The million $ question is how to increase Production, Revenues, Market Share and Customer Satisfaction and finally the Share Holders Value. The natural corollary is the question of Cost Reduction.
Every Business does value addition. There is an output at the end of the value addition.
To do the value addition, Businesses create elaborate
processes. Some Processes are core while other are created to support the core processes.
For example a Camera Manufacturer wants to make Cameras and to sell them in the market.
Component Supply and Inventory
Thus the activities related Manufacturing form the Core Processes. To use commonly used metaphors, we would say that the following Processes are core to the Camera Manufacturer:
Production and its Planning
Production Capital Maintenance
Marketing and Sale of the Cameras
However, it would not take much to understand that to effect the above mentioned processes, the Camera Manufacturer needs to people, machines, and most importantly access to Money/Finance to get the first two! From these needs comes about the need for Support Processes.
Thus the Camera Manufacturer has support processes of Human Resources, Information Technology, Customer Support (for Product, Sales and Service) etc.
Every Business Process or group thereof requires the following for getting initiated and implemented:
Information for output or decision making. For example, to make a sale, the Company needs to know
the buyer details, taxation rates, inventory position of finished goods, quantity ordered and the sales price.
All this information forms the backbone of Sale Process. Similarly, while creating a marketing plan,
the Company needs demographics and market survey.
Communications modes for interaction between various stakeholders of a Process. Specialization requires
that all the stakeholders interact to deliver the whole output. If the production planning manager cannot
interact/communicate with its Vendor, how would the Production take place?
Workflow. Every Process is a series of inter-related activities performed either by people or by machines
(with or without the help of people). Thus every Process has embedded workflow embedded within it.
In a nut-shell, Businesses have Processes to do what they have to do. Thus, if there were something which could:
enable creation of better processes which till now could not be implemented due to cost or practicality.
For example, the Camera Manufacturer would like to sell his Cameras in the entire World. However, the cost of
organizing and maintaining such a process would be stupendous.
enable creation of new processes which were not possible due to technological or cost constraints
reduce the time taken to effect workflow/activities embedded in the Process. The Camera Company would
like its customer to get the Repairs done in least amount of time. If the Repair Center could get predictive
demand for Spare Parts well in advance (based on error/failure rate of components of critical Parts as
a % of Sales figures), its Repair Turn Around Time could be brought down considerably.
provide more reliable and timely information. If the Camera Company could get timely demand pattern from
its Sales Team, it could plan its Production with minimum chances of getting straddled with Dead Stock.
Reliable and timely information begets better decision making.
reduce cost by making activities less time consuming or changing the form and shape of the activities.
Instead of getting a Fax by the overseas branch office for supply of Cameras, if the Company could get the
information in seconds at virtually zero cost, the cost of Sales would go down and consequently, the Company
could think about reducing the Sale Price. This would also have the indirect effect of increasing Sales and hence
the market share.