Why SMEs Struggle with Process Optimization and How to Fix It

Exploring Why Process Excellence Is Now the Engine of SME Growth, Resilience, and Sustainable Impact By Liliana Domingues and Stephanie Prenderville

Executive Summary

Small and medium-sized enterprises (SMEs) face unique pressures: limited resources, talent constraints, and rising customer expectations. While process optimization promises cost savings, operational resilience, and scalability, many SMEs fail to capture these benefits. This article explores the root causes of these challenges and acknowledges the importance of a pragmatic framework that could help SMEs unlock efficiency, strengthen teams, and achieve sustainable growth (BCG, 2025a; Eurofound, 2024).

What Process Optimization Means and Why It Matters

Process optimization is the foundation of competitive, resilient, and sustainable organizations. By streamlining workflows, eliminating inefficiencies, and embedding data-driven decision-making, companies enhance productivity, free employees for higher-value work, and reduce operational frustration. 

Optimized processes also enable scalable growth and business expansion, giving CEOs the freedom to focus on strategy and innovation rather than firefighting day-to-day operations. At the same time, they minimize waste and resource consumption, improving margins, meeting regulatory standards, and strengthening environmental and social impact. 

In short, organizations that prioritize process optimization position themselves to grow efficiently, retain top talent, and thrive sustainably in increasingly complex markets (IDC, 2020; Deloitte, 2024). When applied effectively, it transforms operations into a competitive advantage.

Key Benefits of Process Optimization:

1. Boosts Productivity and Reduces Waste – Bottlenecks, duplicated efforts, and manual approvals consume operational capacity. Streamlined processes enable employees to focus on high-value work (MojoHelpDesk, 2020).

   
   

2. Enhances Talent Engagement and Retention – Removing frustration and unnecessary work increases retention, engagement, and innovation (Gallup, 2023).

   
   

3. Supports Scalable Growth – Standardized, digitalized, and automated workflows allow expansion without proportional increases in cost or complexity (European Commission, 2024).

   
   

4. Strengthens Market Competitiveness – Operational maturity signals reliability to customers, regulators, and investors (PwC, 2023).

   
   

5. Enables Data-Driven Decision-Making – Accurate, real-time process data empowers leaders to act proactively rather than reactively (Xu et al., 2024).

   
   

6. Builds Resilience and Adaptability – Flexible, efficient processes enable rapid response to market shifts, supply chain disruptions, or customer demands (McKinsey, 2021).

In short, process optimization is a strategic imperative: companies that fail to prioritize it risk inefficiency, disengaged employees, and stagnation, while competitors gain market advantage (Forbes Coaches Council, 2022).

Process Optimization as a Catalyst for Sustainability

Process optimization is not only an operational lever but also a decisive driver of sustainability. Inefficient processes lead to wasted resources, higher energy consumption, and unnecessary emissions, all of which directly impact both the bottom line and a company’s environmental footprint. By embedding optimization into day-to-day operations, companies can advance financial performance and meet rising stakeholder expectations for climate responsibility.

• Resource Waste and Carbon Footprint: Roughly one-third of all food produced globally is wasted, contributing an estimated 3.3 billion tonnes of CO₂ emissions annually, making food loss the world’s third-largest emitter (largely due to inefficient processes in supply chains and logistics) (Wired, 2024).

  
  

• Energy Efficiency in Manufacturing: Companies that adopt process optimization and energy management practices achieve up to 30% energy savings, with direct gains of 20% linked to process optimization alone (Number Analytics, 2023).

  
  

• Industrial Case Studies: Process optimization initiatives in manufacturing have led to a 25% reduction in energy intensity and a 15% drop in carbon emissions, thanks to IoT monitoring, lean workflows, and energy recovery systems (Cardoni A. et all., 2020).

  
  

• Facilities and Operations: In cooling systems, optimized control strategies reduced electricity costs by 3–17% and lowered CO₂ emissions by 2–11% (SpringerOpen, 2022).

  
  

• Circular Economy and AI: Applying AI optimization to waste and recycling processes resulted in a 25% decrease in energy use, an 18% rise in resource recovery, and 30% lower transport emissions (arXiv, 2025).

  
  
  
  

In short, optimization is about competitiveness and resilience. Well-designed processes reduce energy and material waste, minimize emissions, and open the path to circular value chains. This strengthens margins, enhances compliance with regulatory frameworks, and aligns with customer and investor expectations of sustainable growth.

The Optimization Divide: SMEs vs. Large Corporations

While executives recognize its importance, SMEs and large corporations approach process optimization very differently. OECD and Gallup research shows SMEs often adopt only basic digital tools (e.g., e-invoicing, spreadsheets), whereas large corporations implement integrated ERP, automation, and analytics systems (OECD, 2021; Gallup, 2023). 

Implications:

• SMEs generate on average half the value added per employee compared to large firms (OECD, 2021).

  
  

• Fewer than 20% of SMEs have implemented comprehensive performance measurement systems, and up to 70% fail due to poor readiness or misalignment (MDPI, 2020).

  
  

• Over 80% of SMEs in Germany lack formal strategic roadmaps, whereas large corporations embed process optimization into core decision-making cycles (revistaespacios.com, 2020).

Dimension	SMEs	Large Corporations
Digital Tool Adoption	Basic, fragmented (OCDE, 2021)	Integrated across operations
Productivity (value added)	50% of large firms per employee (OCDE, 2021)	Higher productivity and economies of scale
Performance Measurement, Systems Strategic Planning, Digital Transformation	<20%; high failure rates (MDPI, 2021) Informal or absent (ResearchGate, 2021). Limited scope, accelerated only during COVID (OECD, 2021)	Formal, strategic, successful deployment. Formal, shared across all levels. Comprehensive integrated transformation.
Automation & Decision Support	Nascent, increasing (XU et al., 2024)	Established, guiding continuous improvement.

The result is a significant productivity gap. This gap highlights that process optimization is not optional since it is essential for competitiveness, scalability, and long-term resilience.

Why SMEs Struggle with Process Optimization

SMEs face several structural and cultural barriers:

1. Resource Constraints – Small teams and limited budgets lead to fragmented, short-term fixes rather than scalable change (BCG, 2025a; Eurofound, 2024).

   
   

2. Overreliance on Legacy Practices – Paper-based workflows and spreadsheets create errors, delays, and hidden costs (IDC, 2020; MojoHelpDesk, 2020).

   
   

3. Cultural and Change Resistance – Employees resist new processes if benefits are unclear or training is insufficient (Gallup, 2023; McKinsey, 2021).

   
   

4. Technology Misalignment – Investments in digital tools without operational alignment often result in “tool fatigue” (Forbes, 2022; Xu et al., 2024; Deloitte, 2024).

   
   

5. Execution Blind Spots – Lack of structured implementation support means initiatives stall after initial enthusiasm (PwC, 2023; Sanguinesa Consulting, 2024).

Case Studies: Process Optimization in Action

Company	Challenge	Intervention	Result
Precision Parts Supplier (Ireland)	Manual scheduling, verbal updates	Digital scheduling software, standardized planning	Lead times ↓22%, overtime ↓15%, on-time delivery ↑78%→96%
Food Processor (Portugal)	Finance team spent 30% time reconciling invoices	Automated invoicing, linked stock levels	Management time freed ↑12%, errors ↓40%, supplier trust ↑
Packaging Firm (Ireland)	Operators leaving; younger hires resisted old workflows	Computer vision for quality, digital work instructions	Retention ↑30%, recruitment costs ↓, line efficiency ↑18%
Textile Manufacturer (Spain)	Bottleneck in finishing stage	Lean mapping, workflow reorganization	Throughput ↑27%, WIP inventory ↓40%, cash flow ↑
Construction Supplier (UK)	Paper orders, poor stock visibility	OCR orders, BI dashboard, demand forecasting	Sales ↑19%, stockouts ↓60%, expansion into 2 regions

These examples demonstrate that incremental, targeted interventions can generate measurable operational and human capital gains (Winkler, H., Franke, F., Franke, S., & Riedel, R. (2022).

From Aspiration to Action: Embedding Sustainable Process Optimization

Achieving meaningful process optimization requires more than one-off fixes or isolated digital tools. Organizations must identify and eliminate bottlenecks to free capacity (BCG, 2025b), introduce technologies thoughtfully while upskilling teams (Deloitte, 2024), and cultivate a culture of ownership and continuous improvement (Gallup, 2023). Success comes from deploying solutions iteratively, measuring impact at each step, and embedding changes into day-to-day operations (PwC, 2023).

When approached systematically, process optimization moves companies from aspiration to actionable results, unlocking sustainable efficiency, scalable growth, and strategic agility (McKinsey, 2021).

Addressing these challenges requires a coordinated approach that bridges strategic insight and hands-on execution. By aligning capacity creation, capability building, cultural change, and agile deployment, organizations convert operational inefficiency into resilience, talent engagement, and competitive advantage (ProfileTree, 2025; McKinsey, 2025; PwC, 2025).

The partnership established between AMARNA Vida and SP Consulting structured a methodology which helps SMEs close the gap between current practices and the digital, data-driven processes that larger corporations already leverage, laying the groundwork for long-term competitiveness. It also naturally sets the stage for understanding why all European industry, mainly Irish industry, cannot afford inefficiency, a topic explored in the subsequent article.

Process inefficiencies quietly erode profitability, limit growth, and frustrate talent. SMEs that act decisively can unlock cost savings, strengthen teams, and scale efficiently. Through AMARNA Vida’s and SP Consulting’s structured, practical, and measurable approach, operational transformation becomes achievable and sustainable (BCG, 2025a; Eurofound, 2024).

Conclusion 

Process optimization is a strategic imperative, especially for SMEs that envision expansion, since companies that fail to address inefficiencies risk losing competitiveness, frustrating their workforce, and constraining growth. Those that act decisively, however, unlock sustainable efficiency, stronger talent engagement, and the strategic agility required to thrive in volatile markets.

The path forward demands systematic action: removing bottlenecks, integrating technology with purpose, embedding cultural ownership, and executing with measurable impact. Organizations that master this discipline not only strengthen their present operations but also lay the foundation for scalable expansion, innovation, and leadership resilience.

Now is the moment for leaders to move from aspiration to action. The companies that succeed will be those willing to rethink their processes and embed optimization into the fabric of their strategy.

👉 Stay tuned for our next articles and insights, where we will explore why inefficiency is one of Irish industry’s biggest risks and how forward-looking businesses can transform it into a competitive advantage.

Cheering you on as you unlock growth and resilience, 

Liliana Domingues & Stephanie Prenderville

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