How to evaluate workflow improvements
In order for a business to remain competitive, its work processes (both production and financial) must be constantly improved. For this reason, there is a need to evaluate the results of such innovations. As the saying goes, “you can’t improve what you can’t measure.” To solve the problem, the business must develop metrics for the measurable components of business processes and organize the collection of analytical data before and after innovation. The subsequent analysis of the indicators will allow us to conclude how effective the changes in the processes were. But you need to start by choosing the most important indicators for your business processes.
Organization of a system for evaluating work processes
Determine what needs to be measured. In other words, what should give you the next innovation. Do you want to make your workflow more reliable, faster, more efficient or improve it in some other way? The answer to this question will bring some clarity to your intention. Make sure that the output of the workflow is something that can be measured in one way or another.
For example, if a company wants to expedite delivery, it will measure the delivery time. A digitizing company can measure the number of errors in the digitized data packets or in the total amount of work.
Use a unified term set for your project. You need to use commonly known terms so that everyone understands them correctly and uses them consistently. This will increase the reliability of information that is transmitted between employees of various units or departments. To avoid misunderstandings, clearly define all the indicators that need to be measured.
Let’s say your company measures time in days. Different departments of the company may understand the term “day” in different ways. For example, it can refer only to calendar workdays, to any full day, or only to an eight-hour workday. Such inconsistencies can be confusing.
Determine how data is collected. Data must be collected uniformly across all departments of the company. For example, if one department uses random data sampling, the rest of the departments should do the same. Otherwise, the data will be incomparable. It is also necessary to approve the units of measurement. They must be the same, no matter in which department the results are evaluated.
For example, the speed of delivery can be measured in minutes or hours, and the need to convert one unit of measure to another for calculations cannot be considered an effective approach.
Standardize the accuracy of your calculations. This means that one department should not round the time to the full hour, while the other should reflect it in hundredths. Otherwise, a different level of data detail will make the overall results incorrect. Keep in mind that smaller units of measurement will allow you to give a more accurate estimate of the results.
For example, all departments must agree on the same rules for rounding decimals.
Selecting the Right Metrics for Project Evaluation
Select a primary production metric. The main indicator should reflect the result or purpose of the introduced changes in business processes. For example, at a car factory, this could be the number of cars produced per hour. Even before the innovations, it is necessary to determine the base value of the selected indicator, and after the implementation of the project, it will again need to be measured. And only then it will be possible to assess the positive changes (if any).
In addition to the main metric, select related performance measures. Evaluation of related indicators will allow you to understand how changes in work processes help the company achieve one of the main goals of its activities. For example, if the main production metric was the rate of output, it can be directly related to increasing the company’s profits or reducing fixed costs. Cause-and-effect relationships must be present between the main and accompanying metrics. They allow us to prove why it is important for a business to improve the main production indicators.
Consider the possibility of unexpected results. Innovations can bring with them not only benefits, but also side harm. If the main metric is to measure what needs to be improved, then in addition to it, a number of proxy indicators should be used.