Process improvement is the act of increasing the value of a process’s output in the eyes of its customers. 

 Putting this into a business perspective, we can view a business as a collection of processes that focus upon providing an output that its customer’s are willing to pay for. Therefore, the objective of a business process is to add value to a collection of inputs, from a customer perspective, to produce a profit to the business.  Consider the following, simplified, value equation.

 Profit = Perceived Value – Inherent Value

 Perceived value is customer and competitor driven.  From the customer standpoint, this involves their perception of cost, function, ease of use, absence of defects, customer service, etc.  The customer’s view of your competition, in these same categories, provides the competitor influence. 

 Inherent value comes from the cost of raw materials, infrastructure, and process. This adds up to the actual cost of production of a product, or the actual cost of provision of a service.  Businesses wish to increase the perceived value of their products and services. While at the same time, they wish to decrease their inherent costs.  The result is increased customer satisfaction and higher profits.  Process improvement becomes the vehicle to accomplish both.