AIM: This unit focuses on the understanding and skills needed tomanage activities in the workplace toimprove effectiveness and efficiency.
Every business has a reason(s) why it operates. An aim is where the business wants to go in the future. A mission statement sets out the business vision and values. Business objectives are measurable targets of how to achieve aims. All companies have a culture, a set of values or beliefs they follow. All functions of the business have to work together to achieve the aims/goals of the business. Business Process management (BPM) provides methodology and tools to identify, measure and improve companies‘ processes operations.
..Process Processes Inputs Outputs Goods Services Outcomes Process Management
PROCESS: A business process or business method is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers. PROCESSES: ―A series of actions or operations designed to achieve an end‖.A process takes inputs and converts or transforms them into output.
INPUTS: These are the resources which are used in a process. There are two main types of resources which all organisations make use of. They are People and facilities (which includes all non human resources such as buildings, equipment and technology. OUTPUTS: Business Outputs are defined as being two types. They are either goods or services.
GOODS: ―Goods would be defined as anything that anyone wants or needs‖. E.g: Food and clothing Goods are tangible and can be stored… SERVICES: ―Services would be the performance of any duties or work for another; helpful or professional activity‖. E.g: Teaching, Emergency services Services are intangible….
OUTCOMES: Outcomes are the results or consequences of a process. E.g: A faulty manufacturing process is likely to result in a good which does not meet its specification. The likely result is that customers will not buy it or if they do they will return it. Activity 1.
PROCESS MANAGEMENT: Process management is the ensemble of activities of planning and monitoring the performance of a process. The term usually refers to the management of business processes and manufacturing. Process management is the application of knowledge, skills, tools, techniques and systems. Thus, to visualize, measure, control, report and improve processes with the goal to meet customer requirements profitably. Business Process Management (BPM) and Business Process reengineering are interrelated, but not the same.
We will look at appropriate systems that improve organisational performance. E.g Total Quality Management, ISO9000 ISO9001 (Family of Standards) promotes the process approach to managing an organisation. ...promotes the adoption of a process approach when developing, implementing and improving the effectiveness of a quality management system, to enhance customer satisfaction by meeting customer requirements.
In Marketing, the seven Ps refer to the product, price, promotion, place, process, physical evidence and people that make up the marketing mix. They are an extension of the more basic ―Four Ps‖: product, place, price and promotion. Process refers to the processes and systems within the organisation that affects its marketing process. Processes are important to deliver a quality service. Services being intangible, processes become all the more crucial to ensure standards are met with. Process mapping ensures that your service is perceived as being dependable by your target segment.
In business the words ―process” and “system” have become interchangeable. For example: The ‗Induction Process or System‘ — that is the way in which we bring new members of staff into the organisation to make them effective employees as quickly as possible. ..‗Production System or Process‘ or the ‗Materials Handling System or Process‘. We can use Systems Approach models to provide an effective method of understanding processes. The following diagrams develop this theme.
Inputs Outputs CONVERSIONLand PROCESS Goods or servicesLabourCapital FeedbackMachinery
The diagram illustrates simply that inputs are processed into outputs by converting them. The simple systems or process diagram could represent an individual process. Itneeds to be emphasised that all the activities necessary to obtain the inputs and to convert them into output (of either goods or services) are the responsibilities of managers.
...Allorganisations operate in an environment. They obtain inputs from it, convert them into a good or service which is then an output back into the environment. Organisations start with a series of aims and objectives and complete them by meeting their goals.
ENVIRONMENT ENVIRONMENT Outputs from Inputs to other systems other systems Series of activities TRANSFORMATION ORAims and INPUTS OUTPUTS Organisational CONVERSION UNIT goalsobjectives Interrelated sub- systems Feedback Feedback The above is an example of how the technique of modelling can be used in business.
E.g of this might be break-even charts or Gantt charts. Budgetary control charts, profit and loss accounts are further examples. Otherareas, eg gross and net profit ratios, are described as equation models (but still forms of symbolic modelling).....
One of the key tasks that managers have is to manage business processes. ...Management relates to all the activities of the organisation and is undertaken at all levels of the organisation. It is an integrating activity. An influential writer on managing business processes was Dr W. E. Deming who initiated the Total Quality Management Approach.... He insisted that all companies or organisations which wished to establish and maintain a reputation for quality must: • improve existing processes • innovate new processes.
...Managers need to manage the process to reduce all waste and inefficiency. E.g:... Inverness Airport has grown spectacularly quickly in linewith the growth of the city. Despite a £9 million development some 5–6 years ago it has outgrown that and now requires a really major expansion.• Over 330 aircraft movements per week at the airport.• 50 per day• Airport closes at 10 pm, except in emergencies.• Growth like this emphasises the importance of managing processes. Think about some of the processes which may be involved in an organisation like Inverness Airport.
Processes that need to be focused on. Check in passengers. check in baggage Handle baggage Handle increased aircraft movements Car parking Transport systems, such as road and rail links Waiting facilities for passengers and for those coming to the airport to meet passengers and/or to see passengers off Air traffic movements. Of course it is not just enough to handle all this extra traffic. It must be done while reducing waste and inefficiency.
Look at a much smaller set-up, for example the workshop manager of a franchised garage in a small townQ1. What business processes need to be managed?
Managers need to manage the following processes: • reception where cars are received from customers • diagnosis of faults in cars • provision of standard services such as MOT testing or routine services • billing customers. The manager will need to manage all these processes to make sure that available resources are used as effectively as possible. Having mechanics hanging about with nothing to do or equipment lying idle is simply a guarantee of going out of business. Managing processes involves the manager in constantly juggling activities to ensure that resources are as fully utilised as is possible.
A process:‗a series of actions or operations designed to achieve an end‘. Series of actions is designed to convert (or transform) inputs into outputs. Every business process there will be a specific aim, objective, target or goal. Any organisation is likely to have a very large number of processes. Managers are responsible for managing business processes.... Processes may be divided up to suit the departmental structure of an organisation. E.g The process of dealing with customers: An order from a customer, for instance, may be dealt with by several different sections in an organisation. ...In principle defining a process is straightforward, in practice it may not always be easy. Thus, interrelationship of functions and processes.
What the expected outputs (and outcomes) will be, ie what exactly does the process have to achieve. • what the starting point is, eg the process could be something new, starting from a completely unknown situation, or it could follow on from an earlier process? • what the goal or target is which is expected of the manager of the process? • what inputs or resources the process will require? • what activities and operations will be involved in converting the inputs into the desired output? Designing a business process involves thinking about the key characteristics of a business process.
Business processes are designed to ensure that organisations achieve the targets and goals that they have established for themselves. These targets or objectives will depend on the nature of the organisation. For many business organisations this means making a sufficient level of profit to continue in business or to grow. Charities or local authorities may not have profit objectives. They will however, have equivalent objectives.
...A charities objective may be to gain a specific amount of income from donations, charity events and so on. A local authority may aim to provide a specified service at a stated cost. All organisations, whatever their objectives, have processes and every organisation needs to measure how well the processes are working. This means that managers need to ensure effective management of all the resources used in every process within the organisation.
All forms of measurement for processes fall in two categories. These are: • quantitative, ie numeric • qualitative, ie meet the specifications determined. In most business processes both categories will have to be met. Obviously there would be little point in turning out a good or service in large quantities which customers were not prepared to purchase. Another example might be operating a passenger train service with the trains running almost empty. Equally it would be entirely illogical to produce a good or service which was of such high quality that its costs of production were such that no customer was willing to pay the price which would result.
Measuring business processes, therefore, requires that measures are used to cover both categories (Quantitaive and Qualitative). With modern computer-based systems it is often possible to combine the quantitative and qualitative measures. Modern production lines, for example, can usually measure output and test the product against the quality specification. For example, producing something as simple as a chocolate biscuit would see the final product being counted then separated into those which pass the (automatic) test and those which do not. Again these two results (which can be described as outcomes of the manufacturing process) will be counted.
This will provide three immediate pieces of information which are vital. 1. What is the total output? Does it meet planned levels? 2. What proportions pass quality tests? Is this acceptable? 3. What proportion failed? Is this acceptable? If the failure rate (no. 3) is unacceptable then further investigation is urgently required to find the process which is faulty.
Most measuring systems use a form of sampling to check how well a process is working. Most tend to concentrate on quality measures. The best known method of checking a product or service as it is going through the business process is Statistical Process Control (SPC). This makes use of control charts to monitor the results of many samples over time. If the measures indicate that there may be a problem with the process, it can be stopped if this is possible. The problem can then be identified and any corrective action taken.
The best known system of SPC is the ‗Six sigma‘ approach developed by Motorola. It began when the company introduced a policy of ‗total customer satisfaction‘. This meant that products must meet several requirements: • be delivered when promised • have no defects • not experience any early life failures • not fail excessively in service.
SPC involves using statistical techniques to measure whether the variations in a process are within acceptable limits. All processes vary to some extent, eg people do not always perform a task in exactly the same way. SPC therefore is a way of checking whether the variations remain within an agreed range of tolerance.
Motorola set very strict tolerance limits and originally concentrated on reducing defects in manufacturing. The company soon realised, however, that many of the defects stemmed from deficiencies in the design of the products. This meant that as well as concentrating on getting its processes as effective as possible it also tightened up its design specifications. It is very important to do this but it is possible that problems which arise may stem from the design of the product or service. They may also be the result of poorly designed processes.
Incidentally, ‗Six sigma‘ refers to the range within which deviations in the process will be tolerated. (Sigma is a letter in the Greek alphabet which is used to denote a statistical concept called standard deviation.) Six sigma means that a defect rate of 3.4 defects per million is the level which will be tolerated. Anything above this is unacceptable. There are a large number of other techniques which can be used to measure business processes. The list below gives some examples: • Break-even charts • Cost benefit analyses • Pareto analysis • Budgetary control systems • Fishbone diagrams • Decision trees.
The above techniques can be used for measuring the effectiveness of business processes as ways of developing new business processes and also for measuring the effect of changes in business processes. The decision regarding which one of these (or which number of them) will be used will depend on a number of factors including: • the particular process which is being measured (eg Motorola were measuring manufacturing processes) • the importance of the process to the organisation (this may mean more than one method of measurement) • the resources required by the technique (people may need to be trained to use the techniques and this may take longer for some than for others) • the use to which the information on measuring the process will be put.
PROCESSES: ―A series of actions or operations designed to achieve an end‖. A process takes inputs and converts or transforms them into output. PROCESS MANAGEMENT: Process management is the ensemble of activities of planning and monitoring the performance of a process. The term usually refers to the management of business processes and manufacturing. Process management is the application of knowledge, skills, tools, techniques and systems. Thus, to visualize, measure, control, report and improve processes with the goal to meet customer requirements profitably.
In business the words ―process” and “system” have become interchangeable. We can use Systems Approach models to provide an effective method of understanding processes. SIMPLE SYSTEM OR PROCESS DIAGRAM One of the key tasks that managers have is to manage business processes. Management relates to all the activities of the organisation and is undertaken at all levels of the organisation.
Managers need to manage the process to reduce all waste and inefficiency. Business processes are designed to ensure that organisations achieve the targets and goals that they have established for themselves. All organisations, whatever their objectives, have processes and every organisation needs to measure how well the processes are working. All forms of measurement for processes fall in two categories. These are: • quantitative, ie numeric • qualitative, ie meet the specifications determined.
With modern computer-based systems it is often possible to combine the quantitative and qualitative measures. Most measuring systems use a form of sampling to check how well a process is working. Most tend to concentrate on quality measures. The best known method of checking a product or service as it is going through the business process is Statistical Process Control (SPC). The best known system of SPC is the ‗Six sigma‘ approach developed by Motorola.
SPC therefore is a way of checking whether the variations remain within an agreed range of tolerance. There are a large number of other techniques which can be used to measure business processes. The list below gives some examples: • Break-even charts • Cost benefit analyses • Pareto analysis • Budgetary control systems • Fishbone diagrams • Decision trees.
Theabove techniques can be used for measuring the effectiveness of business processes as ways of developing new business processes and also for measuring the effect of changes in business processes.