Publication: SAM Advanced Management Journal
Publication Date: 22-SEP-05
Delivery: Immediate Online Access
Author: Baker, Gary ; Maddux, Henry
Article Excerpt
For some time manufacturers have realized that the efficiency of their processes is as important as the quality of their products. Their bottom lines reflect both. Now many nonmanufacturing businesses are trying to apply a process view to their operations, and it's not easy. Structural changes may be required in the transition from a traditional functional focus. Technology may be needed to facilitate cross-functional teams. Workers must be educated to the necessity and competitive advantages of a process-oriented organization, and the new focus must be implemented and managed effectively. A case study of GE Aircraft Engines shows the academic concepts in practical operation.
Introduction
Organizations are continually searching for innovative ways to enhance competitiveness. In recent years, techniques directed toward improving business processes have received much attention (Nave, 2002). Hammer (2004) argued that "operations can often be the foundation of strategy and the basis for superior performance." Improving processes with the goal of enhancing the firm's competitive position requires an analysis of both construction and performance processes and also a critical assessment of how individual processes contribute to the firm's business model and strategy. At the highest level, a firm's business model is one large process, made up of thousands of smaller interrelated processes. Magretta (2002) described a firm's strategy as "focusing on defining the competencies that will enable the implementation of that model."
Most process improvement initiatives have focused on operations as opposed to marketing or finance. Historically, operations management has been associated with manufacturing and manufacturing support activities. In the past two decades, process management was established within the operational function of organizations under different names. Beginning in the mid 1980s, most process management attention focused on applying controls in the manufacturing areas. The operational implementation was seen in quality improvement, notably Deming's approach (Deming, 1986), Motorola's six sigma approach (Mikel and Schroeder, 2000), various versions of total quality management (Oakland, 1989), just-in-time manufacturing (Harrison, 1992) and lean thinking (Womack and Jones, 1996). More recently, the term "operations" has evolved to denote all activities involved in bringing products and services to customers, and businesses have been applying the techniques of operations management to the entire spectrum of business operations. Enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM) all provide an opportunity to enhance existing processes and serve as a catalyst for operational innovation.
In the 1990s, much of the attention in the process arena was focused on business process re-engineering (BPR), an approach introduced by Hammer (1990). The potential benefits cited for BPR included increased productivity through reduced process time and costs, improved quality, and greater customer satisfaction. Despite significant investments of time and resources, however, many BPR projects failed to achieve desired results (Holland and Kumar, 1995; Al-Mashari and Zairi, 1999). Valiris and Glykas (1999) found that many methodologies "concentrated on organizational processes without paying attention to the roles and responsibilities of the employees who carry out the activities that compose these processes." Inefficient communication, ineffective management of organizational change, and failure to create essential supporting organizational culture and structure are cited as common reasons for BPR failures (Al-Mashari and Zairi, 1999; Cooper and Markus, 1995). Hammer (2002) claimed that to be successful, performance directed improvement initiatives such as balanced scorecard, supply chain integration, and six sigma must be implemented under an overall process-management umbrella.
A more comprehensive approach to process management provides a variety of options that help organizations "avoid the tendency to fall prey to the hype of a new management fad" (DeToro and McCabe, 1997). Implementing process management faces several significant challenges. First, process management requires structural changes that enable a business to operate around processes instead of functions. For example, process management often uses both technology and cross-functional teams to integrate activities that span traditional functional boundaries. Second, the rapid changes associated with moving to a process management environment often require workers to adapt. Pressure to improve and change the status quo can result in constant tension among individual workers. Finally, process management requires knowledgeable individuals who are able to manage in the increasingly complex process-oriented environment. While recognizing the need to deal effectively with the unique issues posed in each of these three areas, the primary purpose of this paper is to enable process workers and organizations to meet the last challenge. We propose to accomplish this by providing the conceptual process building blocks that employees can use to pursue their organization's chosen strategies through effective process management.
The pursuit of an organization's strategy and support for core competencies requires carefully adopting and implementing a process view. To accomplish this, we suggest an evolutionary pattern composed of four stages of development on a continuum of process maturity. We link this pattern of evolution to the one developed by Hayes and Wheelwright (1984) in their seminal treatment of manufacturing strategy. Their strategic continuum had four stages:
(1) Internally neutral. In this mode, firms minimize manufacturing's negative potential. Internal control systems are used for measuring performance. Outside experts direct much of the decision making. Operations are reactive.
(2) Externally neutral. Finns keep pace with industry competitors and technology. The focus is primarily on capital investment in order to compete.
(3) Internally supportive. All manufacturing decisions are screened to ensure consistency with business strategy. Business strategy drives changes in operations structure automatically. Long-term needs for change are systematically addressed.
(4) Externally supportive. Assessment of process and product trends drives change in operational design on a continual basis. The capability of the operations function is a primary input to long-term strategic planning. Proactive planning of needs to meet emerging challenges is a determining characteristic.
Hayes and Wheelwright proposed that "given the inertia of most large organizations, any enhancement of manufacturing's competitive contribution tends to take place through systematic movements from one stage to an adjacent one." Stage 4 firms have experienced an evolution to the point of continual and in-depth assessment and the adjustment of operational capability through process refinement. The industries in which they compete are therefore called "process-intensive" because all players must match leader's process performance or...
NOTE: All illustrations and photos have been removed from this article.
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