How To: - Achieve Competitive Advantages through Dynamic Customer-Oriented Process Management ...
Contents, fundamentals and process models that enable lean, customer-oriented process management.
What should you know before you optimise processes?
Demands on companies and service providers have risen massively in recent years. The reason behind this originates from the time available to develop products and introduce them to the market becoming increasingly shorter. The complexity of these products however is also increasing, as too is the number of variants – hence the demand increases.
Customers (regardless of whether they are B2B or B2C) anticipate and expect first-class quality from service processes and information when they have questions needing answers. The positive experiences they have enjoyed in the respective areas are anticipated to be transferred to the other areas and become expected.
1) Value and Goals of Process Management
2) Definition of Process Management
3) Where in the Company Can Process Management be Used Successfully?
4) Problems with the Use of Process Management
5) From Business Process to Value Chain
6) From the Value Chain to the Value Network
7) Process Management Methods of Representation
Value & Goals of Process Management
Demands on companies and service providers have risen massively in recent years. The reasons for this are manifold. The time available to develop products and bring them to market is becoming shorter and shorter. The complexity of products is increasing. The number of variants is increasing, in some cases massively. Customers expect first-class quality from service processes and information in case of questions. It does not matter whether they are B2B or B2C customers. The positive experiences in the respective areas are automatically transferred to the other area and expected.
The reason for this is simple: customer expectations and degrees of fulfilment are to be realised in the result of every process. Therefore, permanent process management and process optimisation should be an essential part of a company's DNA. Especially when the company is in a highly competitive environment.
Successful companies use process management permanently and scrutinise processes from their customers' point of view. They initiate measures when process management leads to improvements in customer performance in the context of process optimisation.
Consistent process management is also able to identify and eliminate underperformance and thus reduce costs. Process management is the basis for becoming a customer-centric company. Process management thus helps to realise competitive advantages.
Our Services in the Area of Process Management ...
How is Process Management Defined?
4 Central Building Blocks ...
1. Strategic Process Management
This translates the company's organisational strategy into process management requirements. This is to ensure that the goals of the corporate strategy can be achieved. The focus here is on determining which are core processes and which are support processes. In process management this is described and justified in text form.
What is important in strategic process management?
Strategic process management helps to define the long-term orientation and implementation of process optimisation initiatives in organisational terms. This prevents process management from losing momentum and falling asleep over time. You thus anchor your process management in the organisational structure and in parallel define the key figures that monitor the effectiveness of process management.
2. Operatives Process Management
In operational process management, the central core processes are defined and described during implementation and realisation. We recommend that you also define key process indicators. This allows you to measure the effectiveness of process improvements. Simple key figures such as cycle time, process deviation (frequency), necessary manual interventions up to individual control variables that are important for your customer process are possible. Only by measuring process quality do you generate the necessary management information in process management. This helps to achieve operational goals. Analyses and data collection from quality management are often used for this purpose and presented in a comprehensive dashboard in process management.
3.Professional Process Management
Here you will find all activities involved in the analysis, evaluation and documentation of process improvements. This also includes meetings of all participants on the status of process management as a whole. The evaluation of achievements, the determination of which additional information or which data must be recorded are also part of the technical process management.
4. I.T. Process Management
Process management in the context of I.T. consideration comprises 2 areas:
Area 1: the performance of the I.T. organisation and the I.T. service itself.
Area 2: Process management through the use of I.T. as a data processing tool and for the collection of information. Process management is also used in I.T. to provide key figures so that the performance of I.T. can be assessed.
Active and effective process management will challenge the performance of the I.T. department in the face of demands for digitalisation and digital transformation. The transformation of analogue into digital processes usually leads to cost reductions and thus improvements in competitiveness. More and more, process management is therefore being used in larger organisations. It is not uncommon for organisations or companies that deal with process management to increasingly define positions such as head of I.T. (CIO) or head of digitalisation (CDO) at management level.
What is Required of I.T. in Process Management?
- The requirements are diverse and include (in excerpts) topics such as:
- Supporting customer processes through ERP software
- Presenting real-time information wherever it is required
- Rapid support of new organisational models and process flows through software that can easily adapt to new challenges.
- Supporting users through ongoing training, etc.
- Ensuring the integrity of data security.
- Ensuring I.T. security.
- Adherence to compliance rules within the framework of legal regulations and the DSGVO.
What can Process Management be Used for Profitably?
Under the impression and perception of permanently changing customer expectations, business models have to be redeveloped.
Key points of new business models are:
- Customer orientation
- Digital processes
How To: - Successfully Implement Process Management in a Company?
Process Management in Logistics
Logistics is becoming more and more decisive for the success of a company in many manufacturing and trading companies. It is not only the customer-optimised services or attractive products, but the entire package in the end-to-end process - from ordering to payment - that decides whether a company is successful in the eyes of the customer or not.
The complete inbound and outbound logistics are under consideration and optimisation through modern process management. This naturally includes process optimisation in complaints handling. In such cases, process management looks at process optimisation from the notification of the complaint to the credit note to the new delivery and the verification of whether the customer has been satisfactorily served.
Process Management in the Supply Chain
Process management within a supply chain promotes and challenges companies at all levels to become increasingly networked. Requirements within the framework of Industry 4.0 as a driving force for new technologies, networking and automation affect all companies involved in the supply chain. In order not to be classified as a "commodity" service provider or supplier by the customer, it is important to consistently take the step towards process management.
Where Are the Focal Points in Supply Chain Process Management?
The focal points are usually clearly outlined with the standardisation of I.T, reduction of I.T. island solutions and I.T. island systems as well as with standardisation and process automation. The optimisation potentials within the supply chain are usually easy to identify with the help of process management techniques. Process optimisations can be realised through ever greater automation and avoidance of I.T. system breaks within the value chain. Process management therefore encompasses all companies involved in the supply chain.
What Has to be Considered in Process Management & Process Optimisation Along the Value Chain (the Supply Chain)?
It must always be taken into account that changed processes must also be reflected in the redesign of the process mapping in the ERP system. This means that the IT department must be involved in all initiatives.
Process Management in the Production
The ideas of the smart factory are being applied more and more. One keyword here is the ability to produce the so-called "digital twin" before production begins.
Mass customisation and batch size 1 production are further buzzwords that can only be realised competitively at a high-wage location with excellent process management.
This also includes the ability to deal with generated data, to analyse it and to derive actions for management from it.
Reference models from manufacturing also serve this purpose and can provide a clue as to where and how best practice can be used.
Process Management in the Administration
The concept of administration concerns both the administration of a company and the administration within the framework of the public service or local authority.
In both administrations, process management is a possible approach to define workflows, automate processes and reduce system breaks. This mostly includes questions related to the topics
- Document management,
- DSGVO up to
- Personnel files and
- Application management
Process Management in the Digital Economy
The Benefits of Process Management?
At the moment, we are experiencing an enormous acceleration (also due to the pressure triggered by Covid-19) towards networking and cooperation via the internet. This is leading to new processes and structures of information gathering and information sharing in many areas. We realise that it is easy to redefine a supply chain, to suddenly bypass classical information structures and to bypass the hierarchy in a company. Some companies are experiencing this in the context of remote work or home office. It is not always easy to speak directly to one's superior who is sitting in the traditional office right next door if no IT software is used for direct communication.
The increase in these networks also increases the complexity of the processes, uncertainties usually increase (management on sight as a keyword). This is another important reason why business processes will continue to increase in importance. They provide the rules and procedures and also allow the necessary tolerances and leeway for direct decisions that may have to be made by employees for customer processes.
It is very important to ensure that process management is aligned with these new challenges, such as delivering value faster, greater flexibility to deliver customer services.
This also applies to the requirements for improving customer orientation.
It should not be forgotten that the weaknesses and process errors discovered so far, which have led to both higher costs and problems for the customer, must also be further reduced.
What is "VUKA" in Process Management?
Solution strategies include the digitalisation of the processes to be designed and the use of tools to optimise process management. This can also include the use of agile techniques.
Good experience has been made with the use of the elements and new methods of the BPM toolbox and with the consistent application of agile method elements. This can be, for example, the structuring of the procedure with the help of sprints or the use of process owner roles and various other techniques.
This makes it possible to identify and optimise existing "suboptimal" processes or weak points as well as - and especially - to design new, efficient customer processes. The decisive factor is the will to use process optimisation consistently as a management tool and to use the necessary tools correctly. With this, success will come on its own.
In the context of continuing globalisation and optimisation of the supply chain, companies are permanently forced to further optimise their processes in a highly competitive environment.
One keyword here is the acronym VUKA, which stands for:
- U= Uncertainty
- K= Complexity
- A= Ambiguity
The constant competitive pressure and the inevitably necessary process adjustments also lead to uncertainty, both among the affected companies and employees as well as among the responsible management (the keyword here is - corporate management on sight), which is repeatedly communicated in press conferences and statements by company leaders.
Is Process Management Sustainable?
In business practice - as well as in classical business and organisational theory - the approach of the functionally structured organisation dominates. The reasons for this are understandable and economically effective. Functional specialisation enables the development of many advantages, for example, the rapid learning effects of induction (Taylorism as the maximum expression of a breakdown of work processes into small steps represents the basis of this functional specialisation). The development of special tools and special machines only for this one work step has its origin in this idea and brought enormous efficiency gains for all involved.
However, the functional organisational model also generates problems that need to be solved. Customer-oriented value creation (value stream) usually runs through several functional organisational units. There is often talk about a so-called "silo organisation", where a customer process meanders vertically up and down the company several times until it eventually leads to a value added contribution of a product or service for which a customer is willing to pay.
A customer, however, usually travels "horizontally" across the entire breadth of the company and obtains services from sales, production, forwarding and logistics, as well as from the finance department in the context of invoicing and payment settlement.
What Influence do Organisational Models Have on Process Management?
The widespread functional organisational models and organisational structures are usually organised vertically within the framework of authority and work really well. Coordination at the horizontal level is much more difficult because the organisational boundaries usually have to be overcome for process orientation. Who hasn't experienced it: different perceptions of sales vis-à-vis production, logistics in turn has different ideas about sales promises and production struggles with sales promises and logistical challenges regarding delivery dates or costs.
Individual process optimisations limited to functions can also be counterproductive in the overall value creation process. Not every (partial) optimisation is a gain in the entire customer process, but can also paralyse it (assuming departmental thinking). Therefore, systematic process management along a customer process is the decisive initiative to realise a competitive advantage.
Process Optimisation and the 'Yo-Yo' Effect
The recurring "yo-yo" effect when using process optimisation is partly due to the fact that the focus is often on the "previous, preserving" functional processes. The smallest improvements are certainly better than no process improvements. Nevertheless, we experience time and again that the participants in a process optimisation initiative lack the courage to think completely anew and discuss the "green field approach".
Parallel to this, we also notice that the use of systematic process management for process optimisation also experiences fluctuations in attention. Therefore, studies (such as the BPM Compass) have also confirmed that the intensity of use can fluctuate depending on the strategy focus in the company.
What Roles do Employees Have in Process Management?
First, a short excursion into the history of process optimisation ...
Process optimisation was usually started as self-contained projects, this worked well in itself, but with increasing use and experience it quickly became clear that this was not necessarily associated with sustainable process improvement.
With increasing experience of the use of process optimisation (for a long time, the methodology of re-engineering by Harvard professors Michael Hammer and James Champy was the benchmark and was also understood as a fundamental and radical rethinking of processes), continuous process optimisation came more and more to the fore.
After a few years of dealing with the re-engineering of processes, many companies have moved away again somewhat from this radical approach and are again more concerned with approaches that make incremental optimisation possible. This was to ensure that processes could meet customer process requirements in the longer term and that the employees involved also supported the organisational changes.
Parallel to this, in many cases a so-called process owner was installed. Mostly experienced users who were able to oversee and manage a horizontal process flow. (Mostly end to end processes). These process owners are enormously important and play a decisive role especially in projects when new I.T. or ERP software is to be introduced at the same time.
Challenges Utilising Process Management
It is not uncommon to see process optimisation initiatives or projects that are very much defined by basic methods or, even worse, by corresponding business process management (BPM) tools and software tools. Depending on the existing I.T. orientation, classic visualisation programmes up to serious tools were used for this purpose.
Now and then this may be understandable in the well-founded approach of avoiding a proliferation of tools. But not every tool works and is useful for every issue. Above all, professional BPM tools also require the corresponding expertise of the users. The notation associated with these tools, such as EPK (event-driven process chain, which was used in the ARIS/von Scheer model), or the BPMN notation are anything but self-explanatory. This means that the tool itself can often be an obstacle and thus lead to worse results than expected. Furthermore, it is not easy to prepare the results of such a notation for management levels that do not work with these tools on a daily basis.
In order to circumvent these problems, classic presentation programmes were used from time to time to draw the processes.
From Business Process to Value Chain
The changes in the environment and competition of companies have led to the importance of process organisation and thus also the design of business processes becoming more important. The demands on process management have increased for the following reasons:
Internationalisation requires new processes and fiscal adjustments in the context of tax requirements of individual countries.
The rapid development of information technology today means that the factors of time, price, flexibility, quality and service have become competitive differentiators.
What does this mean as a consequence?
The organisational structures of a company must therefore be primarily oriented towards the horizontal perspective (the process organisation).
This was also proven in a study by Harvard professor Alfred D. Chandler, who formulated it as follows: "Structure follows process follows strategy".
This study examined how companies adapt to changes in the environment in order to continue to ensure the efficient use of resources.
From the Value Chain to the Value Network
The concept of the value chain was first published by Harvard Business School Professor Michael E. Porter in 1985 in his book "Competitive Advantage". Here, processes were broken down into primary and secondary processes. The totality of processes enables the company to create value. Primary processes create value directly, secondary processes support and thus create value indirectly.
The idea of the core business on which a company should focus, which has been discussed in recent years, has led to the terms "extended workbench" or "outsourcing" gaining in value. Many companies no longer perform all the services themselves, but outsource contract steps to value-added partners. This means that individual companies are embedded in one or more cross-company value chains. This can be a national or international network. This can go so far that value creation partners have final products manufactured in design and product designations by specified suppliers (OEM).
This means that individual companies are no longer in competition with each other, but complete value chains are in competition. Therefore, it is important for competitiveness that process management considers the entire value chain: the supply chain.
Process Management Methodology
A multitude of methods that can be used for modelling business processes makes it difficult to choose the right methodology.
Therefore, a small selection of the most widely used modelling methods is presented in the following section:
EPK (Event-controlled Process Chain)
The EPC is considered one of the best-known types of process modelling. Under the direction of Professor Scheer at Saarland University, this method was developed on behalf of SAP in 1992. Within the framework of the Architecture of Integrated Information Systems (ARIS), this process model became known. The basis for it was Petri nets. These were extended to include symbols and semantics, so that today it is known under the term extended event-driven process chain (eEPK). Complex processes can be mapped through a sequence of functions and events.
UML (Unified Modelling Language)
The Unified Modeling Language was created as early as 1990 and has been further developed again and again. The UML is based on an object-oriented view. Objects are extracted from real business processes, given certain attributes and described. Several similar objects are combined into classes. Classes thus become blueprints of the objects to be created. The basis for the diagram types in UML are object, class, attribute and method. Static and dynamic models can be developed.
BPMN (Business Process Model & Notation)
The Business Process Model and Notation has become a quasi-standard for modelling business processes. It is often simplified and used colloquially as BPM. The focus of BPMN is on the graphic representation of business processes in process management. The comprehensibility of the models should help to present technical issues in a simple and comprehensible way.
There are different types of diagrams.
One diagram type is the Business Process Diagram, whose elements can be divided into 4 groups.
- Flow elements (flow objects)
- Artefact elements (Artefakts)
- Connection Objects (Connection Objects)
- Partitions (Swim lanes)
'Swim lanes' can be used to divide business processes into areas of responsibility (business areas/departments). The flow elements of the BPMN are similar to the elements of the EPC. However, BPMN is easier to use because it does not use the restrictions of EPC.