Improving Processes Raise Profits
The purpose of a company’s processes is to take valuable company resources and turn them into profits. This means, if a process can be improved the company’s profits can also improve and increase. One way of looking at how companies operate can be described by a simple equation:
Resources + People + Processes = Profits
When viewing business through the lens of this equation, analyzing a company’s effectiveness and solving various problems can become much easier. Let’s take a closer look at how this equation works and how your company can use it to raise profits.
Companies have resources they use in order to provide goods or services to the public. Resources could be things like time, equipment, licenses, facilities, software, customers, money, etc.
The individual managers and employees within a company are primarily responsible for using these resources to create value for the company. How effective people within the company put the resources to work is a critical factor in this equation.
The company’s processes are the steps, channels and/or guidelines employees follow in order to create value for the company and turn these resources into profits. In order for the company to enjoy the highest level of profitability possible the processes must be smooth and efficient.
Addressing Process Problems
To solve most business problems the first step is to identify what the problem is in clear terms. Many business problems can be traced to a particular process that is broken or ineffective. A detailed analysis of the company’s processes that is impacting the problem will help you to determine where the problem is and what you can do to fix the problems.
To further identify the problem start by asking, “What is the primary purpose of the process?” All processes are designed to solve or prevent some sort of problems. They are designed to accomplish a specific goal. Once you clearly identify the purpose of the process the next step is to map out the process and its individual components. An exercise you can do is to get a scratch piece of paper or whiteboard and manually draw out the process. Label each of the individual steps that make up the process.
Next, invite someone from another department, or someone who is not directly involved in the specific process, to review the process and ask you questions about the purpose of each step within the process. Explain and teach them the reason each step of the process is being used. This exercise will force you to think critically about each step as you explain it. Write down any ideas that come to your mind as you are explaining the process. This exercise will help you understand if the processes you are using as a whole are no longer working efficiently. If you find the processes you are using are working but there are bottlenecks in certain steps of the process, this exercise should reveal what those bottlenecks are.
By now you should know where the problems are within the process you have been analyzing. Next you will want to ask yourself a series of questions such as, “How can we simply this process? Can something be consolidated or removed all together? Can something be added to address unmet needs? Who else is impacted by this process? Are their needs being met? Answering these types of questions will help generate new ideas to simplify and improve the process in question. Next you will want to develop a plan for the changes to be made. Prior to implementing the changes, allow yourself some time to test the changes. Get some feedback from those individuals who are impacted by the process. Apply their feedback to the plan and make any necessary changes. Always keep in mind the end result and goal of the process: to raise profits. It can be easy to get lost in the details and forget the reason for making these changes. Improving your company’s process will help you improve the effectiveness and morale of your company. People get excited when processes improve and they are able to be more productive.
It is important to remember that the purpose of a company’s processes is to take valuable company resources and turn them into profits. If a process can be improved the company’s profits can also improve and increase. You can use the simple equation we talked about above to help give you focus and direction when solving business problems. Doing so will help take your company to the next level.
To learn more about maximizing your profits and improving your company call 208-346-1005 or visit the Hansen Group Company website at hansengroupcompany.com.