Processes go before departments

The approach of Business Process Management for promoting competitiveness in Latin America

We could state that processes are continuously present in our lives. For example, we can buy fruits and sugar (inputs) in order to bake them and offer a cake (output). In that same way, companies purchase raw materials, transform and finally deliver them to their clients. Or the personal department receives curriculums (inputs), runs interviews and finally welcomes a new employee (output). Directives may organize a meeting for gathering ideas (inputs), revise them and finally release the yearly strategic plan. And in this way, businesses run a big amount of processes in all areas (production, sales, personal, information systems, communications, etc.), maybe without even knowing it.

Despite of this, many companies still stick to the traditional view of “departments”, not “processes” when it comes to management. For example, they assign a department focused exclusively on selling clothes, whereas another department for just purchasing cotton. The result: the sales’ department complains that products do not arrive on time; the purchasing department complains that sellers make unrealistic enquiries. And they both complain that people in charge of production do not react quickly when there is an important last minute deal. Thus, they don’t see the whole process; they only focus on their department. The general manager knows this, and he/she gets the job of fixing problems between employees.

What would happen if the company designates a person in charge of the “process of t-shirts”? this person would be accountable for facilitating the communication between the purchasing, production and selling area towards “providing good clothes for our customer”, instead of solving functional requirements, like “get cheap suppliers”, “sell more to the same customers”, etc. This is what we call business process management, which offers clear advantages for companies applying this approach, for example:

• The business strategy will be broader: it won’t just be about improving areas, but complete core processes of the business.
• A well description of processes helps to identify potential points of cooperation between departments. And even to identify unnecessary activities within that process.
• Better communication: departments know what the others are doing, because all are accountable for the process and thus, start working closer.
• It is possible to install software that may help the better control of the whole process, and not just the accountant area, sales, or other.
• The company can better decide which processes are worth to keep and on the other hand, which are not that valuable (for closing or outsourcing).

The productivity battle

Recently the World Bank released a new study indicating that Latin America has not yet won the productivity battle, which would allow entering a virtuous circle of stronger public sectors, higher growth and opportunities for all. We can generate this trend and foster competitiveness if we put business processes and not just the classical departments on the center of decision making. North America, Europe and Asia are actively doing this since the late 90s, we need to put it on our agenda as well.

Source: Piero Ponce

Written by: Piero Ponce
Economist
@pieroponce