7 Key Questions to Assess the Effectiveness of Your Business Processes
The essence of any company lies within its workflows and business processes. Companies focused on growth and scaling should pay special attention to managing their business processes. By doing so, they can effectively set priorities, enhance customer satisfaction, and ultimately optimize the company's efficiency, which is crucial for its development.
In this article, we will discuss why it is essential to develop business processes, explore their classification, and provide key questions to assess their effectiveness in terms of driving successful company performance.
The role of business processes in the functioning of a company
Business processes, or BP, form the cornerstone of a company's operations, mapping out the sequence of daily tasks and shaping the workflows needed to achieve specific goals.
Within a company, BPs play a pivotal role across diverse functional areas such as finance, marketing, sales, logistics, and others, accommodating the unique needs of each individual involved and enabling the organization to operate effectively as a whole. Specifically, it is essential to ensure the seamless usability of products or services, along with internal software programs. This will facilitate getting information and sharing it, and enhance data accessibility, which results in improved company performance.
Optimized business processes enable well-coordinated and efficient teamwork. In contrast, chaotic processes hamper productivity, lead to faults, and project delays, ultimately resulting in financial damage for the company.
As a result, well-established business processes let the company:
- enhance productivity
- reduce costs
- provide higher quality products and services
- improve collaboration among all process participants
- increase competitiveness
Classification of business processes
Business processes can be categorized based on different criteria, depending on their purpose and the roles they fulfill within the company. Business activities can be classified into two main categories: operating and growth-oriented.
These activities are aimed at the development, production, and delivery of products or services to the consumer. They include the following:
Primary business processes:
- product or service production
Supporting business processes:
- financial management and accounting
- human resources management
- development and implementation of the company's strategy
- project management
- client and partner interaction
They are aimed at creating new products or services and improving the organization's performance in the long run. Among them are the following:
- implementation of new technologies and solutions for business growth
- scaling up company operations
All business processes require ongoing analysis and improvement. Even if they are currently functioning well, it does not guarantee their long-term effectiveness. Therefore, it is essential for each company to consistently evaluate them and seek opportunities for their optimization and improvement.
How to tell if your business processes work effectively?
It is often quite challenging to understand whether business processes are working effectively without predefined evaluation criteria. To find out areas that need improvement, you need to do the following:
- Identify common groups of business processes. These can include processes related to sales, logistics, accounting, customer or partner interaction, and more.
- Create a list of BPs applied in a specific functional area you want to analyze.
We have compiled a list of essential questions to assist you in analyzing your business processes and identifying areas for improvement. Let`s explore them basing on the example of partner interaction.
1. What business processes are applied when collaborating with partners?
The primary objective of this stage is to identify current business processes that are used for partner interaction.
In terms of partner collaboration, the following business processes can be distinguished:
- document management (exchange, verification, reporting)
- sales tracking
- payment processing
- logistics (inventory management, delivery)
2. Do current business processes meet the requirements of the market and your partners?
While addressing this question, you may examine partner inquiries or feedback that may indicate areas of dissatisfaction with certain business processes. Additionally, the competitor and market analysis results may be taken into account to assess the efficiency of business processes in comparison to other companies.
Let`s take electronic document management. Based on market demands and partner needs, we can identify the areas that need improvement:
- Ensuring timely data transmission
- Improving data quality
- Reducing human error
- Use of dedicated tools, like electronic signatures or platforms for swift data exchange
By implementing targeted improvements, the company will elevate the quality of its products or services, reduce expenses, increase profitability, enhance partner satisfaction, and improve overall company competitiveness.
3. Is communication effectively organized throughout all stages of the business process?
To answer this question, it is important to consider how the information is shared, and specifically pay attention to the following:
- Is the information processed and analyzed effectively at each stage of the process?
- Is there a feedback process in place to identify and resolve any issues that may occur?
- What communication tools are being used, and are they effective and convenient for all participants involved in the process?
When interacting with partners at all stages of the business process, it is important to bring them together and create a unified workspace for their collaboration and fast communication. This will help prevent delays, reduce mistakes, and enhance overall effectiveness.
4. Which Key Performance Indicators (KPIs) and tools are applied to gather and analyze data?
At this stage, it is essential to determine the goal of assessing your business processes and to identify the KPIs in order to detect areas of concern and explore their solutions. Analyzing KPIs also aids in identifying trends and predicting future outcomes.
Performance indicators can include a variety of metrics. Regarding partner interaction, KPIs like the number of orders, average order value, website conversion rate, and more. Various ready-made solutions, such as reporting and analytics systems, serve as tools for data collection and analysis.
5. Which business processes have the potential for optimization?
Over time, certain processes may become outdated, inefficient, or demand significant resource investments. In this case, optimizing business processes might be beneficial as it helps enhance productivity and reduce costs.
Take partner interaction. All the above mentioned processes - document management, sales, financial accounting, and logistics - can be optimized. This objective can be realized by employing automation software that enables effective management of the partner network.
6. Which business processes can be combined?
By integrating various business processes into a unified system, the accuracy and completeness of data can be improved, leading to more informed decision-making.
For example, we can consolidate business processes from different internal systems, such as CRM and document management system, as well as integrate processes from external systems to simplify data exchange with partners and counterparts.
7. What are the potential approaches for automating your business processes?
Employing targeted software is an effective method to tackle this issue. The result is cost reduction, minimizing the human factor, and automating business processes.
An example of such a system is our multifunctional platform, fdForge, which offers a range of ready-made solutions to streamline business processes. They can be combined and adjusted to fit the specific needs of a particular business. To address different aspects of business processes, we have grouped our key solutions into dedicated toolkits (KITs). These are comprehensive suites of tools for building and managing business processes, including the implementation of CRM, ERP, referral, and document management systems, integration platforms, and so forth.
One of the solutions offered by the fdForge platform for partner interaction is a PRM system. It enables the collection, storage, and sharing of partner information, facilitates data exchange, allows for sales and marketing adjustments, generates reports, and more.
In the contemporary business landscape, characterized by escalating competition, the efficiency of business processes plays a crucial role in the company success. An effectively implemented business process system empowers a company to deliver high-quality products or services, reduce costs and risks, and enhance competitiveness.
Leveraging the comprehensive capabilities of the fdForge system, we offer pre-built solutions for automating specific processes, ensuring swift and seamless adaptation to suit your business requirements.
Feel free to leave your contact details in the form, and our manager will answer all your questions, outline the benefits and capabilities of the system, and develop a personalized proposal that caters to your specific project needs.