February 17, 2017

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From Process Approach to Entity Approach – New way to enhance Enterprise Efficiency

The traditional way of analyzing an enterprise’s function is to understand its business processes and measure its efficiency by benchmarking the linked KPIs. This approach has produced results and many transformation initiatives have been executed via this method. A business process is a set of activities performed for the over-all execution of an organizational function. The concept of business process mapping consists of a recording of the business processes from high-level functions to low-level activities carried out by individuals and enabled by IT systems.

Traditionally SCOR Framework has been used extensively for such activity. SCOR® stands for Supply Chain Operations Reference – a process reference model developed by the Supply Chain Council. It basically consists of two components – the framework and reference model.

SCOR Framework did not produce a satisfactory result in many cases.

Any business process framework consists of the following dimensions - business processes, metrics, best- practices, gap analyses, organizational change management and design. It connects these three aspects into relationships between processes, in terms of material, information and workflows. It consists of 5 Distinct Processes– PLAN, SOURCE, MAKE, DELIVER and RETURN for MTS / MTO / ETO configurations of the supply chain.

Using SCOR Modelling is a very old and traditional concept. In many cases, it did not produce a satisfactory result. Now if we analyze what interactions are happening through these five fundamental processes, we can see that at any point of time they are interacting with either CUSTOMER or various other PARTNERS. And all these five processes are directly and indirectly dealing with various types of OPERATIONS or SERVICES.

Let us look at the diagram below.

The process ‘PLAN’ is done through various ‘OPERATIONS’. The process ‘SOURCE’ is dealing with suppliers which are nothing but ‘PARTNERS’. The process ‘MAKE’ comprises of various ‘OPERATIONS’. Process ‘DELIVER’ and ‘RETURN’ deal with ‘SERVICES’ and ‘OPERATIONS’ and ‘PARTNERS’. Since all the time processes are dealing with various entities, it may be a wise approach to see the expectation and satisfaction level of these entities. If enterprises analyses these four entities, its evolution, working principle etc. it will be easier for the enterprises to deliver best results. Enterprises can identify best practices, right level process changes to satisfy the respective entity in the right way.

One way of interpretation is that enterprises can use the top down approach by understanding the expectation of specific entity and getting its process right with the right blend of best practices to deal with this entity.

A new approach of CUSTOMER 360, PARTNER 360, OPERATIONS 360 and SERVICES 360 will definitely help enterprises increase its efficiency.