Business Process Management (BPM)

“BPM is a structured approach employing methods, policies, metrics, management practices, and software tools to manage and continuously optimize an organization's activities and processes”
-- Gartner Research

Business Process Management (BPM) can be defined as the practice of improving the efficiency and effectiveness of any organization by automating the organization's business processes [In general, a process for a task comprises a sequence of steps that should be followed to execute that task]. Business Process Management used to be referred to as Business Process Reengineering in the past.

Some the general goals that every organization aims at are:

(i) Better Customer Service
(ii) More sales channels
(iii) Online services
(iv) Better efficiency

Besides, the ever-changing business scenario demands for higher levels of quality, optimization of cost, on time delivery, rapid adaptability, identifying productivity bottlenecks, risk mitigation and risk control. BPM provides solutions to all these demands. Some of the benefits that BPM will provide include:

(i) Reduces risk in business processes
(ii) Consistent quality output
(iii) Increased Return on Investment
(iv) Wider range of participation in process
(v) Drives process improvement
(vi) Simplified Training

The central aim of BPM is to align the organization with the customers’ wants and needs. BPM attempts to continuously improve business processes and achieves process optimization by defining, measuring, and improving business processes. The concepts of BPM has evolved from operation transformation and enables flexible design, deployment, monitoring and tracking, process focus, and efficiency.

Each organization will have business processes that are unique to its business model. These processes will evolve over time as the business reacts to market conditions. Therefore, the BPM software tool in use at the organization must be easily adaptable to the new conditions and requirements and continue to be a perfect fit for the organization. An effective use of BPM demands that organizations stop focusing exclusively on data and data management, and adopt a process-oriented approach that blends machine and manual operations.

The concepts of KAIZEN are often used for business process improvements. In general, KAIZEN can be explained as:

KAI = Change
ZEN = Good
Changing for improvement; Changing to become better.

According Wikipedia, “A closer definition of the Japanese usage of KAIZEN is ‘to take it apart and put back together in a better way.’ What is taken apart is usually a process, system, product, or service.”

The process of implementing KAIZEN can be summarized as follows:

Go to GEMBA = Go to the place where things happen
Watch at GEMBUTSU = Look at what happens
Look for MUDA = Look for waste
Perform KAIZEN = Improve something good to make it even better

Before we move on to the life cycle of Business Process Management, let us take a closer look at what ‘model’ and a ‘workflow’ are. A ‘model’ is a multi-dimensional representation of reality capturing a moment in time. A model has purpose, perspective, audience, content, level of detail and phases as related to a life cycle. A model conveys a message and summarizes information. A Business Process Model describes the details about the way a business conducts its work. A workflow is an integral element of Business Process Management. Workflow is a term used to describe work definition, allocation, and scheduling. It defines the sequence and conditions based upon which steps consisting of work, flows. Workflow handles the routing of work between resources [people, systems, or machines]. Workflow manages the order in which these steps are handled. Workflow also enables employees to monitor and, reconfigure the flow of a business process as needed.

From a high-level view, the life cycle of Business Process Management consists of Process Mapping, Process Deployment, and Process Improvement.

Process Mapping consists of Process Discovery and Process Design. Process Discovery consists of identifying the key processes and defining the rules and roles for each process. Process Design involves modeling the process with its rules and roles on to the system.

The key focus of Process Deployment is integrating participating systems and training the different stakeholders of the processes.

Process improvement involves analysis and optimization. Analysis identifies bottlenecks in the processes. Analysis also measures the time taken per work step, per person and per process. The role of optimization is to redesign processes so that bottlenecks identified during analysis are removed.

A key component of BPM is Business Activity Monitoring (BAM). As the name implies, it is essentially a facility to enable automated monitoring of business process activity related to an organization. Before a BAM facility is put in place, it is very important to define the Key Performance Indicators (KPI) that need to be tracked using BAM. This will prevent information overload and overreaction to business exceptions. Once the KPIs are defined, a system need to be created that allows monitoring and responding to changes, ideally in real time. Business Activity Monitoring allows an organization to respond faster to new opportunities and threats appearing in the business scenario. The core concept of Business Activity Monitoring is recognizing an enterprise’s key performance indicators and implementing the right technology in place to monitor them. A typical BAM system provides real-time, graphical Key Performance Indicators and analysis, enables control, and manages ongoing business operations using closed-loop visibility. It also enables zoom in on cross-process metrics with real-time analysis to determine which processes are creating bottlenecks or which customer is most profitable. BAM also enables organizations to respond quickly to change based on business events in real-time.

BPM makes it easy for enterprises to program their current processes, automate their execution, monitor their current performance, and make on-the-fly changes to improve the current processes. BPM software enables you to automate those tasks that are currently being performed manually. Many of these tasks require some type of application process, approval or rejection process, notifications and status reports. Handling exceptions is an area where BPM really excels. Organizations have few problems when their processes run smoothly ninety-nine percent of the time. However, it is the one percent, where the exceptions are, that dominate the majority of the organization’s time and resources. BPM is ideal for processes that extend beyond the boundaries of an enterprise and communicate with processes of the partners, customers, suppliers, and vendors. BPM gives companies the agility to stay competitive and reduces the time elapsed in a business process. BPM also increases the productivity per person. Business process consists of many steps and a typical BPM initiative reduces the number of steps by half. A business process needs many people and resources and a good BPM should reduce the number of resources needed for the same business process. BPM also helps improve coordination across departments and geographic locations of an organization.

This concludes the blog post on Business Process Management (BPM). Thanks for your interest.

Human Resource Management (HRM)

"People are our most valuable asset" has become a cliché these days, but it will be very hard to find an organization that will disagree with this statement. In this blog post, we will look at some of the aspects of Human Resource Management (HRM). A complete coverage of all aspects of Human Resource Management is, however, beyond the scope of this blog post.

According to Wikipedia, Human Resource Management (HRM) is the strategic and coherent approach to the management of an organization's most valued assets - the people working in the organization, who individually and collectively contribute to the achievement of the objectives of the business. Wikipedia goes on to explain that Human Resource Management involves employing people, developing their capacities, utilizing, maintaining, and compensating their services in tune with the job and organizational requirement.

The rate of change in business scenarios in recent times has increased largely and in order to be successful, organizations need to absorb and manage change at a fast rate than in the past. This implies that organizations faced with the need to respond to changing business scenarios should implement a successful business strategy and the organization should be staffed with the right people capable of implementing the business strategy. Hence, recruitment becomes a priority for any organization and is often considered a key human resource management activity. Finding the right kind of people to be bought ‘on board’ is often an expensive activity and the job market for qualified candidates is very competitive. Further, new employees can sometimes disrupt the activities of existing employees and new employees take time to synchronize with the work culture, product knowledge, and process knowledge of the organization. Briefly, the recruitment function of Human Resource Management can be described as the process of ensuring that at all times the business is correctly staffed by the right number of people with the skills relevant to the business needs.

The recruitment function ensures that the right numbers of the right kind of people are bought into the organization at the appropriate time. Once the employees join the company, the focus is to retain them and keep them motivated to perform at their best, in tune with the business needs of the organization. As discussed above, recruitment is often an expensive process in terms of time, cost, and effort and hence it is very important to retain the recruited employees. For retaining good employees and to motivate them to perform well, careful and continuous attention need to be paid to the tangible and intangible rewards offered by the organization. Basic rewards and conditions of work like number of hours to be put in per week may be decided by regulations prevailing in a country. In general, it can be said that about half of the rewards and terms of conditions are negotiated by the human resources department and the employee and hence varies from organization to organization. Good personnel policies, which guarantee good work environment and employee benefits, are crucial in motivating and retaining employees. It is important to keep in mind the limitations of money as a motivator and the importance of factors like job satisfaction, avenues for professional growth, involvement, etc., while planning for activities aimed to improve employee motivation. It is an acknowledged fact that the influence of behavioral science discoveries is becoming important in employee motivation. Hence, it is essential that Human Resources department acts as a source of information for the application of the findings of behavioral science in educating managers about the new perspectives of job design, work organization [Job design and work organization is the specification of the contents, method, and relationships of jobs to satisfy technological and organizational requirements as well as the personal needs of job holders] and employee autonomy.

An organization should continuously evaluate the performance of its employees for three reasons:

(a) to improve organizational performance by improving the performance of individual contributors
(b) to identify potential candidates for promotion to higher levels in the organization or for transfer to other positions where better use of employee skills can be made
(c) to provide a basis for linking rewards to performance

A human resource department supports the employee evaluation process in several ways such as:

(a) designing and establishing an evaluation system suited to the organization
(b) define targets for achievement
(c) explaining how to quantify objectives
(d) introducing self assessment
(e) eliminating complexity and duplication
(f) providing training related to employee evaluation system
(g) monitoring the evaluation system

Another key function of human resources department is employee education, training, and development. Employee education can be defined as preparing the employee for training, training involves the systematic development of attitude, knowledge, skill pattern required by a person to perform a given job adequately, and employee development is the growth of the individual in terms of ability, understanding, and awareness.

Employee education, training, and development are needed in an organization in order to:

(a) develop employees to undertake higher job positions in terms of responsibilities
(b) provide training for new employees
(c) raise efficiency and standards of performance
(d) meet legal requirements
(e) as a means to inform employees

Evaluation of the effectiveness of training is done to ensure that it is cost effective, to identify needs to modify what is being provided, to reveal new training needs, and to redefine priorities and most of all to ensure that the objectives of the training are being met.

This brings us to the end of this blog post on Human Resource Management (HRM). Thank you for your interest.

Supply Chain Management (SCM)

After covering Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) in previous blog posts, let us now look at some of the basic concepts of Supply Chain Management (SCM).

What is a supply chain? In simple terms, if the business of a company involves creating a product from parts bought from suppliers and selling the product to customer, it can be said that a supply chain exists. Supply Chain Management (SCM) describes the management of flow of materials, information, and funds across entire supply chain, from suppliers to component manufacturers to product assemblers/integrators to distribution of finished products, and finally to the customer. SCM can also be extended to include after-sales service, product returns, and recycling. The complexity of supply chain will vary with the size of the business and the intricacies and number of products manufactured.

Supply Chain Management (SCM) is not necessarily a business function. It is considered as a new business model necessary for an organization’s success and calls for the involvement of every member of the organization. In today’s business scenario, there is a need to be more socially and environmentally responsible while doing business, which results in more risks that need to mitigated and managed. This, coupled with ever-increasing customer requirements and expectations, globalization, pressure on cost and lack of availability of resources has increased the difficulty level of doing business. It is under these circumstances that managers are expected to improve profitability, increase revenue growth, capture and protect larger market share. In order to succeed under these conditions, companies must recognize that the ultimate success of an organization depends on the ability to integrate the organization’s network of business relationships in a mutually beneficial manner. The efficient management of this network of business relationships is Supply Chain Management (SCM).

A supply chain consists of several elements or components, which are connected by the movement of products along it. The customer is at both the ends of the supply chain – the supply chain starts with the customer deciding to buy a product and the cycle is completed when the product is delivered to customer, accompanied by the invoice [An invoice is a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer] for the product.
 
Let us now take a closer look at the different components of the supply chain.

Customer: As already discussed, the supply chain starts when a customer decides to buy a product offered by a company. Once the decision is made, the customer contacts the sales division of the company and places an order. The sales department creates a sales order, which specifies the type of the product(s), the required quantity, and the delivery date specified by the customer. If the product involved needs to be manufactured, the sales order will include a requirement that needs to be fulfilled by the production department.

Planning: Each sales order generated in response to customer request will trigger a requirement. Such requirements from all the sales orders will collated by the planning department. The planning department will then create a production plan to manufacture the products to fulfill the customers’ orders. Manufacturing the products often requires purchasing of raw materials.

Purchasing: The purchasing department is responsible for arranging the purchase of raw materials required for the manufacturing of products to fulfill customer orders. Based on the inputs from planning department, the purchasing department sends purchase orders to suppliers to deliver necessary raw materials on the required date as per production plans.

Inventory: The inventory division is responsible for tracking delivery of raw materials from suppliers, ensuring quality, and quantity of received materials and for moving the materials to warehouse. The storage of materials until the production department requires them is also the task of the inventory division. Suppliers also send invoice for the materials delivered to the company.

Production: The inventory division moves the raw materials from the warehouse to the production area, based on the production plan prepared by the planning department, as explained above. The production division manages the manufacture of products ordered by the customers, from the raw materials, which has been moved to the production area. After the manufacturing process is complete, the products undergo testing before being moved back to the warehouse, where the products will be stored until they are delivered to the customer.

Transportation: Once the finished and tested products arrive at the warehouse, the transportation (shipping) department identifies the most efficient way to ship the product so that it arrives on or before the date specified by the customer while ordering the product. The invoice for the finished goods is also delivered to the customer along with the goods.

This brings us to the end of this blog post on Supply Chain Management (SCM). Thank you for your interest.