Process-based organization: the best way to generate value!

When you think of a business, you should keep in mind one (or several) delivery to an end customer.

Whoever has a restaurant, for example, delivers food dishes in a more or less sophisticated environment, according to their value proposition and positioning.

An automobile factory supplies vehicles; an airline delivers a safe and agile trip between two points; a hotel delivers pleasant and comfortable lodging in a certain location.

For these final deliveries to take place, a number of other intermediate deliveries need to be made.

In this post, you will understand how the organization of processes coordinates all these deliveries to get the best end result.

Inputs, outputs and value chain

Let’s return to our restaurant example:

When sitting at a table, a customer makes a request, that is: a delivery of information to the waiter; who delivers the request to the chef; who uses the ingredients that have been delivered by the vendors to prepare and deliver a plate to the waiter who in turn will deliver it to the customer.

Realize that for the preparation of every delivery to begin, they had to receive (before) another delivery (an entry), thus forming a continuous chain of deliveries.

Each step that starts with receiving a delivery (an entry) and ends with another delivery to the next step (an exit) is called a process.

Note that every process starts with an input and ends with an output.

The set of ordered processes, which culminates in the final delivery to the customer, is called the process chain or value chain.

A process-oriented organization relies on this idea: final deliveries to its customers are the result of a sequence of internal processes that need to be well organized.

Process organization aims to perform each of these processes optimally and efficiently, ie using the least amount of resources to perform final deliveries of high added value.

You will understand this better by reading the next topics in this post.

In the meantime, take a look at a value chain, according to the creator of that concept, the renowned Harvard professor Michael Porter:

Also see: Strategic IT process planning: create value for your business

How to organize processes

BPM – Business Process Management – is the management approach used for the organization of processes.

In a nutshell, we can say that BPM is based on the value chain of your business, dividing it into each intermediate process, as described above.

These processes are analyzed one by one, represented visually in a process flow or process diagram, and then are studied for improvement opportunities.

Here’s an example of a process diagram:

Opportunities for improvement are bottlenecks, delays, waste or difficulties in exchanging information (among others) that can make processes less efficient.

With the help of process diagrams, they are redesigned, to become more efficient, eliminating those detected failures.

After designing the diagram of the newly optimized process, performance indicators, called KPIs, are defined.

These are indices that measure process performance and, if they do not show the desired performance, indicate that the process needs to be studied and improved once more.

The organization of processes, therefore, is to define the best way to accomplish each of them so that they use the least amount of resources to deliver the highest possible value.

Thus, if the sum of all the efforts of each process represents a lower value than that perceived by the final customer for the delivery performed by the company, it will be making a profit.

Remember:

The ultimate delivery of the value chain is a product or service for which the customer is willing to pay this perceived value.

A company’s main processes

There are 3 main types of processes in a company.

So when you define an organization by processes, you need to understand the role of each of them in the business value chain.

Check out what they are:

1- Management processes

Management processes do not add value directly to the clients of the business, but they organize the management of the other processes.

They are used to monitor and control other processes and to verify that they are meeting business objectives.

The activities of a board of directors are typical management processes.

2- Primary processes

Primary processes are those directly linked to customer value delivery.

Therefore, production lines, food preparation in a restaurant and the sanitization of hospital rooms are examples of primary processes.

3- Support processes

Support processes do not deliver value directly to the end customer, only to other processes.

So, to have good employees on the production line, you need efficient HR processes (a typical support process).

Want to test your knowledge about the key processes of a company?

We challenge you to respond to this test of knowledge!

Test your knowledge on Types of Business Processes

The importance of a process office

As you have seen, a process-driven organization requires the mastery of a number of concepts. In addition, it is necessary to correctly follow some very specific methodologies.

In day-to-day work, the process owner does not necessarily master the rules and techniques of BPM.

Therefore, to help you, a process-driven organization often has a process office.

But what is a process office, anyway?

A process office is staffed by a team of BPM analysts and consultants. They need to have a Chief Process Officer (CPO) who will coordinate their work.

The function of this office is to support the organization of processes in a company.

Thus, if the human resources department wants to make improvements in the hiring process, it will be up to the process office to assist this area with all of its BPM knowledge. In this way, the newly optimized processes will actually meet the needs and objectives set forth.

It is also up to the process office to verify that the objectives of the processes, in addition to meeting the demands of the department that uses them, are aligned with the organization’s strategic objectives.

A process office should not only provide support, but also be the custodian of BPM methodologies in the organization of processes in the company. Therefore, it must be independent and autonomous.

Learn more: Business process management office: 10 reasons to create one.

Is your company a process-based organization?

How does your company organize itself? Do you use the concept of value chain and BPM methodologies?

Do you use any BPM software for this?

Share your experiences with us in the comments!