Is the Business End of Your Business Giving You the Business?

by Dr. Gordon D. Booth

In a very general sense, we can define a process to be any group of activities that convert one or more inputs into outputs. A process uses the resources of the organization to produce a result. Therefore, a process can be either effective or ineffective; it can be efficient or inefficient.

Every organization has two types of processes: production processes and business processes.

A production process is any process that is involved directly in the development or production of the product. This is equally true when the product is a service as when the product is a tangible, manufactured object.

A business process can be any process that supports the production process or any process that provides a service internally. Examples of business processes are the processing of orders, shipping, payroll, human resources, and the engineering change process. A business process provides support to the delivery of the organization's product, but not in the direct production of that product.

Unfortunately in many organizations, almost all of the resources expended on quality efforts, are directed to the production processes. Often, the reason for this one-sided effort is the result of an incorrect perception of the importance of business processes on the organization's profits.

Some of the most substantial costs--or losses--to an organization are the results of negative impressions the customer has of the organization. It has been estimated that a customer is five times more likely to turn against an organization due to poor business processes than due to poor products.

Popular misconceptions of business processes are that they don't cost the organization much and little can be gained by improving them. It is also commonly believed that business processes cannot be controlled. They can be. Often process improvement methods, designed specifically for business processes, can result in tremendous direct savings to an organization. However, the greatest benefit comes in an overall improvement of the image of the organization as it is held by the customer. An improved image can bring about huge savings and improved market share.

Every organization would do well to take a new look at their business processes with an eye toward improving them just as diligently as they work on improving their production processes.