Like mentioned in the previous blogs, the business strategy is linked to strategic objectives. On their turn, these are being powered by process objectives and quality criteria which help to determine what has to be the expected process output. The diagram below illustrates how process objectives (and process output) contribute to the more general strategic and organisation objectives. And also how process objectives are being “fed” on their turn by (individual or team) job objectives. Alignment on 3 levels.
In this blog, we focus on the high performance of the process itself. This performance clearly has an impact on the key performance indicators (KPI’s) and hence on the general business performance.
Most important types of process performance
Performance can take many forms. Here below we already give you the main types:
Following up the quality criteria on a continuously basis, is essential to improve the customer satisfaction. See the blog of 19th February 2015 (Quality thanks to effective process management), which explains the significance of process-oriented thinking with regards to the quality of the final product or service.
A company that can deliver the same quality, but at a lower cost, creates more value. Therefore, costs have to be monitored and optimized continuously, without compromising the quality. This is possible by eliminating the so called “wastes” (i.e. the use of resources which do not add value). Knowing which the most “expensive” activities in a process are, also helps to manage the process even better. Because, by focusing on the efficiency of these activities may help to increase the efficiency of the process and ultimately the one of the entire organization.
The faster a process is executed, the better. Less delays, stocks, bottlenecks, … will result in a more efficient (less expensive) output, but also leads to a higher customer satisfaction. This is actually one of the basic principles of Lean management, known as “flow”. Different kinds of times can be measured in a process:
- execution times of the respective activities (process steps)
- total throughput time of the entire process, or throughput time for a series of processes (the so called “end-to-end” process)
- delays between 2 activities, or delays before the start of a specific activity
It might seem less obvious to measure the performance of innovation; however this is at least as important; especially in quickly evolving industries like e.g. technology where agility is crucial. Time-to-market, or the time between an idea and its market availability is a classic example. But you may also measure the frequency of new products or services (the number of new products/services developed over a period of time); or the respective success rate of new products/services, measured in sales volume. Or still, the ratio between the final market products and/or services against the amount of ideas or prototypes; say the “drop” of new products / services through the innovation process. This may help to figure out why there is a significant drop.
Measuring the impact of a process on the environment can also be very important. Especially for companies who already have a considerable impact on the environment by the nature of their activities. Take e.g. the CO2 emissions, in particular for some energy-consuming production processes. The measurement of such an emission is in many countries even already an obligation. But this is also a commercial (image) advantage when your organisation can communicate that you are CO2-neutral; this obviously also applies for a supplier of services. Or when your product is recyclable for nearly 100%.
6. Safety, Health and Hygiene
The importance of a motivated and productive staff goes without saying. Independently of the regulatory aspects, those performance aspects are important ‘demotivating factors’ when they score (too) low. And since a process can only be optimal when the human factor is optimal as well, you need to be careful with these as an organisation.
Practical tips and future blogs about process performance
Because performance management of processes is a fundamental aspect of BPM, this subject will be discussed in much more detail in future blogs. Here is already a ‘preview’ with easy and quick applicable methods.
Evaluate (all) activities of a process on their value addition and categorize these in one of the 3 following types:
- Adding value
- Not adding value, yet necessary (e.g. to make other – value adding – activities possible)
- Neither adding value, nor necessary
This results in a table like this:
- For activities in the first column, you should challenge yourself to define what the added value of the activity actually is; keeping the quality criteria of the process output in mind.
- For activities in the second column, you should be critical about the real need: is this activity really necessary?
- You can immediately drop the activities in the third column, because these are “pure waste”.
Estimate for the most important activities their respective execution time, as well as potential delays before or between the activities and the total time of going through the entire process. This could give some interesting insights about the flow (velocity); but it indicates at the same time where improvement opportunities are. Although process mining will be discussed in more detail later, I would like to mention that this quite recent technology offers many notable advantages with regards to process performance. As below video illustrates, the animation obtained through process mining shows quite clearly where bottlenecks occur in a business process; based upon data from information systems which reproduce the facts truthfully.
Do you already want to find out what Process Mining is and what the advantages of it can be for your organisation? Feel free to ask here the describing document.
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