ST102E - Lesson 3: Business Process Management, Organizational Structure, and Risk Management

Business Process Management (BPM)

• Definition: A set of correlated, interrelated activities leading to a result; focuses on continuously improving processes to achieve specific business objectives.
• Purpose: To ensure that customer needs are met, maximizing satisfaction through effective process management.

Importance of Process Maps

• Definition: A visual representation of processes within a business. Essential for understanding, implementing, and optimizing processes regardless of business size.
• Key Benefits: Helps streamline service delivery, manage operations effectively, and enhance customer satisfaction.

Steps to Map a Company's Processes

1. Identify Activities
   • Create a comprehensive list of services and activities.
   • Example: For a sneaker company named Baskets In Love, key activities include order processing, purchasing raw materials, designs creation, testing, production, delivery, invoicing, and training.
2. Turn Services into Processes
   • Categorize activities into processes when they are sizeable enough for focused study.
   • Example Processes:
     • Order Processing (Customer service team)
     • R&D Process (Design Office team)
     • Production Process (Production team)

Types of Business Processes

• Operating Processes: Core functions that directly contribute to customer satisfaction.
• Managing Processes: Oversee and control operational processes, ensuring objectives are met.
• Supporting Processes: Facilitate operational tasks, such as HR, IT, and administrative support.

Organizational Structure

• Definition: A framework that dictates how activities are directed to achieve organizational goals, including roles and communication flows.
• Types:
  • Functional Structure: Groups employees by specialties; clear roles but may hinder interdepartmental communication.
  • Divisional Structure: Organizes teams based on product/project; encourages flexibility but can lead to inefficiencies.
  • Matrix Structure: Combines functional and divisional structures, promoting collaboration but can create confusion in reporting.
  • Flatarchy: A hybrid model that reduces hierarchy for faster decision-making, usually in smaller organizations.

Risk Management

• Definition: Risk refers to the potential variability in outcomes, particularly for investments.
• Types of Risk:
  • Strategic Risks: Market changes and competitive pressures.
  • Financial Risks: Issues like liquidity and credit risk.
  • Operational Risks: Disruption in production processes.
  • Compliance Risks: Non-adherence to regulatory standards.
  • Reputational Risks: Risks that impact public perception.
  • Environmental Risks: Natural disasters and environmental issues.

Ishikawa Diagram

• Definition: A visual tool used to identify potential causes of a problem, often resembling a fishbone structure.
• Purpose: Helps in diagnosing issues in processes by categorizing various causal factors.
• Steps to Construct: Determine the problem, identify major categories of causes, and drill down to specific factors.

Conclusion

• Effective BPM, understanding organizational structures, and robust risk management strategies are critical for optimizing business operations, ensuring success, and adapting to market dynamics. Continuous improvement is necessary to meet customer needs and business objectives.