Are you planning to turn your idea into business? Assessing the feasibility of your idea is one of the main things you should assess. Process and resource analysis is an effective way for you to do this. In this post, you will get an overview of process and resource analysis including the many benefits it provides.
26.10.2023
Heikki Immonen, Karelia University of Applied Sciences
Process and resource analysis helps with feasibility assessment
In process and resource analysis, you identify the process steps and the related resources, such as tools, equipment, skills, personnel etc. This is especially useful in analyzing the production or service processes of your future business, its marketing process, and even the experience of your customers.
Process and resource analysis is an excellent way to estimate the feasibility of your business idea. Your business idea is feasible, if you are able to do it as required and your product works as planned. Note that feasibility depends on the resources and skills you have or can easily acquire. For a mega-corporation, many different business ideas are feasible. On the other hand, a part-time student has much less resources at hand, thus limiting the number of business ideas that are feasible for them.
Why process and resource analysis is important
Even small businesses can have complex operations with many tasks and sub-processes. If you have not yet implemented your business idea, it can be difficult to imagine what all this complexity means.
However, if you map out the processes of your business and connect them with relevant resources, everything becomes more manageable. As a result, you are able to assess your business vision more objectively. This will be beneficial for several reasons:
- You are able to invest and recruit correctly
- Easier and more realistic financial analysis
- Better products and services
- Waste can be removed
Let’s look at each of these benefits in more detail.
Better investments and recruitment
When you have mapped out all the daily tasks in your future business, it becomes clearer what type of equipment or tools you need to accomplish these tasks. The same applies to skills. You can more clearly assess whether you have the skills needed to implement the process steps successfully or not. If you are lacking some skills, you can think of a strategy for acquiring these skills.
- A gluten-free bakery was able invest in a right-size oven after carefully analyzing the process
One obvious benefit is that if you are planning to expand your team with new members or recruit an employee, your process and resource analysis helps you to know exactly what process steps the new recruit should be able to handle. This includes the resources (tools, equipment) the process steps are handled with. Suddenly searching for talent becomes easier, and comparing different candidates straightforward.
Easier and more realistic financial analysis
When you know exactly how long it takes to manufacture your product or to serve your customer, you are able to define personnel costs much more realistically. Knowing how long something takes also helps you to estimate the overall profitability.
- A maker of handmade longboards was able to shorten a key process step by 80 %, thus increasing profitability a lot
This is done by first looking at the required number of products you need to sell to reach your profit and income goal. Then, you compare that to the working hours you have budgeted in the first place.
- See a more detailed explanation of this in the article about profitability and the use of reverse income statement.
Also, you are able to invest smartly when
- you know the tools and resources needed to run the key processes of your business AND
- you know what capability is expected of the resources.
With correct investments, you are better able to reach your profitability goal, compared to the situation where you under- or over-invest.
Better products and services
Process analysis can lead to better products in at least two ways:
- Improve product quality by removing the causes of defections by developing the process.
- Studying customers’ use case and experience that leads to insights on how to improve a product.
One of the main reasons to start building and testing prototypes early is to reveal defections and quality issues when it is still cheap and quick to fix them. When you discover them, you can analyze the process to find the cause for the defect. You then improve the process so that the cause for the defection is removed, thus preventing the defection from happening again.
- A new business self-publishes a book and discovers that the 1st edition contains some spelling errors. They analyze their proof-reading process and adjust it so that this will not happen for the next batch of books to be printed.
To improve the design of your product, you apply the process mapping techniques to customers’ current experience. This way you will reveal both pain points in the customer experience and the causes for these pain points. You can then move forward to improve the design of your product or service so that the pain points are prevented from actualizing in the future.
- An entrepreneur developing a yoga-class visits several other yoga classes offered by competitors. She analyses her experiences and the structures of these classes in detail. As a result, she gains insights for making her future classes stand out from the competition.
Waste can be removed
Finally, one of the hallmarks of an efficient process analysis is the discovery of waste. When we talk about waste, we are talking about work done or money spent as part of the process that doesn’t contribute to the value the product or service is bringing to the customer.
Let’s look at a few examples:
- A bakery buys too much of certain ingredients that go bad because they weren’t used on time. Solution: improve the ingredient buying process.
- A mobile app developer builds 20 featureso for their product, only to discover that customers only use 3-5 of them. Solution: improve the app design and testing process
When the waste is removed, it typically results in better profitability and in a better customer experience. This is especially true in stable and predictable markets. When times are tumultuous and chaotic, having some inefficiencies in the process gives you room for adaptation.
About this article
The writing of this article was supported by the INnoVations of REgional Sustainability: European UniversiTy Alliance project. https://www.invest-alliance.eu/ . This project is funded by the Erasmus+ Program.
The content of this article represents the views of the author only and is his sole responsibility. The European Commission and the Agency do not accept any responsibility for use that may be made of the information it contains.
References
Anthony, S. D. (2014). The first mile: a launch manual for getting great ideas into the market. Harvard Business Review Press.
Bicheno, J., & Holweg, M. (2016). The Lean Toolbox 5th Edition: A Handbook for Lean Transformation. PICSIE books.
Dori, D. (2016). Model-based systems engineering with OPM and SysML (Vol. 15). New York: Springer.
Liker, J. K. (2021). Toyota way: 14 management principles from the world’s greatest manufacturer. McGraw-Hill Education.
Siegenfeld, A. F., & Bar-Yam, Y. (2020). An introduction to complex systems science and its applications. Complexity, 2020, 1-16.
