Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.
What Is Process Innovation?
Process innovation is a new or significantly improved way of doing things in a business that typically increases production levels and decreases costs. Process innovation might come in the form of new processes or techniques, new equipment, or software.
Imagine you're a small business owner with several stores, a headquarters that houses your administrative offices, and a small warehouse. What types of process innovations would you envision to make your business better? It could range from a more effective way to deliver payroll checks to a simpler method of store ordering to a more streamlined way to move things inside your warehouse.
The process of innovating new solutions could fall into one of these areas:
- Production: This is where you'd find processes, equipment, and technology to enhance manufacturing or production processes. This includes computer software to aid in production design and development or new equipment that makes a process run more efficiently or effectively.
- Delivery: Delivery process innovations involve tools, techniques, and software solutions to help in supply chain and delivery systems. Barcodes, tracking systems, or shipping software would be useful innovations in this category.
- Support services: Innovations in processes aren't limited to simply production or delivery, but also areas including new product development, purchasing, maintenance, and accounting. If it is a business process, innovative solution could be pursued or developed to improve methods and deliver better results.
Process Innovation Example: Ford
One of the most widely recognized automobile companies in the world is American-based multi-national manufacturer, Ford Motor Company. Now more than 110 years old, the company was founded by Henry Ford and has succeeded in innovative designs and ideas for more than a century. One of their most notable innovations came more than 100 years ago with the invention of the world's first moving assembly line. The process not only simplified vehicle assembly but shortened the time necessary to produce a single vehicle from 12 hours to 90 minutes. That process innovation, creating an assembly line to speed up production, not only benefited the auto giant, but manufacturers of other consumer goods, such as refrigerators and vacuum cleaners. It remains the typical mode of production for businesses today.
Process Innovation Example: Zara
Across the Atlantic Ocean, clothing manufacturer and retailer, Zara, got its start in Spain in the mid-1970s. Their innovative processes have helped to make them the world's largest fashion retailer.
Zara relies on a simple 'copying' technique to deliver the latest fashions seen on runways and in magazines and using customer feedback to improve their designs. And, instead of using far-flung manufacturing facilities, the bulk of their clothing is designed close to their main hub, which allows for quick processing after consumer feedback. Their supply chain processes are also innovative in that they have set ordering times for all their store locations around the world. By controlling their distribution and shipping, they are able to reach most locations with their goods, already tagged and ready to sell, in 24 to 48 hours, at home and abroad.
Like the examples of Ford, with their automated assembly line, or Zara, with their design and distribution methods, we can see process innovation at work. Process innovation is any way in which business processes can be improved to increase operational efficiencies, generate more effective products, or save a company money. Innovating new solutions can literally take place inside of any organizational department, but is frequently seen in production, delivery, and support services including purchasing, maintenance, and development.
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Process Innovation: Types & Examples Quiz
Instructions: Choose an answer and click 'Next'. You will receive your score and answers at the end.
Benefits of process innovation could include all of the following EXCEPT which?
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