Acorporation must change in order to
survive and thrive. Change will
include process re-engineering, or the analysis of business processes with the
goal of improving communication, methods and procedures to align with the organization’s needs.
“You need to have the mindset to revamp
something you may have initially designed
because now you can make it better with
new information, new knowledge and new
systems,” says David Davis, Risk Management Services partner, Armanino McKenna
LLP. “Process re-engineering can suggest
scrapping an entire process or uncovering
simple solutions, like improved system and
software training.”
Smart Business spoke with Davis about
how process re-engineering can reveal
improvements to core processes that ultimately produce tangible and intangible
benefits for growing companies.
What size companies can benefit from
process re-engineering?
What I’ve seen in my career is that companies with more than $25 million in revenue, and specifically those that have been
growing, can benefit from engaging in
process re-engineering. Growth companies
need to reanalyze their processes on an
ongoing basis instead of just adding more
resources.
What core business processes should be
analyzed?
Some areas that present problems for
companies are inventory management and
logistics and any department responsible
for moving goods from one place to another or coordinating the receipt of products
and services. There is always a ton of
paperwork associated with these functions, which seems to bog down a lot of
companies.
There are also other areas around manufacturing. For example, the management of
raw materials that go into the process, the
proper inventory of the finished goods and
how that information is properly communicated internally so companies can more
accurately record information that will better service customers in a timely manner.
Some additional processes to consider
are how financial reporting integrates with
other departments as well as budgeting
and forecasting processes and performance analysis. How do you know you
should be implementing changes, adding
staff or considering a different vendor
unless you are doing some type of analysis
and forecasting about what’s going to happen to your business?
What gains should be expected from a re-engineering effort?
One area includes tangibles like hard cost
savings from reduced shipping, reduced
replacement costs, savings from head
count improvements and cost reductions
in manufacturing. There also are intangibles like improved communication within
the company and the benefits from people
better understanding what other workers
do and how they do it. Communication is
the biggest problem I see in companies
today.
How are target processes identified?
Mapping is an important place to start. If
a company doesn’t have their existing
processes mapped so they understand what they can do, then they really need to
do that. You can’t just come in and say,
‘Change this and change that,’ unless you
understand the processes. If the company
tells me they already have their processes
mapped, then I strongly suggest that we
walk through them to make sure they are
accurate. Otherwise, wrong decisions can
be made, or perhaps the process only
needs a tweak here and there instead of
throwing it out and starting from scratch.
Often, it’s just a training issue because
people aren’t doing things the way the
company first designed it. Chances are a
large percentage of the people you trained
when the process was first put in now have
different jobs or are gone completely. One
recommendation I always seem to end up
making is for companies to get their people
better training on the systems. Workers
like to create spreadsheets and programs
on the side, and they’re the only ones who
know the information contained there.
This slows down other people.
Can employees view re-engineering as invasive or threatening?
Sometimes there will be head count reductions, but that’s not always the goal of
process re-engineering. Upon my initial engagement with a company, I tell the staff
that my goal isn’t to eliminate jobs, but to
make their jobs more efficient so that, as
the company grows, they can do more but
not have to work more. You’d be surprised
how enthusiastic people get if they think
it’s going to make their life better. It’s also
important to get a company’s senior management behind the effort early on.
Should companies tap outside resources?
Many times it makes sense to bring in
outside help. Consultants bring a different
and more critical view than the insiders
who may have originally designed a
process. They’re not biased — they come
in, and if they see a problem, they tell management what they’ve uncovered.
DAVID DAVIS is a Risk Management Services partner with
Armanino McKenna LLP in San Ramon. Contact David at (925)
790-2726 or [email protected].