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Managing organisations – Business Processes

A process is a sequence of activities that take place within the organisation so that a product or service can be provided to a customer.

Each process has an input, a sequence of activities and an output. In any organisation may such processes take place with the output of one process representing the input of the next. So we get a flow of the work passing through the organisation with, let’s say:

  • Raw materials coming in at one end of the flow

  • A number of intermediary processes taking place each of which adds some value
    and finally

  • A finished product emerging

It is important to remember that processes take place laterally through the organisation as well as horizontally.

Lateral processes

In a lateral process, each process has an input. Something happens as a result of the input and an output is created. Each process has, within it, a number of sub-processes. For example, when an invoice is raised, a receivable is created, a stock record is updated etc.

Each process – besides generating an input to the next – probably also generates inputs to other processes not shown. For example, the input of the receivable triggers processes for the collection of cash etc.

Vertical processes

Vertical processes are processes which work up from top to bottom in the organisation and are usually part of planning activities. Vertical processes collect information from across the organisation, say from operating departments, take central decisions based on the information, and then allocate resources.

The flow of work through the organisation and the processes which take place obviously require coordination. You will readily see that if interdependent processes are placed within different departments of the organisation, a high degree of coordination will be necessary to assure a smooth flow. If, on the other hand, you place interdependent work processes in one area of control the degree of coordination required will decline but you may have to provide a wider range of functional competencies within that area. You will be able to see more clearly when we look at the structural options available to you.

Business process re-engineering

Business process re-engineering is a recent business of issue of great importance. So great in fact that Michael Hammer, the man credited if not with its invention, then certainly with its international dissemination, was voted by Time magazine as one of the 25 most influential Americans.

Process re-engineering looks at the workflow and redesigns all company processes so that only those which add value are retained. It is radical, when undertaken it usually changes organizational structures significantly, and it is historically achieved great cost savings. This has led it to be associated with downsizing, outsourcing and layoffs.

Process re-engineering is not the work of a moment, it requires intensive fact finding and analytical work across the entire organisation. Workflows are mapped, redundancies, and duplications of effort are identified and new more rational workflows are designed.

Excerpts from The University of Leicester Diploma in Management – Resource Development International (RDI) Jamaica.
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