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What is BPM?

What is Business Process Management?

  1. A set of performance improvement methodologies (Lean, Six Sigma, etc.)
  2. An approach to optimizing and managing cross-functional value chains
  3. Techniques that enable the full return on investment from IT transformations
  4. A philosophy that creates a culture of collaboration and customer focus
  5. Integrated activities that deliver an outstanding customer experience
  6. A means to leveraging distinctive capabilities for strategic advantage
  7. All of the above

“Process management” has been around for almost 100 years in one form or another. Many organizations have used it to streamline operations, reengineer value chains and shorten service cycle times. These are good tactical outcomes but they only scratch the surface of BPM’s potential.

True BPM delivers sustainable, cross-functional operational excellence that can be leveraged to foster growth, open new markets, create new services, and delight customers. We describe the evolution as Four Waves. It is not necessarily a linear journey; you can take a positive step in all four waves of BPM today.

First Wave: Continuous Process Improvement

Modern BPM was born during the “Quality Revolution” of the 1980s. Total Quality Management (TQM) was an extremely popular team-based performance improvement methodology that spread to all industries. While nobody uses the term TQM anymore, most Continuous Improvement (CI) programs are based on the principles of TQM.

Six Sigma grew out of TQM and added a greater emphasis on statistical tools they can help you understand and manage process variation. It aims for very high levels of performance and introduced new, dedicated quality jobs (greenbelt, black belt). Lean Management is the American expression of the Toyota Production System. While many organizations use its techniques to drive out waste and minimize cycle time, the most important aspect of Lean is that it drives problem-solving down to the front-line.

CI, Six Sigma and Lean are the three most popular flavors in the alphabet soup of performance improvement methodologies. You do not have to religiously follow a single approach. Select the method or combination of methods that are is the best fit for your culture and processes. It is important to note the tools sets for these methodologies overlap. The most important common technique is process mapping. No Wave 1 initiative can succeed if processes are not mapped and understood before analysis begins.

What is TQM/Continuous Improvement?

According to the ABPMP, Continuous Improvement (CI) is an approach to operational process improvement that is based on the need to continually review operations for problems, cost reduction opportunity, streamlining, and other factors that together allow optimization. Continuous improvement activity provides ongoing insight, measurement, and feedback on process performance to drive improvement in the execution of processes. CI builds on the basics quality/problem-solving tools of TQM and relies on small, team-based projects. Essential tools include the process map, pareto charts, scatter diagrams, fishbone diagrams and control charts.

What is Six Sigma?

According to the ABPMP, Six Sigma is a method that drives business performance improvement by reducing or narrowing variation in work or in quality. The goal is to reach a statistical variation of Six Sigma (or six standard deviations of variation) within the limits defined by the customer’s specifications. Since its introduction in 1987, Six Sigma has become one of the most recognized enterprise improvement methodologies for companies seeking to identify business problems, define improvement opportunities and projects, and deliver solutions to realize predictable and repeatable results. Six Sigma adds several statistical techniques to the TQM toolkit, including the t-test, ANOVA and design of experiments.

What is Lean Management?

According to the ABPMP, Lean Management is a philosophy and approach that stresses the elimination of waste or non-value-added work through a focus on continuous improvement to streamline the operations. It is customer-centric and stresses the concept of eliminating any activity that fails to add value to the creation or delivery of a product or service. Lean is focused on providing higher quality, reduced cycle time, and lower costs. Because it produces improved production systems, it is believed to increase production capability and flexibility. But in practice, its concepts can be, and have been, applied in all areas of a business. James Womack and Daniel Jones developed the term “Lean” in their book about the Toyota Production System (TPS).

Second Wave: Business Process Reengineering

The book Reengineering the Corporation was the driving forced behind the Second Wave of Process Management. Reengineering (BPR) preached a more aggressive process improvement approach that leverages information technology to rethink cross-functional performance to achieve dramatic performance improvement. The author’s catch phrase was “Don’t automate, obliterate.” In other words: Don’t tweak existing operations; build a new, better mouse trap.

In truth, Wave 1 and Wave 2 are part of the same continuum: Managing processes to achieve operational excellence. Both help you achieve higher quality and lower costs. Every organization needs to steadily improve processes (via CI) and periodically redesign processes (via BPR). Deciding which approach is appropriate for your current situation is a business decision that is, in part, a function your current level of process effectiveness.

What is Business Process Reengineering (BPR)?

According to the creators of BPR (Michael Hammer and James Champy), business process reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed. Reengineering strives to break away from the old rules about how we organize and conduct business. It involves recognizing and rejecting some of them and then finding imaginative new ways to accomplish work. That is why it has been referred to as “creative destruction.” BPR requires CI/Six Sigma tools (especially process mapping) and techniques that support innovation.

Third Wave: Enterprise Process Management

Operational excellence cannot be sustained unless all management structures and systems are aligned to support business process performance. This is the goal of the Third Wave of Process Management: Enterprise or Cross-Functional Process Management. This revolutionary advance takes the short-term gains from Lean, Six Sigma, reengineering, etc. and makes them long-term assets that deliver consistent business results and strategic advantage.

The Third Wave is not about technology solutions like ERP or BPMS. These systems do aid cross-functional performance by reducing data handoffs, speeding the flow of information across silos and improving accuracy. However the management and behavioral changes are much more important. IT alone cannot change the culture of your organization. Nor can it nurture the unique strengths of your processes and workforce. Only a holistic approach can enable your organization to make the leap from Wave 1 and Wave 2 success to true enterprise-wide BPM .

Click here to further explore Third Wave Concepts.

Fourth Wave: Process-Based Competition

Once excellence is a sustainable asset, your organization’s distinctive capabilities – strengths that are built into the DNA of your culture, work processes and collaborative abilities – can be leveraged to create new business strategies. In other words: Process-Based Competition or the Fourth Wave of BPM.

A great example of this can be found at United Parcel Service:

In order to devise strategies that foster growth, open new markets, create new services for existing customers, and delight existing customers, your organization needs to:

  • Evaluate the strategic potential of core process capabilities
  • Utilize “Blue Ocean” and Process Leveraging techniques to envision breakthroughs
  • Link and align initiatives so that the full promise of the Fourth Wave is delivered

To further explore these concepts, visit our Process-Based Competition page.

BPM Videos: Tools and Perspectives

Please enjoy this collection of videos that addresses a variety of key tools, concepts and management strategies necessary to achieve mature, sustainable BPM. Feel free to reach out to Margaret Powers or complete the form at bottom if you have any questions.

Key Concept: Design vs. Deployment Failures

Holistic Solutions = Sustainable Excellence

Cross-Functional Costing

Key Tool: The System Map

Treating Symptoms vs Finding Solutions

Change: Technical, Behavior, Cultural

Pillars of BPM Success

The Job of Management

Let Orion help you leverage your unique process capabilities to achieve enduring strategic success. Call Margaret Powers today at (800) 510-2117 or submit a question below.

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