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First a Definition: - 'What is Meant by Process Management?
Process Management or Business Process Management (BPM) usually includes all organisational initiatives and measures that have to do with value creation. This includes the identification, design of the process, its documentation and implementation. Objectives that deal with improving competitiveness are central components of process management in terms of process costs, time, flexibility, innovation and service.
Why Are There Different Methods in Process Management?
Ensure the Performance of Business Processes
There are various methods to improve the performance of an organisation or a company. Both the qualitative and quantitative performance of individual processes must be recorded, assessed and evaluated. Process performance indicators are defined and process performance is measured. These can be compared with internal targets as well as with external metrics. The collection of external metrics is usually difficult because even with industry metrics from associations, it cannot be assumed that the data is without scatter and error. Best practice approaches should therefore be viewed with a certain tolerance.
At what Intervals Are Process Measurements Useful?
This frequently asked question cannot be answered in a general way. It depends on the number of business processes in a period, up to risk assessments of processes and performance. In summary, however, it is clear that a periodic determination and comparison of the relevant process key figures makes it possible to recognise a trend and also a targeted control and optimisation of the process quality and the business process.
Different Methods of Process Management
Process Performance Management (PPM)
Process Performance Management is based on William E. Deming's thoughts on quality management and a process-oriented approach to business. Deming's approach is applied in a cycle through regular monitoring and controlling to assess the performance of key processes.
What Are Benefits in the Process Performance Management?
- Automatic analysis and visualisation of process flows
- Identification of deviations - target/actual analyses - from predefined values of target achievement.
- Development of measures to optimise process performance. Rapid, timely development of measures to restore target achievement in the event of deviations.
For this purpose, there are measurement criteria developed within the framework of ISO/IEC 15504 to represent process performance. The performance levels that can be determined with this represent criteria for the degree of implementation in order to make the benefits of business process optimisation measurable. ISO 15504 goes far beyond the requirements of ISO 9001.
Which Performance Levels Are Defined in the Process Performance Management System:
- Level 0: Incomplete
- Level 1: Process purpose achieved (Performed)
- Level 2: Process Control (Managed)
- Level 3: Documented and implemented (Defined) - corresponds to ISO 9001
- Level 4: Target-oriented and measurable (Quantitatively Managed)
- Level 5: Optimised
What is the Goal of Process Performance Management?
enable systematic and multidimensional performance measurement. Based on the results of performance measurement, management and control as well as necessary improvements are defined and implemented. This approach affects all areas of a company. Performance measurement is presented on the basis of key figures (Performance Measurement Systems).
Value Stream Mapping
Value Stream Management or Value Stream Mapping is based on the principles of process analysis, but extended to include the analysis of intermediate inputs up to the final product. It comes quite close to the ideas of supply chain management, as value stream analysis also talks about end-to-end processes.
What is Made Possible by a Value Stream Mapping?
A value stream analysis enables the examination of customer processes for their efficiency and effectiveness. Effectiveness has several target variables: On the one hand, the fulfilment of deadline and quantity requests, on the other hand, the fulfilment of product quality demands.
What is the Goal of Value Stream Mapping?
The goal of a value stream analysis is to identify and eliminate processes that do not add value. This is often referred to as "waste" production or activity that does not generate value. The Toyota production model is a well-known representative of this idea of eliminating waste. Lean production" has also become established in American linguistic usage.
Which Production Wastes Are Distinguished?
- Material movements (Transportation)
- Stocks (Inventory)
- Superfluous movements (Motion)
- Waiting times
- Processing (Over-Processing)
- Over-Production
- Corrections and errors (Defects)
Where Does a Value Stream Analysis Start?
A value stream mapping always starts at the end of the project, that is, really at the process output (the performance that the customer perceives) towards the process input. The material and information flows are recorded and evaluated on a timeline.
What Happens After the Recording of a Process Flow?
After capturing and evaluating a value stream (process flow), the target state for a process is developed and both the focus and the metrics for measuring process performance are defined. This is followed by implementation and continuous monitoring of the process performance. If necessary, readjustments are made and thus optimised again.
Process Benchmarking
Qualitative performance comparisons between companies are standard today. These include, in particular, comparisons with companies in the same industry and with leading competitors. The first approaches to the ideas of benchmarking go back to the Xerox Corporation, an American manufacturer of copying machines in the 1970s. In the process, Xerox compared itself with its Japanese competitor Canon. Xerox acquired Canon copiers, disassembled them, analysed and compared them with its own products and carried out cost comparisons of the materials used.
Benchmarking is still very popular today. A small example: quite a few leading car manufacturers buy products from Tesla to disassemble and analyse them. Cost comparisons are one focus, another is to gain an understanding of manufacturing technology and know-how about the competitor's product.
How is Benchmarking Defined?
The business use of benchmarking is based on measuring and assessing through comparison with reference and benchmark values. The difficulty is often also to relate the quality of the external data to one's own data. What is the data basis of the external benchmark data? Is the data collection narrow or broad? How reliable is this data, which is usually collected and reported by industry associations? These are the questions that need to be asked before comparison and benchmarking when comparing external sources with own data.
Which Distinctions in Benchmarking Are Standard?
- Internal: Benchmarking within a company, for example production lines, plants, branches.
- Competitive: Benchmarking of operations (processes) against direct competition.
- Functional: Benchmarking of similar processes across a broader spectrum of the industry.
What Are the Advantages of Benchmarking?
- Uncovering potential for optimisation
- Objectivity of the assessment
- Efficient decision-making
- Improvement of the innovation culture
- Assessment of value creation partners
How Effective Benefits Arise from Benchmarking?
It should be important and self-evident that no effective benefit arises from the determination of key figures and a comparison with best practice alone, but only from the resulting improvement measures.
