Process management: What it is and why to implement it in a small or medium-sized company

According to the Gartner platform, 3/4 of companies are currently at the stage of automation and standardization of processes, i.e. at the beginning of organizational maturity. This means that now is the time to focus on processes and give them the proper attention. Using process management increases project success rates by 70% and process management tools have a very good return on investment. So, you gain a competitive advantage both in your products or services and in your company culture and employer branding.

What are processes, business processes and process management

A process is any (usually, but not necessarily, repetitive) activity that converts inputs into outputs. It is a sequence of actions or steps that lead to a particular outcome. This means that processes are all around us, and process management does not have to be about massive belt production in an automobile factory at all, as it sometimes seems to be according to management textbooks. A process is also, for example, taking your child to school in the morning, or sending out invitations to a birthday party.

The word „process“ might sound quite negative, because we associate it in our minds with unpleasant, even tragic matters such as political processes or ossified processes in a dysfunctional bureaucracy. But put that out of your mind and think of processes in a more positive spirit of automation and increasing work efficiency, as the popularizer of digitalization Adam Barta talks about them in an interview.

Business process definition for business management practice

Not everyone is keen on it, but the definition must not be missing in a proper article. That’s what the literature says. 😉

• „a set of interrelated or interacting activities that transforms inputs into outputs“ (according to EN ISO 9000:2000)
• „an activity that uses resources and is controlled to convert inputs into outputs“ (according to EN ISO 9004:2000)
• „a set of one or more interrelated activities contributing collectively to the achievement of a corporate objective, usually in relation to an organizational structure that defines functional roles and relationships“ (Hammer, Champy: Reengineering)
• „a set of activities that requires one or more types of input and produces an output that has value to the customer“ (Davenport: Process Innovation: Reengineering work through information technology)

You see, the customer and the value to the customer comes into the definition, which is something you should always keep in mind when doing business. It doesn’t always have to be the person who pays you, but it can also be users, internal people and other stakeholders.

What are the benefits of process management: efficiency and improvement

Processes are usually described in books using examples of large, industrial, often manufacturing companies or corporations with complex organizational structures. It may therefore seem that small and medium-sized companies are not concerned with processes. But this is an unnecessary prejudice. Even in a small company with 3 people, processes are worth dealing with, not only in terms of automation and digitalization.

I help to find the optimal solution; we think about automation to help people and save them time. You always have to remember that processes don’t appear in a vacuum. They just are. And people are an integral part of them.

– said Michaela Tréglová, consultant of effective processes and professional coach in an interview for Freelo.

• Efficiency: clearly defined procedures save time by eliminating unnecessary steps.
• Overview and the ability to delegate: Processes give an overview of who is doing what and when, which makes it much easier when tasks need to be delegated.
• Easier training: new employees learn faster because they have clearly defined procedures. Onboarding then doesn’t require as much involvement from the manager or other team members.
• Improvement: in a structured process, you can more easily identify weaknesses and bottlenecks to improve them.
• Consistency: repeatable processes ensure that the result is always the same, allowing a high and comparable standard to be maintained for products and services.

When and who processes have helped: 3 examples

Take a look at the examples, which differ in the time they took place, the impact and the size of the company.

Toyota’s Just-in-Team supply has reduced costs worldwide

A textbook example of process improvement is the introduction of the Just-in-Time supply system, where, following the example of American supermarkets, parts and materials began to be delivered exactly when they were needed for production. The result was a dramatic reduction in stock levels, shorter production cycles and greater flexibility in production. This system not only improved Toyota’s efficiency, but became the standard for the entire automotive industry, leading to better production management and cost reductions worldwide.

No-code platform in a small company reduced error rate in dog adoption

An example that hasn’t made it into the textbooks (yet) and is easier to imagine in your company is the reworking of a dog card in an unnamed shelter. Whereas previously the dog data was entered into Excel where the information was not linked, making it hard to track and hard to change in all the right places, they now have a dog card created using a no-code platform. The card contains all the information about the dog including genetic makeup, ancestry and behavior and the database is easy to search and edit the information. This saves the shelter staff and volunteers time on a daily basis and most importantly, has reduced the error rate.

A template for a copywriter in a medium-sized company allowed delegation to external people

An even simpler example is to create a template that is easy to share and edit, so delegation is a breeze. For example, this is what the template for creating articles with an external copywriter looked like. Following such a guide, the copywriter managed the complete article preparation by himself and basically the first time.

This template could be improved by adding due dates and preset solvers. Which would be a beautiful example of the Kaizen process management method. We’ll talk more about Kaizen below.

Do you use repetitive processes that create errors? Introduce checklists to reduce errors.

– Honza Kvasnicka, UX designer and strategist

How process management methods were developed or inspiration in history

Process management has its roots in the industrial revolution of the 18th and 19th centuries, when the need to manage manufacturing processes effectively first emerged.

The key point was the transition from artisanal production to factory production. The famous names of Frederick Taylor, the father of scientific management, and Henry Ford, the first assembly line owner, automotive pioneer and founder of Ford, played a major role. Taylor’s emphasis on the division of labor and the precise measurement of output influenced the whole industrial world. Ford built on it, cutting car production from 12 hours to 90 minutes. Read more in the book „ The Toyota Way “ by Jeff Liker (2004), which managers still draw from today.

Lean Manufacturing, Kaizen and Just-in-Time

In the 1940s and 1950s, Taiichi Ohno, a Japanese engineer from the Toyota car company, came up with another approach to process management called Lean Manufacturing. He focused on minimizing waste, saving materials and so-called lean manufacturing through Just-in-Time replenishment. The Kaizen method, which is the Japanese word for „continuous improvement“, also emerged at this time.

Total Quality Management (TQM)

At the same time, TQM (Total Quality Management), i.e. comprehensive quality management, was also emerging. While Taylor focused on productivity and labor efficiency, TQM added a new element to the game – quality, not only from a product perspective but also from the perspective of all business processes.

A key figure in TQM was W. Edwards Deming, who was particularly influential in post-war Japan. Deming developed 14 principles of quality management that became the cornerstone of the Japanese economic miracle. His approach emphasized the involvement of all employees in quality improvement and the effort to eliminate variability in production processes. One of his main ideas was that quality is not the responsibility of one department but of the whole company.

Quality is when the customer returns, not the goods

– attributed to W. Edward Deming, the father of quality management

Another important TQM figure is Joseph Juran, who emphasized the need for quality planning and considered quality as a strategic tool for achieving success. Juran’s book „Managerial Breakthrough“ (1964) provided ideas on how to manage quality throughout the enterprise, which influenced process management in a broad sense.

Reengineering

However, according to Michael Hammer, author of „Reengineering the Corporation“ (1993), incremental iterations are not enough and traditional processes require a complete redesign. Thus, in the 1980s and 1990s, BRP Business Process Reengineering came into being.

Six Sigma

In recent decades, process management has evolved with an emphasis on technology. Six Sigma, introduced by Motorola and popularized by Jack Welch at GE, focuses on eliminating errors and inefficient steps in processes. Today, process management is primarily focused on digital transformation, and automation and artificial intelligence are gaining importance.

Functional management versus procedural management

During the 20th century, there was also a shift from strict division of labor and specialization in the smallest possible parts to collaboration across departments in cross-functional teams and customer-oriented processes. This makes work more flexible and avoids the loss of work from one department to another. The rapid environmental changes typical of the 21st century require even more agile approaches.

The currently most used methods for business processes and which one to choose

Although today’s times are much faster, more unpredictable and more automated than in the middle of the last century, the methods of that time are still in use. Maybe in a slightly different context and combination, but they definitely still work. When managing a business, it is therefore essential to choose the right tools and methods to help improve the efficiency and quality of processes. Whether you are managing a large production line or a small business, these proven approaches will allow you to better control operations and achieve better results.

Lean: eliminating waste

The Lean method focuses on identifying and eliminating anything that does not add value to the customer. The process starts by mapping the entire workflow, which means detailing all steps from raw material to finished product or service. It then analyses which activities are unnecessary, hold up work or cause waste – for example, waiting, overproduction or unnecessary employee movements. These steps are then eliminated or simplified.

Examples:

• In a manufacturing company, whether a large automotive company or a small artisan bakery, Lean is used, for example, to reorganize the workspace so that employees don’t have to walk long distances between different stations
• In a furniture company, Lean can mean that the production process is simplified by removing excess inventory, which reduces costs

You can use Lean principles virtually anywhere. Managers are usually familiar with this method and sometimes tend to overdo it in the pursuit of productivity. For example, they assign additional work to employees in downtime that is not related to their main specialization, etc. This can work to a certain extent, but keep in mind that people need to focus and maintain mental capacity.

Efficiency > Productivity

– Jason Fried & David Heinemeier, It doesn’t have to be crazy at work

Six Sigma: reducing variation and improving quality

Six Sigma is a method focused on reducing errors and variation in processes by using statistical tools to measure variation, leading to quality improvement. The process begins by measuring existing production results, then identifying variations, and then implementing changes to make quality consistent.

The basic Six Sigma process is DMAIC – Define the Problem, Measure Performance, Analyze Causes, Implement Improvements, and Control Results.

It is suitable for companies that work with data, have a budget for statistical software and people who are able to evaluate it.

Examples:

• In the automotive industry, Six Sigma can ensure that every car produced meets exactly the same standards, reducing the number of complaints
• For a smaller company, such as a cosmetics manufacturer, Six Sigma may mean implementing strict quality control in production to ensure that each product has the exact formulation and consistency, which will increase customer satisfaction and reduce complaints

BPM (Business Process Management): process optimization

BPM is an approach to managing and optimizing processes throughout an organization. As opposed to one-off improvements, BPM focuses on continuous process management and improvement. The basic step in BPM is to create a process model that describes each step of the workflow. This model is regularly analyzed, monitored and adjusted to make it as efficient as possible. BPM uses software tools that enable real-time monitoring and evaluation of process performance.

Examples:

• In a larger company, such as a logistics company, BPM helps to streamline the delivery process. The software allows you to track where delays are occurring, and the delivery process is optimized so that shipments arrive faster and more efficiently
• In a small business, such as an accounting office, BPM can help standardize processes for documents and invoices, speeding up work and minimizing errors

These principles can be used virtually everywhere. How to implement them will be discussed next.

Kanban: visualization and workflow management

Kanban is a visual management method that increases workflow efficiency. Kanban works with a simple principle: tasks are represented on a board divided into columns according to the phase they are in, for example „To do“, „In progress“ and „Done“, in English for example „queue“, „in progress“ and „done“. Employees can easily see what is being worked on, what is finished and what needs to be done next. This improves clarity, prioritization and team collaboration.

Examples:

• In a production facility such as an assembly line in an automotive plant, Kanban ensures a smooth flow of work. When one phase of production is complete, the part moves to the next workstation where workers wait for it as needed
• In a small marketing agency, a Kanban board can help keep track of where each client’s job is and ensure that there are no unnecessary delays on any project

Kanban is a very simple visual tool that can be used in less organized and structured teams such as editorial offices, school clubs and volunteer organizations. Just beware that the (apparent) simplicity invites misuse.

Kaizen: continuous improvement

Kaizen is a methodology that focuses on continuous improvement in small steps. Kaizen engages all employees in finding small but meaningful improvements that can be implemented immediately. This method fosters a culture of innovation and continuous improvement at all levels of the organization.

Examples:

• In manufacturing, Kaizen is often used to look for small improvements on the assembly line, such as moving tools closer to workers to reduce the time it takes to complete a task
• In a small business, such as a coffee shop, this can mean improving the organization of employees, leading to faster customer service

Especially with Kaizen, a company culture based on trust, respect and collaboration is crucial to ensure that employees themselves come up with suggestions for small improvements and feel part of the process, regardless of their position. We will talk more about how to build a company culture with respect to processes and, conversely, processes with respect to company culture.

The choice of method depends on many factors, including company size, company culture, data availability, and available funds. Overall, be guided by the needs, capacities and goals you have in your company. You can also combine methods. 😉 Find out how to implement the processes in your company in the next article.

Process vs. project management

Process and project management are two basic approaches to work organization, each with a different focus, but they work together and in the beginning it makes sense to address them together.

Process management

Process management focuses on (not necessarily, but mostly) repetitive activities. It is about ensuring that these activities are carried out efficiently and without error in the long term. For example, the belt production in the car factory is mentioned in the introduction, where the aim is to optimize processes to reduce production times and minimize costs.

BUT, although repetition is a typical feature of processes, it does not mean that repetition is a necessary condition. When a process is structured, it can be one-time. For example, launching a product is a unique and one-off process, but it has clear steps such as market research, development, testing and marketing campaign, so it is more of a process.

Project Management

Projects have a clearly defined beginning, end and, most importantly, a single objective. Projects often have a more complex structure and involve more diverse activities. An example is the development of a new product or the introduction of a new IT system in a company. The project team works to achieve a specific outcome that ends when the project is completed.

The process is like a cake recipe and the project is when you bake the cake.

– Karel Dytrych, consultant whose online projects save time for others

This analogy will help you to get your head around the concepts, but don’t use it in the management exam. 😉 (About like Harry Potter describing the difference between a ghost and an inanimate by using transparency).

Process and project management can coexist

Although they seem different at first glance, process and project management can coexist very effectively. Imagine a company that continuously improves its production processes (process management) and at the same time implements projects to introduce new technologies or products (project management). Processes ensure stable, efficient operations, while projects bring innovation. Project management, when done correctly, can also improve team effectiveness.

In the automotive industry, for example, Toyota not only optimizes its production processes through Lean Management, but also regularly carries out projects to develop new models. Thus, the project approach is used to make strategic changes, while process management keeps day-to-day operations efficient.

Agile planning and its role in process management

Agile planning originally originated in software development but is increasingly finding its way into process management. Its main advantage is its flexibility and ability to adapt quickly to change. In process management, an agile approach can bring dynamism – processes can be flexible and respond quickly to new stimuli.

For example, in a customer support firm, implementing agile planning would allow the team to respond quickly to new client needs. The team would regularly evaluate its processes and adapt them to current conditions, leading to better customer satisfaction.

In practice, this can look like using agile planning methods, from the Scrum approach, even in a different area than software development. Although in practice, it is then more about hybrid planning than agile planning.

Every Monday we have a sprint in the customer care department where we go over the priorities for the week, product news and what we’ll be doing outside of direct customer contact.

– Tereza Nemcova, Head of Customer Care at Freelo

Processes are the key to successful delegation

It’s impossible to lead a team without delegation. But delegation is easy to say and harder to do. To delegate properly takes a little practice, flair and a healthy dose of self-confidence. Almost 40% of projects fail because of poorly defined requirements, and whose fault is that? So be careful when you formulate the task you delegate.

Renata Novotná, a process management consultant who helps Legitas, for example, fine-tune processes, recommends practicing delegation by starting with tasks:

• Which you personally know well
• They are clearly structured
• You have them clearly described

It will help you to clarify what you want from the person, he will know what to do, he will do it without mistakes and you will have something to check it against.

Delegating effectively without processes is very challenging.

– Renata Novotna, consultant

Now you know what a procedural procedure is, how and when it was created, what methods it has and how to choose them. In the next article you will learn how to introduce process management into your company, where to start and who can advise you.

Freelo team 16. 12. 2024