Process Management and Systems Thinking: Foundations for Business Process Analysis

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Process Management

Introduction to Process Management

Process management is a systematic approach to monitoring, controlling, and improving the components and subsystems of a transformation process. The goal is to enhance the quality and efficiency of outputs, which are products or services delivered to customers. This approach is foundational in business operations and underpins many statistical quality control and improvement methods.

Systems and Systems Thinking

Definition of a System

System: A collection or arrangement of interacting components with an ongoing purpose. A system receives inputs, transforms them, and delivers outputs to its environment.
Subsystems: Components within a system that themselves have all the properties of a system.
Owner: An individual or entity that can control and direct the system.
Resources: Both physical (machines, materials, people) and abstract (methods, knowledge) elements under the owner's control.
Boundary: Separates the system from its environment, defined by the area within which the owner can cause change.

Types of Systems

Natural Systems: Living organisms, solar system
Human Activity Systems: Business organizations, universities
Designed Physical Systems: Automobiles, computers
Designed Abstract Systems: Mathematics, logic

Model of a Basic System

A basic system can be represented as:

Supplier	Inputs	Transformation Process	Outputs	Customer
External/Internal	Information, Methods, Energy, Materials, People	Implemented by people and/or machines	Products, Services	External/Internal

Customer feedback is a critical input for continuous improvement.

Hierarchical Subsystems

Systems are often composed of subsystems, each with its own processes and outputs. Variability is inherent in the output of processes, and no two items produced are exactly the same.

Sources of Process Variation

Personnel
Machines
Materials
Methods
Environment

Measurement of process output over time helps identify and control variation.

Systems Thinking vs. Reductionist Thinking

Systems Thinking: Focuses on wholes and their properties, emphasizing the interdependence of parts. Used for complex problems that cannot be reduced.
Reductionist Thinking: Breaks complexity into component parts for separate analysis ("divide and conquer").

Both approaches are complementary in business analysis.

Root Ideas of Systems Thinking

Purpose: The reason the system exists; all activity should contribute to this purpose.
Hierarchy: Systems within systems, with different properties emerging at each level.
Emergence: New properties or behaviors arise at higher levels of organization.
Communication: Essential for learning and control.
Control: Imposing constraints at one level to yield meaningful activity at a higher level.

Benefits of Systems Thinking

Focuses on processes rather than outcomes, enabling prevention of problems.
Recognizes process variation exists in all systems.
Encourages investigation of problems at all levels of the system hierarchy.
Promotes a comprehensive view of organizations, including suppliers and customers as part of the system.
Helps prevent functional silos and isolated "freedoms" within organizations.

Process Management in Organizations

Organizational and Process Levels

Organizational Level: Focuses on strategy, design, performance, interface, and resource management.
Process Level: Focuses on goal alignment, process design, performance management, and resource management within and across functions.

Traditional vs. Process View of Organizations

Traditional View	Process View
Emphasizes authority, accountability, and control; does not reflect interdependence or processes.	Describes processes, reflects interdependence, is customer-oriented, and emphasizes internal/external customer-supplier relationships.

Product/Service Realization Process

Market analysis → Product planning → Product design → Process design → Procurement → Production → Distribution → Customer operations → Customer feedback → Customer satisfaction

Principles and Fundamentals of Process Management

Modern Process Management

Customer orientation
Shared responsibility for quality and productivity
Purposeful data collection
Continuous improvement of quality

Fundamentals of Process Management

Establish objectives of the process.
Identify suppliers and customers to define process boundaries.
Establish ownership and responsibility for process change.
Identify subsystems and their interactions.
Specify details and eliminate factors that distort results.
Identify listening points for performance measurement.
Establish continuous links to customers and suppliers.
Analyze and interpret data for improvement.

Dr. Deming's Points (Selected)

Create and communicate a clear purpose and philosophy.
Improve constantly and forever the system of production and service.
Institute training and leadership.
Drive out fear and encourage teamwork.
Eliminate numerical quotas and slogans.
Encourage education and self-improvement.

Flowcharting a Process

Purpose and Benefits of Flowcharting

First major step in understanding a process.
Reveals what people actually do and uncovers hidden complexity.
Documents the process and identifies redundancies.
Assesses customer focus and identifies improvement opportunities.
Helps identify causes of variation and simplify processes.

Flowchart Symbols

Symbol	Meaning
Rectangle	Operation or Activity
Diamond	Decision, Evaluation, Computation
Parallelogram	Input or Output
Document shape	Document (Input or Output)
Pentagon	Continued on Another Page
Circle	Continued on Same Page
Arrow	Flow Line

Steps in Flowcharting a Process

Identify the process and its objective.
Identify customers and suppliers to establish boundaries.
Construct a macro flowchart (overview with key steps).
Identify activities for detailed analysis.
Construct a micro flowchart for detailed process flow.

Example: Making Tea (Flowchart)

Start → Add water → Boil water → Put tea bag in cup → Water boiled? (Yes/No) → Add water to cup → Making tea → End

Questions to Ask When Using Flowcharts

Where do errors occur?
Which subprocesses generate complaints?
Are there bottlenecks or non-value-adding steps?
What causes variation in output?
Are subprocesses stable and predictable?

Applying Flowcharts in Process Improvement

Understand and simplify the process.
Eliminate complexity and redundancy.
Improve customer orientation.
Identify listening points and causes of variation.

Process Improvement

Focuses on correcting internal and external failures, appraising products and processes, and implementing improvement activities.
Redesigning processes can lead to simplification and increased value.

Example Flowcharting Projects

Producing laundry detergent, balancing a checkbook, sales calls, manufacturing, retail sales, processing insurance payments, forecasting sales, revenue planning, etc.

Additional info: These notes provide foundational concepts for process analysis, which is essential for understanding data collection, process variation, and quality improvement in business statistics. While not directly covering statistical formulas, the content is highly relevant for students preparing for topics such as process control, data analysis, and quality management in business statistics.