity.

“All industries can learn from manufacturers,” says Dave Mills, project manager at Definity Partners. “Proven implementation methods and process improvement tools can be applied to any organization in any industry with operational and process functions.”

Smart Business spoke with Mills about how your business can begin to implement process improvements to cut waste, improve efficiency and increase profitability.

What can companies in other industries learn from manufacturers about process improvement?

Many manufacturers have simplified, standardized and automated their operations by involving employees to drive improvement results. Now, other industries are employing lean principles, especially service companies, nonprofits and health care organizations.

These other industries are realizing that getting their people involved is key to understanding process challenges on a daily basis. This perspective is key to understanding what’s holding them back from being able to implement improvements. It doesn’t matter whether you’re in manufacturing or some other industry, having your people involved is the key to driving and creating sustainable improvements.

What industry segments are most likely to need improvements in terms of operational efficiency?

Any industry with cost pressures will benefit. If you have costs that are going up or even staying the same while your revenue is going down, working on operational efficiency is a must.

Global economic forces in manufacturing have forced it to lead the way with operational improvement. As the national health care debate continues, medical services organizations must streamline themselves to take costs out of the system. Additionally, technological advancements have caused several industries to begin working on their operational efficiencies. They’re being impacted by innovation, creating another opportunity to evaluate processes and identify potential opportunities.

Even nonprofits can benefit from process improvement. With the current economic challenges, their revenue is going down while their costs are going up and the number of constituents they’re serving is increasing. By streamlining their processes, they can trim waste and operate more efficiently with fewer resources.

What process improvement techniques work especially well for service industries?

Any activity involving the customer experience must be evaluated. Think about what your customer wants — whether it’s a manufacturing company looking to reduce product delivery time, a medical practice eliminating the time patients are kept in the waiting room or a nonprofit anticipating more service demand. If you start with the customer, you’re going to be focusing on the right things.

A proven technique is our ‘run, improve grow’ model. It’s a way of understanding how your employees are looking at what they do on a daily basis. Are they working on making improvements in the business, and are they looking at ways to grow the organization? As you work on making improvements that can help you with the way that you’re running, you start to remove waste in the process. This gives you more time to focus on improvements and organizational growth.

How can health care and service industries determine when to undertake a process improvement initiative?

The challenge is that you always can find a reason not to begin an improvement initiative — you are facing new competition, market demand is changing, new products are being introduced or something else. With that said, the best time to initiate change is before you are forced to by market conditions. Being proactive in improvements is always better than a reactive response.

Take an example of two merging non-profits. They leveraged that opportunity to spend time improving their processes. It would have been very easy to say, ‘We shouldn’t do that now because we’re merging and we’re too busy.’ Instead, they looked at it the other way and said, ‘Now is as good a time as any. We’re going to be making changes anyway, so let’s take this as an opportunity to look at our process and eliminate some of the waste in there and take the best of both worlds and bring them together.’

Don’t wait until there are problems or only focus on the top of your organization. You really need to take every opportunity to involve your most valuable employees who are on the front lines to take your processes to the next level.

What are the benefits of a process improvement effort?

The No. 1 key deliverable is that it needs to make financial sense. No matter what industry you’re in, there’s always an opportunity to address the bottom line. Focus on increasing productivity, cutting defects and/or reducing operational costs.

What is often even more important and impactful, however, is creating that culture where you can continually drive and sustain process improvements. It’s not just when you’re working on a project; you need to create a culture where motivating employees allows you to continue to drive improvements throughout the organization. Success is measured on never being complacent when it comes to achieving better results.

In the end, it allows you to be more competitive so that you’re not just reacting to the economy or the competition, but you’re being proactive with the continuous improvement culture that you created to drive operational excellence.

Dave Mills is a project manager at Definity Partners. Reach him at (866) 520-2003 or dmills@definitypartners.com.