Process Mindset 03 Here comes the comlexity

In the previous post, I share some basic definition for business process and one simple example. However, we can hardly have standardized look of business process, based on my experience.

Step back a little bit; business process itself is nothing but boxes and arrows. There is no point to map business process only for business process itself. When we talk about business process, there is always a basic question to ask, WHY WE ARE DOING THIS. Then it will be much easier and clearer for the process discussion and even the process mapping itself will be much more helpful. For example, to discuss about business processes to manage the inventory level and to control the inventory accuracy in one factory will definitely have different focuses; the former requires us to look at the whole supply network to understand demand, supply and time-delay; the latter needs us to concentrate on transnational step-by-step tasks within the factory.

After understand why, business process definition still differs based on your business context, scope, complexity and goals, even for the same collection of activities. Here are some areas you may consider:

Slide3

Scenario

Business process is defined in certain context which is called scenario. Scenario differs, variant changes; and therefore, processes may be different. With the example for on-line fulfillment in previous post, if the customer is located in oversea countries, custom clearing may become a separate important step.

Granularity

How to define the granularity of process activity? Should we define the on-line payment as a sub-process or single activity? The answer is, it depends.

  • It depends on actors.

Normally, an activity is defined as the same actor (or actor group) processing the same input to produce the same output. For example, placing order is conducted by external 3rd party customer and shipping order is done by internal shipping clerk independently; therefore, they are naturally separate steps. However, receiving package is an activity involving cooperation between deliveryman and customer; therefore, it is just one single step in the process with 2 actors. But, it’s recommended to have a clear owner of every step.

  • It depends on how complex the issue is.

Ship order with 2 piece of skirt may not be so difficult, out from the garage of family business. However, shipping electronic components or automobile spare parts out from a warehouse with 5000 SKU, 100 + orders per day and one order would have 20 items worth $50,000 USD, we may need to divide the shipping activities into more detailed steps, picking, packing, loading, final shipping and clearly track status in between all the steps.

  • It depends on how much you want to monitor

For one step – order placement, if you need to monitor conversation rate [1] of selected item to order and order to payment so as to improve the on-line purchasing experience of customers, then this step may be considered as a sub-process and divided further.

Performance measure

A business process is to serve particular business goals. The final output of the process can be measured against the goal, so as to every activity in the process. It may sounds like old cliché; still, the KPI is coming from business strategy and goal. If you do not know what to measure; generally, you do not know what to do.

Take the above example; the business goal of online fulfillment is to deliver all the items at the right location with the right quantity as per the customer requirement. Therefore, for the process overall, we may take OTIF (on-time delivery in full in logistics term) as the process measure. For step2 specifically, the measure could be that the order shipping activity is started within 1 day after order placement.

However, not everything can be quantified; therefore, numbers can only tell you part of the truth.

Reference

[1] The conversion rate is the percentage of users who take a desired action. The archetypical example of conversion rate is the percentage of website visitors who buy something on the site.

 

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