The next decade in business is all about improvement. Rapidly advancing technology has disrupted traditional business models and created opportunities for companies willing to embrace change.
Regularly making small changes in your business can have a big impact over time. Ironically, just as the math of compound interest is often overlooked, the power of continuous improvement is too.
To stay ahead of the curve, businesses must make regular, incremental changes to their processes, products, and services.
The result? They take advantage of opportunities for efficiency, quality, and customer satisfaction. And in today’s market, the ability to keep up with change is essential for survival.
If you’re one of the many businesses that have been overlooking – or even neglecting – continuous improvement, it’s time to change course. Here’s a look at how costly that mistake can be.
What is continuous improvement?
Continuous improvement is the practice of making small, incremental changes to your business to improve your overall performance gradually.
It’s often compared to the concept of compound interest, where each new improvement builds on the previous ones, resulting in exponential growth over time.
Unlike traditional businesses that focus on short-term gains, businesses that embrace continuous improvement always look for ways to improve their long-term prospects.
Why do businesses overlook continuous improvement?
Businesses typically overlook continuous improvement for one of these three reasons.
- They don’t see the value in making small changes: Why would you bother making minute changes when you could be focused on more impactful initiatives? But here’s the thing: those tiny changes can have a big impact over time.
- They’re too busy firefighting to focus on long-term improvements: When you’re busy reacting to fires, it’s tough to find the time for proactive improvements. But the fires will keep coming if you don’t slow down to make those improvements.
- They lack a structured approach to identifying and implementing improvements: With so many potential gains, how do you know where to start? And how do you ensure that the changes you’re making are improving your business? These questions can often cause analysis paralysis, and nothing changes.
Whatever the reason, continuous improvement is vital for long-term success – and process intelligence can make it considerably more accessible and approachable for businesses.
What is process intelligence?
Process intelligence is a new approach to business process improvement that’s gaining traction. It relies on data collection, enrichment, and analysis to understand how your business processes are currently being executed and identify areas for improvement.
The main components of process intelligence, process mining, and process discovery are ranked as the top leading technology investment made by Global 2000 enterprises, among other emerging technologies like artificial intelligence (AI), process automation, and cybersecurity.
Unlike other methods of analysis, process intelligence provides a real-time, comprehensive view of your processes by evaluating the performance of each segment of the process and its relationship to others.
This approach helps to identify operational inefficiencies, process bottlenecks, and potential areas of improvement quickly and without the friction and subjectivity of traditional process analysis. It also provides valuable insights into how your employees execute processes and where they may need more training or support.
How does process intelligence help business performance improvement?
With the help of process intelligence, businesses can overcome the three common obstacles to business performance improvement.
- Provides visibility into every process in real-time: By collecting and analyzing data throughout the ERP, process intelligence can help you identify potential areas of improvement across functions and teams.
- Helps prioritize improvements: With so many potential improvements that could be made, where do you start? Process intelligence can help you find the low-hanging fruit and prioritize what will have the most significant impact on your business.
- Enables you to measure the impact of changes: By tracking the performance of your processes over time through a data-driven approach, process intelligence can help you determine whether the changes result in improvements.
Without process improvement, you are essentially settling for low-quality processes – and that’s an expensive compromise.
What are the costs of low-quality processes?
Inefficiencies, errors, and bottlenecks caused by low-quality processes can significantly impact your business. It isn’t easy to put an exact dollar amount on the cost of low-quality processes, but it’s safe to say that it can result in:
Lost revenue
One of the most direct impacts of low-quality processes is lost revenue. When processes are inefficient, it takes longer to complete tasks and deliver products or services to customers, which can cause increased expenses from errors and rework and lost sales.
Companies are estimated to lose 20 to 30 percent of their annual revenue because of inefficiencies in their processes. It’s not surprising that businesses far more mature in their process intelligence efforts are more profitable than those with less process control and visibility.
Poor decision-making
In today’s fast-paced business environment, the ability to make informed decisions quickly can mean the difference between success and failure. But when businesses don’t have visibility into their processes, they’re more likely to make decisions based on guesswork or inaccurate data, which can lead to costly mistakes.
For example, a company that doesn’t have visibility into its fulfillment processes may make decisions about warehousing partnerships based on the number of delayed shipments instead of resolving inefficiencies in their current warehouses.
As a result, money is wasted on unnecessary warehousing expansion when it could be spent making shipping processes more efficient.
Unsatisfactory customer experience
Since customers have more choices than ever, businesses can’t afford to lose customers because of avoidable mistakes. If your customers are regularly experiencing problems with your product or service, they’re likely to take their business elsewhere.
Once a customer is lost, winning them back can be difficult and expensive. It’s estimated that it costs around five times more to acquire a new customer than to retain an existing one.
Poor customer experience is also cited as a main reason customers switch brands. According to a study by Qualtrics and Service Now, 80% of customers have switched brands because of poor customer experience.
Higher employee turnover
Poorly designed processes can cause employees a great deal of stress, frustration, and burnout. It can take a toll on their mental and physical health, leading to increased absenteeism and turnover.
Not only is employee turnover costly in terms of the cost of recruiting and training new employees, but it can also lead to a loss in productivity as existing employees take on additional workloads.
Missed opportunities
Opportunities can come and go quickly. If your processes are holding you back or if you don’t have visibility in your processes, you’re more likely to miss out on opportunities to grow your business, such as the failure to capture new customers or the inability to capitalize on market trends.
Do more with process intelligence
As more businesses wake up to the importance of process intelligence, those that have already adopted it find that it provides them with a competitive edge.
While process intelligence is relatively new, organizations already using it can improve their processes 90 percent faster than those using traditional methods.
If you’re ready to start your path to process excellence, you can’t afford to overlook continuous improvement with process intelligence.