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Matrix Management Wiki

5I. Business Process Management

  • 5I1. A business process is a set of steps that turns inputs into repeatable outputs for an internal or external customer.
    • 5I1i. Business processes are first designed and then run continually until changed or retired.
    • 5I1ii. They have people pre-assigned to run the process who complete specific tasks within the process.
    • 5I1iii. Process goals are typically set annually as part of the strategic goal-setting process.
    • 5I1iv. Process improvement goals can be defined at any time during the year.
    • 5I1v. The resources required to run the process are typically planned for during the annual budgeting process.
  • 5I2. There are three types of business processes in every organization:
    • 5I2i. Operating business processes, which produce products and services for external customers.
    • 5I2ii. Support business processes, which produce a product or service for an operating process or another support process.
    • 5I2iii. Broad spectrum support processes, which serve large segments of the organization so it can execute support and operating processes.
  • 5I3. A business process can be broken down into subprocesses.
    • 5I3i. Each subprocess must serve the next customer in the customer/supplier chain.
    • 5I3ii. Each subprocess processes inputs and creates outputs for a customer, usually internal, unless it’s the last subprocess in an operating process, in which case it serves the external customer.
  • 5I4. Each business process should have a Business Process Owner (BPO).
    • 5I4i. The BPO has individual accountability for the performance of the business process from beginning to end.
    • 5I4ii. Each segment of the business process (subprocess) needs a subprocess owner.
    • 5I4iii. If the business process is strategic, then it requires a Business Process Steering Council (BPSC), which is a governance team that oversees the business process and is led by the BPO. (The owners of any business subprocesses typically sit on the BPSC.)
    • 5I4iv. The BPSC manages the interdependencies between the various subprocesses within the business process and makes sure the business process as a whole achieves its outcomes effectively and efficiently.
    • 5I4v. Team members of the BPSC have individual accountability for the subprocesses they own and team accountability for the performance of the whole process.
  • 5I5. The key functions of the BPSC are:
    • 5I5i. Align, develop, and deploy resources to meet the needs of the business process so that it serves the customer and meets its goals.
    • 5I5ii. Identify process improvement opportunities and create projects to continually improve the process.
    • 5I5iii. Re-engineer the process when needed. Re-engineering (redesigning the whole process) should be done every five years or so.
    • 5I5iv. Figure 5.3. Diagram of the evolution of a business process.
      horizontal map to identify business processes
  • 5I6. To determine what BPSCs are needed, create horizontal maps of the organization that identify each of the business processes and their customers and suppliers.
  • 5I7. Rules for business processes:
    • 5I7i. Every cross-functional business process must have one business process owner who is accountable for the whole process.
    • 5I7ii. Strategic business processes should have a BPSC who is accountable for the process.
    • 5I7iii. Performance goals for each business process should be set and monitored.
    • 5I7iv. Business process goals take precedence over subprocess goals.
    • 5I7v. Each business process should have a process flow chart.
    • 5I7vi. There should be customer/supplier maps for each business process.
    • 5I7vii. Business processes need to be continuously improved and redesigned every five to seven years.
      • 5I7viia. Continually remove process waste by eliminating non-value-adding steps.
      • 5I7viib. Deploy best practices.
      • 5I7viic. Avoid reinventing the wheel.
      • 5I7viid. Monitor process efficiency.
  • 5I8. Every business process must have process measures:
    • 5I8i. Measure effectiveness
      • 5I8ia. Customer satisfaction
      • 5I8ib. Defect measures
    • 5I8ii. Measure efficiency through time-based measures:
      • 5I8iia. Response time
      • 5I8iib. Cycle time
      • 5I8iic. Lead time
      • 5I8iid. Product development time
      • 5I8iie. Percent value added/non-value-added activities
      • 5I8iif. Percent of rework
      • 5I8iig. Cycle time
    • 5I8iii. Measure inventory levels