Manufacturing articles
Business Process Enhancement Enhances Competitiveness
Author: Nitin Khare
Date: April 2010
Publication: Canadian PLANT
There isn’t likely an executive in any manufacturing operation who wouldn’t want the company to be more competitive and more profitable. And yet many manufacturing leaders overlook a simple and cost-effective way of enhancing competitiveness and profits.
Business process enhancement (BPE) is one of the most powerful tools available to improve operational performance. Solutions are typically targeted to the short term, therefore improvements are often realized within only a few weeks – and costs recovered within months.
Virtually any manufacturing enterprise can benefit from business process enhancement, which is a disciplined approach to removing barriers that impede the flow of work. As supplies, markets, customers and competition continually change, manufacturers adapt to these shifts. Activities and workflow, however, tend to become desynchronized, leading to inefficiencies and problems.
BPE optimizes performance by redesigning and aligning workflow processes to more efficiently realize business goals. It can be used to improve quality, increase productivity, reduce costs, enhance customer satisfaction, reduce risks and increase profitability.
BPE can be applied to overall operations or to specific components. Purchasing, inventory management and materials handling are often the focus of enhancements for manufacturers, representing as they do, such a significant investment for these companies. BPE can also help to prevent problems. Before integrating new information technology or financial systems, for example, a business process assessment can ensure efficient, successful implementation.
Manufacturers can also benefit from business process enhancement when considering a merger of a division, plant or another company. BPE can help to determine which features, capabilities, and controls of each entity will best achieve consistency and efficiency.
Business process enhancements are particularly valuable for manufacturing operations experiencing:
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the introduction of new systems
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an escalation in technologically-driven processes
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the introduction of a new business model
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mergers of departments, plants or processes
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rapid growth
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escalating costs
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Declining profitability.
When embarking on a BPE project, some companies appoint internal teams to drive the process. Others look to external specialists for an objective perspective, experience and resources to guide the initiative. Projects typically include five phases.
- Identification: BPE involves assessing the current state of operations to identify inefficiencies, gaps and risks and then recommending changes to specific areas that impede productivity. Thus the first phase involves acquiring a thorough understanding of the organization and its goals, customers, processes, risks and key performance indicators. The BPE team reviews relevant documentation including organizational charts, policies and procedures. They also interview the executive team as well as key personnel to acquire an understanding of current processes and areas of concern. A company may be experiencing challenges, for example, with a specific function or activity such as parts procurement, or problems with a major function or system, such as accuracy of production data.
By the end of this phase, the team will have documented current processes – including a detailed diagram of the current state of operations, the individuals who perform key functions, the amount of time dedicated to each activity, the activities that add value and those that don’t, and what risks are involved, such as production downtime or insufficient or excessive inventory.
This phase also defines the project scope, including the specific areas of focus and sets out a project plan with milestones and timelines.
- Analysis: This phase involves reviewing documented processes to identify pressure points, gaps, bottlenecks and/or areas of inefficiency – along with the objectives for future processes. Potential cost and efficiency improvements, along with alternative solutions and results, are identified and quantified.
- Recommendations: The BPE team then develops preliminary recommendations that may include changes to work processes, policies, standards, procedures, controls, people, training or support systems and infrastructure. These recommendations include a detailed diagram of the proposed processes as well as objectives, controls required to manage risks, specific measures to drive success and the projected impacts on the business. The BPE team meets with the executive team to discuss the recommendations and to determine the most practical action steps.
- Implementation: Once management has provided feedback and approved the implementation plan, the recommendations are integrated into a detailed implementation plan. This serves as a map for the executive team and as a baseline to evaluate results. Some management teams prefer to assume responsibility themselves for implementing process enhancements. Others prefer the hands-on support of BPE specialists to guide management and to assist employees in understanding and implementing the necessary changes.
- Follow up: The BPE team then monitors implementation progress and assists with any problems should they arise to ensure that implementation is successful.
By this point, a manufacturer will have a strong foundation in place supporting enhanced business performance. Improvements will already be evident and recovery of BPE investment costs will be underway.
For manufacturers focused on competitiveness and profitability, BPE provides an opportunity to break down the barriers and optimize performance.
