Business Process Management

Business processes are the foundation of an organization’s operation. Yet, the majority of small and medium businesses do not even have the understanding of what processes are and why it is vital to properly manage them, not to mention having the capacity to actually do so. The most common scenario is a single person, or a couple of partners start a business, run it based on their intuition, and it either flies or sinks.

Having your processes documented touches every aspect of the organization. Here is a non-exhaustive list of organizational activities, greatly benefiting from properly documented business processes:

Operational Management – how can you manage a process if you do not know what it involves in terms of actions, resources, actors, external stakeholders, inputs, outputs, milestones, timeframe, etc.? A great deal of managers carry all these details in their heads, which leads to a plethora of problems – mistakes, centralization – overload, as everyone needs to consult them in person about everything, delays and queues due to this mode of operation, creating a very weak and system-wide single point of failure (the manager), difficulty and inherent inefficiency in delegation, inefficient hiring process, etc.
Quality Management – to achieve and sustain quality, lots of factors need to be considered and addressed, but one of the basic disciplines is to eliminate fluctuation in practices, caused by different people doing things in a different way. Having documented processes eliminates improvisation and omissions, no matter who is the actual person, performing the process activities.
Process Improvement – in order to improve and innovate an operation you need to deeply understand how discrete processes operate and interact with each other. It is unlikely to achieve significant results without proper process documentation, preferably in both written and graphical representation. The documenting itself forces you to analyze existing processes and their links, identifying missing components, bottlenecks, duplication, waste of resources, etc. A deeper analysis further helps to optimize resource use, eliminate unnecessary steps and simplify flows to achieve greater efficiency.
Human Capital Management – process mapping forces you to also consider roles and duties, resulting in true, competence-based job descriptions (a proper one should have about 300-400 specific, measurable competences, rather than the generic HR lingo “to be a team player”, “to act under minimal supervision”, etc.). It will then support the two essential human capital disciplines – assessment (hiring, evaluation) and training (again, for new hires and existing employees). Further load and responsibility adjustment can be performed, once you inevitably realize some of your employees are overloaded, some roles are crucial and need reservation – have more than one person performing it to avoid single points of failure, etc.
Knowledge Management – process documentation and mapping is a good (and later much needed) starting point in generating an organizational knowledge management library. Turning tacit knowledge (the one residing only in the heads of specific employees) into explicit knowledge – a process known as externalization – helps organizations capture valuable intellectual property, as well as create training and assessment materials.
Procurement, Inventory, Supply Chain Management – understanding process inputs and dependencies allows you to better plan and optimize procurement and inventory procedures, manage enterprise resources and achieve greater efficiency, eliminating unnecessary loss of capital, time, space, etc.

Business Process Analysis / Mapping

The proper business process understanding starts with business process analysis – documenting and visually modeling existing business processes, as well as critically evaluating the documentation to identify missing components, links and dependencies. The analysis discipline aims to create understanding and documentation of the organizational modus operandi, both internally and externally. As a side effect, it also usually helps identify inconsistencies, bottlenecks and ideas for improvement, re-engineering (see below) and innovation.

Business Process Design / Modeling

Further analysis of business processes continues with identifying problems and their causes (root-cause analysis), bottlenecks and performance issues (cause and effect analysis), as well as performing various simulations (what-if analysis), which aim to model and alter processes to operate under different conditions – what if we have to perform with only 80% of resources, what if we reduce time or retail price, etc.

Business Process Improvement / Re-Engineerring

Addressing identified flaws in business processes (bottlenecks, duplication, race conditions, ineffectiveness, etc.) is an integral part of the discipline of Business Process Improvement. Identified problems and bottlenecks are fixed, processes that can achieve better efficiency, identified through modelling and what-if analysis, are re-engineered.

Continuous Process Improvement

Process improvement should be an iterative, continuous process. Continuous improvement plans and schedules should be designed and implemented in order to maintain competitiveness. Proper resources (especially time) should be reserved and allocated exclusively to Continuous Process Improvement.

Tags: analysis, business process, business process mapping, business process re-engineering, continuous process improvement, design, improvement, modeling

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