Standard Operating Procedure (SOP) is a great tool for organisations to document and streamline their business processes. SOPs are equally beneficial for startups, small, medium and large organisations. It is a great low-cost tool to transform an organisation from being a person-driven one to a process-driven one. The purpose of this article is to highlight some of the unique benefits of developing SOPs for your organisation.
Be it a new employee or an experienced employee, training with the aid of an SOP will sharpen their skills and reduce defects or errors in their day-to-day activities.
- SOP conveys an organisation's intention in a court-of-law. A well-developed SOP with supporting documentation showing that the necessary training were imparted to the employee will only speak in favour of the organisation in case of accidents.
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- SOPs clearly establish the roles and responsibilities of the staff working in various functions such as manufacturing, procurement, sales, marketing, accounts, finance, legal, customer service, human resources, administration etc. SOP introduces immense clarity in understanding one's own job, eliminates confusion among colleagues and avoids blame-gaming.
- Typically in organisations the employees working on the customer-facing side may have less experience and qualification. A well-crafted SOP will enable such organisations to deliver superior customer service at low-cost.
- In organisations where they have multiple outlets or spread across a wider geography, SOP brings consistency in their operations and clearly establishes the brand image in the consumer mind.
- SOP identifies the process owners who are responsible to maintain the functioning of a process. It becomes the responsibility of the process owners to continuously improve the SOP with best practices.
- SOP helps in auditing a process for its validity and to find out the deviation between the documented and actual performance.
- SOP enables the process owners and process improvement experts to quickly get an understanding of the current state of the process. SOP establishes the foundation for all process improvement efforts.
- While expanding the capacity of an organisation or while commissioning an additional production line, SOP comes handy to estimate the quantum of work especially the factors of production such as men, machine, material and money required.
- SOP demonstrates a company's sound process orientation and their commitment towards process improvement, which is appreciated by the clients and boost your credibility, especially in a B2B environment.
- SOP is a tool for communicating the organisations expectation in terms of the standards of performance with reference to functions, processes and activities.
- When employees follow SOP, which is thoroughly evaluated for its best practices and safe operation, it tremendously increases the safety and security of not only the employees who are performing the activities, but also others in the vicinity.
- Organisations that establish sound SOPs for their functions and processes can have a good negotiation with the insurance companies as it mitigates the exposed risk and its degree.
- SOP provides a global view of processes helpful in identifying opportunities for small or large automations in processes.
- A good document to capture and consolidate the business rules that need to be followed while performing a transaction or operation.
- For public safety and national security, companies in industries such as pharma, healthcare, insurance, banking etc. are mandated by the respective national governments or regulatory bodies to establish and follow SOPs.
- In case of a long repeated processes, human memory is limited and there is a possibility of missing certain activities. SOP along with a check list will be of immense help in these situations.
- When companies want to implement an ERP system or to move from a legacy system to a new system, SOP will help the software implementers to understand the organisations processes with greater accuracy. In the absence of SOPs, the software implementers have to go through a phase of numerous meetings with the stakeholders and eventually create such documents that represent the organisational processes.
Venkadesh Narayanan is the Principal Consultant at Fhyzics Business Consultants Pvt. Ltd. with over 25 years’ experience in business consulting, business analysis, process improvement, supply chain and new product development. He is a mechanical engineer and an MBA worked for several organizations in India, USA and Canada prior to joining Fhyzics. He is a former Indian Civil Servant [IRAS 2000 Batch] and served in Ministry of Railways, Government of India. You can find some of the videos of Venkadesh Narayanan on various topics in our YouTube Channel Business Analysis Digest and also feel free to connect with him through LinkedIn.
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