The more complex a company’s operations, the more difficult it becomes to get a grip on them. In the age of digitalization and Industry 4.0, it is therefore increasingly important to regulate internal processes so that chaos does not ensue. If the procedures are not organized within an orderly framework, the worst-case scenario is that the company goes bankrupt. To prevent this from happening, the majority of companies have process management in place. This article describes what process management is and why it is essential for companies today.
What is a process?
Before taking a closer look at the concept of process management, the question arises as to what a process or business process is? A process/business process is a sequence of different activities in a company. This sequence of activities usually recurs and is defined in advance. The process has a starting point and an endpoint.
At the end of the process, an inevitable result comes out. A process is also referred to as input and output. The result or the outcome that is created is intended for the (end) customer of the respective process. The end customer can be an internal customer (a department within the company) or an external customer.
The actual process involves a wide variety of company resources (internal and external). Resources include:
- required material,
- energy, etc.
The process always follows clearly defined rules or regulations. These commands are also divided into internal and external rules.
- External rules concern legal regulations and work rules (for example, work safety and working hours).
- Internal rules concern the actual process and specify what exactly is to be done and how. The procedures within the process are always aligned with the output expected by the customer. The result is either products or services.
What is process management?
Process management is also referred to as business process management (BPM). Business process management is concerned with identifying, designing, documenting, controlling and optimizing the various business processes.
Business processes can be viewed and organized in the overall context of business process management. The focus is always on who does what and when, and which resources are to be used for this purpose.
Process management thus has the task of optimizing and automating workflows and processes. Process management also serves to make the workflows within the company transparent. Processes are often presented in visually prepared process chains. A process chain can look like this, for example:
- Specialist department: Needs material and requests it from Purchasing.
- Purchasing: Orders the required material requested by the specialist department.
- Warehouse/Logistics: controls and organizes the warehousing of the ordered material.
- Accounting: The invoice for the material is paid by the accounting department.
Flow diagrams are used to visualize business processes to be quickly captured in the clearest possible form. Another way of visually representing business processes is through process flow diagrams. There is a standardized notation with flow charts to get a common understanding of the business processes. This prevents misinterpretations and misunderstandings.
Challenges that need to be overcome
For those responsible for business process management, three challenges, in particular, need to be resolved:
1) Flexibly meet customer needs9
Fulfill customer expectations. Especially in today’s world, customers expect companies to be very flexible in meeting their needs.
- Increasing customer demands: Because the customers’ demands are growing more and more, the service level in the companies is also growing. Orders have to be delivered faster, as customers expect prompt delivery in the digital age. Furthermore, additional offers such as service contracts and financing are in demand.
- Short life cycles: Products increasingly have shorter lifespans. A product has to be brought to market faster and faster with even more innovations. The best example is the many smartphone models that are relaunched in annual cycles. Customers also expect that they will still be supplied with accessories for a more extended period despite older products.
- Increasing product variants: As demands on the various product variants increase, so do the challenges facing inventory management. The different product variants have to be adapted and optimized to meet the increasingly specific requirements of customers.
2) Ensuring efficient and standardized processes
Shareholders in companies, or the company owners, have one goal: to maximize profit. For this purpose, it is necessary to work more and more focused on performance as well as greater efficiently. Work processes should be standardized. But also the employees of the company increase these requirements.
- Site security: Employees of the company want a secure workplace. In addition, it is essential for them to perform varied tasks in the company and be deployed according to their skills.
- Efficient processes: Shareholders expect the highest possible profit so that their return on investment is high. Accordingly, they expect a standardized and fluid business process, which in turn affects the operations.
3) Increasing competitive pressure
Competition is becoming more and more intense. Every competitor in the market is trying to outdo their rivals by increasing product quality and service offerings. This leads to more and more competitive pressure in companies.
- Price transparency: Due to digitization and the fact that products are reaching customers ever more quickly via the Internet, companies have to respond ever more rapidly. By comparing prices and increasing transparency on the Internet, the customer has free choice, which immensely increases the pressure on companies to respond ever faster. Because price pressure is increasing, companies are forced to compromise on price.
- Flexibility: The more the market is visible to customers (through the Internet), the more companies are compared by customers. This leads to higher demands in terms of flexibility on the part of companies
- Transparency about product quality: Reviews on the Internet are the decisive purchasing criterion for most customers. It only takes a few minutes to post a review on the Internet about a product or service. This, in turn, increases the pressure on companies to offer high-quality products and services at reasonable prices.
The company tries to meet these challenges by managing its processes in a forward-looking and planned manner.
What are the roles in process management?
Management never works alone. In process management, too, the various tasks are performed by different people. These people have other responsibilities and are assigned to different roles. Each role and duty is clearly defined. For each position, there is a corresponding role description, which is reflected in the organization.
Tasks: Who takes on which role?
Competence: The owner of a role must have certain skills to perform this role. If they lack certain skills, they must be learned.
Responsibility: Each role has its clearly defined responsibilities. Questions about the rights, powers, and duties of the person in charge must be clarified.
The roles in process management services serve, on the one hand, to ensure that the processes are managed correctly and on the other hand to ensure that the processes are executed perfectly. There are three types of process roles:
What are the goals of process management?
The main goal of process management is, on the one hand, to achieve or improve the company’s objectives and, on the other hand, to control the business processes in a way that takes the customer into account. To achieve this, the following steps must be considered:
- Define interfaces and integrate them into the processes. Process chains should be represented more clearly.
- Methods and standards must be documented.
- Processes and are to be created and optimized.
- Costs are to be calculated in such a way that they are based on the rules.
- High flexibility.
What are the activities involved in process management?
The following activities occur in business process management:
- Plan and model business processes.
- Execute processes.
- Monitor processes and make adjustments if necessary.
What are the common goals of IT and process management?
Business process management without IT makes little sense in the age of Industry 4.0. In combination with in-house IT, business process management achieves the following goals:
- Greater transparency of operational processes and workflows.
- Better quality of products and services. This leads to higher customer satisfaction.
- The company should react more flexibly to changes.
- Business processes are to become much more effective.
- Costs are to be minimized.
- New business areas and models are to be explored.
What types of process management are there?
There are two ways in which processes are managed:
- Operational process management, which is designed for the short term.
- Strategic process management, which is based on a long-term approach.
How is process management introduced into the company?
f a company decides to introduce process management, this has a significant impact on the entire company. That is why it is essential to play with open cards and strive for open communication right from the start. At all levels, transparent communication is the be-all and end-all. Among other things, management must clarify the following questions in advance:
- What is the main idea or motivation for introducing process management in the company?
- In what context should process management be introduced? Only for a specific part of the company or for the entire company?
- In what time frame should process management be introduced?
- Which employees and, therefore, which team is mainly responsible for the successful introduction of process management?
- Which approach should be followed? From top to bottom (top-down) or from bottom to top (bottom-up)?
- What resources or capacities are available to implement process management? Is there a lack of resources? Is there a need for action in advance?
Once these questions have been clarified, it makes sense to convene a meeting of all the company’s employees to inform them about this and to sensitize them to help introduce process management. If this critical step in communication is missed, it will lead to mistrust and uncertainty among the workforce right at the beginning. Without this step, employees are given the feeling that something will change, but not what exactly is changing.
The next step is to analyze whether process management can be introduced by the company itself or whether help from outside, i.e., external consultants, is needed.
The advantage of an external consultancy is that they are not misled by “corporate glasses” but look at everything independently. Further benefits of external consulting are:
- In most cases, external consultants have already successfully introduced process management in many companies. They, therefore, have the relevant experience and the necessary know-how. This avoids mistakes when introducing process management.
- The view of external consultants is further into the distance and therefore not short-sighted. They know about mistakes that should be avoided.
- External consultants are independent and thus not integrated into internal company structures. They, therefore, have a neutral view of the entire process.
- External consultants do not need internal staff resources. This means that internal employees do not have to be withdrawn for this purpose, and the company can concentrate on the actual day-to-day business with its employees.
What factors lead to success in the introduction of process management?
The following factors have a decisive influence on the successful introduction of process management:
- Transparent communication with a clear goal. This should be based on the SMART criteria.
- Inform employees at regular intervals about the current state of affairs.
- Give employees the opportunity for their ideas and questions.
- Successes should be acknowledged accordingly.
- Employees’ concerns and worries should be taken seriously.
Managing the digital transformation properly with process consulting
With FORCAM’s IIoT process consulting, we help industrial companies to systematically and sustainably manage digital transformation successfully. We work with you to develop the relevant value chains for your manufacturing based on your strategy.
We draw on an established process management and process modeling method: Iterative Process Prototyping (IPP®). In joint workshops with your teams, the aim is to define a harmonized and optimized target picture of your technical requirements in a transparent and binding manner. In this way, we jointly reduce the time required for analyses to a minimum and identify potential risks and optimization potential at an early stage.