Process Innovation

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About 'Process Innovation'?

Process innovation refers to the introduction of a new or drastically improved method of production or distribution.

In the first place, process innovation can occur through the introduction of new materials, new techniques, new software systems and new equipment used in the production or distribution process.

Furthermore, all of this allows production or distribution costs to be reduced and also in some cases to improve the quality of products already produced by a company. In addition, new products could be produced or distributed

Similarly, these changes can significantly increase a company's ability to produce goods and services more efficiently, or to deliver more efficiently. This involves an improvement in the production system process or in the distribution logistics process.

Methods used in process innovation

The methods used in process innovation are:

1. Production methods

In principle, production methods are related to the implementation of new techniques, equipment and software that are used in the process of production of goods and services. The idea is to make them more efficient and less expensive for the company.

2. Delivery methods

In a similar way, these methods include the novel use of equipment, software and techniques in the logistics of the company's distribution. In order to achieve an improvement in performance and productivity in the delivery of final products to the market.

Successful examples in process innovation

For example, the use of this process innovation system is the case of Ikea, since it managed to differentiate itself from its competitors by innovating its sales process. Ikea changed the sale of furniture by selling the wooden pieces to customers so that they would carry out the assembly process.

This allowed a considerable reduction in its costs and as a consequence it was able to sell its products at prices much lower than the competition.

Advantages of process innovation

Among the most important advantages of process innovation we have:

1. Reduction of production times

Indeed, one of the most important advantages of process innovation is that it generates high profitability for companies in the medium and long term.

This is due to the fact that production times are reduced, by increasing the productivity of the human factor. Since workers perform a greater number of tasks using fewer resources. Consequently, companies that innovate in their processes know that the money used in these processes doesn't represent an expense, but rather an investment.

2. Improves worker productivity

Next, when the human resource becomes familiar with the new processes implemented and uses them efficiently, they reach a high degree of productivity and efficiency.

As a consequence, this allows production times to be maximized, but additionally staff feel motivated. Because now you do your job achieving better results and using less time.

3. There are fewer mistakes

In every process there are human errors that cause monetary losses for the company. But with process innovation, human errors are drastically reduced.

Because processes become more standardized, automated and established protocols are followed. This contributes to less economic losses for the company.

4. The decision-making process is improved

Above all, in such a competitive market it's vital for any company to make quick and successful decisions. Process innovation enables decision making to be made faster and more efficiently. Given that entrepreneurs and company leaders have information that is generated in real time thanks to the new systems, which makes it possible to cross and relate important and crucial data in decision-making.

5. Greater customer satisfaction

Likewise, process innovation increases the level of customer satisfaction, because it allows better adaptation to their needs. Since companies prepare new proposals that are better suited to variations in market supply and demand.

In addition, it allows a better fit to the changes that occur in consumer trends and at the same time to the challenges presented by the competition, in the new proposals that it offers to the market.

Disadvantages of process innovation

The most important disadvantages of process innovation are:

1. Poor management and waste of money

All in all, process innovation in a company is efficient if it can be implemented correctly. Otherwise, a poor implementation of the process will lead to the company losing money and other resources.

Either way, the company has to spend a lot of money, but if the process is implemented incorrectly the money is lost very quickly and it's difficult to recover it.

2. Innovation can be limited

Of course, the company's resources must be used fully and optimally. For this reason, if a process innovation is made without a previous and very detailed analysis, in reality the innovation could be limited to adapt to new competitive trends.

3. Poor communication

Communication is certainly essential for process innovation to take place. Therefore, if effective communication processes aren't generated, it can cause the innovation of the processes to end in a huge failure.

In conclusion, process innovation helps companies improve their production or distribution methods. Because companies can optimize the use of time, increase human resource productivity, minimize errors, speed up decision making and improve customer satisfaction. But for process innovation to be efficient, the whole process must be managed efficiently, it must be carefully analyzed so that it's not limited and communicated appropriately.

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