Regardless of the industry, every company has regulated internal processes to ensure that standard tasks are routinely executed. However, if the steps are not thoroughly outlined, procedures can run inefficiently, reducing operational efficiency and productivity.
Therefore, organizations should understand the importance of well-defined processes and explore ways to modernize and improve internal systems.
What is a Business Process and Why is it Important?
A business process is a set of steps performed by a group of employees or stakeholders to attain a set goal. Each stage requires the completion of a specific task in order to move on to the next step. The execution of a business process directly impacts the success of related operations such as business process management (BPM) and process automation.
Process management is an essential operation that helps to streamline dependent activities, ensuring tasks are completed promptly. Without a defined process, employees would not be able to initiate and efficiently perform standard procedures, such as audits, cycle counts, or developing actionable insights.
A detailed business process enhances company performance as well as-
Eliminates Duplicate Tasks
Streamlines Internal Communication
Optimizes Use of Resources
3 Types of Business Processes
Depending on the company's industry, there are typically three types of business processes that are handled-
Operational Processes - Also known as primary, an operational process interacts with the core business and value chain by providing valuable products and services to the customers. Operational processes encompass all essential business tasks that work towards a common goal, such as boosting revenue and profits. Common primary operations include customer order fulfillment and accounts payable.
Supporting Processes - Also referred to as secondary, supporting processes support back-end functions within a company. For example, human resources and work compliance departments are available as support for essential systems. The most significant difference between primary and secondary processes is that operational services directly provide value to customers while supporting systems accomplish this indirectly.
Management Processes - Management processes monitor and regulate the activities that revolve around standard business procedures. Common management processes include internal communication, data analytics, and budget planning. Similar to supporting operations, this process does not directly interact with customers.
Essential Characteristics of a Business Process
Identifying and defining a business process can be challenging. However, there are four key elements that make recognizing processes simple-
1. Repeatability - The most significant aspect of a process is repeatability. Processes are performed repeatedly, whether daily, weekly, or monthly, to achieve the desired outcome. Therefore, standardizing procedures ensures that each process run-through is smooth and provides the expected output.
2. Flexibility - While many processes are maintained within a business indefinitely, alterations are often made to adapt to external factors and improve efficiency. For these reasons, companies must ensure that there is flexibility within their processes to make changes when needed.
3. Specificity - An adequate process must have well-defined phases, inputs, and factors that contribute to the output. These steps should clearly illustrate the operation's beginning, middle, end, and ultimate goal. If a process is automated using a BPM system, further terms, such as the benefits of automation and requirements for human intervention, should be explained.
4. Measurability - The metrics of a business process must be measurable to allow management to decide if automated solutions are needed to improve efficiency and reliability. Managers should be able to pull key performance indicators (KPIs) from every phase within an operation, to allow finetuning on specific functions.
4 Ways to Get the Most Out of Business Processes
While every organization has routine processes that they perform, these operations are often unorganized and undefined. Without thorough and explicit instructions, employees may be confused about the best practices for each step. There are several tools companies can use to improve business processes, including-
1. Business Process Mapping
Business process mapping physically outlines each process, from the first step to the last. Management can use paper and pen methods or advanced management software that digitally visualizes a model of the operation.
Once the processes are illustrated, management is responsible for generating reports, data analyses, and actionable insights to monitor performance levels.
2. Business Process Improvement
Once every process is clearly defined and mapped out, companies acquire a holistic view of their performance, allowing them to make changes where needed. This often leads to a business process improvement (BPI) campaign, in which management works from the top down to improve processes.
When renovating operations, managers may find that certain phases contribute little to the outcome or are inefficient. By eliminating wasteful steps, businesses can reduce operational expenses to boost performance and profits.
3. Business Process Automation
Business process automation (BPA) uses advanced software to automate standard business processes, reducing manual labor. Without human intervention, management does not have to worry about human error compromising data integrity or reducing process efficiency.
BPA also minimizes the time needed to execute basic operations, reducing the use of resources and labor costs. Automated software performs processes based on programmed steps to ensure the desired outcome is always achieved, promoting reliability and consistency.
4. Business Process Re-Engineering
Some businesses still utilize outdated processes that significantly limit productivity and profitability. Adding to an obsolete process can quickly add up unnecessary expenses and often result in a faulty operation. Instead, companies with older systems should consider starting from the ground up.
Business process re-reengineering (BPR) requires organizations to dismantle their inefficient processes and legacy systems and find more efficient methods to perform operations. While re-engineering can be manual, automated software can streamline processes, including accounting, email marketing, and employee maintenance.
Business processes are the building blocks of a company that ensures all internal operations are correctly executed. Defined processes can minimize operational risks while promoting productivity, functionality, and business expansion.