Oswaldo Lorenzo. Professor. Instituto de Empresa
24 November 2005
Process has become the latest catch word in the business world. But what does the term really mean? It’s important to know because processes, when applied, can boost customer satisfaction and company results.
For quite some time now there has been too much talk about business processes. The comments aired almost daily about processes are not only varied, but very general and contradictory, such as "processes are the key factors…” "Processes have to be in-line with strategy"; "processes need to be redesigned"; "process re-engineering is a trend" or "it's another invention by consultants". It seems these days that everyone--or almost everyone--has accepted the concept of process. However, experience shows that this term continues to be an abstract concept for many and, as a result, difficult to grasp. What is a process? Where is it going? What is a process made of? What or who defines the elements of a process? What is the difference between a process and its purpose? Why is it important? How is a culture of process introduced into a company? In this article, I shall try to give a brief answer to some of these questions.
What is a process?
A business process is a set of activities or tasks that transform certain components such as materials, clients or information into results—which means products delivered and/or services rendered. That requires meeting a customer need or, in other words, giving a customer value added. The most important part of this definition is the last part: "giving a customer value added". To that end, a process should be aimed at organizing and grouping together all the tasks responding to a need once it is identified or providing a service once it is requested, such as applying for a loan, purchasing an air ticket or filling a warehouse supply order. A process is concluded only when such a need is met.
Using the same examples as above, a process is completed once the credit is granted, the air ticket is issued or the goods are delivered to the warehouse. In other words, a process runs from "start to finish" and includes all the tasks and services that are required to meet business needs. From this viewpoint, a process is an inter-functional or inter-organisational grouping together of tasks that can be carried out sequentially, in parallel or at different times and/or in different places.
Finally, it is important to point out that business processes are associated not only with the manufacturing of products, as was traditionally believed, but also with administrative processes (invoice payment), logistic processes (the delivery of an order) and customer relations (responding to complaints).
How do they add value?
A process affects parts of a business that have traditionally worked (and may still work) hermetically. Processes not only focus on tasks but also on how these tasks are inter-related (i.e. the inter-phases). More specifically, processes involve the integration and coordination of business and its different parts. These concepts, when applied, have had a very positive impact on customer satisfaction and company results.
Seamless integration of these processes reduces customer waiting time, the period of service completion and waste. In other words, process application dramatically improves business efficiency and effectiveness.