5.1 Process: Concept and Impact
As discussed in Chapter Two, profit-oriented firms initiate the organization of their operations by establishing competitive priorities. These priorities typically include:
- Low-Cost Operations
- High-Performance Design
- Product Customization
- Development Speed
- Fast Delivery Time
- On-Time Delivery
- Volume Flexibility
In practice, it is rarely feasible for a firm to outperform competitors across all these dimensions simultaneously. Most organizations strategically focus on excelling in one or two areas. The ability to achieve and sustain these competitive advantages is fundamentally dependent on the effectiveness of process management.
To better understand the significance of processes in business operations, it is useful to view them through the lens of operations chains. A process is defined as a structured set of activities that transforms inputs into outputs. The success of business operations is, therefore, intrinsically linked to how well these processes are designed, executed, and monitored.
Categorization of Business Processes
Organizations consist of numerous interdependent processes, which can be broadly categorized into three types:
- Upper-Management Processes: These govern the strategic direction and overall governance of the organization. Examples include corporate strategy formulation and organizational oversight.
- Operational Processes: These are the core value-generating activities of the business. They encompass functions such as procurement, production or service delivery, marketing, and sales.
- Supporting Processes: These provide essential support to the core operations. Examples include finance and accounting, human resources, and information technology (IT).
Each business process, regardless of its scale, can be conceptualized as a sequence of supplier–customer relationships. Within this framework, every organizational unit, department, or individual function acts as both a customer of the preceding step and a supplier to the next. This interconnected structure ensures a continuous and coordinated flow of value across the organization.
Supplier(s)
Input(s) from one or more suppliers.
→
A Business organization/department, or an individual operation.
→
Customer(s)
Output from one or more customers.
Figure 5.1.1: Business processes form a sequence of suppliers and customers.
Moreover, a major process often comprises multiple sub-processes, each with its own objectives that contribute to the overarching goals of the organization. Both individual firms and broader supply chains consist of numerous such processes and sub-processes. Adopting a process-oriented perspective enables organizations to optimize performance, enhance coordination, and drive continuous improvement.
This approach is formalized in Business Process Management (BPM), which encompasses three key activities:
- Process Design: Structuring processes to align with strategic goals.
- Process Execution: Implementing processes efficiently and effectively.
- Process Monitoring: Continuously evaluating performance to identify areas for improvement.
In the context of operations and supply chain management, two critical aspects of BPM are:
- Managing processes to meet demand
- Addressing process variability
These dimensions are essential for maintaining operational efficiency, responsiveness, and long-term competitiveness.
“4. Process Management: Types of Process and its Implication in Operation Strategy” from Operations Management by Sudhanshu Joshi is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License, except where otherwise noted.—Modifications: Used section 1; reworded; added further content.
