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Process Standardization: A complete guide
Process Standardization is a vital component in streamlining business operations for efficiency and consistency. This guide offers the essential information of process standardization, using real-world scenarios to illustrate its impact on operational excellence. Dive in to understand how standardizing processes can transform your business's performance and outcomes.
Let’s start with a real-world example:
a retail customer is frustrated, having seen a delivery notification for a parcel that they haven’t actually received. They search the seller’s website for contact details, track down a customer service number and join a call queue behind another customer in the exact same predicament. The first customer is directed to an agent who apologizes profusely for the situation, while acknowledging that as the parcel has been registered as delivered, there’s no chance of a further update. Met with further frustration, the agent sends out a replacement item free of charge, refunds the customer for their original postage and delivery fee, and logs a complaint to the company on the customer’s behalf.
The second customer is directed to a different agent. This agent logs the customer’s reference number into the tracking system on the relevant courier’s website, and after a quick investigation notices that the customer has previously requested their parcels to be sent to a designated safe place - a storage box in the alley beside their house. The customer checks the storage box, locates the parcel, thanks the agent and ends the call.
The takeaway is clear: if all customer service staff were trained to handle a missing parcel complaint in the same way as the second agent, asking the right questions in the right order, the error rate would be lower, customer satisfaction would be higher, and fewer unnecessary costs would be incurred by the company.
This is why process standardization matters in business.
What is process standardization?
Process standardization is a methodology that businesses adopt to keep their processes consistent, repeatable, and predictable. It’s basically a documented set of rules, procedures, and guidelines for how each business process should be followed.
More than anything, business process standardization helps ensure tasks are being completed uniformly (with caveats that we’ll explore later), in the best possible ways, for the lowest operational costs, and using the fewest possible resources. It also makes it easier to identify where things are going wrong in a current process. Having a standardized set of business processes can be helpful for training employees, so they can get up to speed quickly and deliver consistent, higher-quality work sooner.
A process standard should answer questions such as:
What is the objective of this process?
How many discrete tasks are contained within this process?
Which departments or employees are responsible for each stage of the process?
How long should the process take to complete?
What results need to be achieved at the end of this process, and how will they be measured?
Why does process standardization matter?
Having a set of standardized processes is crucial for any organization, but especially large enterprises where hundreds, potentially thousands of employees may be trying to complete the same tasks in entirely different ways. As we’ve seen in a customer service context, standardization is crucial for ensuring customers are being treated equally and put on the fastest, most efficient paths to success. The same goes for all other industries - for example, in Life Sciences, process standardization is crucial for ensuring the consistency of medicines being produced, while in Oil and Gas, process standardization tends to deliver the most value in helping operators manage and reduce risk.
Business process standardization is also an effective strategy for ensuring you hit your KPIs in areas such as procurement and inventory management. For example, having a standardized process for creating and preparing goods in your supply chain maximizes your chances of improving end-to-end lead time. Similarly, having a standardized process for investigating blocks in order processing can lead to significant improvements on your OTIF (on-time in full) KPI – as well as on customer satisfaction.
Meeting regulatory requirements such as ISO (International Organization for Standardization) is also easier to achieve with standardized business processes, as there’s less room for error or deviation from what’s been tried, tested, and is required.
Does process standardization mean all processes look exactly the same?
This is a common misconception, and one of the reasons process standardization can actually become ineffective.
Some process variation can actually be valuable to your business. For example, an optimal process in one region may not be the most efficient in another. Take logistics - suppose there’s a regional weather pattern that makes it difficult to have delivery trucks on the road during certain times of day. Perhaps a rain storm is guaranteed pretty much every afternoon between 3 and 5pm, meaning driver visibility will be limited, traffic will be heavier due to people not wanting to walk, and the risk of an accident will be higher due to slippery tarmac. In that case, it could make sense to design a schedule that maximizes journeys before 3 and after 5. In a drier region with no regular storm pattern however, this schedule wouldn’t make sense. For this reason, it would be a waste of time and resources to design a rigid, last-mile delivery process that’s supposed to work on a global scale.
What’s important is that the medium that hosts your documented processes, whether it’s a hand-drawn flowchart or an advanced digital platform, allows for variations in a controlled way and according to a defined set of variables (such as region or weather conditions), rather than opening the door to processes being followed in arbitrary ways.
For example, the image below shows how a single order management process can be followed in different ways, but according to a defined set of rules, which prevent ambiguity or deviation.
So is process mapping the secret to process standardization?
One of the first records of process standardization being implemented was when Henry Ford pioneered the concept of mass production in the automotive industry. His first assembly line slashed the time it took to build a car, which he achieved by standardizing processes one after the other, before lining them all up sequentially in a factory.
That exercise was essentially process mapping - he was drawing out the sequences of steps that go into building a car in the form of flowcharts. Many businesses still rely on process mapping to this day. In fact, as many as 65% of businesses are still pursuing process mapping in the hopes of increasing consistency across their operations.
However, business process technology has evolved significantly since the days of Henry Ford. And for good reason - the problem with process mapping is that it’s a slow, labor-intensive endeavor that, more often than not, leads to underwhelming results compared to the amount of work put in. Process maps also run a high risk of bias, and therefore reduced efficacy, as they typically rely on input gathered from interviews rather than reliable data on how work is happening on the ground.
Instead, if you apply process mining to your business data and get a reliable, 360-degree view of what’s happening across your organization in near-real time, you can easily automate the standardization part - before moving onto much bigger things…
Is process standardization the main output of process mining?
Process standardization is just one of the ways process mining technology can be used along an organization’s process-excellence journey.
Here’s what that journey looks like:
Process standardization: Reduce variations and make processes as repeatable as possible across the whole organization
Process streamlining: Remove redundant or unnecessary activities from the process, reducing the number and complexity of steps
Process optimization: Reengineer your processes to optimize for a specific KPI and produce more value, such as improving quality or reducing operational costs
Process automation: Reduce human effort by automating repetitive tasks within a process, such as removing a credit block, or flagging payment term mismatches between a PO, invoice and vendor master data
As you can see, the scope of process mining technology extends far beyond process standardization, though process standardization is an important aspect of improving process performance.
If you’re interested in embarking on your own process-optimization journey, or getting a better understanding of what kind of initiative would make the most sense for your business, why not take our process maturity assessment.
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