As the competitive environment intensifies and organisations fight for growth, every step that improves processes, lifts productivity and enhances customer value, can make a difference.
Forward thinking organisations are embracing technology to automate tasks and speed up processes, freeing their people to engage in higher level activities such as innovation and continuous improvement.
Nicola Buddee, Director, Audit and Assurance, KPMG, says to remain relevant in this dynamic landscape, it is essential for organisations to create opportunities to explore how to improve efficiencies and overall productivity, and to foster a culture of ‘continual improvement’.
"If you don't, you will never get more efficient, your business won’t evolve, and from a quality perspective, there are missed opportunities," she says.
As auditors of many Australian businesses, KPMG examines their processes and sees many that could be done better. This puts the KPMG team in a unique position to not just focus on how processes impact the numbers, but to also help identify inefficiencies.
Chris Hollis, Partner, Audit and Assurance, KPMG, says that bringing a Lean methodology lens to audits is an ideal way to achieve this, as it can help organisations enhance value.
“It can help with breaking down processes, focusing on customer value, spotting pressure points and helping to prioritise enhancements,” he says.
Lean as a management philosophy was developed by car manufacturer Toyota around 70 years ago, but has since proven applicable to all organisation types.
"Using Lean thinking and its techniques helps to build a clearer picture of what you are trying to achieve, and a deeper understanding of how well your processes are working,” he says.
A key Lean technique is process mapping in a workshop, Hollis explains.
“The workshops provide an opportunity to explore how a process or function, such as finance or payroll operates, and importantly they are held with the 'doers'. You have people involved from the frontline who face customers. From the factory floor, IT, and more, all in a room together. These people have the best knowledge of the process, its pain points and how to fix them,” he says.
Hollis says that in many organisations, a Lean process workshop will be the first opportunity the staff have had to pause and consider their processes from end to end. For example, it could simply be breaking down the steps of receiving a customer application form, assessing what is missing, and then considering how to streamline the amount of 'back and forth' required to ensure it is complete.
"People gain an understanding of the impact each step has down the line. You often get a snowballing of momentum and enthusiasm, and the staff discuss how they can improve the issues that we capture," he says.
Through a simple method of placing coloured post-it-notes on a wall to map process steps, identify good ideas and pain points, a visual map begins to emerge. Buddee says the benefit of this approach is that solutions come from the teams that need to deliver them, rather than being imposed upon them.
"It empowers everyone to design a process that is fit for the team. It fosters a collaborative culture, and you end up with a 'to do' list of actions," she says.
In addition to facing technology automation and disruption, organisations are contending with a barrage of new risks. Cyber-attack, customer privacy concerns, compliance breaches, customer relations problems or negative social media exposure could all have an impact. Understanding processes can help raise a flag to where hidden spots for risk could be located.
“Problems and errors can happen and you need controls to catch them. But controls are often poorly designed, ineffective and simply add inefficiencies into a process. So we take a step back and ask, what are the things that can go wrong and what is the best way to catch them? Stopping a problem as quickly as possible is best, preventing it from moving further along, but if it does you need controls to detect it,” he says.
Understanding risk, and the balance of preventative and detective control is another key outcome of a Lean process workshop.
"You wouldn't take controls out, but ideally they won't need to catch anything, as everything is right the first time. Often finance departments are too busy ‘mopping the floor’ to go and find and turn off the tap, so a Lean process mapping workshop is an opportunity to find the tap,” he says.
Amid the challenges from technology and emerging risks, organisations are also facing a new breed of customer. Consumers have access online to the best service from around the world, and expect to experience the same from every institution. Hollis says one of the key principals of Lean process mapping is to put the voice of the customer first.
“Understanding who your customer is, and what they want, is the starting point. It is about considering what product or service they are buying from you, and stepping through everything you do in your business to get to that point,” he says.
The goal is to get service right the first time, with delivery constantly moving forward.
"Through the customer lens, you ask, if it is not delivering value to the customer, why do you do it?”
Buddee says KPMG Audit is in an ideal position to apply a Lean lens to client’s processes.
“Through our audit we can create the opportunity for our clients to re-examine how their processes deliver customer value while managing risk. In addition to finding efficiencies across the board, adopting Lean tools can also help enhance the traditional audit process,” she says.
There is the added benefit of improving the reliability of the numbers, which can lead to an improvement in audit quality.
“There are longer-term benefits to gaining these skills and understating how to think this way," she says.
KPMG Dynamic Audit is powered by people and technology to meet today’s and tomorrow’s demands. For more information about Lean and KPMG Dynamic Audit, contact your KPMG professional.