Operations & Business Process Management

Abstract

Operations managers are increasingly concerned with the management of business processes in
organizations. These processes are any of a number of linked activities that transform an input into the
organization into an output that is delivered to the customer or other member of the supply chain.
Emphasizing business processes enables the organization to be more flexible, optimize the responsiveness of
the organization to the demands of the marketplace, reduce costs, and address issues of quality, consistency,
and capability. Some of the most well-known approaches to business process management include business
process reengineering, Total Quality Management, and Six Sigma programs. When applied correctly, these
tools can be invaluable for optimizing the effectiveness of the organization.

Applications

Although business process reengineering is still successful in many organizations and is a sound approach to
organizational change and effectiveness, it is not as popular as it was when originally introduced. This is
because in some instances, it was used as a code word to excuse making unpopular decisions such as layoffs
or reductions in force without truly addressing the underlying problems or processes of the organization.
However, business process reengineering and business process management are both valuable concepts if
correctly applied. For example, using qualitative methodology, Armistead and Machin examined business
process management in four large organizations. These organizations were at various stages in their
implementation of business process management, but were all considered excellent against various criteria
of success as discussed above. The results of the study showed six clusters of attributes: Organizational
coordination, process definition, organizational structuring, cultural fit, improvement, and measurement.

Typically, business processes are characterized in part by the fact that they cross functional lines within the
organization, starting with inputs from outside the organization and ending with outputs to the marketplace.
One of the implications of this characteristic is that business process management is cross-functional in
nature. Therefore, to be optimal, it is necessary to coordinate functions across the entire organization.
Managers of organizations that have effectively implemented business process management tend to discuss
how they run their entire organization rather than isolated pieces or processes. Processes are also described
in layers from a top-level view down to an individual task-level view. To coordinate across the entire
organization effectively, it is important to also manage the borders of the processes. This can be done, for
example, by establishing networks around each process to formulate and implement strategy as well as to
liaise with other processes with which there might be issues. In this way, not only can one business process
be improved, but the other processes which impact or are impacted by it can be improved in a ripple effect
throughout the organization.

As shown in Figure 2 , when initially approaching business process management, most organizations tend to
first address operational processes. Once these have been improved, organizations typically move on to also
consider the support processes while maintaining their emphasis on operational processes. Direction-setting
is then added to the mix while continuing to address the needs of the other two types of processes. Typically,
management is considered a superordinate to the othercategories of processes. This "sandcone" model of
business processes has additional implications. First, as organizations develop their approaches to business
process management, their techniques will change. In addition, as organizations move through the process of
refining their business processes, there will be an increasing impact on the organizational structure. This
means that structural changes (i.e., the design of an organization including its division of labor, delegation of
authority, and span of control) will also need to be addressed in order to optimize the benefits of business
process management. Finally, as the organization moves through the stages of emphasis in business process
management, coordination throughout the organization will need to be concomitantly increased.
Another aspect of successful business process management is process definition. Although much of the
literature deals specifically with business process improvement, empirical research has found that the real
value of business process management does not come from focusing on the details of improving tasks at the
task or team levels, but by defining and improving processes at a higher level. This often proves a difficult task,
with much of the effort focusing on the defining procedures. However, communication across different levels
of the organization can help overcome this problem by increasing a common understanding and definition of
the processes of the organization.

In addition, another aspect that needs to be considered in the optimization of business process management
is the structuring of the organization. Organizational structure is the design of an organization including its
division of labor (i.e., the way in which work in an organization is divided into separate jobs assigned to
different people), delegation of authority (i.e., authorization for a subordinate to make certain decisions in
place of the supervisor), and span of control (i.e., number of employees whom are directly supervised by the
person one level above in the organizational hierarchy). Although some theorists propose that the
best organizational structure for business process management revolves around the processes themselves, in
practice, optimal structure is usually matrixed. In a matrix structure to organizational design, employees
report both to a functional or departmental supervisor and to a project supervisor. Matrix structures in
organizations that have implemented business process management matrix the organizational structure
between processes and functions. Again, processes provide a framework for the relationships and help the
organization build understanding and common approaches to processes across the organization. Although in
theory these matrices may tend to be unstable and move toward a process-centric structure, in practice they
are both stable and desirable and enable the organization to remain flexible so as to be more successfully
responsive to various demands.

Business process management also needs to take into account the culture of the organization if it is to be
effective. Organizational culture is the set of basic shared assumptions, values, and beliefs that affect the way
employees act within an organization. Although in the long-term it may be necessary to address and change
the culture of the organization, to be successful, business process management needs to work within the
parameters of organizational culture — at least within the short-term. This is as opposed to some approaches
to business process reengineering that unsuccessfully attempt to implement change while running rough-
shod over the organizational culture. Organizational culture often changes as the implementation of business
process management techniques is successful and a drive to constantly improve processes builds within the
organization. Finally, business process management can only be successful if measurement techniques are set
in place. Organizations need to be able to objectively determine whether or not their change efforts and new
processes are effective. In addition, they need to be able to continually identify trends, determine marketplace
requirements, and assess the stability of the organization. This can be done through measuring performance
against predetermined goals and objectives, collecting measures of customer satisfaction and loyalty, and
looking at the efficiency of processes in addition to the effectiveness.