5 emerging areas for process excellence
Formal process excellence approaches and methodologies have been around for decades. Whether it was Statistical Process Control in the earlier part of the last century or Lean and Six Sigma towards the end of it, we’ve always been coming up with news way to improve how we improve.
And while many of the methodologies for process improvement have their origins in manufacturing, practitioners know that these disciplines can be applied to just about every type of work out there. So where are the big growth areas for process excellence?
Here are five emerging areas:
#1: Law firms and legal departments
The legal profession is jumping on the "continuous-improvement-process-management-Lean-Six Sigma" bandwagon in a big way. It was an industry that until recently enjoyed large margins and seemed immune to the normal cost pressures to which most businesses are subject. That changed in 2008 with the start of the global recession as companies put their legal advisors and fees under greater scrutiny.
Now, with the United States suffering a glut of lawyers on the market, disruption from low cost providers at home and abroad, and competition from online resources (for instance, websites that make standard legal contracts freely available) the pressure is on lawyers to improve their efficiency and decrease costs. Clients – whether in house legal departments or individuals – are no longer willing to pay by the hour; fixed fee work has become de rigeur adding additional incentives for lawyers to find ways to get their jobs done in less time and for less money. (We wrote an article that looks in more detail at the topic here).
If we didn’t know already that healthcare processes were well and truly broken, it’s a fact that’s been confirmed by the industry itself. In our February 2013 "Future of PEX" survey of over 900 process professionals, those in healthcare cited "broken processes" as one of the biggest barriers to change. (You can see the results in our report here). But as populations age and government spending declines (or in the case of the United States – as healthcare providers want to remain profitable), fixing healthcare is no longer optional.
Process improvement methodologies like Lean and Six Sigma have already been applied to great success in the industry. The Virginia Mason Hospital, a Seattle-based teaching hospital, for instance, has been applying lean principles to "increase patient safety and quality of care, and reduce costs" for over a decade. The hospital now operates its own institute offering training to other healthcare providers looking to implement Lean.
#3: Shared Services & Outsourcing
Over the last decade, many companies have reaped huge benefits by outsourcing to low cost countries or creating shared service centers. While initially the cost savings and efficiency gains may have been achieved just by changing the operational set up, the pressure is on to continue to eke out gains from the model. As a result, many are now turning to process improvement to fine tune to the performance engine.
In a whitepaper, consultant Dan French, argues that Shared services has entered a ‘third wave’ where the focus is now on continuous improvement (the first ‘wave’ was all about "transactional consolidation" – i.e. putting systems and people together - and the second ‘wave’ focused on process standardization).
"As the big bang transformation programs complete, continuous improvement is becoming the common agenda," he writes. "Organisations are building structures, responsibility and accountability for global process leadership and the new focus is the end to end process that spans the business functions of sales and purchasing through the SSC and back around."
#4: IT Management
Since the start of the 2008 global recession, all parts of businesses have been under pressure to save costs and increase efficiency. The challenge has always been, though, how can you cut costs while maintaining the quality and reliability of your services and products?
The role of the Information Technology department, in particular, has become critical to all aspects of business operations. IT problems of reliability and quality can not only affect overall business productivity but can even come with reputational risks as IT glitches can have a major impact on customers. (For instance, IT glitches at several banks in the United Kingdom have led to customers being unable to access the money in their accounts – a relatively critical service for a bank to provide!)
Consultant Peter Waterhouse says that the principles of Lean management "better enables IT to identify and eradicate anything that is wasteful within IT management." Waterhouse translates the "8 wastes" into IT specific examples. Excess inventory, for instance, could be something like unused IT licenses. An example of a Defect could be poor project execution.
Management consultants McKinsey claim that applying Lean principles to IT management can result in dramatic improvements to performance and productivity. In 50 recent data center transformations the consultancy has worked on, McKinsey says that the average SLA compliance has risen by 5-10 percent and the average time to restore services by 50-80 percent.
#5: Customer experience management
Forrester Research says that we are now living in the "Age of the Customer." Customers have more choice and information than ever before about the companies they choose to work with resulting in a radical sort of transparency about the quality of a product or service. A poor customer experience, as result, can mean the loss of not just an individual customer or their immediate network but a much wider network as poor reviews on websites spell disaster for a company.
While there are many aspects to creating a good customer experience, processes are the critical underpinning to how your company delivers goods and services. Indeed, a Customer Management IQ survey found that "broken processes" are seen by customer executives as one of the biggest impediments to providing superior customer service.
One of the challenges is that customers deal with different departments and divisions "across" your business. A given transaction may be dealt with by sales, finance, customer contact center representatives, your IT team and many more. While some of these roles – particularly those in the "back office" – have not traditionally thought of themselves as customer-facing, the work that they do contributes the customer’s experience.
That’s why a focus on "end to end" process improvement is increasingly becoming more important. Companies are starting to look at how things like value stream mapping, customer experience mapping, and "outside in" thinking can be applied to processes to ensure that there are no broken touch points that can leave a sour taste in customers’ mouths.
What do you think? Are there other industries or parts of the business where you’re seeing increased interest in process excellence?