Why exceptions are process performance drivers
Updated: Jun 29, 2021
“The performance of any given process has a strong correlation to the number of exceptions it has to deal with…”
All Processes have exceptions, period.
Of course, business can set “zero exceptions” as their ultimate goal in the same way “zero defects” has been set as the ultimate quality mantra, however, in the real world, all businesses need to deal with the fact that process exceptions are part of life.
An exception is a process input that does not conform with the expected characteristics, it could be a part that comes barely outside spec limits, but you need to enter it into the process because you cannot stop production; an invoice that needs to be paid to avoid a credit hold, but the PO in the invoice does not match with your ERP system; an online order received and approved but for which there is no inventory to ship, so someone needs to contact the customer directly to let them know the situation; well, you got the idea.
“80% of processes fail because they are created with the ideal circumstances in mind, meaning that any exception to the process will create so many additional tasks that will ultimately affect their overall performance despite its low occurrence frequency.”
In this regard, old-school businesses have used two different approaches regarding process exceptions:
Either they declare that there will be no exceptions, which sounds good in theory, and is what most executives want to hear, but is not very realistic at all, as most of the times produces a process so bureaucratic that it became an impediment for business proper functioning, or even worse, a process that is so impractical to execute, that simply is not followed in the day-to-day routine.
Or they embrace all exceptions as part of their business, mainly based on customer service culture. This approach normally generates very complex processes, with a degree of specialization that require a highly skilled staff with years of experience dealing with all kinds of exceptions just to make it work. Unfortunately, these are very expensive processes given the level of seniority required and is so intricate that challenges every intent to automate.
In average, a business process has between 3-15% exceptions.
Process Standardization refers to the ability to minimize process exceptions so that business effectiveness and productivity increases, following the basic principle that “the less exceptions the higher the performance”.
Thus, the key feature for a successful process standardization effort is to ensure that the standardization team knows the process well enough to be prepared to integrate the known exceptions (normal causes) into their process, so those are no longer exceptions, and at the same time, minimize the unknown exceptions (special causes) so that they don´t affect the overall process performance.
This is where the Process Consultant experience plays a key role in the support provided. Thanks to the expertise gained by having touched some many processes, they can integrate valuable insights to standardize any processes with confidence.
So, next time you need to simplify (streamline) processes by eliminating or automating non-added value tasks, homologate processes across brands, divisions, or regions, or simply implement standardized & meaningful performance metrics for your teams, make sure you have a Process Expert on your side.