What Is Business Process Improvement? The 6 Types of BPI Explained

“To improve is to change; to be perfect is to have changed often.” So said Winston Churchill during a speech before the British House of Commons 100 years ago. His words continue to resonate among successful companies, which never stop trying to improve how they operate. That’s where investments in business process improvements make a big difference. Making the effort to maintain or increase the efficiency and effectiveness of business processes at the company, function, department, team, or even individual level can significantly improve company performance. Understanding the basics of business process improvement, the various approaches available, and the benefits of these efforts should be a core capability in every business that wants to keep pace in today’s ever-changing markets.

What Is Business Process Improvement (BPI)?

A business process is any series of steps or activities a company follows to achieve a specific goal, whether that’s onboarding a new employee, identifying sales leads, or restocking inventory. Business process improvement (BPI)—a subset of business process management—is a category of practice that companies adopt to identify and correct deficiencies in their processes that are weakening performance.

Key Takeaways

• Business process improvement aims to increase efficiency, lower costs, and improve employee morale.
• Improving business processes tends to involve some common actions, such as business process mapping.
• Several popular methodologies, including Six Sigma and Plan Do Check Act, offer more specific guidance.
• Modern technologies, such as artificial intelligence and the Internet of Things, can supercharge business process improvement efforts.
• A robust enterprise resource planning system can serve as a foundational tool for business process improvement.

Business Process Improvement Explained

BPI is a systematic approach used to analyze and optimize current business processes. Companies can tap into a variety of methodologies (explained later in this article) for their BPI efforts, but the overarching goals are typically the same: to boost productivity, streamline workflows, increase profitability, cut costs, adapt to changing business goals or customer needs, and/or improve the employee experience.

BPI involves identifying root causes of inefficiencies, implementing changes, and monitoring results. Rather than a one-time fix, it’s an ongoing effort to align operations with business goals. According to Celonis, 83% of business leaders see process optimization as their most effective tool for driving value and rapid change, while 82% emphasize its importance during economic instability as a way to cut costs and improve cash flow.

Beyond reducing expenses and boosting efficiency, BPI enhances product quality, employee satisfaction, and business transformation by integrating automation and innovation. However, challenges arise when employees resist change or leadership prioritizes other initiatives. With careful planning and best practices, companies can successfully navigate these hurdles.

How Does Business Process Improvement Work?

Although specific methodologies that can be applied to achieve BPI vary, most of these initiatives follow a general order of activities. Here are the steps.

1. Identify which processes need improvement: This can happen in any number of ways—as the result of analyzing the root cause of an issue, receiving input from customers or employees, or undertaking an intentional exploration of business processes, for example.
2. Map the process: Business process mapping helps decision-makers visualize the activities, steps, or workflows involved in a process to better understand the way the process exists today.
3. Analyze the process for inefficiencies: With the business process map complete, it’s time to dig into the details to look for inefficiencies, bottlenecks, redundant efforts, and other problematic areas. This can be supplemented with input from key stakeholders—both those involved in the process and those who are impacted by it.
4. Build and implement improvements: Whether streamlining some steps in a process, integrating new technologies, or reskilling employees, this stage introduces improvements to increase operational efficiency. New processes should be tested before they’re introduced to ensure that they will achieve their goals without any unintended negative aftereffects. It’s also a good idea to manage upcoming changes by providing training to increase the likelihood of adoption of the new process, as well as offering any associated new tools or helpful software.
5. Evaluate the results: When pinpointing processes in need of improvement, it’s helpful to identify metrics that correlate with the benefits that the business process improvement is seeking to deliver, such as faster output, higher employee retention rate, or revenue growth. After the changes have been implemented, the team can track and review those metrics to assess how well the new business process is working and make further tweaks or changes, as necessary.
6. Standardize and document: Once the new business process has proved its worth, it can be standardized across the organization. This is also a good time to fully document the new process, through a business process map, for example, which will also be useful when training new employees. The documentation can also serve as a good starting point for future efforts to improve the business process so the company doesn’t have to start from scratch.

The 6 Major Methods of Business Process Improvement

Businesses do not have to begin their BPI efforts on their own. Rather, they can select from a number of well-proven methodologies chosen according to how well they suit their industry, the processes they want to enhance, or the goal of their improvement effort. Some of the most common methods of business process improvement include the following:

1. Lean

Lean got its start in manufacturing—specifically, at automaker Toyota—and has since been applied to a number of processes, such as Lean inventory management. The aim of Lean in the context of process improvement is to reduce waste and minimize the use of resources in achieving the goal. This approach also emphasizes continuous improvement and increasing process efficiency over time.

At the heart of Lean are five primary principles, as defined in the book “The Machine That Changed the World,” by James P. Womack, Daniel T. Jones, and Daniel Roos:

• Identify value: Define what customers value most and are willing to pay for.
• Map the value stream: Create a map or other visualization of the steps involved in a process, noting those that add value to the process and those that do not.
• Create flow: Limit waste and inefficiency by streamlining the process, ensuring a smooth flow from start to finish.
• Establish pull: Begin work (e.g., production of a product) only when there is demand for it, as well as the capacity to complete it.
• Pursue perfection: Continue to improve and, therefore, perfect the process over time.

2. Six Sigma

Developed in 1986 by a Motorola engineer, Six Sigma also has its roots in the manufacturing sector but has since expanded to enhance everything from software development to healthcare delivery. This approach involves the use of statistical data and analytical tools to identify process inefficiencies and introduce improvements that minimize the number of variations in an end product. In the manufacturing context, a process is considered optimized by Six Sigma standards if it produces fewer than 3.4 defects per 1 million cycles.

The main emphasis of Six Sigma is to increase consistency. When used to improve existing processes, Six Sigma adherents focus on “DMAIC,” an acronym that outlines the approach:

• Define the opportunity for improvement.
• Measure the performance of the existing process.
• Analyze the process to uncover defects and root causes.
• Improve the process by addressing defects and root causes.
• Control the improved process and continue to assess future process performance to correct deviations.

3. Kaizen (Continuous Improvement)

Kaizen—a combination of the Japanese words kai (change) and zen (for the better)—achieves continuous improvement through small, incremental changes. The aim of companies that adopt Kaizen is to improve productivity and achieve sustained process improvement. This method has a particular focus on reducing waste, which Kaizen approaches in three ways:

• Muda (wastefulness): Eliminating practices that consume resources but don’t add value.
• Mura (unevenness): Addressing processes that create waste, such as excess product or unused materials.
• Muri (overburden): Easing excessive strain on resources, which can lead to worn-out machines or overworked employees.

The Kaizen philosophy involves establishing objectives and context for incremental process improvement, evaluating the current state, developing an improvement plan, implementing changes, analyzing results, and presenting those results along with recommendations for follow-up actions.

4. Total Quality Management (TQM)

Often applied in the context of supply chain management or production, TQM seeks continuous process improvement over time, with a primary focus on improving efficiency. Some of the salientcharacteristics of TQM include:

• Data-driven decision-making: TQM practitioners collect data and analyze metrics to determine how well a process is performing.
• Customer focus: The goal of TQM is to improve customer satisfaction, so impact on customer experience is central to all decision-making.
• Cross-functional involvement: Unlike some other process improvement methodologies, TQM encompasses a multifunctional group that might include not only the production and supply chain departments but also sales and marketing to keep the needs of the customer front and center.
• Continuous improvement: Like Kaizen, the focus of TQM is on continual, incremental optimization and adaptability.

5. Plan Do Check Act (PDCA)

This methodology was first developed by physicist and engineer Walter Shewhart, who applied the scientific method to economic quality control. PDCA was later refined by economist and business theorist W. Edwards Deming to apply to process improvement. The so-called PDCA cycle comprises four steps:

• Plan: Identify the process that is meant to be improved, lay out the goals for the improvement, collect data to understand the current process, and develop the plan to improve it (with measurable metrics).
• Do: Implement the plan at a pilot level and collect data.
• Check: Analyze the pilot data to determine the effectiveness of the changes and/or identify areas for further refinement.
• Act: Based on the results of the pilot data, determine whether to implement the process change on a larger scale.

PDCA was designed as an improvement cycle, so these steps can be repeated until the desired outcomes are achieved.

6. Business Process Reengineering (BPR)

BPR is a much larger scale strategic approach to BPI than some of the incremental approaches described above. It aims to completely rethink and redesign an organization’s existing processes to achieve some level of business transformation. This methodology tends to take a longer-term process of reviewing the business’s current processes, people, and structures—and the assumptions behind them—to identify opportunities for radical change. Like other methodologies, it centers around assessing workflows, identifying inefficiencies and areas of ineffectiveness, and implementing new approaches to streamline operations, cut costs, or improve productivity.

Companies look to BPR to improve their competitive stance, transform the customer experience, or make other fundamental changes. This method typically includes the implementation of new technology and changes to organizational structures and teams. It usually involves the following actions:

• Determine which processes to reengineer, typically focusing on critical processes in need of improvement.
• Map out the current process (or processes) to identify issues.
• Redesign the process to improve efficiency and effectiveness.
• Test the new process with a pilot to see how it works and to address any problems.
• Implement the new process across the organization, providing necessary change management, communication, and training.
• Monitor and measure key performance indicators related to the process, collect feedback from users, and continue to refine and optimize the process.

Other Types of Business Process Improvement

The six methodologies above are the most widely adopted and recognized. However, a few other techniques exist that can be helpful in improving processes.

• The Five Whys Analysis, for example, seeks to identify the root cause of a problem. This approach is exactly what it sounds like: Stakeholders come together to ask five “Why?” questions about a problem, starting with “Why did/does this happen?” Then they ask follow-up questions, digging further into each answer until they get to the core of the issue in order to improve the process.
• The Theory of Constraints identifies and addresses the central limiting factor in a process or system. Developed in 1984, this approach assumes that any process or system is being held back by a small number of constraints. It involves locating the primary constraint in the process, maximizing the efficiency of the constraint, aligning other processes to improve the constraint and invest in other resources to address it, and then repeating the process to address each additional limiting factor.

Benefits of Business Process Improvement

Process improvement is the main point of improvement efforts, but the benefits can be wide-ranging. A successful business process improvement will:

• Reduce costs: BPI seeks to reduce or eliminate waste, redundancies, and inefficiencies in both activities and resources, so companies are likely to see cost benefits from these improvements—often quickly. Thus, the return on these efforts can be significant, particularly for organizations that perform process improvement on a continuous basis. Cost savings can come in the form of lower overhead, fewer errors, less need for rework, fewer compliance issues (and related fines), more opportunities for increased automation, and better allocation of resources. Such cost savings can lead to greater profitability and better overall financial performance.

• Boost efficiency: Nearly two-thirds of business leaders surveyed by Celonis said that suboptimal business processes cost their departments time and reduced productivity. A primary focus of business process improvement initiatives is to streamline processes by addressing bottlenecks, eliminating non-value-adding activities, standardizing activities or tasks, and digitizing or automating where possible. These efforts can subsequently result in increased productivity, reduced delays, and faster completion of tasks. Increased efficiency can also lead to additional knock-on benefits, such as faster response times (to internal employees or external customers), quicker delivery of products or services, and better utilization of resources.

• Increase quality: Because BPI endeavors to identify and solve the root causes of defects, errors, or employee or customer frustrations, these efforts can then have a significant positive impact on the overall quality of a company’s products, services, or experiences. Companies that invest in improving their processes can improve accuracy and deliver higher-quality outputs.

• Improve employee morale: BPI can bolster employee engagement, satisfaction, and overall morale. Encouraging employees to contribute to business process improvement can help them feel like they can have a more meaningful impact, through sharing their expertise, experience, and ideas to improve company performance. This creates a greater sense of ownership of the process, fosters stronger ties to the company and its success, and boosts morale. Employees who experience this sense of belonging and value in their work are often more productive, motivated, and committed—which, by the way, can improve business process performance, as well.

  At the same time, because improving business processes allows employees to perform tasks with greater ease or speed, they are rewarded with gaining the time and energy to focus on the aspects of their roles that are less mundane and require their particular experience. This serves to improve the employee experience.

Examples of Business Process Improvements

A wide array of business functions, units, teams, and industries can benefit from business process improvements. Here are some theoretical applications that illustrate the breadth of opportunities available for streamlining and improving business operations, when handled with the right approach.

• Rethinking retail inventory management: A midsize clothing retailer is losing money. Using the Five Whys Analysis, it first asks, “Why are we losing money?” The answer is, it has been overstocking many items and then having to deeply discount them or write them off entirely. Again, it asks why and discovers its inventory forecasts have been inaccurate. Why? Because it has been relying on outdated data and manual processes. Why? Because its current inventory management system is no longer sufficient. Why? Because the company has expanded, but the system doesn’t scale—and so forth. Ultimately, the company decides to invest in a new inventory management system and reengineer the associated business processes to streamline its inventory tracking process, reduce costs, better use its resources, and capture the full business value of its inventory.
• Furthering fraud detection in financial services: For credit card companies, preventing fraud while still enabling the free flow of legitimate commerce is one of their primary sources of value. The best credit card companies are constantly looking for ways to overcome challenges and improve the process. With advances in artificial intelligence and machine learning, these companies can identify suspicious transactions in real time to minimize financial losses; the models also learn from historical transactions and customer behaviors to prevent or minimize unnecessarily declined transactions or redress them more quickly. Continuing to improve the fraud-detection process not only benefits the credit card company, but it also is good news for merchants, issuing banks, and cardholders.
• Going Lean in manufacturing: A bike manufacturer might opt to implement Lean principles to rectify some long-standing inefficiencies in its production process and improve its overall operational and financial performance. As part of the effort, it maps out and analyzes its current production processes, looking for areas of waste and inefficiency. This step leads to a redesign of the production facility to limit the unnecessary movement of materials and factory workers. The manufacturer also decides to move to a just-in-time inventory system to bring down its levels of excess inventory and related holding costs. The two improvements result in improved productivity, increased quality, reduced lead times, lower operating costs, and happier customers.

Technology That Supports Business Process Improvement

In addition to the methodologies outlined above, organizations can harness tools and technologies to improve or manage the various components of a business process. Some of the most widely explored technologies or tools that can play a role in business process improvement today include:

• Business process automation (BPA): BPA is less a single technology than a strategic approach that replaces manual processes with automated systems to streamline complex or repetitive business processes. BPA can incorporate a variety of technologies, such as robotic process automation (RPA), which executes tasks based on user-defined rules; business process management software; and cloud platforms.

• IoT devices and sensors: Internet of Things (IoT) sensors and devices monitor and collect data from their environments in real time to contribute to process improvement. A manufacturer, for example, might use IoT sensors to collect vibration and temperature data related to its machinery to check for anomalies and perform predictive maintenance before problems occur. A retailer might install weight sensors on its shelves to automatically track inventory levels and trigger proactive restocking. In construction and building management, IoT sensors can monitor environmental conditions and structural integrity to proactively address safety issues or optimize maintenance processes.

• Advanced analytics: The collection and analysis of data on existing business processes can reveal opportunities for improvement, elevating the effectiveness of these efforts through more informed insight. For example, a human resources (HR) organization looking to improve its hiring process might analyze time-to-hire metrics generally or for specific roles. Digging into root causes of delays could uncover possibilities to address bottlenecks, introduce automation, or upskill employees to fine-tune the hiring process.

• Artificial intelligence (AI): While RPA (mentioned above) automates tasks the same way over and over, AI and machine learning capabilities allow for the intelligent process automation of more complex tasks, such as financial forecasting, improving results over time. As much as 30% of hours currently worked in the U.S. economy could be automated by 2030—a trend accelerated by generative AI, according to McKinsey.

  In practice, a company might automate text-based processes, using natural language processing, or streamline the generation of emails, meeting notes, and summaries, using large language models. An ad agency might improve its creative development process by producing multiple personalized advertisement options, using generative AI, and testing them before investing in the full production of the best-received options. AI can also be incorporated into predictive maintenance solutions to streamline those processes. The list of opportunities where companies can explore the integration of AI into business process improvement efforts is virtually endless.

Software That Enables Business Process Improvement

Because enterprise resource planning (ERP) software exists to integrate, automate, and optimize various functions throughout a business, it plays a leading role in BPI. The centralization of enterprise information within one unified system, such as NetSuite ERP, eliminates the challenges inherent in data silos and ensures that everyone has access to the same real-time information as they go about the work of improving business processes. NetSuite ERP incorporates advanced analytics tools to generate in-depth reports on key business metrics, such as inventory levels, financial health, and sales performance, to help business leaders identify potential process inefficiencies and make data-driven decisions that optimize related processes.

NetSuite’s cloud-based solution also fosters greater collaboration, transparency, and alignment throughout business process improvement initiatives. And thanks to its ability to automate everything from financial and HR processes to supply chain and inventory management, NetSuite ERP reduces errors, increases efficiency, streamlines workflows, and frees up employees to focus on more strategic activities. It is also scalable, enabling it to meet changing business needs as processes change and the business continues to grow.

The continuous improvement of business processes has evolved into a core capability as companies keep pace in an ever-changing business environment. Inefficient business processes can lead to wasted resources, more errors, lower productivity, and unhappy employees and customers. BPI can reverse those trends and create opportunities to streamline operations, increase speed, improve quality, deliver better customer and employee experiences, boost the bottom line, and even take advantage of new business opportunities.

Business Process Improvement FAQs

What are the primary goals of process improvement?

Business process improvement is designed to improve organizational and operational effectiveness and performance. Some of the primary aims of business process improvement initiatives include increasing productivity or efficiency, reducing costs, improving the customer and employee experience (and, thus, satisfaction), and minimizing errors.

What is a process improvement team?

A process improvement team is a group of employees brought together for the purpose of systematically assessing, redesigning, and optimizing business processes within an organization. The remit of these teams is to identify inefficiencies or ineffective methods, develop innovative solutions to improving the business process, implement those changes, and track the impacts of the improvements.

What should a process improvement plan include?

A well-thought-out process improvement plan typically contains certain key elements to increase the likelihood of an effective business process improvement effort. These elements may include an analysis of the current process, the goals of the process improvement effort, a detailed strategy for implementing the improvements, and a change management and communication strategy.