Introduction
Processes are a fact of business life, yet many people find great difficulty in recognizing a process, let alone in defining one. This may come as a surprise, in light of the popularity of business process re-engineering (BPR) in the 1990s and the growing emphasis on process management in areas such as business process outsourcing and automation, and in international management standards such as the ISO 9000 series and the EFQM excellence model.
Processes are how an organization gets things done; how it implements its business strategy, how it makes and delivers its products and how it meets its objectives. Processes should be planned, and will require resources, skills and management. You cannot manage or improve how you operate until you understand what you are doing at present.
It can be difficult for those who are steeped in narrative procedures suddenly to change their thinking sufficiently radically to allow them to see their processes, and how they interact. Often they think of what their department does as a series of disjointed tasks, rather than identifying what initiates an action and how it is followed through to completion.
And products equally have to be designed, planned and controlled so that they conform with specification and comply with relevant legislation.
A manufactured definition?
Quality is about meeting customer requirements and ensuring customer satisfaction. ISO 9001:2000 specifies the requirements for a quality management system
Where an organization:
- needs to demonstrate its ability to consistently provide product that meets customer and applicable regulatory requirements
- aims to enhance customer satisfaction through the effective application of the system, including processes for continual improvement of the system and the assurance of conformity to customer and applicable regulatory requirements
Unfortunately, the wording of the standard has been influenced by its manufacturing origins, which can make it difficult for service organizations and administrative functions to understand how to apply it to their business.
ISO 9000:2000 sets out the meaning of words and phrases (fundamentals and vocabulary) used in the companion standards, so a 'product' is the 'result of a set of interrelated or interacting activities which transforms inputs into outputs', and a customer is an 'organization or person that receives the result of a process'. But a note in ISO 9001:2000 states that the term product applies 'only to the product intended for, or required by, a customer'.
What sometimes happens with a long-winded narrative procedure is that more words are added to explain something which is not clear, and the result is that the document loses its impact and consistency. Are there situations when terminology is better left undefined, or at least care is taken to avoid contradictions?
Might it perhaps be clearer to define product as 'the output from an organization', and processes as 'the means by which the output is created'?
The standard draws the following diagram of the relationship between an organization and its customers/suppliers. Few are likely to find a problem with this explanation, but the standard also states that 'a customer can be internal or external to the organization', which seems to be at odds with the diagram.
Supplier → Organization → Customer
The concept of internal customers and suppliers
The concept of internal as well as external customers does give a useful reminder that individuals within the organization rely on others' performances, but the term product is used in relation to the deliverable supplied by the organization to an outside party (an external customer) – which is perhaps the way most people think of it.
While the definitions above relate to an organization and how it operates with external bodies, there can be benefit in applying the same thinking to an individual process by considering:
- who provides goods or services (in the widest sense of the terms, including for example information, energy, premises) for the process to function
- who receives output from the process
This is one of the key elements of process management, and goes beyond mere process mapping. What influences how the process works, and who is affected by or relies on the process? What risks may apply, and what do you need to manage as a result?
It is also valuable for an internal department which never speaks to or sees a customer to realize that their actions within a supporting process may have an affect on the production and delivery processes. The fact that processes, and the people working in them, form a chain which connects the customer order with the delivery of the product is made more visible when processes are defined and the involvement of people is highlighted.
Types of product
Unfortunately, notes in ISO 9000:2000 which explain the term product are even less helpful:
'There are four generic product categories, as follows:
- services eg transport
- software eg computer program, dictionary
- hardware eg engine mechanical part
- processed materials eg lubricant
No wonder people get confused! Literally, a product is something that is produced. The same term is normally used in relation to a wholesaler or reseller, who supplies products even though it did not produce them.
Services are different enough in concept (you cannot touch them, or put them in a box or on a shelf, and each delivery may vary slightly – sometimes with good reason) that there is a natural inclination to talk of goods and services to indicate that a product can be material or non-material. Another distinguishing factor is that the provision of a service does not result in a transfer of ownership.
Other related terms include:
- output - something which is put out (intentionally by something or somebody)
- outcome - something which comes out or happens, as a consequence or result of some event or action
So the output from a process is the (intended) deliverable - generated by the activities that constitute the process, and in many cases defined by its objective(s). This could be:
- a goods delivery
- a new member of staff
- a detailed plan for the development of a new product
- a tender submission for a contract
Other outcomes, or by-products, may be more difficult to recognize, and are often given less attention. Learning and increased knowledge will hopefully be an outcome for the people who are involved in a process, as they should be for the organization, especially if it sees itself as a learning organization.
But this will require a culture and approach to how you operate which looks at what you are doing, how you are doing it, how well you are doing it and what you are trying to achieve. In other words, you need to look critically at your processes, their efficiency, their resource requirements and their objectives.
Again because of the manufacturing mindset which often shapes the wording, products tend to be thought of as physical entities, and the words 'and services' are often added, even though an earlier definition may have stated that wherever product is mentioned it includes services. Although goods may sometimes be seen as a direct equivalent for products, the term goods and services may help to show that product can include not only physical entities but also such things as (the provision of) training and information.
For the sake of clarity, we shall use the terms in the following context, which hopefully will be intuitive to most readers whether they work in manufacturing, service industries, administration or the voluntary sector:
- product - goods or services which are produced or provided by an organization for the benefit of another organization or person.
- customer - an organization or person that receives a product from another organization or person
- supplier - an organization or person that provides a product to another organization or person.
So payment is not necessary for the customer or supplier relationship (although payment is often involved, and this might be one of the characteristics which comes to mind first).
Who is the customer for a product?
Bearing in mind that one of the keys to staying in business is to satisfy customer requirements, it is essential to identify customer needs and expectations (as well as other requirements relating to the product and its delivery which must be met).
Given that a customer is an organization or person that receives a product from another organization or person, you might be surprised that it can sometimes be a challenge to identify who your customer is and what is the product you are supplying to them.
To illustrate this, consider the position of a university. If you ask the staff whom they see as their customer, you may get suggestions such as the student, the state and even the international marketing department (which promotes their courses around the world to attract revenue-earning registrations from fee-paying students).
It can be difficult to determine which one of these should be classed as the customer - and perhaps there is value in regarding each as a customer in its own way. Depending on the choice, however, the idea of a related product may change.
For example, is the organization providing a service to the parents, who are often the source of significant funding to get their children through a course? Is their product a better educated young adult? Does the state benefit from a better-qualified workforce? Does the international marketing department receive a portfolio of courses to promote?
Another example which raises the same sort of questions is a football club. Are the paying spectators the customers, or is it the television companies, or perhaps the club sponsors? Depending on which view you take, the customer requirements (and therefore how they are satisfied) will be different - and possibly contradictory.
In practice, the needs of all stakeholders should be considered, whether or not they are paying for the privilege.
A matter of scale
As an alternative to the traditional definition of a process (a set of interrelated or interacting activities which transforms inputs into outputs), it may help you to design, develop and manage your own processes if you consider it as a:
- process - a sequence of related tasks triggered by an event and intended to achieve an objective. It> uses resources and is subject to influences
The event can be an action, thought, decision or diary date - so a process can be reactive (responsive) or proactive. For example:
- responding to a sales enquiry
- recruiting staff
- holding a management review meeting
This definition works as well at the organizational level (running the business) as it does for an individual process. Clarity of the mission is essential to ensure that everyone within the organization is working towards the same ends. Resources must be made available, whether physical, information or (competent) people.
It also avoids the risk that artificial transformations will be invented to fit the traditional definition, and that inputs such as methodologies and templates and even staff are allegedly transformed, when they will patently still exist (and be required) the next time the process is followed. Most people don't go to work to do transformations – they have an objective to accomplish, or at least they will respond to events as they happen.
Types of process
Processes can be:
- continuous (as on a production line/in manufacturing)
- transactional (as in sales order processing)
This difference is also recognized in six sigma methodology (which again originated in manufacturing, and was then extended to service and administrative activities).
There are two key differences between these types of process. First you can't always see transactional processes. You can see (and hear) the production line running from the time it starts up, but if you walk into an accounts office you are likely to see a number of random people working at computer keyboards or working with pieces of paper. Transactional processes tend to be discontinuous.
The second difference is that people involved in transactional processes often choose to do bits of different processes (and different instances of the same process) at different times. Transactional processes are also selective in the way they are sometimes progressed.
Some transactional processes commonly run alongside other instances of the same process (eg dealing with a number of sales enquiries) whilst others are performed maybe once a year (eg preparation of the annual business plan).
In all cases, however, factors which can influence successful performance (and a compliant product) must be identified and managed, and the effect that operations will have on the environment must also be anticipated. This is the essence of risk management.
And once processes are in place and operating, management must review and improve them on the basis of hard facts - whether or not a process needs to be defined in detail, suitable measures should be in place to allow management to assess if:
- the process is achieving its objectives
- there are ways to reduce variation in the results of the process
The production process
To ensure that the product (goods or services) which you deliver to your customer meets his requirements, it is essential that you understand what the customer/end user requires the product to do. You may be given a specification, but in many cases it is not easy to establish all the relevant information when the need is identified. The requirements may affect how you design and operate the relevant process(es). In addition, you need to ensure that the product will not cause harm, meets applicable legislative requirements and that it can be produced efficiently.
And however good your product, and however efficient your process, the aim must always be to seek to improve – or risk losing business to the competition.
Further information
The member pages covers
- identifying requirements, such as customer, statutory, regulatory, technical, production and service specifications
- designing products, processes and services using appropriate quality tools and methodologies
- verification and validation of processes and products
Only available to CQI members. Find out more about membership
Sources
ISO 9000:2000 Quality management systems - fundamentals and vocabulary
ISO 9001:2000 Quality management systems – requirements
Rummler and Brache Improving Performance – How to Manage the White Space on the Organization Chart (Jossey Bass 1995). A practical guide to management systems and business process development.