What Is Process Improvement? 8 Methodologies To Consider

Toyota has spent 13 consecutive years as the top retail brand for passenger cars in the US—in part, likely, because of its legendary commitment to continuous process improvement, as embodied in its Toyota Production System. The automaker constantly audits its existing business processes, looking for ways to streamline workflows while embracing new technologies and project management techniques.

You don’t have to be an industrial giant to embark on process improvement initiatives. Even if you’re a small dropshipper operating an ecommerce store out of your apartment, you can create a process improvement plan and find ways for your existing processes to work more efficiently. Here are some time-tested process improvement methodologies to consider.

What is process improvement?

Process improvement is the systematic practice of analyzing and refining existing workflows, tasks, and procedures to make them more efficient. Optimizing business processes falls into the broader category of continuous improvement, when a business makes constant operating adjustments to improve outcomes and ensure sustainability.

Companies of all sizes can implement process improvement techniques. Even a small business with limited resources can set about improving business processes without spending a lot of money. That’s because many process improvement efforts don’t require hiring more staff or buying expensive equipment. Rather, they focus on current processes and finding smarter, faster, and less wasteful ways to get things done. However, some process improvement methodologies may involve investments in time and training or cultural changes that will require navigation.

Benefits of process improvement

• Time savings
• Improved customer satisfaction
• Waste reduction
• Increased employee morale

For small businesses, process improvement isn’t just a buzzword. Refining your business operations and eliminating inefficient processes can lead to cost savings, better customer experiences, and a happier workforce. Here are some of the benefits of successful process improvement initiatives:

Time savings

For a small business, time is often the most precious and limited resource. When processes are inefficient, employees spend valuable hours on redundant, repetitive tasks. Improving processes can recapture some of this wasted time.

For example, a small business that automates its invoicing process can free up hours for higher-value activities like customer outreach or product development. It’s possible that the process automation will require investing in software or an invoicing app, but your business can recoup the money spent if your expenses fall or revenue increases.

Improved customer satisfaction

More efficient and effective internal processes directly lead to a better experience for your customers, enhancing their satisfaction and loyalty.

For instance, if your ecommerce business improves its order fulfillment process, customers receive their products faster and with fewer errors, leading to positive reviews and repeat purchases—all of which are key performance indicators (KPIs) of a thriving business. Conversely, clunky or slow internal processes can lead to delays, mistakes, or frustrating buying experiences, which can negatively affect your customer feedback.

Using fulfillment software or even outsourcing your fulfillment to a third party could result in improvements that more than cover the required investment.

Waste reduction

Effective process improvement is great for eliminating waste, which you can think of as anything that consumes resources without adding value to the final product or service.

Waste can take many forms, including wasted time (e.g., waiting for approvals), wasted materials (e.g., errors leading to scrapped products), wasted effort (e.g., duplicating data entry), or wasted talent (e.g., highly skilled employees doing menial tasks). A process improvement plan will help you identify and eliminate these inefficiencies.

For example, human resources is an area of your business that can be rife with duplicate data. Improving your human resource management processes, including investing in a human resource information system (HRIS) or other HR software, can reduce effort and prevent errors caused by duplication. Having a single source of HR data means a member of your HR team doesn’t have to enter the same employee data in your time tracking, payroll, benefits administration, and other systems.

Increased employee morale

The best business leaders don’t implement improvements just for the bottom line. A continual improvement process also helps the employees who make the business run. New processes can enable your team members to transition away from work that they may find tedious, redundant, or a poor use of their talents. And if you simultaneously develop solutions for monitoring progress, your team members can watch the business tangibly evolve.

For example, if you implement AI tools for marketing, you can use those tools to track KPIs that illustrate your marketing reach. You can free your employees from scheduling and monitoring marketing communications, and show them the benefits of the automated system.

8 popular process improvement methodologies

1. PDCA Cycle
2. Total quality management (TQM)
3. Kanban
4. 5S
5. Business process management (BPM)
6. Six Sigma
7. Root cause analysis (RCA)
8. Process mapping

Over time, corporate strategists have developed several business process improvement methodologies. Selecting the right process for your business—or attempting to combine multiple processes—requires evaluating your goals, available resources, team culture, and the complexity of the processes you want to optimize.

Here are eight improvement strategies to consider:

1. PDCA Cycle

The PDCA (Plan-Do-Check-Act) Cycle, also known as the Deming Cycle, is an iterative, four-step management method used for problem solving and implementing change. PDCA is extremely versatile and low-cost, meaning there’s almost no barrier to entry.

A Shopify merchant could use PDCA to test a new shipping label printing process (plan), try it for a week (do), analyze if it’s producing the right labels (check), and fully implement the system if testing goes well or change/abandon the system if not (act). Consider PDCA for new product development, customer service improvements, or optimizing marketing campaigns.

2. Total quality management (TQM)

Total quality management is a holistic management philosophy focused on long-term success through customer satisfaction. This process improvement methodology involves continuous improvement efforts from all company team members, who are encouraged to keep the brand reputation top of mind. TQM is notably beneficial for businesses where customer loyalty and brand reputation are closely tied to the quality of goods and services.

For merchants selling handmade goods, custom products, or specialized services, TQM may stand out from other process improvement methods. For example, a Shopify business selling artisanal crafts could use TQM to ensure consistent product quality and minimize defects. With all team members buying in, TQM can quickly improve the brand’s reputation and help it secure more business.

3. Kanban

Kanban is a workflow management system that emphasizes visualizing work, limiting work in progress (WIP), and maximizing efficiency. Tasks and workflows are typically represented on boards with columns like “To Do,” “In Progress,” and “Done.” It’s designed for teams responsible for rapid application development (distinguished by quick development cycles and frequent user feedback), working through customer support queues, and rolling out marketing campaigns.

A Shopify merchant can use a Kanban board to track new orders, oversee order fulfillment steps (e.g., picking, packing, shipping), and tackle customer service inquiries. If part of your team is remote, you can use online Kanban boards to maintain transparency and help coordinate employees in far-flung locations.

4. 5S

5S is a Lean methodology, deriving from the famed Toyota Production System (TPS) and focusing on maximizing customer value while minimizing waste. 5S emphasizes a clean, organized, and efficient workplace. 5S stands for:

• Sort (eliminate unnecessary items)

• Set in order (arrange necessary items for easy access)

• Shine (clean and maintain the workspace)

• Standardize (create consistent procedures)

• Sustain (maintain the discipline to keep 5S going)

A Shopify merchant could use 5S across many segments of their business, such as organizing their packing station, ensuring tools are in their place, and improving safety. This leads to faster order fulfillment, fewer packing errors, and a more productive environment.

5. Business process management (BPM)

As opposed to simply improving a single process, business process management takes a broader view, treating processes as assets to manage and continuously improve through refinement and careful review of performance metrics. It often involves mapping out entire workflows, identifying inefficiencies, and implementing software to automate repetitive tasks. This systematic approach can lead to a full business transformation.

BPM is traditionally associated with larger enterprises, yet simplified BPM concepts can benefit growing small businesses. For example, a Shopify merchant looking to scale operations might use BPM to formalize the customer onboarding process, tracking critical performance measures, and identifying automation opportunities (like email sequences) to make it more efficient and consistent.

6. Six Sigma

Among process improvement methods, Six Sigma is known for its structured problem-solving approach. It traditionally leverages the DMAIC process (Define, Measure, Analyze, Improve, Control) to identify areas that need improvement and generate potential solutions.

Originally developed by engineer Bill Smith at the electronics maker Motorola, Six Sigma can benefit small businesses dealing with quantifiable, recurring errors that affect customer satisfaction or cause unsustainable costs. Examples include high rates of shipping errors, product defects, or customer service issues. So a Shopify merchant experiencing frequent order fulfillment mistakes could use Six Sigma’s data-driven approach to pinpoint the exact steps causing the errors and implement robust solutions to achieve order accuracy.

7. Root cause analysis (RCA)

A root cause analysis (RCA) is a systematic process for identifying the underlying reasons for a problem, failure, or undesired event. The goal is to move beyond superficial fixes and implement lasting solutions by understanding why a problem is occurring and standardizing processes to prevent it from happening again.

RCA fits hand in glove with the Theory of Constraints (TOC), which posits that every system has at least one constraint that restricts it from meeting its full potential. If you adjust your business processes, you can remove such constraints and maximize your output.

Adhering to TOC allows you to focus RCA primarily on issues that either represent the system’s constraint or significantly impact the performance of that constraint. For example, your business may struggle to ship orders on time. A TOC analysis may find that the constraint holding you back is the lack of a dedicated shipping department—you’re using general staff members to fulfill orders rather than shipping specialists. You can address that constraint by hiring one or more dedicated shipping professionals and then streamline processes so that everything related to shipping is handled exclusively by those workers.

8. Process mapping

Process mapping involves visually charting the steps involved in a business process to identify redundancies, delays, or inefficiencies. Companies use this approach to understand the current state of a process and identify bottlenecks, redundancies, and any steps that extend a process without adding value. This can prove valuable for any business looking to understand how their operations actually work versus how they’re perceived to be working.

A Shopify merchant struggling with lost and mislabeled customer returns could create a process map of their current returns procedure. This visualization would quickly highlight where delays occur, who is responsible for each step, and potential points of confusion, leading to targeted improvements for future process performance.