How to conduct business process analysis
A business process is a system that a company uses to achieve a goal. Also, this term can be defined as a sequence of actions that allows you to create a product or service for customers. Managers analyze business processes to determine the usefulness and effectiveness of the process. First of all, the manager analyzes the current process. Management may then decide to make changes to improve the existing process. For example, an improved process can help a company save time, reduce costs, or create a more compelling product.
Decide how to create a business process
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Outline the business process. A business process is the day-to-day activities of employees to achieve your organization’s goals. The process embodies the steps that will lead you to a specific goal. A business process should cover all changes or exceptions to such a process. To correctly approach the analysis, you must first consider the order in which the business process is created.[1]
Consider the scope of the task. Let’s say you want to update the process for sending invoices to your customers. Task scope is the amount of work that needs to be done. In this example, let’s assume that the volume is one account per customer. Let’s say the average company sends out 200 invoices per month.
Determine the desired result. What do you want to achieve with this process? In this example, you aim to send an invoice to each customer in a timely manner after the product has been delivered. You send a hard copy of the invoice when the order ships, and you also email the invoice to each customer.
Within each process, there are subprocesses. The more specific the process, the easier it is to analyze and improve.
Document the business process. The process can be documented as a sequence of steps, and a flowchart can also be created. In large organizations, the process often spans different departments. So, the process of sending invoices can involve the billing department and accounting department.
Identify the departments or functions of the organizational units in this process, as well as all inputs and outputs. For example, compiling a payroll requires knowing the production department’s inputs and hours worked, the pay rates, and the deduction amounts that the HR department provides.
Write down all exceptions to the process. Each type of business activity has its exceptions or variations. For example, some of your customers receive significant discounts. They ordered a large volume of products. The billing department must reflect these discounts in your billing program calculations. Large discounts must be entered manually to generate an accurate invoice.
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Document the business process and determine the type of process you created. Separating processes by type will help analyze and make improvements. It is not uncommon for two processes of the same type to use the same improvement methods. The process can be production, auxiliary or managerial.
Production is the daily tasks that allow you to provide a product or service to a customer. Invoicing can be called a production process. It is very important to send accurate invoices to customers in order to receive payments immediately.
The auxiliary process, as the name implies, is designed to help production. The HR department is a good example of a support department. Human Resources assists the head of billing by interviewing and hiring new employees. The Human Resources department does not work directly with customers, but assists the production departments.
Every organization needs a leadership that can carry out the overall management of the enterprise. The process of planning and executing the budget is a management process. Every company needs a formal budgeting process. To do this, management should discuss the budget of the departments with the financial director of the company.
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Analyze business processes for inefficiencies. Any business process consists of inputs and outputs. Labor, energy, materials, means of production are investments. Investments are an asset that allows you to earn profits and incomes, while results are a tangible product or service. Investments get into the process and create the result. Conduct an analysis to identify aspects of low performance.
The process must make efficient use of inputs to produce results. For example, you own a network of auto repair shops. Your investment is labor, equipment and spare parts, and the result is repaired customer vehicles.
A long renovation or a large amount of work ahead is an indication that your process is not going smoothly. One of the problems may be an unrealistic work plan.
