Organizational processes are a set of core processes that make an organization effective, efficient, and adaptable; or processes are focused on delivering the right quality of products or services to customers, per customer requirements. Core processes differ from one organization to another and may be dependent on the organizational structure.
A manufacturer sources raw materials from their vendors. Material and resource requirement planning includes both inward and outward logistics. And when logistics include importing materials in stores, moving from supply to production line in a timely fashion, and storing raw materials as needed. Outward logistics include dispatching finished goods and forming the organizational process called supply chain management. This process may cut across different departments, geographies, and products.
Core processes are supported by sub-processes, enabling the processes to achieve higher customer satisfaction, better product quality, and increased delivery and time to market speed.
- Purchase – Increase profitability by procuring high-quality raw materials at the most cost-effective price and optimizing the inventory cost of raw materials.
- Production – Process raw materials efficiently and produce high yields by reducing defects and rework. Pay attention to training and reducing machine downtime via suitable maintenance programs for production machinery.
- Sales and Marketing – Employ innovative strategies as part of public relations. Increase the willingness of the customer to buy the manufactured products via advertising and sales campaigns.
- Delivery – Take care to process the order quickly, freeze the scheduled time of delivery, and ensure the delivery schedule is met in the most cost effective manner. Obtain customer feedback for this sub-process.
Organizational drivers are the highest level of measure in a business process and are strongly linked to the strategic goals of an organization. If the key drivers of an organization are achieved, the organization can be considered to have achieved its overall goal set for that period. Organizational goals are usually defined for a three to five year time frame. Organizational drivers are usually business level metrics, such as financial and performance measures. They can be customer, market, product, and/or supplier related, and form the backbone of any business effort to improve customer, operational, and financial performance.
There should only be about five goals at maximum. The measurement system is established to measure the progress of the strategic goals, and thus the strategic goals are referred to as the Big Y and are considered outputs in operational processes. These organizational drivers are linked to the downstream key metrics of processes.
Metrics are process and operational level measurements of the efficiency and effectiveness of processes. Operation level metrics are measurements that relate to the efficiency or effectiveness of cost, performance, time, and much more. They provide inputs to constantly gauge the effectiveness and efficiency of process improvement efforts. Efficient processes help an organization meet the three to five year strategic goals. Gauging the organization and its processes is dependent on the selection and use of these metrics. Operational and process level metrics are considered to be the ‘X’s and inputs for organizational drivers or the Big Y. Metrics are tactical in nature, measured often, and are easily impacted. Organizations can achieve the Big Y by monitoring and controlling these Xs.
A balanced scorecard (BSC) is a strategic performance management framework for measuring the impact of strategic decisions across all organizational drivers of an organization. BSCs provide a wider perspective on strategic decisions by measuring the impact on key business drivers, such as finance, customer requirements, internal processes, innovation, and growth perspectives. The BSC is intended to overcome the limitations of traditional performance measurement tools. Managers can use it to track the activities of their direct reports and monitor the impacts of their actions. In the decision making levels, a BSC is utilized as a tool that facilitates strategic decision making and provides insight into future performances.
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