3 effective ways to measure business process improvement

Ambar on March 17, 2021

Introduction

Do you have a problem with your business processes that are secretly consuming your internal resources and negatively impacting your business? 

We often see businesses struggling to measure those things that drive the results of their goals and ensure that their organization stays competitive. So it’s critical to identify and measure the business process improvement when it becomes a problem quickly. We believe a measurement system should be built from the ground up, beginning with business processes. 

This article will focus on different KPIs to measure a business process. You can then apply equivalent methodologies that can then be applied to the business system and various enterprise levels.

 

What to consider when measuring a process?

 

1. Define what needs to be measured. 

That’s right, start by determining what exactly you mean by process improvement. Do you want your process to be more reliable, faster, more efficient, or better in some other way? Figure out the end goal or result that you want to achieve. This will bring more clarity to the process. 

Just keep in mind that your process should produce an output that can be measured in some way. Let’s say, for example, an e-commerce company wanting to improve delivery speed would measure the delivery time or a lead generation process that might wish to collect all the data collected in one place for a better customer experience.

 

2. Choose a primary metric.

The primary metric should be defining the output or goal of the process improvement. For example, a mobile manufacturing factory might choose the number of mobiles produced per hour. Before a process improvement is introduced, a baseline measurement is taken. At the end of the process, the metric is measured again. The company can then calculate the amount of improvement.

 

3. Correlate your primary metric to a business metric.

The business metric will help you measure how a process improvement will help achieve one of the company’s goals. Continuing the above example, if the primary metric is to manufacture the mobiles faster, the business metric might increase profit or reduce the manufacturing costs. So, here’s a cause-and-effect relationship between the metrics, demonstrating why the improvement in the primary metric is good for business.

How to measure your business process improvement?

Let’s have a look at the few ways to measure the impact of your company’s process improvement efforts.

 

1. Return On Investment (ROI)

The financial impression for measuring an improvement can be one of the easiest ways to ensure if you are in the right direction of continuous improvement. For example, determine the cost of improvement for delivering a product and compare it to the post-improvement (like increase in orders, further revenue growth) and the amount spent to implement the idea.

 

2. Product and Services Quality

The next KPI to keep an eye out for is to determine if continuous improvement has positively impacted the quality of your products and services. The number of faults identified before the product/service reaches the customer is an important metric. Others include the number of product returns or replacements, service complaints. There should be an increase in product quality to have a successful business; otherwise, the improvement would be a waste. The superiority of products or services will ensure an increase in sales, loyalty of customers and employees.

 

3. Customer Satisfaction (CSAT)

This KPI will measure the quality of your product or service, such as how well your product or service meets the customers’ needs. Bain & Company did research, which states that 80% of companies say they deliver a superior quality of customer service; unfortunately, only 8% of customers agree. That’s why it is essential to measure how improvements impact customers. You can come up with a way to measure this — it could be surveys, customer service ratings, reviews, testimonials, etc. 

Conclusion

Measuring your business processes isn’t an easy task. Processes are ever-evolving, and there are dozens of different metrics available. Focus on the things you have the most control over and which will significantly improve your business.

When you measure a business process, you should have a specific purpose for process performance. Most enterprises measure what is easy & comfortable and not what is essential. By broadly evaluating the essential process elements and then aligning performance measures with strategic purpose and intent, the company leader can drive best-in-class performance that provides a sustainable and competitive advantage.

 

Originally published at Medium.