l2 business processes

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MANAGING BUSINESS ACTIVITIES TO ACHIEVE RESULTS AIM: This unit focuses on the understanding and skills needed to manage activities in the workplace to improve effectiveness and efficiency.

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Page 1: L2 business processes

MANAGING BUSINESS

ACTIVITIES TO ACHIEVE RESULTS

AIM: This unit focuses on the understanding and skills needed to

manage activities in the workplace to improve effectiveness and efficiency.

Page 2: L2 business processes

RECAP 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.

Page 3: L2 business processes

INTRODUCTION

..Process Processes Inputs Outputs Goods Services Outcomes Process Management

Page 4: L2 business processes

DEFINITIONS 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.

Page 5: L2 business processes

DEFINITIONS

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.

Page 6: L2 business processes

DEFINITIONS 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….

Page 7: L2 business processes

DEFINITIONS

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.

Page 8: L2 business processes

PROCESS MANAGEMENT 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.

Page 9: L2 business processes

PROCESS MANAGEMENT

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.

Page 10: L2 business processes

7 PS 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.

Page 11: L2 business processes

PRINCIPLES AND MODELS OFEFFECTIVE PROCESS MANAGEMENT

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.

Page 12: L2 business processes

SIMPLE SYSTEM OR PROCESS DIAGRAM

InputsLandLabourCapitalMachinery

OutputsGoods or services

CONVERSION PROCESS

Feedback

Page 13: L2 business processes

SIMPLE SYSTEM OR PROCESS DIAGRAM

The diagram illustrates simply that inputs are processed into outputs by converting them.

The simple systems or process diagram could represent an individual process.

It needs 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.

Page 14: L2 business processes

PROCESS MANAGEMENT MODELS

...All organisations 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.

Page 15: L2 business processes

SYMBOLIC MODELLING

The above is an example of how the technique of modelling can be used in business.

ENVIRONMENT

ENVIRONMENT

Outputs from other systems

Inputs toother systems

Series of activitiesTRANSFORMATION

ORCONVERSION UNITInterrelated sub-

systems

INPUTS

OUTPUTS

Aims andobjectives

Organisationalgoals

Feedback Feedback

Page 16: L2 business processes

SYMBOLIC MODELLING

E.g of this might be break-even charts or Gantt charts. Budgetary

control charts, profit and loss accounts are further examples.

Other areas, eg gross and net profit ratios, are described as equation models (but still forms of symbolic modelling).....

Page 17: L2 business processes

MANAGERS 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.

Page 18: L2 business processes

MANAGERS ...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.

Page 19: L2 business processes

ANSWER 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.

Page 20: L2 business processes

ACTIVITY

Look at a much smaller set-up, for example the workshop manager of a franchised garage in a small town

Q1. What business processes need to be managed?

Page 21: L2 business processes

ANSWER 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.

Page 22: L2 business processes

BUSINESS PROCESSES 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.

Page 23: L2 business processes

DESIGNING A BUSINESS PROCESS 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 froman 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.

Page 24: L2 business processes

TYPES OF BUSINESS PROCESSMEASURES AND HOW TO

ASSESS THEIR SUITABILITY 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.

Page 25: L2 business processes

TYPES OF BUSINESS PROCESSMEASURES AND HOW TO

ASSESS THEIR SUITABILITY ...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.

Page 26: L2 business processes

TYPES OF BUSINESS PROCESSMEASURES AND HOW TO

ASSESS THEIR SUITABILITY 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.

Page 27: L2 business processes

TYPES OF BUSINESS PROCESSMEASURES AND HOW TO

ASSESS THEIR SUITABILITY 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.

Page 28: L2 business processes

TYPES OF BUSINESS PROCESSMEASURES AND HOW TO

ASSESS THEIR SUITABILITY 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.

Page 29: L2 business processes

TYPES OF BUSINESS PROCESSMEASURES AND HOW TO

ASSESS THEIR SUITABILITY 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.

Page 30: L2 business processes

TYPES OF BUSINESS PROCESSMEASURES AND HOW TO

ASSESS THEIR SUITABILITY 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

severalrequirements:• be delivered when promised• have no defects• not experience any early life failures• not fail excessively in service.

Page 31: L2 business processes

TYPES OF BUSINESS PROCESSMEASURES AND HOW TO

ASSESS THEIR SUITABILITY 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 thesame way.

SPC therefore is a way of checking whether the variations remain within an agreed range of tolerance.

Page 32: L2 business processes

TYPES OF BUSINESS PROCESSMEASURES AND HOW TO

ASSESS THEIR SUITABILITY 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.

Page 33: L2 business processes

TYPES OF BUSINESS PROCESSMEASURES AND HOW TO

ASSESS THEIR SUITABILITY 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.

Page 34: L2 business processes

TYPES OF BUSINESS PROCESSMEASURES AND HOW TO

ASSESS THEIR SUITABILITY 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.

Page 35: L2 business processes

SUMMARY 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.

Page 36: L2 business processes

SUMMARY 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.

Page 37: L2 business processes

SUMMARY 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.

Page 38: L2 business processes

SUMMARY 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.

Page 39: L2 business processes

SUMMARY 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.

Page 40: L2 business processes

SUMMARY

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.

Page 41: L2 business processes

THANK YOU !......