Business process
A business process, business method, or business function is a collection of related, structured activities or tasks performed by people or equipment in which a specific sequence produces a service or product (that serves a particular business goal) for a particular customer or customers. Business processes occur at all organizational levels and may or may not be visible to the customers.[1][2][3] A business process may often be visualized (modeled) as a flowchart of a sequence of activities with interleaving decision points or as a process matrix of a sequence of activities with relevance rules based on data in the process.[2][3][4][5] The benefits of using business processes include improved customer satisfaction and improved agility for reacting to rapid market change.[1][2] Process-oriented organizations break down the barriers of structural departments and try to avoid functional silos.[6]
Not to be confused with Business strategy.History[edit]
Adam Smith[edit]
An important early (1776) description of processes was that of economist Adam Smith in his famous example of a pin factory. Inspired by an article in Diderot's Encyclopédie, Smith described the production of a pin in the following way:[8]
Related concepts[edit]
Workflow[edit]
Workflow is the procedural movement of information, material, and tasks from one participant to another.[16] Workflow includes the procedures, people and tools involved in each step of a business process. A single workflow may either be sequential, with each step contingent upon completion of the previous one, or parallel, with multiple steps occurring simultaneously. Multiple combinations of single workflows may be connected to achieve a resulting overall process.[16]
Policies, processes and procedures[edit]
The above improvement areas are equally applicable to policies, processes, detailed procedures (sub-processes/tasks) and work instructions. There is a cascading effect of improvements made at a higher level on those made at a lower level.[29]
For example, if a recommendation to replace a given policy with a better one is made with proper justification and accepted in principle by business process owners, then corresponding changes in the consequent processes and procedures will follow naturally in order to enable implementation of the policies.
Reporting as an essential base for execution[edit]
Business processes must include up-to-date and accurate reports to ensure effective action.[30] An example of this is the availability of purchase order status reports for supplier delivery follow-up as described in the section on effectiveness above. There are numerous examples of this in every possible business process.
Another example from production is the process of analyzing line rejections occurring on the shop floor. This process should include systematic periodical analysis of rejections by reason and present the results in a suitable information report that pinpoints the major reasons and trends in these reasons for management to take corrective actions to control rejections and keep them within acceptable limits. Such a process of analysis and summarisation of line rejection events is clearly superior to a process which merely inquires into each individual rejection as it occurs.
Business process owners and operatives should realise that process improvement often occurs with introduction of appropriate transaction, operational, highlight, exception or M.I.S. reports, provided these are consciously used for day-to-day or periodical decision-making. With this understanding would hopefully come the willingness to invest time and other resources in business process improvement by introduction of useful and relevant reporting systems.
Supporting theories and concepts[edit]
Span of control[edit]
The span of control is the number of subordinates a supervisor manages within a structural organization. Introducing a business process concept has a considerable impact on the structural elements of the organization and, thus also on the span of control.[31]
Large organizations that are not organized as markets need to be organized in smaller units, or departments – which can be defined according to different principles.
Information management concepts[edit]
Information management and the organization's infrastructure strategies related to it, are a theoretical cornerstone of the business process concept, requiring "a framework for measuring the level of IT support for business processes."[32]
