The continuous improvement model is a well-known concept that has been around for a couple of decades now. Until recently, it has gained popularity across a variety of industries for its focus on finding and implementing time and quality efficiencies to specific organizational processes.
However, in the ever-evolving world of corporate process initiatives, there is a new kid on the block. This is the model known as continuous process management, promising to revolutionize business operations in a way that the continuous improvement model has failed to do so far.
Let’s take a closer look at the characteristics of each method, along with some concrete tips on how to leverage success through continuous process management within the finance and procurement functions.
Why the continuous improvement model is dead
Continuous improvement is a management method that focuses on making ongoing and frequent improvements to the services and products created by a business. It does this by examining and analyzing the processes that lie behind business operations and identifying opportunities to simplify, streamline, or change them. There are many different types of continuous improvement, from Six Sigma to Lean working and Total Quality Management (TQM).
There is no denying the popularity of these approaches in organizations of all types. However, it has become increasingly apparent that this approach is no longer as beneficial as it was once thought.
From a finance perspective, for example, continuous improvement is potentially too slow and vague of a concept to deliver fast and tangible results for the business. Efforts to eliminate waste via a lean approach (a process that focuses on the business model rather than the business plan) in the peer-to-peer area, for example, need cross-departmental inputs across a concentrated period to recognize opportunities within requisition, invoice and purchase order (PO) processing, reconciliation, and payment.
Continuous improvement, as a concept working alongside day-to-day operations, doesn’t have a wide enough focus to manage underlying issues and address them within a short time frame.
How continuous process management has the edge over continuous improvement
There are a few significant distinctions between continuous improvement and continuous process management that actually make all the difference in terms of their effectiveness:
1. Management and team involvement
Continuous process management encourages leaders to work on a hands-on basis alongside team members. This helps them to understand practical, real-life barriers and opportunities. It also allows decisions to be made much more quickly, leading to smoother and more deliverable change.
2. Focus on outcomes
Continuous improvement tends to prefer to deliver smaller, more incremental improvements. Continuous process management is much more geared toward achieving dramatic, favorable, predetermined outcomes, offering much more powerful and noticeable change at set endpoints.
3. Narrow vs. wide focus
Continuous process management has a much broader scope than continuous improvement, allowing it to target and identify potential efficiencies across the whole business operation, rather than just in the narrowly-defined set areas of focus.
How to unleash the power of continuous process management
One of the inherent components of continuous process management is the fact that it cannot operate in a silo. Its success depends on the unwavering support and commitment from the senior leadership team of the organization in the long term and agreement that all areas of the business can be exposed to its principles. This allows the best possible improvements in productivity, efficiency, and quality.
It also should be clear from the outset that, unlike continuous improvement, continuous process management is a redesign of the thought processes within the business. It has the scope to make significant and dramatic changes to existing methods of working.
Using continuous process management in practice
Now that we understand more about continuous process management as a concept, let’s consider how it can be put to good use within the finance and procurement functions.
Lean procurement is a great example of effective continuous process management, with the aim of cutting inefficiencies unnecessary spending within processes.
Continuous process management supports lean principles first by segmenting the various parts of the procurement process such as supply, procurement administration, tactical purchasing, and strategic purchasing. Next, it ensures that key resources are paired with the most value-adding activities. An example of this could be eliminating repetitive and manual activities performed within the buying team and using robotic process automation (RPA) to automate straightforward tasks. This frees them up to work on more value-adding processes within the procurement cycle, such as negotiating with suppliers and monitoring performance.
If you are already working with a continuous improvement model in your organization, take a closer look at the benefits that moving to a more targeted and focused continuous process management concept could bring your business, working with an online tool such as Kissflow FinOps Cloud. Many organizations already working with this model have realized dramatic improvements within their finance and procurement operations as a result, and your business could too.
