3 Reasons Continuous Process Improvement is Important

Continuous Improvement at a process & system level is the single most important factor to long-term business success.

The writers of the 2015 version of ISO 9001 understood the value of the ISO Quality Management System standards for business improvement by adding this requirement in clause 5.1.1 c.
Ensuring the integration of the quality management system requirements into the organization’s business processes. All processes from the initial contact with the customer to the last contact have a huge impact on long-term business success.

Unfortunately, not all companies embraced this requirement and Registrar auditors are not likely to bring it up unless they see a glaring lack of integration of the business processes. The reason for not embracing is varied. But, ultimately, it is because the individuals maintaining the Quality Management System are so busy they are scrambling to keep up. Revision of their system to the new version and the requirement is just glossed over or overlooked.

How would the auditors know if the business processes have not been integrated? There are a couple of ways.

There are no financial goals being monitored.
Slow invoicing is creating a problem with cash flow.
If the sales process is not monitored and is not included in the process approach flow.
The organization appears to be siloed. The various business processes may be documented as a process approach, but there is no evidence the linked activities actually communicate.

The number one reason according to the ISO Quality Management Standards for continuous improvement is customer satisfaction. This reason does not totally resonate with business owners and managers when money is tight, problems are rampant, and the organization is in chaos. They are struggling to move the business forward and make money and fail to understand that improving their processes will help them do just that. Make more money and improve customer satisfaction.

The three primary reasons continuous improvement is important to a business are:

Increase profits
Fine tune operations- reduce costs, increase throughput
Improve cash flow, relieve stress

Customer satisfaction just happens naturally if all of these factors are taken care of.

The intangible benefits of continuous improvement are:

Employees are happier
There are less rejects and issues that impede the flow to make product
Cash flow improves
Insurance premiums go down
Managers are more effective

Implementing the process approach leads to improvement, and we believe that is how to grow and sustain a great business.

Simple process for continuous improvement:

Look for the Silos in your organization. You will know where they are if you establish key performance indicators for input-output into each activity. Negative trends indicate there is a breakdown in communication between functions.

Identify the key processes that will impact your ability to meet customer delivery times.

Example: This is a Pert chart for a design process. Each circle is an activity. The distance between each circle represents time from one activity to another. You will notice circle 6 is dependent on receiving output from 2,3, and 5. If any of those activities delivers bad output, activity 6 is now faced with not being able to complete its activity on time and ultimately impacts the final output from circle 10.

There are two key steps here.

You need to know what your core processes are. (Which have the biggest impact on your ability to meet customer delivery times) and
How they interact and impact one another.
1. If you know these two things you can look at your on-time delivery on a monthly basis and actually see which of these processes need to be improved.
2. You can get Pert diagrams on Lucid Charts or Visio. A piece of paper and pencil will work just as well. Circles and lines are all you need. Some process are so complicated that you might think you are staring at a spider web.

The last thing you need to determine is what the effect of the critical processes is on your strategic goals and devote your efforts and improving one critical process at a time by prioritizing the risk of each process

Use the PDCA Cycle to Improve

The PDCA cycle and key performance indicators will help you identify where to start.

Every business has their own unique processes, but there are four key processes or segments of your business that actually impact your cash flow the most. They are Sales, Operations, Planning and Finance. I know you are wondering where Finance is in this diagram. It is in the Plan section. The majority of changes to an organization are driven by Finance. This is the one critical process that most companies ignore.

The table below shows you how each activity impacts cash flow and indirectly meeting on-time delivery. The fact that two out of the three impacts negatively affect the organization should be something to ponder on. They are the key opportunities for improvement.

Does your company match this table?

Function	Process Results	Impact:
Sales Process	Client profitable Client break-even Client drains company	More cash Null Cash out of pocket
Finance – Invoice Process	Invoice sent on time Invoice late No invoice sent Invoice errors	Cash in on time Cash flow slow No cash flow Cash flow slow
Operations – Personnel	Enough & Cross Trained Enough no cross training Not enough – high attrition, not skilled	Consistent cash flow Cash flow at risk if no show Cash flow tight – overtime to meet demand
Operations – Supplier management	Materials on-time, no delay Inventory high to ensure no delay Supplier late, rejects	Consistent planned cash flow Cash flow tight – additional cost, Late delivery Cash flow tight – material delay, Late delivery or additional unplanned costs
Operations – Process definition	Processes identified and defined Processes not identified Processes none	Consistent planned cash flow Cash flow tight system chaotic, Late delivery or additional costs Cash flow tight no system, Late delivery or additional unplanned costs
Management – Planning	Measurable goals to all employees Goals established – not shared No Goals	Consistent planned cash flow Cash flow tight Goals are not known Inconsistent cash flow, Risk to on-time delivery
Planning – all functions	Risk and opportunities identified Enough planning to get by No planning, winging it Silo Affect – no inter-function communications	Consistent planned cash flow Cash flow impacted by unknowns Cash flow inconsistent, Risk to on-time delivery Cash flow impacted by miscommunications, Risk to on-time delivery

Start improving your organizational processes once you have identified the process with the highest risk. You will find that your on-time delivery, operations costs and customer satisfaction will improve.

Summary:

The ISO Quality Management System standards stress that continuous improvement is to improve customer satisfaction. The truth is the organization must improve its processes to remain fiscally healthy. No money, no customers, no business.

It is up to you to balance the customer needs and expectations as well as ensure the organization remains as a living entity and is fiscally healthy.

About Continuous Process Improvement Systems. (CPISYS)

CPISYS is focused on providing services to small and medium organizations that are struggling to improve and expand their operations and revenue. We are Engineers with extensive business backgrounds and believe there is an easier way to maintain ISO Quality Management Systems.

Our focus is on simplicity, improved cash flow and customer base for small to medium businesses. Our systems are designed to improve operational and financial results with a 5–10 X return on your investment.

Schedule a Discovery Call to see if this approach will benefit you!
Vicki Delaney and Jim Goodrich
Continuous Process Improvement Systems LLC
864-256-1056
jim@cpisys.com
www.cpisys.com