V.Tupkalo, Doctor of Engineering Science, Professor
S.Tupkalo
Process approach to management: from declaration of standard ISO 9001:2000
to methodological basis of process management theory
This article was published in the magazine «Systems of management, navigation and communication»- Kiev. – 2007. – Issue 4. – p. 114-118.
This article covers the elements of scientific-methods mechanism of current trend of general theory of enterprise management – the theory of process management.
process management, the theory of process management, tasks of synthesis of process system of management
Introduction
One of the current methodology of enterprise management is based on process approach to management, which is particularly declared by the standard ISO 9001:2000. This methodology allows to optimize business processes, to increase the quality of enterprise management. Relevance of process-oriented management concept is that it factually leads to disappearing of boundaries between the management of production quality and enterprise management. Quality management and general management are combined into process-oriented management.
The questions of process approach to company management are often raised in works of foreign and native authors. Despite the fact that there are so many works on that topic many of them have system-wide character or just show some aspects of practical appliance of process-oriented management. But that does not allow to bind together theory and methodology with the problems of real building and development of system of process-oriented management. Today the reality is so that the present “vacuum” in development of methodology of enterprise management is full of methodology of questionable quality. Also there is a row of mythological conceptions about practical realization of enterprise process management. The existing polysemy of the notions “process” and “business-process” is the bright example to that fact [1, 2].
The aim of this article is to explain the empiric data and basic tasks of synthesis of process system of enterprise management which were proved by the authors of this article while performing several consulting projects on establishment of process management on native enterprises [www.tupkalo.com.ua].
Task of the synthesis of process-oriented enterprise management system
The key elements of synthesis are notions “business process” and “conceptual model of process management system of enterprise”.
While defining the notion “business process” it is considered that the management system of any enterprise is multistage system of cooperation among management elements. So in the context of paradigm of process-oriented management the control objects are business processes, and the system of process management is the system of hierarchically connected managerial and technological business processes.
Definition 1. Managerial process (MP) is periodically repeated chain of functional actions “Plan-Do-Check-Act” (PDCA) performed by the official (chief executive).
Definition 2. Managerial business process (MBP) is periodically PDCA controlled hierarchy of internal and interdependent functional actions of chief executive and his subordinates who are middle level managers whose final task is to make managerial decisions for executives (See Figure 1).
MBP = MP of chief executive U (MP subordinate managers)
i i
Figure 1. “The tree” of managerial business process
Definition 3. Production process (PP) is the chain of regular functional actions of officials (executives) whose final task is the creation of the value (material or informational) for a consumer (customer).
Definition 4. Production business process (PBP) is periodically PDCA controlled hierarchy of internal and interdependent functional actions of manager and technological (operational) process which is under his direct control (See Figure 2).
Process management construction (concept model of synthesis on the Figure 3) is similar to house building – laying the foundation, walling and roofing (in such succession). The final stage (roofing) of the managerial system construction is computerized information-gathering, data-processing and reporting system for management. The walls in that building are managerial and technological (operational) business-processes, accounting policy, assessment of efficiency system and operating activity (KPI Key Performance Indicator/ BSC Balanced Scorecard [3]). So what is the foundation of the system? The foundation of the managerial system is the strategy of enterprise development according to BSC-metrics of process management (according to the centers of strategic responsibility of second stage management).
PBP = MP of chief executive U Production process
Figure 2. Production business process
Figure 3. The concept model of synthesis of system of process management of enterprise
Basic tasks of synthesis of process management systems
The statistics of performed consulting projects [www.tupkalo.com.ua] shows that the standard set of practical tasks (business tasks) the solutions of which are the most actual for native enterprises are:
- Optimization of organizational arrangement for reduction of managerial cost and increase of control of operating activity.
- The development of system of strategic and operating objectives of enterprise management and indicator of their achievability (KPI/BSC) for the strategic managerial system implantation.
- Designation, optimization and graphical description of enterprise business-process system for the following efficient adoption of computer-aided management systems (ERP, CRM, etc.), standardization (increase of controllability) of business activity according to accounting and managerial tasks, providing replication of business-processes in the branch.
- The development of rating system of staff activity for adoption of effective motivation system based on monitoring of achievability of set business tasks (Management by Objectives system (MBO)).
- Optimization of managerial flow of documents through the whole vertical line of operating activity management for time reduction of managerial decision making.
- The development of financial budgeting system of enterprise operating activity.
The solution of these managerial tasks required the solution of basic theory-methodological task of synthesis.
They are:
1. The establishment of bijective reflection “business-processes – enterprise organizational arrangement”. The result of this task solution is the method of forming managerial and technological business-processes matrix regarding enterprise organizational arrangement by criterion “one technological business-process within one organization department” [4].
2. Synthesis of balanced managerial model based on strategic business-objectives of top level of making managerial decisions (BSC-model). The result of this task solution is the method of bijective reflection of managerial and technological business-processes matrix in graph model of cooperation of centers of top level (strategic) responsibility (BSC- graph of management by Tupkalo). The view of basic (4 managerial business-metrics) BSC-graph of management is displayed on Figure 4.
3. The establishment of bijective reflection “BSC- model of company managerial system (BSC- graph of management by Tupkalo) – pyramid of process management (the pyramid of process management by Tupkalo)” [4]. The result of this task solution is the method of bijective reflection of BSC-graph of management in pyramid of enterprise process management (separate strategic business-unit of enterprise) and its optimization by “span of control”. The general view of the process management pyramid is displayed on the Figure 5.
4. Synthesis of PDCA-model of strategic managerial system based on the development of complex mission. The result of this task solution is two methods:
- the method of synthesis of PDCA-models of strategic system of enterprise management by original data of enterprise complex mission and BSC-graph of management;
- the method of synthesis of BSC-card (the tree of strategic objectives and indicator of their achievability) based on cost of control criterion.
5. The establishment of bijective reflection of “process management pyramid – the system of balanced scorecard of achievability of business objectives of management by BSC-graph of management by Tupkalo”. The result of this task solution is the method of BSC synthesis, the key element of which is the notion “BSC-cone” (BSC-cone by Tupkalo, see Figure 6). The basic model of the system of balanced scorecard of achievability of business objectives of management is displayed on Figure 7.
6. Synthesis of model of business planning and controlling based on PDCA-diagram of its process management pyramid. The result of this task solution is the method of synthesis based on the principle of “cascade waterfall” of the system of interdependent PDCA-diagram of the managers who are realizing the chain of functional managerial actions “Plan-Do-Check-Act” through the year [4].
7. The establishment of bijective reflection of “process management pyramid – pyramid of MBO-cards”. The result of this task solution is the method of development of original data for realization of staff-motivation system on process-oriented enterprise. The core of the method is displayed on Figure 8.
8. The establishment of relevant surjective reflection of summary and reports about enterprise operating activity for its centers of managerial responsibility. The result of this task solution is the method of optimization of managerial flow of documents by the developed criterions of continuity and completeness of chain creation of managerial information value for enterprise management (through the whole vertical line of process management pyramid).
9. The establishment of bijective accordance of the pyramid of enterprise process management with operating budget of its centers of managerial responsibility on the principle of: one solved operating task within one business-process - one subdivision –one operating budget. The result of this task solution is the practical method of process budgeting.
The conclusions
The empiric data and basic tasks of synthesis of process system of enterprise management (above) can be regarded as theoretical basis of theory of process management and together with the methods of solution of application tasks of process management and they represent scientific-methodic mechanism of process management in its known conception [5].
Bibliography
- V. Tupkalo Restructuring of enterprises: process approach // Corporate systems.-2004.-¹2.
- O.Vynogradova Reengineering of business-processes in current management: Monography. - Donetzk: Donetzk State University of Economics and Trade named after M. Tugan-Baranovskiy. 2005.-195 p.
3. copy
- V.Tupkalo Restructuring of enterprises based on process approach to management //Business Education in Ukraine.-2005.-¹8.
- Dissertation. Methodological recommendations for candidate of scientific degree/ V.Tupkalo, A.Serdiuk, S.Cherepkov, - Kharkov: Kharkov Institute of Management, 2000. - 158 p.
Figure 4. The graph model of cooperation of centers of top level (strategic) responsibility
(basic BSC- graph of management by Tupkalo).
Figure 5. Pyramid of process management
(the pyramid of process management by Tupkalo)
Figure 6. BSC-cone (BSC-cone by Tupkalo)
Figure 7. The basic model of the system of balanced scorecard of achievability
of business objectives of management (4 managerial business-metrics)
Figure 8. The methodology of forming MBO-cards of staff-motivation system
