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Arun Hariharan

Management

Business Process Management Systems Must Be Interlinked

Performance measurements must be an integral component of the business process definition

Published: Wednesday, September 27, 2017 - 11:03

In my October 2013 column, “Standardize to Improve,” I dealt with business process mapping in detail. Business process management systems (BPMS) comprise the entire gamut of documenting process steps, assigning ownership to process owners, and often, process-compliance audits to check whether you do what you document, and document what you do.

In my August 2011 column, “Layers of Performance Measurement,” I spoke about the importance of having a set of relevant and interlinked performance measurements or balanced performance measurement systems (BPMS).

While it is important to have both of the above BPMS in place, it is equally important to ensure that these two are interlinked. Better still, performance measurements must be integral components of the business process definition itself.

Let’s take the analogy of an automobile. Driving the car is the process. The various readings on the car’s dashboard—e.g., speed, fuel level, engine temperature, and so forth—are performance measurements. You would laugh at me if I were to say, “Give me a car with just four wheels, a brake, and an accelerator. I don’t need a dashboard. After all, I know how to drive!”

The consequences of driving a car without a dashboard can be disastrous. What if my car had a dashboard, but I refused to look at it? Equally disastrous. What if I looked at my dashboard, but it showed the wrong readings (for example, the speedometer shows 40 when I’m doing 80, or the fuel-level indicator shows full when my tank is almost empty)? Again, no less disastrous. On the other hand, what if my car had 50 instruments showing different types of measurements on the dashboard? It would virtually impossible for me to pay attention to all of these instruments.

Thus, the car example highlights four scenarios that can be equally dangerous:
• Having no performance measurements, or not having adequate performance measures
• Having performance measurements, but ignoring them
• Having inaccurate performance data (that do not reflect the actual state of the process)
• Having too many measurements, which make it impossible for you to focus on the “vital few.”

Businesses or other organizations where one or more of the above scenarios are true are not uncommon. Especially when it comes to performance measures related to processes or customers.

Take the example of a pizza joint. In this business, you have standardized processes such as order taking, pizza making, and delivery. Each of these processes would consist of a series of steps. Possibly these steps are documented in process maps. Further, each of these processes would (or should) have performance measures. Examples of performance measures (from the customer’s point of view) are:
• Quality of the pizza
• Time to fulfill the order

These two overall or “end-to-end” measures can be further broken down into in-process measures (i.e., ones that will affect performance on the overall measure). See figure 1.

Overall measure

 In-process measures

Pizza quality

  • Quality of Ingredients
  • Accuracy of order taking (an inaccurately taken order can result in customer complaints)
  • Speed of delivery (delayed delivery can result in the pizza becoming cold or soggy)
  • Condition of equipment (defective equipment can affect quality)
  • Training of pizza-making employees

Time to fulfill order

  • Time to take order
  • Time to make pizza
  • Time to deliver

Figure 1: Overall (end-to-end) and in-process measures

How do I measure performance?

The best (or most important) way to measure your performance on overall or “end-to-end” measures is to—what else?—ask the customers. In the pizza example, ask the customers if they are happy with the quality of your pizza and if it was delivered within the promised time. If you have millions of customers, you may take feedback from a random sample of customers. Customer complaints about quality or late deliveries are another useful source of data.

In addition to the “voice of the customer,” you should have your own internal measurement of pizza quality (perhaps by hiring an expert taster who will check samples for various quality parameters). You can also measure the time taken for every delivery (independent of customer feedback or complaints). Thus, if a thousand pizzas are delivered in a day, you can measure how many of them met quality standards, and how many were delivered on time.

In addition to the end-to-end measurements, you will need in-process measurements so you can pinpoint where exactly an opportunity for improvement lies. For example, in order to be able to do something about a high number of complaints regarding delayed order fulfillment, you will need to know where exactly in the overall process the delay lies. Is it order taking, pizza making, or delivery? If your data show you that it is the delivery that is getting delayed, you will further need to know if the delays are happening on particular routes or with a particular delivery-person. This will enable to you to get to the root of the problem and take focused corrective action.

An example of an overall measurement and how to measure it is shown in figure 2.

 Overall (end-to-end) measurement

 How to measure voice of the customer

 How to measure voice of the end-to-end process

 How to measure voice of the process (in-process)

Timely order fulfillment (from order to delivery)

  • Customer survey feedback for on-time delivery
  • Customer complaints on delayed delivery

Percent of all orders that were delivered within target time

  • Percent of all orders where order taking was within target time (from customer call to order given for pizza making)

 

  • Percent of all orders where pizza making was on time (from order receipt to pizza being ready for delivery)
  • Percent of all orders where field delivery was on time (from pizza being ready to reaching customer’s hands)

Figure 2: How to measure overall and in-process measures (example)

Any self-respecting pizza business would have process maps showing the steps and substeps of order taking, pizza making, and delivery. Many of them also have performance measurements. The questions that we need to ask ourselves are:
• Have we thought about what we need to do (i.e., process steps) and how to find out if we are doing it well (performance measures)? Are the relationships between these two determined in an integrated manner, simultaneously? Or are process mapping and performance measurement two discrete, stand-alone events that have nothing to do with each other?
• Have we ensured a strong relationship between the processes and performance measurements?
• Have we thought through how data for performance measurement will be obtained, and at what frequency?

Processes and performance measurements are, in a sense, made for each other. One without the other does not make sense. Performance measurement tells us what we need to improve, while the process is where we make the improvement. For example, the pizza joint’s performance measurement data showed a high number of complaints pertaining to delayed order fulfillment. After analyzing the data and drilling down, they were able to pin-point where exactly in the order-to-delivery process maximum delays were occurring. Once the root cause of the problem was found out, they were able to make the necessary process improvement to solve the problem.

The message of this column is simple: Make sure that process mapping and defining performance measures are done simultaneously in an integrated manner.

Your process maps must document the steps and outcomes of each business process. Performance measures are nothing but indicators that tell you how well (or not so well) you are achieving the process outcomes. Usually, you will be able to identify at least one measure of quality or accuracy, and one measure of timeliness for a process. For example, the pizza-making process will have pizza quality and time to prepare as measurements.

Stand-alone measures that aren’t linked to any process are of little or no use.

Performance measurement is not an end in itself. The only thing that matters is what process-improvement actions get implemented as a consequence of the performance measurement. Therefore, it is important to identify the vital few performance measures, and focus on them in a sustained manner.

Discuss

About The Author

Arun Hariharan’s picture

Arun Hariharan

Arun Hariharan, author of Continuous Permanent Improvement (ASQ 2014), and The Strategic Knowledge Management Handbook (ASQ 2015) is a strategic quality, knowledge management (KM), and performance management practitioner with nearly three decades of experience in these fields. He has worked with several large companies and helped them achieve substantial and sustained results through quality and customer focus. He is the founder and CEO of The CPi Coach, a company that provides partnership, consulting, and training in business excellence and related areas. Former roles held by Hariharan include president of quality and knowledge management at Reliance Capital Ltd, and senior vice-president of quality and knowledge management at Bharti Airtel Ltd, India. He is a frequent speaker at quality and KM events around the world. He is also the author of more than 50 published papers on quality and KM.