Process Optimization Fundamentals

By Joanne Wortman Posted August 5, 2016

Process optimization is critical to ensuring process improvement projects meet the expected results. Once you've gone through process mapping, as per our previous article, it's time to begin the optimization process.

process optimization (BPO) cycleCharting the Course for Process Optimization

It does not matter if you have fully-documented current state processes or if the current processes are undocumented but well internalized. At the outset of a process optimization initiative, align your team's understanding and make sure everyone understands the following:

  • The primary business goals of the process
  • The non-negotiable constraints placed on the process
  • The strengths and weaknesses of the process as currently performed
  • Acceptable optimization strategies for preserving/enhancing strengths and mitigating/eliminating weaknesses

Let's look at an example.

Process: Manage Client Contracts

Process Goals:
  • Contract Data is Current, Correct and Complete.
  • Up-to-date contract information is accessible to sales reps in the field.
Process Constraints:
  • Contract Data Is Only Maintained in the System of Record.
  • Contract Data is Secure from Information Breaches.
Strengths of Current Process/Strategies for Preserving or Enhancing Strengths:
  • We can perform discount analysis with current reports/Maintain current report structure.
  • Clients don't see many errors when reviewing contracts for final signature/Maintain tight data validation.
Weaknesses of Current Process/Strategies for Mitigating or Eliminating Them:
  • Our auditors have issued findings on our revenue recognition in the last two audits/Implement and enforce a standard process for project managers to track percent work complete against stated contract deliverables.
  • We have limited ability to understand total customer value when multiple contracts have been written in separate sales territories/Explore master data management approaches and automate the current spreadsheet-based consolidations.

Now let’s take a look at some of the common sub-optimizations that plague both small and large process improvement initiatives.

The Low Hanging Fruit

Smaller optimization projects may be led centrally or by self-organizing teams within a department or across departments that participate in a bigger process chain. These projects can make substantial improvements by addressing the low-hanging fruit.

Eliminating Off-system Work

Many businesses spend considerable capital and effort when implementing modern enterprise systems that automate business processes that were formerly performed in isolation and sometimes on paper. However, off-system work sometimes persists. Consider the following examples:

A Thirty-Year-Old Workflow

A customer care organization photocopies a form, writes in the content of a congratulatory letter for clients who have been with the company for 10 years, and sends it through inter-office mail (or walks it!?!) down to the Word Processing Department.

The Word Processing Clerk types the letter, prints it and gives it to the Word Processing Manager to proofread. The Word Processing Manager hands the letter back to the clerk, who interoffice mails it to the customer care manager. The customer care management signs it, and hands it to the customer care clerk for bundling and sending to the mailroom for outbound delivery.

Even if the company's brittle mainframe could not automate this labor intensive (and low business value) process, a modern workflow tool could have eliminated the manual movement of paper between departments and speeded up claim payment.

Potentially Deadly Mistakes

Before electronic medical records (EMRs), patients were discharged from the hospital with handwritten discharge instructions: one copy went to the patient, one stayed at the hospital, and one went to the patient's primary physician. Now, doctors enter their orders in the EMR, the discharge nurse finalizes and prints a copy for the patient. Hopefully, the primary doctor can access the hospital system from home or from her office.

This works well in theory, but what happens when one of the specialists for a patient with a complex medical condition is late to enter discharge dosages of critical medications while the ambulance transport is waiting to convey the patient home? A nurse may scribble the last prescription on the patient's copy and forget to enter it into the EMR.

Later that evening the patient is confused and it requires numerous phone calls to the ward (where a different nurse is on duty), the primary, and the specialist to understand what meds and dosages need to be taken at bedtime. The correct process would have been to dismiss the ambulance, track down the final specialist, have the primary review all the discharge instructions for potential drug interactions and errors, and THEN and only THEN print the discharge instructions for review with the patient.

Ensuring Value-Added Handoffs

There are two aspects to consider when evaluating the handoffs between roles in a process or workflow (and this is one reason I always use swim lane diagrams for process visualization):

  • Does the step itself add significant business value to the goals of the process?
  • Does the step truly require a handoff?
    Sometimes segregation of duties requirements mandate a handoff, but in some organizations, there are handoffs in place to justify high staffing levels or to work around the preferences or skill deficiencies of particular resources.

Here is another example of low-value work + unnecessary off system work that I encountered in a member services organization.

The member services department had centralized the event notification function of the local member chapters. In this workflow, the local chapter coordinator sent the event notification information (time, place, program, fee, etc.) by email or fax to member services at the main office.

A member services clerk formatted this information (normally just a few sentences) in a desktop publishing application. The clerk printed a proof and set it in a pile. The next morning, a different clerk would proofread the pile of draft postcards and run the mail merge.

When I first suggested eliminating the printing step, I was almost run out of town. I took a quick survey of chapter coordinators and found an almost unanimous request for the elimination of the postcards in favor of emailing the event notifications out themselves. Significant work was being wasted on steps that had no business value.

Re-thinking Approval Workflows

As far as possible, approvals should be enforced by system rules. When situations require human approval, the approver and date/time of approval must be auditable in a system. Verbal approvals are a significant cause of profitability holes for many businesses.

Consider the following real example from an insurance company:

A local agent submits a claim for a minor benefit. It appears in a workflow queue at the main office. A claims clerk verifies eligibility requirements, prints a copy of the claim, and walks it into the office of the claims manager. If the claims manager approves, he or she initials the printed claim and hands it to the clerk who sends it via inter-office mail to a payables clerk.

The payables clerk enters the claim into the mainframe for the nightly check run. IT delivers the checks the next morning to the payables clerk who clips each check to its printed paperwork. The payables manager reviews the checks and paperwork. Approved claims are sent back up to the claims department.

A claims clerk prints the accompanying form letter (hopefully without the involvement of a Word Processing Department!) and takes the check and letter to the claims manager, who signs the check and the letter. Then the clerk sends them down to the mailroom.

This real-world example contains multiple approvals as well as non-value added steps that could have been automated either within the enterprise systems or in a modern workflow tool.

I hope you have enjoyed these examples and that they have made you think about where the low-hanging fruit in your own business processes. If you can top these stories, we would love to hear from you — drop us a comment!

Joanne Wortman

Joanne Wortman is an independent business/technology consultant and freelance writer in the NY Metro area. She has almost two decades of experience providing business process optimization, organizational change management, M&A integration, and program management across many business sectors, with a concentration in manufacturing.

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