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Process Approach to Management

• satyendra
• November 9, 2013
• 1 Comment
• customer, management, PDCA cycle, process, process approach, Process characteristics, Process improvement tools,

Process Approach to Management

In the present day environment under which the organizations function, constant changes and growing competition are part of realty for the every organization, regardless of its size, location, and the industry sector in which it is operating. There is a tendency today for the organizations to choose for a process oriented management instead of the traditional functional approach to the management because of the factors such as (i) an increase in the frequency of ordered products, (ii) the need for rapid transfer of information, (iii) need for rapid decision-making, (iv) need to adapt to the demand changes, and (v) need to adjust its operations to an environment where there is a constantly increase in the number of competitors.

The growing interest in the process approach to management has been to some extent enforced by the introduction of quality management standard. Process approach to management is also associated with the benefits which amount to the restructuring of the organization into an organization which is process oriented. It is a transition from functioning in a static structure, primarily oriented to the organizational functions, to a dynamic structure in which the orientation on the processes dominates. This results into noticeable improvement in the efficiency of the organization.

The purpose of the transition from a functional hierarchy to a process-oriented organization is to support customer orientation which in turn improves the organizational performance and competitiveness. The essence of the change is to replace the focus on functional units in the organization working system to the focus on the processes the organization. The objective is to break down barriers between functional areas so as to promote the organizational flexibility and improve value for the customers. Process based organization is built on the principle of integration of activities into the organizational processes.

Every organization is made up of a series of interacting processes. In fact, processes permeate all facets of the organization. Some processes exist within one functional area, while others cut across functional areas. Effective design and management of the key organizational processes is an important differentiator and source of competitive advantage for the organization in the manufacturing as well as in the services. Process management is the application of knowledge, skills, tools, techniques and systems to define, visualize, measure, control, report, and improve processes with the objective of meeting profitably the requirements of the customers.

A process can be defined as a set of interrelated or interacting activities, which transforms inputs into outputs. These activities need allocation of resources such as people and materials. All the organizational processes are required to be aligned with the objectives, scope, and complexity of the organization, and are to be designed to add value to the organization. The assessment of the process effectiveness and efficiency can be carried out through internal or external reviews.

In a process, inputs and intended outputs can be tangible (such as equipment, materials or components) or intangible (such as energy, or information). Outputs can also be unintended, such as wastes or pollution generation. Every process has customers and other interested parties (who can be either internal or external to the organization), with needs and expectations about the process, who define the required output of the process. Fig 1 shows schematic of a generic process.

Fig 1 Schematic of a generic process

Characteristics of a process

Each work involves a process which consists of things going in (inputs), getting worked upon (conversion), and coming out as products (output). The value adding conversion activity within a process transforms input into output. Process inputs and outputs can be tangible (e.g. raw materials or finished product) or intangible (e.g. information or service). Each process has a supplier, a customer, and an owner. The supplier and customer can be either internal or external to the organization. The process owner has defined responsibility and authority to operate, control, and improve the process.

Every process needs resources such as people, equipment, materials, and technology etc. These resources can be inputs (materials or information) as well as the value adding conversion activity (use of machinery, equipment, technology, and people etc.) for transforming inputs into outputs. Every process has also to meet different requirements which can be specified by the customer or can be applicable regulatory requirements or can be the requirements of the organization.

The performance of the processes needs monitoring to determine how they are performing. For this, it is necessary to have measurements of the different parameters of the processes and the measured data needs analysis to know the effectiveness of the process.

The main advantage of the process approach as compared to other approaches is in the management and control of the interactions between the processes as well as of the interfaces between the functional structures of the organization.

Interactions between the processes can occur at any of the three process stages namely (i) input, (ii) output, or (iii) conversion activity. The interaction can occur in several different ways such as physical, documentary, verbal, and electronic etc. For each process, the interactions need to be identified and assessed for the risks of problems which can occur and appropriate controls are to be exercised to prevent them.  Fig 2 shows an example of a process sequence and its interaction.

Fig 2 Example of a process sequence and its interaction 

Types of processes

There are several processes which are in operation in an organization for the purpose of meeting the goal and objectives of the organization. Though these processes can be unique for each organization, yet the processes can be broadly classified in the following types.

Processes for the management – These processes include processes relating to strategic planning, establishing policies, setting objectives, ensuring communication, ensuring resources and carrying out management reviews of the performance of the processes.

Processes of managing resources – These processes include all the processes which are necessary for providing the resources (raw materials, energy, and manpower etc.) needed for the fulfillment of the goal and objectives of the organization.

Realization processes – These processes are those processes which provide the desired outcomes of the organization. These processes are responsible for different operational activities in the organization.

Measurement analysis and improvement processes – These processes are those processes which are needed to measure and collect data for analysis of the performance and for the improvement of the efficiency and effectiveness of the processes. These processes include those processes which are needed for measuring, monitoring, auditing, performance analysis, and improvement of the processes. Measurement processes are normally documented as an integral part of the management, resource and realization processes while analysis and improvement processes are autonomous processes which interact with other processes, receive inputs from measurement results, and send outputs for the improvement of those processes.

The organizational processes can also be classified by a different method. The processes as per this method of classification are described below.

Customer oriented processes – These processes includes processes for the determination of the customer requirement, for the production of the product needed by the customer, for delivering and servicing of the product, and for determining customer satisfaction etc. These processes need maximum interaction with the external customer.

Support oriented processes – These processes provide the necessary resources to customer oriented processes for facilitating product realization and include measurement and monitoring activities. These processes have normally a large degree of interaction with the customer oriented processes at the operational levels.

Management oriented processes – These processes provide the strategic planning, commitment, leadership, resource reviews, and decision making. These processes normally interact with all the processes.

Quality management processes – These processes interact with all the processes and provide quality management support to them. These processes include monitoring and measurement, records, and document control, internal audits, control of non conformance, corrective and preventive actions, and continual improvements.

Outsourced processes – The outsourced processes are those processes which the organization needs for its functional system and which the organization has chosen for getting them performed by an external agency.

Process approach

For the process approach to management, the organization is required to define the number and types of processes needed for the fulfillment of the organizational goal and objectives. The objectives can be unique to each organization, it is however possible to identify typical processes, such as (i) processes for the management of the organization, (ii) processes for managing resources, (iii) realization processes, and (iv) measurement, analysis and improvement processes.

Process approach is the application of a system of processes within the organization, together with the identification and interactions of these processes, and their management. The purpose of the process approach is to improve an organizational effectiveness and efficiency in achieving its defined objectives. Process effectiveness and efficiency are normally assessed through internal or external review processes. The process approach hence means improving customer satisfaction by meeting customer requirements.

The application of a system of processes within the organization, together with the identification and interactions of these processes, and their management to produce the desired outcome, can be referred to as the ‘process approach’. Hence, a process approach means that the organization manages its operations as a system of processes and not as departments, or people, or products. This system is used to gather data to provide information about process performance, which is then to be analyzed to determine if there is any need for corrective action or improvement.

The process approach includes establishing the organizational processes to operate as an integrated and complete system. This include (i) the management system integrates processes and measures to meet objectives, (ii) processes define interrelated activities and checks, to deliver intended outputs, and (iii) detailed planning and controls can be defined and documented as needed, depending on the organizational context.

The normal understanding is that a good set of processes yield a good result.  Fig 3 shows a simple example showing interactions between the processes. The interactions (the inputs and outputs which tie the processes together) between these processes is important. As seen in the Fig 3, the output of one process is the input of another process, which stresses the importance of not treating each process as an individual silo (e.g. department, job, etc). Each process needs to ensure that it delivers (outputs) what the next process needs (inputs).

Fig 3 Simple example showing interactions between the processes

With the introduction of the process approach to management, the organization gets several capabilities which include (i) the process approach allows to optimize the control system, make it transparent for management and able to respond flexibly to the changes in the environment, (ii) the process approach allows to obtain and use a system of indicators and criteria for assessing the effectiveness of management at all stages of the production and management chain, (iii) the process approach provides confidence among the co-founders of the organization which the existing management system is aimed at continuous improvement of efficiency and maximum consideration of the interests of stakeholders. Since the system is based on measuring the performance of the organization, planning and achieving continuous improvement of performance, the system is aimed for meeting the needs of persons interested in the activities of the organization such as investors, employees, suppliers, and society, (iv) process management ensures the implementation of the process approach in the organization in accordance with the requirements of ISO 9000 quality management standard and obtaining the appropriate certificate, (v) the process approach, and quality management system assure a certain order and responsibility for the development, coordination, approval and maintenance of the organizational documentation, and (vi) the basis of the process approach to management is fact-based decision-making. The presence of an information system in the organization allows owners of the processes to obtain objective information for management in the event that it is built within a single system of management of the organization on the basis of the process approach.

A major advantage of the process approach, when compared to other approaches, is in the management and control of the interactions between these processes and the interfaces between the functional hierarchies of the organization. Various other advantages of the process approach include (i) integration and alignment of processes to enable achievement of desired outcomes, (ii) ability to focus effort on process effectiveness and efficiency, (iii) provision of confidence to customers, and other interested parties, about the consistent performance of the organization, (iv) transparency of operations within the organization, (v) lower costs and creation of shorter cycle times, through the effective use of resources, (vi) improved, consistent and predictable results, (vi) provision of opportunities for focused and prioritized improvement initiatives, and (vii) encouragement of the involvement of people and the clarification of their responsibilities.

Understanding of the process approach

Process approach to management is a powerful way of organizing and managing activities in order to create value for the customers and interested parties. Organizations are normally structured into a hierarchy of functional units and are normally managed vertically. In such organizations, the responsibilities for the intended output rest with the respective functional units. The end customer or the other interested party is frequently not visible to those involved in the functioning of different processes. Hence the problems which occur at the interface boundaries do not receive proper attention and get lesser priorities than the short term goals of the organization. This results into actions being focused on the functions rather than on the intended output leading to little or no improvement for the customer or the interested parties.

The process approach to management introduces horizontal management, crosses the barriers between different functional units and unifies the focus of the different units on the key objectives of the organization. It improves the management of the process interfaces. It is also one of the eight quality management principles upon which the entire ISO 9000 series of standards is based. This principle says a desired result is achieved more efficiently when activities and related resources are managed as a process. Quality management standard ISO 9001 promotes process approach for the management. The processes are managed as a system, by creating and understanding a network of the processes and their interactions. The consistent operation of this network is sometimes referred to as system approach to the management.

The performance of the organization can be improved through the use of the process approach. The processes are managed as a system defined by the network of the processes and their interactions, thus creating a better understanding of added value. The consistent operation of this network is frequently being referred to as the ‘system approach’ to the management. Many a times, the outputs from one process can be the inputs into other processes and are inter-linked into the overall network or system.

Methodology for process approach

The process approach is one of the strongest approaches for integrating management system since every process is to be managed and improved simultaneously for all process performance measures. Directly linking of process performance measures with customer needs is one of the most powerful aspects of the process management. Several methodologies are available for managing and improving processes, but all of them share some simple basic elements. A simple process management and improvement methodology is frequently organized in a series of steps which are described below.

Step 1 – It is critical to have an overall process manager or process owner with end to end responsibility and accountability for all aspects of the process performance. The process manager needs to understand the entire process and has the authority to effect changes in any part of it.

Step 2 – The process manager and process management team need to carefully define the process so that everyone working within the process has a shared understanding of how it operates. How much documentation is needed depends on such attributes as the stability and education of the workforce and the complexity and criticality of the process. All process inputs and outputs are identified, along with the suppliers and customers, who can be internal or external. The team also identifies process steps and flows.

Step 3 – The process management team carefully gathers, analyzes, and documents customer needs, including how customers use the outputs of the process. The team frequently communicates with customers to understand needs from their viewpoint. To the extent possible, the team defines measurable customer needs and ranks them in order of importance. The team also directly validates the needs and requirements with the customers.

Step 4 – In this step, the customer needs and requirements are translated into measures of process performance. This is one of the most important and difficult steps in the process management. This step includes customer satisfaction, in-process measures, and measures of supplier performance in process measures. The step relates all important customer needs, defect rates, product tolerances, and employees’ health and safety issues etc. to the performance measures.

Step 5 – In this step, first the process performance measures are used for ensuring that the process is operating in a stable and predictable manner. Then the process performance measures are compared with the needs and requirements of the customers.

Step 6 – The first five steps provide a basic methodology for the process management. But the responsibilities of the process manager and process management team do not end there. A significant benefit of process management is its natural fit with process improvement. Once process performance has been compared with customer requirements, process improvement is the natural next step. The gaps in process performance and the customer needs are used to determine critical process improvement opportunities.  The process performance measures are analyzed for the improvement opportunities related to sources of such attributes as errors and defects, process simplification opportunities, process bottlenecks, and lack of adequate process controls. Both process effectiveness and efficiency can improve as a result of process improvement activities. Several tools exist to identify process improvement opportunities.

Step 7 – The process improvement opportunity is selected which is needed to be pursued. This selection is to take into account such attributes as the criticality of improvement needs, difficulty of improvement opportunities, and resources and expertize available. The process improvement teams are established to pursue specific improvement opportunities.

Step 8 – The process team carry out the assigned specific improvements to the processes. The team is empowered to carry out the specific improvements and is provided necessary support of the resources.

When planned process outcomes are being achieved and requirements fulfilled, the organization is required to focus its efforts on actions to improve process performance to higher levels, on a continual basis. The method for improvement is to be defined and implemented (examples of improvements include: process simplification, enhancement of efficiency, improvement of effectiveness, reduction of process cycle time). After its implementation, the effectiveness of the improvement is required to be verified.

Tools used for process improvement

There are several tools which exist in the process approach to management for improving the processes.  Some of them are check sheets, bar chart, histogram, Pareto chart, control chart etc. Some of the common techniques which are used are described below.

Risk analysis tools can be employed to identify potential problems. The root cause(s) of these potential problems are also to be identified and eliminated, preventing occurrence in all processes with similarly identified risks. This is done by doing root cause analysis.

Visualizing a process approach can be extremely beneficial. It allows the employees of the organization to interact and map out the process. This can allow for the employees to better organize the process and is a helpful tool which is frequently being deployed for process improvements. Fig 4 shows some tools used for process improvement.

Fig 4 Some tools used for process improvement

The PDCA (Plan-Do-Check-Act) (Fig 4) methodology can be a useful tool to define, implement and control corrective actions and improvements.  In PDCA cycle (i) ‘Plan’ is for the establishment of the objectives and processes necessary to deliver results in accordance with customer, statutory, and regulatory requirements, and the organization’s policies, (ii) ‘Do’ is for the implementation of the processes, (iii) ‘Check’ is for  the monitoring and measuring processes and product against policies, objectives, and requirements for the product and report the results , and (iv) ‘Act’ is for the taking of actions to continually improve process performance.

The PDCA is a dynamic methodology which can be deployed within each of the processes of the organization. Maintaining and improving process performance can be achieved by applying the PDCA concept at all the levels within the organization. This applies equally to all the processes, from high-level strategic processes to simple operational activities.

Flow chart (Fig 4) is a good way to describe a process. It breaks down the process into parts to allow for easier explanation and to help in improving the process. Flow charts are simple diagrams which map out a process, making it easy to visualize and to communicate. They allow for the people to better see what really happens in a process as well as their interaction.

A ‘Turtle diagram’ (Fig 4) is another great tool the organization for visualizing process characteristics and can use for a visual aid for processes. Processes are made up of inputs, outputs, criteria, etc, and a Turtle diagram visualizes a process to assist in their effective execution and improvement. The diagram looks like the body of a turtle, with components as body, legs, head, and tail. This tool helps identify inputs, outputs, criteria and other information to allow the people to effectively execute and improve processes.