Long processing times, poor quality output , rising costs, low productivity and low rate of return on resource and capital investment may all be a result of process inefficiencies. This article discusses a few simple and effective ways to identify the root causes of process constraints and offers solutions that can be easily implemented.

Identifying Root Causes

Before I discuss how to identify root causes of process constraints it is important to first understand what the customer expectations are from the services and goods you are selling/providing. An efficient process will not be effective if it doesn't meet the needs of the customer.

Point 1 - Examine the Customer's Expectation

To understand what the customer's needs are, start by examining how the customer perceives the quality of goods and or services he/she is receiving from you and the processes you are using to deliver those goods and services. The customer can be a purchaser of your goods and services or it could be an internal customer who receives your services or products. To get feedback from the customer you can conduct a survey, you can look at complaints or suggestions received from your customers or you can simply ask you customer. All data sources are great sources of information. The point is to ensure that your process objectives are aligned with the customer's needs and to do that you must understand what the customer's expectations are with respect to the goods and services you are providing.

Point 2 - Examine the process from end to end

Now that you understand what the customer's expectations are you must understand how your processes are delivering those goods and services to your clients. Most business processes are likely to be part of a system of processes that have many interdependencies and these interdependencies could be impacting the performance of the whole process. This is an important concept because in order to effectively identify the parts of a process that are inhibiting your ability to meet your customer's needs one must consider the complete system and not just an isolated process.
Often I find many process issues occur at point of entry, i.e. where you take control of the process, and are often not detected until further into the process. For example, you may find that your employees spend more time more time throughout the process correcting your supplier's mistakes than processing your customer's orders. For this reason I would examine how many order defects you get from your supplier, examine how much time your employees spend with a supplier on the phone clarifying issues with an order and examine how many orders are received late. It does not matter if it's an order from a supplier or a good or service from an internal or external partner the issues are likely still to be the same and poor quality coming into your process will impact you ability to be efficient.

Point 3 - Undertsand the process

Once you have examined both ends of the process than you can look at what is happening within the process. I usually conduct a walk through of the process and follow the work from a to z so that I understand, how the process works, how activities are being conducted, how work is being performed, the resources and material being used in the process and what final goods or services are being produced as a result of the process . Therefore it is important to understand the process before you can identify the process issues.

Point 4 - Understand the process capabilities.

Now that you understand a little more about what is happening in the process try to understand what the current process is capable of producing. To get a better sense of those capabilities I usually analyze some basic process metrics such as, the demand for your goods and services, throughput of work, work in progress, inventory, total costs, processing time, aging of work, re-work and error rates. These performance metrics usually give me an indication of the process capabilities and why the process may not be meeting the customer's needs.

Point 5 - Examine the constraints within the process.

Once I have a general sense of the process issues than I will look at some more specific process metrics that enable me to understand what some of the process constraints are and where why these constraints exist. Some useful metrics to use include, but not limited to, the following:

• Processing Time per activity/Total elapsed time per activity -Total elapsed time is the time when work arrives to the time it leaves an activity. This ratio should be as close as possible to 1. When this ration is one than this indicates that all the activity time is spent processing however, when this ratio is less than one it means that certain work sits idle for a period of time and this not ideal.
  
• Queue times - This is the average time a file is sitting in queue waiting for a resource to start the work. Increasing queue times is an indicator of work building up so the lower the queue times the better.
  
• Inter-arrival times - This is the time when works leaves one activity until it is received by another. Any idle time between activities adds no value to the process and therefore inter-arrival times should be as low as possible.
• Number of times the same file is re-examined by another employee -Ideally the less time that people spend reviewing something someone else has reviewed the better. Caution should be taken with this metric as in many cases the review process is a necessary control to prevent errors, ensure quality standards and reduce any other risks.
  
• Error rates and re-work - High error rates and re-work have a negative impact on processing times and therefore, the lower these metrics are the better.
  
• Value add time as a percentage of time working - This is the time a resource is working on an activity that directly contributes to a final output expressed as a percentage of total time the resource is working. Non value time can include time walking over to a fax machine, administration work etc. This measure should be as close as possible to 100%. A measure of 100% indicates that all the time a resource spends on an activity is value add time.
• Total time a resource is working/Total time a resource is available - Total time a resource is available is the amount of time a resource is available to work. This ratio should be close to 1. When this ratio is at 1 the resource is spending all his available time working. When the ratio is less than one the resource is not full utilized.
• Direct Costs/Total Costs per activity - Direct costs are the costs associated with producing a good or service that directly contributes to the production of a good or delivery of a service. Ideally you would want this metric to be as close as possible to one. If this ratio is one than all your costs are being allocated to work that directly results in a good or service. This measure can never be greater than one because the total cost includes direct and indirect costs.
  There are literally hundreds of different metrics you can look at however this list will give you a good handle on what and where the process constraints exist, why they exist and these measures will help you identify an appropriate solution.

Quick Solutions

The solution will depend on the nature of the problem and it is difficult to list every solution for every problem, however I have included some quick and effective solutions to common process problems.

Solution to problems related to the quality of inputs into the process

If the problem with the process truly is a function of the quality of inputs you then need to work with the supplier or the provider of those inputs to resolve the issue. Chances are if you are experiencing problems with the quality of goods and services received then the provider of those goods and services is probably consuming unnecessary time resolving your issues and therefore it is in both of your interests to resolve the issue. I have always found that a clearly specified service level agreement between both parties can help to dramatically improve the efficiency of the process. The service level should include specific objectives, measures and targets to be achieved by both parties. The agreement should also clearly specify who is responsible for what and should clearly state the repercussions for not meeting these targets. Having a service level agreement in place will improve the quality of inputs coming into your process and ultimately the efficiency of your process.

Solution to problems that relate to issues within your process

If the problem resides within the process then you will need to spend some time finding out exactly what the source of the problem is. If the problem is process time, i.e. you just can't process the amount of work given your capacity, then look to see where the work starts to accumulate, not where the most amount of work is accumulating. You want to start to address the problem at the source of the problem because if you don't the problem will always be there even after a solution is put in place. Once you have determined where the work is starting to accumulate examine three things 1)duplicative activities, 2)the amount of time a resource spends processing work versus everything else he/she has to do and 3)opportunities to group certain common activities together i.e. making enquiries or calling people back for information. A quick solution is likely to be discovered when you examine these three aspects.
If the problem is a result of errors that occur in the process than again you will need to spend time determining the source of the problem. Once you have determined the source of the error than work with employees to track the types of errors that occur, the time it takes to correct each type of error and the number of errors that occur by error type. Once you have captured this information take a look at the error types and determine which errors are consuming 80% of your resources' time. Chances are you are spending 80% of your time on 20% of the work but in reality it is likely that 20% of the errors will constitute 80% of the total time required to correct these errors. Find solutions to deal with the 20% of the errors that require 80% of the time.
Improving process does not have to be a difficult task however you do need to spend the time to properly investigate the problem and find solutions that yield the largest return. The strategies presented in this article can help you get started.

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