How to measure the effectiveness of SOPs

1. How to measure the effectiveness of SOPs

2. Why Measure the Performance of SOPs? When we implement a solution, we also see whether it brings the expected results. If not, we re-align the solutions. The process is continued until the best solution is achieved. This is something organisations should also practise after developing and implementing SOPs (Standard Operating Procedures). SOPs are not meant to be static; they are a tool of continuous improvement. Measuring their efficacy leads to identifying potential flaws in them. Corrected SOPs help keep processes relevant and updated. The most important reason to measure the success of SOP implementation is to see whether the intended process outcomes or operational results are achieved or not. There are also costs involved in SOP design and implementation. If SOPs are not delivering the intended objectives, it lowers the ROI and the value of SOPs to organisations. Assessing and improving the SOPs help justify the investments made into SOP incorporation. Measuring the effectiveness of SOPs can reveal the need for training in areas previously not considered. Assessing the performance of SOPs also sheds light on the degree of adherence to the same. If there is a deviation in results, SOPs serve as a benchmark to compare what was required to be done and whether it was done or not. This blog highlights nine metrics that answer how to measure the effectiveness of SOPs.

3. #1 Reduced Process Cycle Time Process cycle time is the total time required to complete one full cycle of a process. It’s a good ground for measuring the efficiency and effectiveness of a process. It is useful in detecting process tailbacks. The key components of process cycle time are input-to-output time, movement time, idle/waiting time, and time for inspection, correction, and rework. Measuring process cycle time has numerous advantages. Figuring out where a process spends most of its time helps focus on areas where the most meaningful changes are possible. Being able to cut down process cycle time directly leads to saving time and achieving the output in a shorter time frame. Quicker processes mean enhanced operational speeds at the enterprise level. Process cycle time is an important element of the SOP definition. In SOP design, each task in a workflow is assigned a timeframe within which that task is expected to be completed. In the same way, there is a timeframe at the level of a process as well. Consistency in the accomplishment of these timelines indicates adherence to the established SOPs. It also speaks about the quality of implemented SOPs. By considering the other components of process cycle time i.e. movement time, idle/waiting time, and time for inspection, correction, and rework – process efficiency and effectiveness can be further improved by realigning or redefining the SOPs. In cases where SOPs are implemented for the first time, reduced process times show the fruitfulness of implementing SOPs.

4. #2 Reduced Error Rate Error rate measures the proportion or frequency of the occurrence of unintended or incorrect outcomes in a process. It shows the reliability level of processes. There are different types of error rates applied to different processes. For example, in the banking and insurance industry, transaction error rates show the proportion of erred transactions as a percentage of the total number of transactions in a given set of data. In manufacturing, defect rates show the percentage of products that do not meet the established standards of quality. Error rates are affected by many factors. Some of the biggest reasons are process complexity, human factors, technical faults, and quality of data. One of the important objectives of implementing SOPs is to reduce errors or faults in process and process outcomes. This makes reduced error rates an unavoidable ground for SOP validation. If SOPs are on point with no change in any other factor affecting a process, there should be a significant reduction in the error rate of that process. For example, it is common for departmental stores to experience deviations in home delivery services with an increase in the number of online orders. As experienced SOP consultants, we have seen over the years that the volume and frequency of complaints or errors in home delivery services go down after implementing SOPs for order fulfilment operations.

5. #3 Reduced Operational Cost The quality of operations has a significant influence on operational costs. For example, grocery stores can reduce the number of trips for home delivery services by clustering orders based on locality and scheduling trips at intervals. This will lower the total cost of delivery which will ultimately also reduce the cost per delivered order. Similarly, there are many such direct and indirect costs that are affected by how operations are planned and executed. The quality of operational execution is where SOPs chip in. The right SOPs help improve operations which in turn creates the possibility of bringing down the cost per unit. Suppose that a grocery store spends USD 5 per order of home delivery. Let us divide this cost into two heads – labour USD 3 and petrol USD 2. The cost of labour may not be flexible but the amount spent on petrol could be reduced by reducing the number of trips. This can be achieved by incorporating certain policy measures and robust SOPs for order fulfilment. As policy measures, the number of delivery trips could be limited to a certain number in a day and setting MAQ limits for orders to be eligible for home delivery. SOPs help implement these measures by serving as workflow and operational standards for the order fulfilment process. So, the going down of cost per unit one way reflects the sharpness of process definitions in place.

6. #4 Higher Employee Productivity In any workplace, the operations systems have a bearing on the performance and productivity of the people working through it. If it is unproductive, confusing, or lacking in any other relevant manner, it brings a certain degree of discomfort. Productive employees cannot sustain themselves in such an environment for long. It is natural that the performance and productivity of employees come down in foggy working systems. SOP is the antidote that brings the opposite results. It brings clarity to what needs to be done. It speaks of the standards of performance to be maintained. It presents the official way to carry out tasks. It reduces the scope of errors and mistakes. Work gets done on time. Employees remain aware of their workload and thus, can manage it well leading to lesser stress and helping create a better work-life balance to some extent. Delegation becomes easier. Supervision and monitoring get done with more certainty as roadmaps and standards stand established. SOPs also help maintain accuracy and transparency in performance evaluations leading to fair judgments and appropriate reward. Such an operations environment cannot easily demotivate people. It is like looking in the mirror. If there is a problem, it has to be somewhere else and the working systems cannot be blamed. Once employees get a hang of their operational specifications, they become more confident with their roles and responsibilities. They get a better sense of where to apply their expertise and experience. Higher employee productivity need not necessarily be only a result of SOP implementation but the latter fulfils an important requirement for increased productivity which is the quality of operations planning through which performance and productivity get a face.

7. #5 Better Customer Experience Customer experience is a cumulative outcome of the quality of efforts put into the value chain. Numerous business processes are involved starting from value creation to value delivery. If these processes are not well planned, their outcomes are unlikely to create the intended results. Once discrepancies enter the value chain, it becomes increasingly difficult to correct them at later stages in the value chain. For example, faulty products entering the value chain due to poor quality control are eventually returned from the points of detection consuming additional efforts and resources. Faults are exceptions, not the rule. The process of customer grievance redressal also serves as an example here. This process should cover all the common and possible types of issues that customers may encounter in the shopping journey. Leaving any issue or its extended versions uncovered means that there is no resolution plan or things are left to uncertainty. Having SOPs ensures that there is a planned roadmap for resolving every possible issue. So, when an issue comes up, customer service representatives can process it as per the SOPs. What needs to be done is a strategic affair; SOPs take care of the execution part. Improved levels of customer experience indicate that the SOP-based operations are in alignment with the CX objectives. There are other aspects to it as well but SOPs lay down the roadmap of doing it in the intended way.

8. #6 Lesser Reworks Doing something takes up resources; doing it again takes up more. This applies to business processes and operations as well. The need for rework arises because of mistakes in planning or in execution. SOPs help ensure that mistakes do not happen in the execution of business processes. It significantly reduces the scope of deviating from the intended course of action. The workflows and standards of results expected are known in advance. Product returns in eCommerce serve as a perfect example here. With adequate QA and QC measures spread across the value chain, the chances of faulty products entering the supply chain are slim to none. SOPs help ensure that no batch passes without going through the established quality checks and standards. If every entity in a value chain incorporates these checks and standards with the help of SOPs, the need for product return may be completely eliminated from the concerned value chain. Organisations achieve high levels of operational efficacy by implementing SOPs to guide their business processes. It also helps them synchronise operational requirements with their value chain partners. In other words, when the quantum of reworks goes down, it shows that things are getting done correctly in the first attempts by implementing SOPs.

9. #7 Higher Compliance Rate The most important stakeholders in SOPs are employees. They are the ones who would need to follow the SOPs. They are the ones whose routine work is affected. It can make their work monotonous as well. It can have ramifications on their PMS. SOPs can test the skills and expertise of employees. If employees are receptive to SOP implementation and are showing high levels of compliance, it is another benchmark speaking for the quality of SOP design and implementation. This compliance will show up in every process and the results will be visible. For example, many departmental stores fail to replenish stock on time for a myriad of reasons. One of the solutions is to rope in additional vendors and consider them in the procurement decision-making process. However, strategies to overcome a problem must also find its due place in operations planning. After implementing the strategy via SOPs, if the store’s offerings remain intact (say customers getting an alternative brand), it shows that the new SOPs are being followed. This also shows that SOPs help maintain value propositions by bringing more agility to operational decision-making. When the intended results are visible, it reflects the adherence to SOPs.

10. #8 Improved Process Output One of the most direct and glaring signs of the success of SOP implementation is achieving the intended process output in adherence to the established standards. Some common examples of process output are order fulfilment, payment of salaries, audit reports, financial statements, tax compliance, regulatory compliance, and content publishing. If the process output is right, it means the SOPs following which that process was executed are also adequate. There may be scope for improvements in it but it is good enough to produce the current required results. If there are deviations in the results, it indicates potential loopholes in the process definitions. These loopholes may also emanate from flaws in strategies and planning. However, process output is the first place of such manifestation. For example, if there is a return of submitted papers from any government office for corrections, it shows the presence of deviations in the concerned compliance process. Maybe there is a need to incorporate the element of checking up with the latest compliance requirements in a compliance process. Or maybe there is a delay in starting the compliance process because of which it might have attracted new/additional requirements (e.g. fines, application citing reasons of delay, filing of papers in another office, etc.).

11. #9 Success at SOP Training The success achieved in SOP training is a pre-indicator of potential success with SOP implementation. Successful training indicates that participants have understood the grill. How they actually perform on the job is a different subject. However, the more realistic a training program is and if employees meet the training objectives, the higher the prospects of them achieving a similar level of results on the ground. SOP training should make employees go through simulated workflows tied to required operational standards. It helps employees acquaint themselves with the nuances and complexities of processes. Over a training period, they can be educated to overcome areas where they struggle or are prone to make mistakes. Training serves like Poka Yoke – the Japanese concept of mistake-proofing. So, the results of SOP training provide a good picture of how things are going to turn out in a real-world scenario. It can reveal if there is a need for training in specific areas of expertise. It can also shed light on any possible deficiencies in the SOPs. Reviewing performances at regular intervals during a training program is important. Training centres should be receptive to feedback from participants and be willing to review the SOPs or the training methodologies. Poor training just does the opposite – employees are never fully equipped with the required knowledge and skill sets to handle the SOPs in real-world situations.

12. Recap SOPs come with a bunch of inherent benefits. They help keep business processes relevant and updated with their environment. SOPs are a tool for continuous improvement. With these three considerations, it is clear that SOPs cannot remain static for too long. It gives rise to the need for keeping a tab on the efficacy of implemented SOPs. Nine metrics of SOP validation have been highlighted in this blog that answer how to measure the effectiveness of Standard Operating Procedures. In SOP design, tasks and activities are attached to timelines within which they must be completed. Consistency in achieving these process cycle timelines indicates adherence to the established SOPs. Error reduction is one of the important objectives of SOP implementation. If SOP design and implementation are on point, with other factors remaining the same, there should be a significant decline in the error rate of processes. Effective SOPs also lead to the consumption of fewer resources. This also applies to operational costs in many direct and indirect ways.

13. Process-oriented organisations (powered by SOPs) also experience higher levels of employee productivity. SOPs bring clarity to what needs to be done with established standards of performance to be maintained giving more confidence to employees in executing their roles and responsibilities. The objectives of customer experience are consistently achieved by organisations that follow SOPs. SOPs lend precision to operations leading to the maintenance of the established parameters of customer service and support. Since SOPs help reduce errors and mistakes in the execution of business processes, the chances of work getting done the right way in the first attempt always remain high. Employees being receptive to SOP implementation and showing high levels of compliance is another yardstick speaking for the quality of SOP design and implementation. Achieving the intended process results in adherence to the established standards is one of the most conspicuous signs of the success of SOP implementation. SOP training aligns with the Japanese concept of Poka Yoke meaning mistake-proofing. The results of SOP training send a bold message of how things are going to turn out in a real-world scenario. To know about our SOP consulting services or to speak to one of our SOP consultants, please drop us a message and we will reach out to you.