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What is ‘Business Process’?

Business process is “a set of logically related tasks performed to achieve a defined valuable business outcome which can be products, goods, services or information”. A process itself is a structured, measured set of activities designed to produce a specified output for a particular customer or market. It implies a strong emphasis on how work is done within an organization.

Business processes can be identified individually, as discrete steps in a business cycle, or collectively as the set of activities that create the value chain of an organization and associate that value chain with the requirements of the customer. Therefore a business process is most likely cross-functional, crossing organization boundaries (e.g. departments and divisions).


Therefore, a business process:

  • has specific customers, internal or external
  • has specific objective, generally to generate value for customers
  • crosses organizational boundaries




Business processes can further be grouped into three main component processes that work together to support its logical activities:

  • Management Processes, which is a human-made system consisting of people, authority, organization, policies, and procedures whose objective is to plan and control the operations of organization. The three most important activities are planning, controlling and decision making.
  • Operation Processes, which is a human-made system consisting of people, equipment, policies and procedures whose objective is to accomplish the work of organization. Activities included in this process are manufacturing, distribution, human resources, and their sub-processes.
  • Information Processes, which is a portion of overall Information System related to particular business process. Information process acts as glue for all process in order to work together.

Good Book on BPM is out!

 A practical and encompassing book on Business Process Management, specifically on the process mapping is out... go and get it... here is the review (in Bahasa Indonesia):

"Apabila Anda ingin membangun keterampilan pemetaan proses, cara terbaik adalah dengan melakukan pemetaan proses yang sesungguhnya. Sayangnya, untuk melakukan pemetaan proses, Anda juga membutuhkan buku panduan. Anda membutuhkan peta untuk memetakan.

Buku Business Process Mapping Workbook untuk meningkatkan kepuasan pelanggan memandu Anda menyusun peta proses untuk bisnis Anda sendiri. Latihan dirancang dalam bentuk tahapan demi tahapan, sehingga Anda dapat mengikutinya secara mudah.

Untuk mengasah keterampilan Anda, pada setiap akhir bab disediakan latihan komprenhensif dalam bentuk studi kasus. Dalam latihan ini, Anda diberi kesempatan untuk mengembangkan kreativitas. Meskipun demikian, pada akhir bab penulis menyediakan solusi. Solusi yang diberikan penulis bukanlah solusi mutlak, karena dimaksudkan hanya sebagai pembanding.

Buku latihan ini merupakan pelengkap buku induk Process Mapping Workbook untuk meningkatkan kepuasan pelanggan

Buku ini dapat dimanfaatkan sebagai referensi cepat ketika Anda menjalankan proyek pemetaan proses. Dengan buku ini sebagai pendamping Anda melakukan pemetaan proses, Anda menjadi semakin percaya diri dan pasti akan berhasil."

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Get it in the Gunung Agung Bookstore or online bookstore such as Buku Kita. I GOT IT ALREADY!!

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Creating better process map

Process mapping is undoubtedly an important initial step in the business process improvement effort. With process mapping we can see how the whole system works in an organization/unit, recognizing which activities generates revenues and costs, along with its stakeholder. The clear high level view of the process will help us in further steps in improving and streamlining to achieve efficiency and productivity, which are the ultimate purpose of the BPI.

Process map will identify the following items:

+ the activities within a business process,
+ the organizational unit(s) responsible or functional boundaries of the activities,
+ the sequential and parallel activities in the process.

Typical process flowchart will only identify sequential activities but rarely elaborate on the parallel process, which we frequently encounter at any organizations. Simple example would be in the fast food restaurant, when the order comes, the kitchen prepares the meal, while the cashier process the payment, these two activities happen almost at the same time but performed by two different persons. Typical flow diagram would fail to show these two parallel process.

Therefore in process mapping, it is advisable to use Activity Diagram. The main feature of activity diagram is ability to display parallel activities and clear division of 'responsible unit/person' depicted in the process itself. Here are some steps to make an activity diagram:

1. Identify activities in the business process. An activity is a step in a business process, whether the step is done by a person or by a computer, for example, receive shipment.

2. Order them in flow chart fashion with decisions and conditional (yes/no type) branching. Business processes often proceed sequentially, sometimes with conditions (e.g., customer has active account?) deciding which next sequential step to take. Model the activities that proceed sequentially.

3. Look for activities whose orders could be switched with no impact on the outcome. Sometimes activities are encountered whose order is irrelevant, as long as they all get done prior to some other activity. For example, to start the day, the activities read e-mail and listen to voice mail, can be done in either order.

4. Arrange these side by side and insert a synchronization bar before them. A synchronization bar is a horizontal line that connects the incoming lines to the processes for which order is not important. In the example below, there are synchronization lines before the activities Receive Project Manager's Package and Receive Employee's Package indicating these follow Process Employee Review but can proceed in parallel.

5. Consider the processes that come after and identify the process at which the parallel processes all must be complete before the identified process can run.

6. Place a synchronization bar before the process, that is another horizontal bar on the outgoing lines from the parallel processes to "tie" them together as preceding the next sequential process. For example, while reading e-mail and listening to voice mail can proceed in any order, perhaps both must be complete before a status meeting can be scheduled.

7. Repeat until no further changes can be made. The first cut of the diagram may not have all the parallel processes identified. People tend to think of processes as proceeding in a stepwise fashion. It is important to review and determine what are sequential processes and what are parallel processes.

Below we can see the examples of activity diagram, the example here is the "Employee Review Process".

Basic activity diagram:

A typical process flowchart

Enhanced activity diagram (add swimlanes):

Activity diagram

Swimlanes in the above activity diagram example are a useful feature. Swimlanes are dashed vertical lines added to the activity diagrams to identify boundaries. These dashed lines give clarity on the who's doing what, even for the parallel activities.
In any Business Process Improvement (BPI) efforts, starting with single or few core processes is necessary since this will allow the efforts to be more focused to processes which are having widespread and deep impact towards organization’s performance. Furthermore, this selection will minimize any risk due to change of process (e.g. employee resistance, disturbance in production process, etc).

There are four general steps in identifying core processes:

 1.      Define Business Model

This may sound simple, but not so much actually. Basically it is like asking yourself the following questions:

  • “What business am I in?”
  • “Where does my revenue come from?”
  • “How do I generate revenue?”
  • “How should I do to generate more revenue?”

The answers these questions altogether are your business model. However it is an imperative to always include customer’s perspective in answering these questions, aside from your own vision and mission statements.

For example, in answering the second questions, we can also identify who is exactly our end customer. On the third and fourth questions, we can already consider what kind of final output that we produce and what are essential requirements of end customer. 

By addressing the third and fourth questions, we are also starting to identify high level gaps (where we are and where we should be) within your business.

2.      Draw Your Processes

After successfully defining your business model, now further elaboration is required, to visualize and link core processes. Visualization and drawing linkages of core processes will allow us to see the whole system at works, where the values are added, the costs incurred and revenue received. Along the value chain, the financial flow (money trail), material and information flow are also identified clearly. Below is a typical high-level process drawing (process map) of a manufacturing company:





Now when all core processes are broken-down and the linkages are established, we can see through which processes the cash and output flows. Thus giving us clearer picture of what our business is all about.

 3.      Facts finding

The process map produced on the previous step is actually an ideal picture and not necessarily the actual processes being implemented. Therefore, we further need the actual picture in your company.

To identify these actuals, there are few alternative analysis’ which can be taken separately or in combination:

  • Analysis of financial statements. This includes balance sheet, income statement and cash flow statement. These statements will indicate where your money is concentrated or spending most of its time. In the other words, where are the critical processes which affect the whole business cycle?
  • Analysis of resource utilization. At which processes require most people and/or working capital? Which processes generate most costs?
  • Analysis of manufacturing/production performance. What is the production time-span? Which processes have longest time-span, waiting-time, lead-time? Which processes generate most rework costs?
  • Analysis of customer satisfaction. What is the level of customer satisfaction toward our products, quality-wise and timeliness? Which department/processes are the origins of customer’s complaints?

4.      Determining the Core Processes to be improved

Based on the above steps, then core processes to be worked on can be decided. This decision must also takes into account time, cost and benefit factors. In summary: start with core processes which have the simple efforts (low cost) but will generate high and widespread impacts for your company.

Business Process Improvement

Business Process Improvement (BPI) is simply a method of improving the way a discrete set of business activities is organized and managed. It is a structured approach to analyze and continually improve fundamental activities of a company’s operation by simplifying and streamlining business processes. BPI will lead to the efficient and effective use of resources such as facilities, people, equipment, time and capital.

Effective processes means the activities within organization are producing the desired results from product or service in comparison to the customer expectations; whereas efficient processes means minimizing the resources used in those business activities.

Under the big umbrella of BPI, three aspects of process improvement strategies and activities commonly being adopted by today’s organizations are:

  • Continuous process improvement (CPI),
  • Business process reengineering (BPR)
  • Business process benchmarking (BPB).

 Therefore BPI is a broad term that covers a continuum from incremental continuous improvement (CI) at one end to the radical re-engineering of the business and its processes, characterized as business process re-engineering (BPR). Process improvement can include continuous business process improvement that incrementally improves the operation efficiency, or total reengineering from a clean sheet to achieve maximum effectiveness during a short time frame. Therefore BPI has double spearheads, short term objective to perform quick wins and achieve effectiveness by radically changing the existing process, and long term objective to incrementally improve efficiency by implementation of continuous improvement mechanism.

Nowadays there are varieties of methodologies that fall under the headline of BPI:

  • Process improvement. The continuous improvement approach, with a tendency for the improvements to be individually small, confined within functional boundaries, and focused on improving the existing system.
  • Process redesign. This concentrates on major business processes with cross-functional boundaries, and is what most companies mean when they talk of BPR. It goes beyond improving existing processes by asking the question, “should we be doing this at all?” It is a natural evolution of TQM and uses many of the techniques of organization and methods.
  • Business process re-engineering. This approach is aimed at the fundamental rethink and radical redesign of business processes to achieve dramatic improvements in performance. It is based on the premise that continuous improvement will not deliver the major breakthroughs that companies need to remain competitive in the global marketplace.

A BPI methodology has been devised which combines the aforementioned three aspects of process improvement strategies and activities. The SUPER BPI methodology, SUPER is an acronym for its steps:

(1) select the process;

(2) understand the process;

(3) proceed with the process measurement;

(4) execute the process improvement; and

(5) review the improved process). Figure 2-2 displays basic structure of this BPI methodology.

 This methodology is systematically depicted below:


 

 

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processdriven
Process Driven

What is it?

The term Process-Driven means that a person or organization has a passion for superior business
performance through process innovation. Process-Driven organizations are those that understand how their work is getting done and focus on finding opportunities to make it better. They focus on the business and the results. They leverage technology, process improvement methodologies and best practices while embracing change to drive the processes that support their business.


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