Management of business processes

1. Management of business processes Lesson № 4

2. Business process Is logically complete set of linked activities to transform the data of different nature (information, goods, people, etc.) into the results corresponding to the predetermined target characteristics with the use of control inputs and resources.

3. Control the impact of different nature (regulatory documents, decisions of the authorized person or any other factor) that affects the order and the implementation of business process

4. Process approach to management

5. Business processes’ Structuring The basic principle of process approach - the structuring of business systems in accordance with the activities and business processes of an enterprise, and not in accordance with its organizational structure. The business process starts with the consumer's demand and ends with his satisfaction. Business processes should be structured in such a way as to create value and value for consumers and eliminate any unnecessary or even redundant activity. As the results of well-formed business processes add value for consumers and profitability (lower cost of production of goods or services). 3 types of business processes • Managers - the business processes that govern the operation of the system, such as Corporate Governance and Strategic Management. • Operating - business processes that constitute the core business of the company and create a major revenue stream, such as supply, production, marketing and sales. • Support - the business processes that serve the core business, such as accounting, staffing, technical support, administrative and economic services.

6. Existing systems of businesprocesess’ sets

7. Typically processes scheme for Retail

8. Deming’s cycle (PDCA) PDCA (plan–do–check–act) is an iterative four-step problem-solving process typically used in business process improvement. It is also known as the Deming circle, Shewhart cycle, Deming cycle, Deming wheel, control circle or cycle, or plan–do–study–act (PDSA).

9. Deming’s cycle (PDCA)

10. PDCA и process approch to management (ISO 9000:2000) are corresponding

11. Example: café’s managementaccording to PDCA

12. Example: cost reduction according to PDCA

13. American Productivity & Quality Center (APQC),

14. APQC system developed by specialized organizations - American concern productivity and quality - American Productivity & Quality Center (APQC), contain standard solutions for various industries. One of the most complete classifications APQC PCF (American Productivity & Quality Center Process Classification Framework) - classification of major and subsidiary company's business processes developed on the basis of analysis of «best practice». APQC offers a cross-sectoral specification of business processes and key performance indicators of these processes, formed as a result of information exchange of the largest and most successful organizations in the world. This classification is the "de facto" recognized standard for describing business processes and comprises the world's best practices of business engineering. Redundancy and versatility of this model allows us to apply it to the business of any complexity, size and scope. The model classifies the processes of 12 key areas.

16. ISO 9001:2008 system of business procesess

17. Businesprocesess’ structuring

18. Value aided chains (VAC) Proff. M.Porter (1985) proposes a scheme that is useful in the analysis of resources in the strategic plan. • The basic idea - the degree of evaluation of products / services to customers / users is determined by how satisfied the actions necessary for the development, manufacture, launch into the market, supply and support the product / service. • These activities should be carefully reviewed, if we obtain an understanding of the strategic opportunities for organizations. • If a company releases material product (or several), the identification of chains of value creation is relatively easy (at least on the upper level of detail). • If the result of the company's business is service, then the detection chain services is much more complicated. • Designing the VACs provides the technology of product’s creation and knowledge how manage the business process to receive this result.

19. VAC design • identify customers; • to determine which company's products consume these clients, and what exactly is the value of the company's products to customers; • identify the flow of the transformation of products (services), the result of which is a product consumed by customers of the company. • each transformation of intermediate products is due to a particular business process. Thus, analysis of the flow of products allows you to identify business processes that are associated with the material transformations;. • find out how to manage business processes, performing material transformation.

21. VAC Advantages: • Identification of the product flow; • focus of analysis - on the results (products, services) processes; • clarity and logic in determining the control processes (management); • Continuous realignment of the divisions of cross-cutting way (value chains are cross-functional); • "clear" possibility of decomposition processes; • clarity and structuring of the whole picture (the possibility of constructing a system of organization's business processes). Disadvantages: • high qualifications of staff performing the construction of the circuit, and his understanding of the techniques; • scheme does not show the dynamics of business processes (hard to bind processes to run-time, for example, to show concurrently running processes); • the complexity of circuits for visual perception;

22. Objects of management As part of the process approach to management, the change of the object from an initial state to a destination is regarded as a way out of the business process. Therefore, business processes can be grouped with respect to the objects with which they are associated

23. Objects of management and metaprocesess

25. Internal prespective on business

26. Procesess’ indicators quality or quantity, showing the extent of achievement. There are 3 types of indicators: process’, products’ and indicators of clients’ satisfaction.

27. Procesess’ indicators In most cases, the business process is characterized by several factors, which in this case should be understood as reflecting the adequacy, integrity and objectivity of the current state of affairs by means of quantitative and qualitative characteristics of the process. In determining the parameters of the following should be considered his options : • the result of (useful); • defects (the proportion of marriage, unusable results); • runtime; • costs of performance.

28. Procesess’ indicators

29. Types of indicators • Performance Indicators of the process (characteristics of the product) - demonstrate the ability of the process to achieve planned results. They can be divided into subgroups: functional characteristics of reliability, security, and additional; • performance of the process - shows the relationship between results and resources used. They can also be divided into types: the cost of equipment, resources, provision of staff; • b- the data on consumer satisfaction with goods or services: the number of complaints, repeat orders, the average purchase price, etc.

30. Result’s impact and efficiency

31. Procesess’ indicators Example №1. Cafe

32. Moments to control the result’s impact of process

33. Procesess’ indicators Example №2. Automobile plant- production and sale of accessories

34. Cycle of management and process improvement

35. Procesess’ indicators monitoring According to the hierarchy of enterprises from corporate to personal levels of performance can be structured in a similar way: a strategic and operational. Performance indicators defined by the parameters of technology, depending on the current situation (for example, the pressure level in the aggregate, the number of preliminary agreements, etc.) and thus are intermediate for the formation of strategic indicators that characterize the business processes of the upper level. Comprehensively assess the performance of the enterprise by using the balanced scorecard (BSC), when indicators are combined into a single integrated picture and each is equally important.

36. Balanced Scorecard – KPI (Key Performance Indicators)

37. Balanced Scorecard (BS) The main purpose of the Balanced Scorecard - ensuring conditions for the successful development of indicators and monitoring of the strategy. MTP is an integral part of the organization's management system and could be its main core. Simplicity and there are clear logical links between the components of the BS can achieve an understanding of processes occurring in the company, at the level of all performers. Upon successful implementation of the BS staff have a clear target appears in the work not as a plan, flat top, and in understanding their role in the organization through which implemented the involvement of staff in the implementation of the strategic goals of the company as a whole, as their personal. BS impact on improving the incentive system, as formulated for the purpose of employees affect their behavior - employees are beginning to understand its contribution to the achievement of company objectives.

38. Indicator’s design • Choose the process; • Define the absolute process’ indicators could be monitored simply; • Define relative procesess’ indicators (efficiency, impact of result) for analysis; • Define product’s indicators; • Define indicators of client’s satisfaction; • Analyze the formed list of indicators, except the repeats; • Go to the next process;

39. Procesess’ indicators monitoring Values of the process change dynamically and should be monitored in order to create appropriate control actions for a deviation from the target value for a certain period of time

40. Business procesess’ optimization The process can be improved by one or more of the criteria by changing the value of the indicator: • reduce the time customer service, • increase the number of repeat visits, • reduce cash costs, • increase productivity, • и т.д.

41. Business procesess’ optimization However, the improvement on the 1 st criteria may cause deterioration in another, for example: • cheaper raw materials -> reduction of costs (+) • cheaper raw material - "worsening the taste of products (-) Balance is needed! There is NO ABSOLUTE optimization!!!