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What is Business Process?
Everything that we do in our life can be referred to a process e.g. planning holidays, making purchases, preparing a meal, writing an email, etc. In business situation processing of inputs such as raw materials or employees abilities and talents into goods and services that customers want.
Business process used not only in the manufacturing to improve effectiveness and efficiency of the production process, but as well in servicing processes in the organization such as human resource management, marketing, administration, sales, decision making where the recipient of this services can be inside or outside the business.
The knowledge of the process management techniques can assist in the main management activities such as planning, delegating, communicating and monitoring, and improve them.
What is a process?
The New Shorter Oxford English Dictionary defines a process as:
"... a continuous series of actions, events, or changes ... especially a continuous and regular action or succession of actions occurring or performed in a definite manner: a systematic series of actions or operations directed to some end."
From this definition we can conclude that process is a number of actions put in specific order to achieve particular result.
In the Figure 1 is shown graphical representation of a simple process.
Let's take an example of the process of booking holidays. This process may involve the subsequent steps:
Discussing of possible places
The order of the activities plays significant role in decision making process as you will not be able to do short listing before the research of possible destinations.
Each of the steps of the booking holiday process requires inputs e.g. travel brochures for research process, paper and pen or computer for short listing, cash or credit card for actual booking. The output of the booking holiday process is the holiday reservation.
A business process referred to any process that a company should perform in order to deliver the final product or service to its customers regardless of the size of the organization or its type (privet or public, for profit or charity). For example, in advertisement agency, processes may include: conducting marketing research, advertisement design, public relations, media choice, etc.; the output will be an advertisement campaign.
In an organisation there may be thousands of processes but only few are actually drive the business and deliver the final product or service to customers.
What is a process for?
The main reasons for the processes are to allow the business to achieve the organisational goals and deliver the wanted product or service to its customers.
There are three types of the business processes:
The core processes are those processes that actually deliver products or services to the external customers.
The support processes are those that facilitate the execution of the core processes, they are internal in the organization and without them the delivery of the output would not be possible. Examples of support processes are purchasing of materials, staff management, accounting - finance management, marketing - promotion of the product or service, etc.
The Infrastructure processes provide the foundation for the entire business. To these processes referred: organization's mission, strategy, policies, organization's politics, values, etc., they help to synchronise activities and make sure that all departments in the organisation move in the same direction.
Why processes management is required?
The better a business can organize inside and outside processes, the more effective and efficient it will deliver the required product or service to its customer and hence achieve organizational objectives. This will give an organization competitive advantage.
But even if the organization is successful in effective and efficient achievement of corporate objectives and delivery of the required output there is a number of factors that play against the organization and may affect their competiveness and success. That is why process management is required.
Hannagan (1995) identified four factors affecting modern organizations:
All external factors that affect organization's effectiveness to fulfil its objectives, such as economy, politics, society, legislation and the environment, constantly changing and the degree of these changes is persistently increasing. Even if you are a leader in the sector today and you do nothing to improve this means that you are losing competitive advantage as the rest of the world is looking for new ways doing the business and improving.
The scale of changes in technological advances in areas of communication, computerisation and electronics and the speed of these changes extremely changed the ways we live and work. Many processes and the equipment that we used to use became completely obsolete. The new technics and equipment emerged and gave an immediate advantage to the owners of these technologies.
The main objectives for the companies now consist not only in bring to the market new product or service, but bring it fast. Everything in our life has shortened; the length of time the search of information takes, communication - happens instantly, product life cycle has shortened, every 12 month electronic products are upgraded.
In the modern times businesses cannot operate in vacuum as they depend on many activities that happen outside the organization. Many operations are not profitable to produce in house and should be outsourced. Just in time technique put you in the position where you depending on your supplier to get necessary part or service when you require it.
Another reason why the process management is required is entropy. Entropy means that over time the process becomes less efficient. In the beginning process is designed to achieve a specific result in specific time, but as the circumstances change the process may be altered. They may be modified, expanded, divided between teems, become overly complicated and hence become labour intensive, time consuming.
That means that over a time it is important to review the processes even well-established ones to make sure that it still the most efficient and effective way of doing things.
A.E. Pearlman, US railroad executive cited in Harrison and D'Vaz, Business Process Re-engineering said:
"After you've done a thing the same way for two years, look it over carefully; after five years, look at it with suspicion; and after ten years, throw it away and start all over again."
Quality has specific and very important function in the process management. The value of the product or service does not matter, what is matter is the fit between customer's wants and the delivered product or service. Not only the product or service must match the requirement of the customer but the way it was delivered should match the customer's expectations. It includes time and place the customer wants the product of service to be delivered and the price of it.
With the globalization of the market and the accessibility to the goods and services in any part of the world the consumers become very sophisticated, complex and demanding. Progresses in any industry and in any part of the world very soon are implemented in the rest of the world.
One of the traditional ways to approach to the quality is to identify the problem in the end of the process which tends to be late, because the resources and time were spent. Another drawback of this system is that only few products or services are checked from the batch, which means that the customer will get the product or service that do not meet standard.
The modern approach to the quality is designing quality in.
In the total quality approach the attention is focused on the way how the product or service is created and delivered. In each stage of the process the product or service is measured against the standards and moves along the process. This allows identifying the problem and solving it on the early stage. In this approach the improvement of the process and quality of the output becomes fundamental element of the process.
The framework for process management
The process management starts with the fundamental review of the processes and should give answers to the questions like:
Why do we do this?
Why do we do this in this order?
And is there other, better way to do it?
Asking questions is just a start of the process management. This means that you will need to find answers to these questions, make decisions, insure that the process yields its best, provide support to the staff that will implement these changes and keep you on track.
There are following seven steps in the framework:
Identify critical process
Evaluate opportunities for involvement
Specify targets foe improvement
Plan and implement the improvement
Review the result
Decide "what next?"
What needs managing?
Managing the fit
The main purpose of the business process is to arrange effective and efficient delivery of the organizational output to its customers. The better fit between the wants of the customer and the product or service the organization is delivering, the more successful the business will be and the better chances it will have to retain its customers.
However we know that external environment in which organization operates is constantly changing and it is not enough just to maintain the current processes and solve current problems, the organisation needs adjusting targets. This is the main purpose of the process management.