Business Process Basics | The Marvel Academy

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Business Process Basics

Introduction

A useful way of viewing an organisation is the "business process view", a.k.a the "process landscape", i.e. network of processes that are linked and interdependent.

The process view of work is about understanding that:

Work can be viewed as "process" with inputs, steps, and output(s)
A process is interfacing with other processes within an organization.

It is the overall awareness of the tactics and methodologies used "by an organized group of related activities that work together to transform one or more inputs into outputs that are of value to the customer."

The above definition communicates several key ideas:

A process is a set of tasks/ activities and decisions that must be performed in a specific sequence in order to produce an output in the form of product or service
The tasks/ activities and decisions making up a process are interrelated, organized, and performed to achieve a specific outcome
Processes are the engine for value creation and delivery to customers, who use or consume the process outputs

The value chain

A process view of work can also be viewed as "value chain," in which each step/ task/ activity activity and decision contributes to achieve an end result.

Some activities directly create value in the form of products, services, and their features/ characteristics, and customers are willing to pay for same
Some activities may either enable or support the value-adding activities
Other are unnecessary - these are known as "waste".

Each activity consumes time and resources, and the challenge for managers is to identify, classify, and assess activities, and:

Optimise activities known as "value adding" (VA) or customer value adding" (CVA): these add no value to a product or service the customer is willing to pay for
Minimise activities known as "business value adding" (BVA) or "business enablers": these add no value directly to a product or service, but they are needed to run the business on a day-to-day basis, and contribute to either business efficiency or compliance
Eliminate activities known as "no value adding" (NVA) that consume time and resources, but neither add value to the product or service nor needed to run the business.

Classifying business processes is about identifying, organising, and grouping them. Once these steps have been completed, you must:

Create the process documentation, in the form of process maps, value stream maps, operational definitions (related to process terms and acronyms), standard operating procedures (SOPs), work instructions, forms, reports, etc.
Create a document control process, that also covers version control
Ensure that the above documents are properly stored, protected from unauthorised access and changes
Make them available and accessible at all points of use
Maintain the above documents by periodically reviewing and, if necessary, revising them, to ensure they are up to date.

What is process?

“A sequence of steps performed for a given purpose”

Institute of Electrical and Electronics Engineers (IEEE)

“The logical organization of people, materials, energy, equipment, and procedures into work activities designed to produce a specified end result”

(Pall, Quality Process Management, 1987)

“A structured, measured set of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how work is done within an organization, in contrast to a product focus’s emphasis on what. A process is thus a specific ordering of work activities across time and space, with a beginning and an end, and clearly defined inputs and outputs: a structure for action. ... Taking a process approach implies adopting the customer’s point of view. Processes are the structure by which an organization does what is necessary to produce value for its customers”

Davenport ,1993

The elements of a process

The include:

Suppliers of process inputs
Inputs
Process steps, transforming inputs into outputs
Outputs, in the form of products or services
Customers, who receive the process outputs.

Suppliers of inputs can be:

Internal, such as employees, business units, departments, etc.
External, such as third party suppliers of goods or services, etc.

Inputs can be:

Tangible, e.g. parts, raw materials, ingredients, etc.
Intangible, such as data and information

There are three types of Inputs:

Consumables, such as raw materials, consumed by the process and transformed into

outputs

Enablers, which enable the process but are not consumed by the process - they are part

of it

Controls are used to set up the input variables such as weight of materials, temperature, moisture, etc. at specific levels. These are not consumed by the process - they are part of it.

Inputs are resources, such as money, labour, materials, equipment, information, buildings, land, administration and management. These are transformed by processes into outputs, which are received by customers, in the form of products or services, (usually) purchased for either consumption or use.

A process has:

A "trigger, typically originating from a customer requesting a product or service from a

supplier

Start/ end points
Steps/ tasks/ activities, and decisions contained between the start and end. These change

the shape, form, or function of inputs transforming them into outputs.

Outputs can be:

Tangible, such as units of product
Intangible, such as decision (e.g. approval or rejection of a consumer loan application), a service (e.g. medical advise over the phone), information (e.g. real time view of flight departure and arrival times and stock prices), etc.

Customers are the recipients of process outputs, and can be internal or external.

The Value Chain

The idea of the value chain is based on the process view of organizations, i.e. the idea of

seeing a manufacturing (or service) organization as a system, made up of subsystems, each

with its own inputs, transforming process steps and outputs.

The way value chain tasks and activities are carried out determines operating costs and

affects profits.

The concept of the value chain as decision enabling and supporting tool is associated with business management. It was first described by Michael Porter in his best-selling book "Competitive Advantage: Creating and Sustaining Superior Performance" published in 1985.

Following are (examples of) value chain definitions:

A set of activities that a firm operating in a specific industry performs in order to deliver a valuable product (i.e., product and/or service) for the market.
A comprehensive collection of all activities performed to design, produce, market, deliver, and support a product line.
The processes, or activities, by which a company adds value to a product or service, including production, marketing, and the provision of after-sales service.

Types of processes

Business processes are typically classified as core, management, and support.

Core processes are end-to-end, cross-functional processes that directly deliver value to

external clients or intermediaries. These are often referred to as “primary” processes, as they

represent the essential activities an organisation performs to achieve its goals and objectives,

fulfil its mission and attain its vision.

Core processes make up the value chain.

Management processes are designed to:

Plan, measure, monitor, coordinate, and control business activities.
Ensure that core or support processes meet operational, financial, regulatory and legal requirements.
Deal with threats and opportunities that that could harm or benefit your business.
Optimize income generation and ensure the continued survival of the business as a whole.

This type of business processes:

Does not directly add value to customers
Is necessary to ensure the organisation operates effectively.

Support processes are enabling processes designed to assist the value-delivering core processes, by providing the resources and infrastructure required by primary processes.

The main difference between core and support processes is that the latter:

Do not deliver value directly to external customers and do not generate income
Add value to internal customers.

Examples of support processes include information technology, finance and human resource services, and provision of goods and services to internal customers.

The fact that support processes do not directly deliver value to customers does not mean that they are not important to an organisation, because they affect the organisation's ability to execute core processes effectively.