Most processes, either on the shop floor or in the office, only operate at about 60% of their true capacity. That statistic hasn’t changed much over the past three decades, despite all the technological advances we’ve experienced. It’s partly because of those changes that processes become mismatched. It’s also because planning standards tend to be inaccurate, which inflates performance and obscures the improvement potential.
There’s a subtle art to diagnosing and finding opportunities within your processes. Most managers know that some of their processes can be improved, but they tend to look for new equipment, new systems, or more resources as solutions. Those things can help, but at least one-third of the opportunity that lies dormant in companies can typically be achieved without any additional capital expense.
Objective observation and the identification of opportunities take a certain skill set that not every manager has acquired.
Here are a few techniques that work for most organizations.
Define the process. To find opportunities for improvement in a process, you first need to properly define the process. Where they start and where they end can be a matter of opinion. Breaking down a process into steps that reflect how value is created is a necessary first step.It’s helpful to involve your front-line people in this assessment. As the ones working through the processes every day, they can identify how the process works, not just how it should work, and often have clear ideas about where things could be improved.
Analyze the process. One of the biggest issues with processes is that they become unbalanced over time. The capacities of different sections don’t match so the flow becomes uneven. You can gain this insight by carefully analyzing the volumes and capacities of different work streams.
Product and service mix can make this exercise fairly complicated, but it helps to identify why work bottlenecks in certain areas. The objective is to try to uncover the key constraint area of your process.
Focus on the constraint areas. The key constraint governs the processing rate of the entire process. If you increase the flow of work through this limiting area, you increase the capability of the process. Conversely, if you spend a lot of time on non-constraint parts of a process, you can end up having little or no impact on the total throughput.
Spend a disproportionate amount of your time observing and studying the constraint areas. Any waiting, rework, or breakdowns at these critical flow points will directly impact the productivity of the entire process.
Look externally. A careful examination of what customers are thinking and what others are doing can also be useful to identify process improvement areas.
While not always reliable or actionable, there’s much to be learned from customer feedback. The most disgruntled customers may be the loudest, but if you are deliberate about seeking feedback from key customer segments, you can gain helpful insights.
If you can define the process clearly enough, benchmarking other companies can also provide ideas. It’s almost always thought-provoking. The difficulty with benchmarking is that it can be difficult not to rationalize performance variances due to perceived differences in the operations.
Stay connected for Part 2 of this discussion on common challenges, coming soon. And if you want to explore these concepts in finer detail, pick up a copy of Results, Not Reports: Building Exceptional Organizations by Integrating Process, Performance, and People.
