What is process optimization?

Process optimization is the act of improving business processes with structured methods and technologies – including automation and AI – to remove inefficiencies, increase quality and drive business value.

Process optimization helps organizations improve their project management and streamline operations, avoid bottlenecks and produce continuous improvement across multiple existing processes. For many organizations, it is a keystone of their digital transformation initiatives, since it uses technologies to optimize performance and automate processes.

Most modern organizations have a range of current processes that would benefit from step-by-step optimization, including financial operations, customer service and employee onboarding. Process optimization is especially important considering the digitization of many services - where actions take place on apps and websites.

Process optimization is a key component of business process optimization (BPO), which involves analyzing and improving existing business processes. And BPO is a component of business process management (BPM), the holistic strategy of managing processes. It is similar to business process improvement in that it drives greater operational efficiency.

BPO is a subdiscipline within business process management (BPM), a management approach that seeks understanding and control of all of the organization's repeatable business processes to introduce efficiency. BPI practitioners use popular process improvement methodologies, such as DMAIC, Lean, Six Sigma and the Kaizen method.

There are several different process optimization methodologies that organizations can pursue.

• Define, Measure, Analyze, Improve and Control
• Lean
• Kaizen method
• Six Sigma

One way to optimize processes is through the Define, Measure, Analyze, Improve and Control (DMAIC) process improvement methodology. Often considered part of Six Sigma, it governs how organizations can go about their process optimization.

In this phase, organizations get a handle of their current processes, including issues that they currently have with their processes and what goals they must improve upon. Issues might be unnecessary downtime, limited throughput or outputs or complications in the production process.

Next, the organization should engage in data collection from existing processes as both a benchmark and an understanding of just how much improvement needs to occur. This is where the organization can identify key performance indicators (KPIs) and actionable insights that can govern how they improve their processes.

This phase requires the organization to dive deeper into the current situation to analyze what is working well and what is not, and to determine how to fix process issues. At this point, they should bring in stakeholders to share what they are having issues with and which processes are working as well as they might. Tools that they can use currently are process mapping, which is a method that studies workflows and processes visually. They “map” out the components of a process to understand how pieces work together and how some may be implemented to make the process work better. These maps can take the form of flowcharts, swimlane, value-stream maps or others.

They can also use process mining, which is a method that promotes a better understanding of processes and helps organizations identify areas for improvement. Process mining involves applying algorithms to event log data to better understand the details of a process. By using data science, process mining can validate and improve workflows. Organizations should be careful to not upend a process that most, if not all, employees prefer for something they find more cumbersome. This is where organizations can use root cause analysis to determine what is causing the primary issues and create a plan of attack for solving them. At this stage, organizations can determine whether the process is salvageable or if a new process is required.

Once an organization has identified the primary issues in their workflows, they should create an efficient strategy to fix them. This approach will likely include a mix of AI, other advanced technologies and employee work.

Now that the organization has introduced those improvements, it must commit to real-time monitoring of how the processes are faring. Ideally, part of the process optimization process included updates to or the creation of a dashboard that produces visualizations of processes that can be monitored. Combined with predictive analytics, this is the best way to ensure that everything is running smoothly.

Lean began as a manufacturing philosophy founded at Toyota. Its major aim is to remove waste, which is defined as anything that does benefit the customer, from its processes. Agile has increasingly been added to Lean to reinforce the value to the customer. Agile is mostly concerned with maximizing value. As IBM® Apptio® VP of Product Marketing Jenny Fong wrote, “Agile methodology looks to improve the product itself; lean looks to improve the process that delivers products.”

Kaizen is a form of process optimization that encourages all team members to work together to improve processes. It avoids siloed thinking by combining employees from different experience levels and departments to tackle problems and highlight opportunities in processes together.

Six Sigma is a data-driven methodology, created by Motorola and popularized by GE, that governs quality management. It’s primary focus is to remove defects and variability in processes. Six Sigma identifies root causes of problems and attempts to have no more than 3.4 defects per million opportunities.

Organizations looking for a competitive advantage should consider process automation, especially with a new suite of AI tools to supercharge their approach.

• Boost profits
• Drive innovation
• Improve customer satisfaction
• Increase security and improve governance
• Reduce redundancies and waste

Ultimately, a company that improves efficiencies through smarter processes requires less manual labor from employees, produces fewer errors and innovates quicker. All of these benefits are likely to improve the bottom line. An organization that can pay invoices quicker, for example, may benefit from early payment incentives. An organization that can cycle through QA quicker can release a new product earlier and potentially beat the competition to a new market.

Optimization efforts likely have a knock-on effect on innovation. Optimized processes cuts costs and time that is spent on tasks, freeing up the organization to invest more in research and development. For example, using gen AI in the brainstorming process can produce more ideas, to which experienced employees can respond to identify potentially viable ideas.

Improving processes within the organization will likely trickle down to the customer through better product quality and improved service. For example, if the workflow related to resolving a customer complaint is streamlined, customer care representatives can provide approvals quicker, and that customer will spend less time waiting for a response.

Optimizing and automating processes can improve security by building in smarter systems that better protect employee and customer data alike. It can minimize the number of people who have access to that sensitive data, minimizing malicious acts or costly mistakes. Organization can also optimize their processes with a security first mindset, strengthening protections against external forces.

Simplifying complex processes through optimization can lead to cost reductions and expedient service. Removing steps, which can bog down an organization’s ability to maintain more efficient processes, is a good idea. For example, using optical character recognition to scan handwritten or printed invoices eliminates the possibility of human error and eliminates a time-consuming step in the invoice resolution process.

There are several technologies that can power process optimization.

• Generative AI
• Machine learning
• AI-driven automation

Gen AI can improve processes in business operations in several different ways. AI-powered process automation can improve decision-making and eliminate the need for time-consuming human intervention in many initiatives. Gen AI can help organizations potentially improve processes better than when done with only robotic process automation (RPA).

Machine learning can help organizations handle their data and security processes more efficiently and effectively through a process called process parameter optimization. It can also power predictive maintenance, avoiding issue or fixing broken equipment before it impacts specific processes. It can also analyzing inventory stockpiles and usage rate to better determine when to order new parts or raw materials.

Organizations are increasingly interested in process and workflow automation to minimize employees need to work on manual tasks while also increasing efficiency and reducing errors. Many processes like billing and invoicing, onboarding and annual reviews and coding quality assurance benefit from automation.

• Customer support ticketing
• Customer relationship management (CRM) hygene
• Expense management workflow
• Invoice approval automation
• Marketing content automation
• Onboarding automation
• Sales order processing streamlining

Organizations can optimize their customer support by automating the routing of specific tickets to the appropriate person. Once the customer care professional solves the issue, it can also automate the closing of the ticket.

Without the right optimizations, CRM platforms can easily grow complicated and unwieldy. Organization can optimize the process to input customer information from several sources and use APIs to update it if any information changes, such as place of employment or contact details.

Organizations can save their employees significant time by automating the collection and reimbursement of expenses. There are many applications that can scan a receipt or invoice and append to it the correct expense code while immediately sending it to the appropriate approver. This process ensures that all expenses are accounted for and the purchaser is swiftly reimbursed.

Organization can use AI and other advanced technologies to help marketing teams create and distribute content. Individuals can use generative AI to identify ideas or help draft different versions of a post or article, which the marketer can then edit. And then AI automation can identify the best time to post the content.

Employee onboarding does not need to be a laborious or manual process, especially considering how many requirements are similar for all employees. Organization can deploy the right tools to provide them with the necessary paperwork to sign and automatically collect relevant information from those documents.

Organizations can abandon manual handwritten invoices and ledgers and fully optimize the sales order process to immediately fulfill orders the moment they come in.