ON
PROCESS MANAGEMENT (PM): THE APPLICABILITY OF MICHAEL HAMMER’S[1]
THEORY IN ARGENTINA
Hernán Bello
Operations Specialist, Argentina
E-mail: hbello76@hotmail.com
Leandro A. Viltard
Pontificia Universidad Católica Argentina
Graduate School of Business, Facultad de Ciencias
Económicas Universidad de Palermo, Argentina
Universidad de San Isidro (USI), Argentina
Universidad del Pacífico, Ecuador
Universidad Nacional de La Pampa, Argentina
Universidad
Nacional de Luján, Argentina
Universidad Nacional del Comahue, Argentina
E-mail: lviltard@yahoo.com.ar
Submission: 09/04/2018
Revision: 08/05/2018
Accept: 28/05/2018
ABSTRACT
This article explores the applicability of Hammer’s
theories on Operational Innovation (OI), Operational Excellence (OE) and
processes, on firms of different industrial sectors and sizes, located in
Argentina. The hypothesis of this study -which was corroborated- suggests that
the manager’s role is supported by what is called Process Management (PM),
which deals with performance gaps in a given period of time. In this context,
OE, OI and processes’ understanding becomes an important constituent of the management
activity. Through the implementation of a holistic PM-based perspective in many
more organizations it is possible to boost results, achieve superior levels of
performance and offer the right customer value. Specifically, a process is
represented by a sequence of activities. It allows installing, following and
measuring an operation, and is based on five enablers and four capabilities that are
explained in this study. This is an exploratory and descriptive work, with a
qualitative methodology. Also, this study has a not experimental/transversal
design. It is based on Hammer’s theories on the matter, which were complemented
with executives/managers' interviews of different multinationals and local
firms located in Argentina. debt crowdfunding in Latin America and Mexico. Implications
for lenders, researchers and policy-makers are also discussed.
Keywords: Process;
Operation; Innovation; Excellence; Michael Hammer
1. INTRODUCTION
In
accordance with Investopedia (2018), Operations Management (OM) is about:
· The
transformation of resources/inputs -staff, materials, equipment and technology- into
goods, services or other results.
· The
creation of deliver value to customers, based on clients’ wants and the abilities of the company.
· Efficiency, maximizing organizational profits.
· Handling strategic issues, like determining the
manufacturing plants’ size and role; project management methods and the
implementation of information technologies networks.
· Supply chain and logistics, dealing with local and
global trends, customer demand and availability of resources.
· Adequate feedback of each OM trail, which is basic for
every department and process improvement.
· Processes, which consist of two or more connected activities.
As a
result, it is suggested that OM must involve the understanding of the different
company processes and be involved in coordinating and developing new processes and
current structures. In addition, the key two drivers of an Operations Manager
are organization and productivity.
But,
as Hammer (2004) remarks, Operations has become a second-class area within many
organizations as it has lost its charm in front of others like Strategy,
Marketing or Finance.
Finally,
management literature is vast when speaking about processes: process improvement, new product development
process, buying process, business processes, investment process, process chain,
and the like are commonly used in the administrative jargon. But, what is the
in-depth meaning and importance of process management? And, why it is so useful
a process-based approach for the current organizations?
1.1.
Hypothesis
The
hypothesis of this work says that the manager’s role is supported on a
relatively simple game called Process Management (PM) and processes deal with
performance gaps in a given period of time. In this environment, OE, OI and
processes’ understanding become an important constituent of the managers’
everyday activity.
1.2.
General
Objective
The
objective of this investigation is to
study the applicability to Argentina’s firms of theories on OE, OI and
processes proposed by Michael Hammer, helping organizations to achieve new
levels of productivity and organizational improvement.
1.3.
Design
methodology and analysis
This is an exploratory and descriptive work, with a
qualitative methodology.
The investigation design is not
experimental and, among them, transversal as it is referred to a precise moment
in time.
The analysis unit included the study
Process Management (PM), Operational Innovation (OI) and Operational Excellence
(OE), It is based on Hammer’s theories on the
matter, which were complemented with executives/managers' interviews of
different multinationals and local firms located in Argentina.
This research was performed in the
period August, 2017-April, 2018, in Buenos Aires, Argentina.
1.4.
Research
limitations/clarifications
In this work it was included the
necessary information needed to support -in a reasonable way- the basis of this
study.
As this investigation is based on Michael
Hammer’s theories on OE, OI and processes and in a field work of different
firms located in Argentina, it is not the aim of this study to confront
different authors on the matter, but to conclude on Hammer’s theories
applicability.
Conclusions are based on what it is
exposed in this investigation and -as a qualitative research- the results that
are shown cannot be generalized; however, they may be useful for management
decisions.
1.5.
Findings
Many factors are putting the game
into the field of Operations and PM, a relatively simple game that is being
left aside in many organizations. That is the reason why Operational Innovation
(OI), Operational Excellence (OE) and processes should be reconsidered, no
matter the firm’s size and location. The organization and skills needed are in
a direct connection with their proper implementation.
It is stated that boosting results
is connected to better ways of doing new or existing activities, but
OI proposes major changes in how work is conducted, being the basis for
superior performance in the long run. On the contrary, OE is not enough to win
open games and it is referred to the short run.
Although
efforts should be done in order to accelerate OI implementation, there are
remarked inhibitors that should be surpassed. Rethinking every area and
redesigning external and internal processes -with disruptive operation modes
and new methodologies- has become a managerial must.
As a
consequence, it is recommended a broader process-based approach to transform
organizations and that processes represent a sequence of activities which
allows installing, following and measuring an operation. The final objective is
to deliver high-performance results and the right value to customers, focusing
management activity on priority matters –thanks to the five process enablers
and four capabilities presented- and allowing less confused, hesitant and
unproductive activities and decisions at business unit level. Finally, it is
concluded that the manager’s role is supported on PM, dealing with performance
gaps in a given period of time.
As
processes are compound by inputs, outputs, customers, suppliers and related
documentation, the field work performed showed that there were national and
multinational organizations in Argentina that offered a value added to society
and stockholders, taking into consideration a process-based perspective. OE and
OI were being mostly applied in order to boost and deliver high-performance
results.
A
fundamental conclusion of this investigation is that to achieve higher
performance levels and the right customer value a holistic PM-based perspective
should be put in place in every area of many more organizations.
1.6.
Originality
and value
Sometime, simple games are missing
or forgotten. In this study, it is said that some basic management routs are
becoming an imperative and they must be revalued as various
activities/functions -in many firms- are not seen at a same level of others. As
a consequence, PM, OE and OI has become a must in the competitive arena,
helping to achieve new levels of productivity, customer value added and
contribution to society.
As a result, this study may be taken
as a base for executives and entrepreneurs when taking decisions, and as a
driver to improve results and effectiveness in their fields of action.
2. THEORETICAL REFERENCES
In this section, there are covered
Hammer’s understandings on Operational Innovation (OI), Operational Excellence
(OE) and how to redesign internal and external processes as they are the key
theoretical references in which this study is based.
2.1.
Operational
Innovation (OI) and Operational Excellence (OE)
OI
and OE have different basis and applications in the business arena. Hammer (2004)
suggests that OI is connected with the invention and deployment of new ways of
doing things, and that it fuels extraordinary results for companies like Wal
Mart, Dell and Toyota. In Wal Mart, the cross docking helped inventory
reduction and lower prices to customers; in Dell a new business model boomed
sales for many years and for Toyota the production system was rethought,
offering a better way of doing their work in their industry.
The
author says that Progressive Insurance -a company which handles 10.000 claims a
day- represents a case of OI in its industry. They focused on high-risk
drivers, and reinvented customer claims processing to increase customer
satisfaction and to lower costs. Customers call the company and within 9 hours
an adjuster inspects the vehicle, prepares an on-site estimate of the damage,
and -if possible- writes a check on the spot.
There
were observed some benefits, like: a shortened the claim cycle time, an
improvement on the customer claim experience and costs reductions, as they were
not having an inventory of damaged vehicles or they had not to rent replacement
cars. In addition and because of the claims velocity, frauds were reduced as it
is easier to investigate a car crash when witness didn’t leave or skid marks
weren't erased. In addition, operating costs were lowered as fewer employees
were managing damages, observing a reduction in claims payout as customers
accepted less money for less inconveniences and for getting the money sooner.
Also,
it was introduced a system which allowed customers, by calling an 800 number or
visiting a web site, the comparison with 3 competitors’ rates. When a customer
had a history of good driving behavior, Progressive Insurance made a contact
-through their applications- with the credit agency and lowered the price to
the customer.
On
the contrary, Hammer (2004) indicates that OE is referred to high performance
via changes in existing modes of operation, reducing errors, delays and costs.
So, it is not changed what is being done. He offers some examples: new ways of
filling orders, providing customer services, developing products or doing what
is being done in a company but in a different way.
The
following Figure 1 remarks the differences between OE and OI that were
mentioned before:
Figure
1: OI and OE differences
As a
conclusion, the author indicates that OI is reliable and low cost in comparison
with other ways that organizations have to boost growth (like acquisitions,
technology investments and market campaigns) and that some signs of what is
happening -like rampant global competition, lower growth, stagnant revenues,
overcapacity, commoditized service offerings, and lowered pricing power- are
putting the game in the field of Operations, lowering costs and prices, and
giving better quality and service.
Also,
Hammer (2004) admits that OE is not enough to win the game. Excellence in
execution can only win a close game, not an open one. As totally different ways
of execution are proposed to be ahead of competition, OI is shown as a major
change in how departments conduct their work and how work is done, rippling
every aspect of the organization, from measurements and reward systems to job
designs and organizational structures. As a conclusion of this analysis, the
author presents the following OI benefits which are shown in the following
Table 1:
Table1: OI benefits
|
OI Benefit |
How? |
|
Strategic benefits |
Higher customer retention. Greater market share. Ability to execute strategies. Ability to enter new markets. |
|
Marketplace benefits |
Lower prices. Greater customer satisfaction. Differentiated offerings. Stronger customer relationship. Greater agility |
|
Operational benefits |
Lower direct costs. Better use of assets. Faster cycle time. Increased accuracy. Greater customization or precision. More added value. Simplified processes. |
Source:
Hammer (2004)
In addition, Hammer (2004) indicates
that OI is not enthusiastically considered inside companies. Some
characteristics of leadership explain this situation:
·
Business
culture undervalues Operations: making acquisitions, mergers, and
buying and selling divisions are a more glamorous job; they are not the same as
transforming product development and redesigning procurement.
·
Operations
are out of sight and out of mind-set: most senior
managers focus on strategic planning, budgeting, capital allocation, financial
management, M&A, personnel issues, regulatory concerns, and other macro
issues, not on how work is done. Many top managers are ignorant on operations
and others think that their hands get dirty, not looking here for competitive
advantage. Finally, financial data dominates in the modern organizations
although operational performance is the driver of financial results.
·
Nobody
owns it: OI is not in the head of anybody, it is not in the
confine of any department and line managers are pressed to do, no to change
things.
·
Process
breakthrough/innovation is not a priority company focus:
Planning and Budgeting are not focus on process breakthrough, and smaller
change initiatives are used to enhance existing processes like CRM (Customer
Relationship Management), ERP (Enterprise Resource Planning) or SCM (Supply
Chain management), Six Sigma (a process improvement methodology) or other
quality programs, having a narrow scope. The distinction between improvement
and innovation projects may be lost in many organizations as people are
juggling on many improvement projects.
Often
OI starts in grassroots movements, individualizing executives who can lead and
sponsor the new idea. Examples of OI include tripling inventory turnover or
initiating claims of insurance within a certain amount of hours, but the author
gives some suggestions to accelerate implementation efforts:
·
Look
for road models (benchmarks) outside your industry: In 1980s, Taco
Bell rethought its restaurants as manufacturing rather than as fast-food,
reducing costs and increasing customer satisfaction because they concentrated
their personnel on customers and not on production.
·
Identify
and defy constraining assumptions: every OI defies actual assumptions
on how work is done. For instance, cross-docking goes against the idea that
goods must be stored in a warehouse.
·
Make
special cases a norm: companies perform extraordinarily in special
conditions, but the challenge is to perform extraordinarily in normal
conditions. As a result, special cases should be transformed into the norm.
·
Rethink
critical dimensions of work: to reimagine processes it is needed
to make choices on what to do; who, when and where should do it; what
information should be considered, and how intensely each activity should be
performed. The following Table 2 shows the different dimensions of work:
Table 2: Dimensions of work
|
DIMENSION OF WORK |
EXAMPLE |
|
What results the
work delivers |
Increased market share by informing customers of its
competitors’ rate as well as its own. |
|
Who performs the
work |
Improved cycle time by changing the order
fulfillment process and concentrating it in one responsible person. |
|
Where the work is
performed |
Cut cost by preparing food centrally instead in
individual restaurants. |
|
When the work is
performed |
Assigning bed in a hospital after the patient was
received. |
|
Whether the work is
performed |
Cross-docking cut costs as it doesn´t maintain
inventories. |
|
What information
the work employs |
Inventory reduction, basing the order process on
actual orders not on forecasts. |
|
How thoroughly
the work is performed |
Preventive medicine puts emphasis on moments before
a crisis strike. |
As a consequence, Hammer (2004)
insists that:
·
Disruptive modes of operations need new and not
conventional methodologies. In addition, OI will be never accurate and complete
as new ideas may look good on paper but not in practice, making necessary to
run a pilot implementation of the new idea with customers and vendors, and run
it in small releases to focus on results and dispel anxiety and skepticism.
·
OI moves companies to new levels of execution, taking
companies ahead the next wave of innovation. It should be a way of life, not
something extraordinary as every area can be rethought in order to build a good
reputation with customers.
·
OI is the basis for superior performance, offering a
sustainable way of differentiation among competitors.
2.2.
Redesigning
internal and external processes
Redesigning external and internal
processes is a key issue in current organizations. Hammer (2007) states that to
deliver greater customer value it is needed to focus on redesigning internal and
external processes, and that a process-based approach is needed to transform
organizations around the world.
Also, that redesigning business
processes implies more than work flows rearrangements (tasks, sequence and
locations). It is about reconsidering jobs in a broader way, empower and
educate front-end personnel to make better decisions, and refocus the reward system
on processes and outcomes. It is about a culture to reconceive personal
accountability, teamwork and customer’s importance; roles and responsibilities redefinition,
and realigning information systems to allow cross-functional processes work
better and interactively among different departments.
But managers find difficulties on
what they should concentrate on and when they should do it, as organizations
have a lot of confused planning, hesitant decisions, unproductive discussions
and delays.
2.2.1.
Characteristics that are needed for process
well-functioning
The author suggests that the following
characteristics are required for process well-functioning:
a) Process
enablers: individual processes features which determine how the process will
function over time. Specifically, their connection is with process design,
abilities of people who operate them, the match of the information with the
management systems and the processes which are needed, and the quality of the
metrics the company uses to measure their performance.
b) Enterprise
wide capabilities: they respond to the process support of senior managers;
teamwork and employees' accountability; good organization to tackle complexity
and to know how to design processes.
Both, enablers and capabilities can
be very useful to plan for transformative processes.
2.2.2.
Process design and redesign
Hammer (2007) states that process
design determines performance or, in other words, form influences function. Moreover,
design is related with people, tasks and their order, location, circumstances,
information and degree of precision. In addition, there are techniques like TQM
(Total Quality Management) and Six Sigma to ensure employees’ correct process
execution. Finally, the author suggests that process redesign -enhancements and/or
avoidance of non-value activities- help organizations to keep their pace on
process innovations.
2.2.3.
Organization and measurements
In
accordance with the author, senior executives must overview key management
processes because they usually exceed the boundaries of one function. Moreover,
most companies tend to overlay new processes on already established functional
organizations but elements like measurements, jobs definitions and hierarchies
don’t always support these processes. For example, to change processes and not
to alter the measurement system may derive in inconsistencies in the employees’
reward system or shortsighted points of view.
Additionally, processes are compound
by inputs, outputs, customers, suppliers and related documentation, having five
characteristics/enablers that guarantee high performance over time:
·
Design: to
know what to do and when.
·
Performers:
adequate skills and knowledge.
·
Owner: a
senior executive with responsibilities over the whole process who ensures
results.
·
Infrastructure: like
IT and human resources systems that will ensure its right performance.
·
Metrics: to
assess performance over time.
These enablers are mutually
interdependent to help performance, but having all of them in place doesn’t
guarantee that the process will perform well. For instance, the mere existence
of a process design doesn’t mean that it is the right one.
Another key ingredient of every
process is maturity. In this sense, Hammer (2004) suggests that PEMM (Process
and Enterprise Maturity Model) applies to every company and process[2].
As a conclusion, Hammer (2007) insists
that in order to assure that processes deliver the right value over time, they
should have two characteristics: the five mentioned process enablers -which
pertain to individual processes- and the four enterprise capabilities -which
relate to the company as a whole-, and are:
·
Leadership:
executives’ characteristic who support process creation.
·
Culture:
values as customer focus, teamwork, personal accountability and desire to
change.
·
Expertise:
skills and methodology for process design/redesign.
·
Governance: for complex
projects and change initiatives’ management mechanisms.
In companies, enablers are
seen with the following different levels of intensity:
·
Level 0: the process work erratically.
·
Level 1: employees are merely aware of the process and
its metrics. The process is reliable and predictable, stable.
·
Level 2: people describe the process and where they
fit into it. The process is established and it delivers superior results.
·
Level 3: employees can express how their work affects
company performance. The process delivers optimal results.
·
Level 4: performers must know how their works affect
customers and suppliers. The process is best in class, transcending company
boundaries.
He concludes that delivering
sustained and high level results implies to have stronger enablers in place.
All the five enablers must be at the same level in order to conclude that the
whole process has reached that level. As a consequence, when one enabler is in
a preceding level and all the others are in an upper one, the process itself is
in the preceding level.
It is stated that supportive
environments are fundamental in order to deliver high-performance results.
Companies must possess or develop four organizational capabilities: leadership,
culture, expertise and governance. These capabilities must be in place across
the company in order to institutionalize enablers and sustain performance. So,
stronger organizational capabilities make for stronger enablers. In this way,
level 1 capability mean that it is possible to advance to level 1 of enablers.
Finally, enablers and capabilities
should be assessed at business unit level.
The following Tables show a summary
of what it was said in this section:
Figure 2:
Processes’ enablers and capabilities
Table 3: Processes’ enablers
|
ENABLER |
CONCEPT |
COMPOSED BY |
|
Design |
Know what to do and when. |
Purpose Context Documentation |
|
Performers |
Adequate skills and knowledge. |
Knowledge Skills Behavior |
|
Owner |
A senior executive
with responsibilities over the whole process and ensures results. |
Identity Activities Authority |
|
Infrastructure |
Like IT and
human resources systems that will ensure its right performance. |
IS HR systems |
|
Metrics |
To assess performance over time. |
Definition Uses |
As it was said before process
enablers are important to improve performance, but it is needed to put in place
the following organizational capabilities:
Table 4: Processes’ capabilities
|
CAPABILITY |
CONCEPT |
COMPOSED BY |
|
Leadership |
Executives who
support process creation. |
Awareness Alignment Behavior Style |
|
Culture |
Values as
customer focus, teamwork, personal accountability, and desire to change. |
Teamwork Customer focus Responsibility Attitude toward change |
|
Expertise |
Skills and
methodology for process redesign. |
People Methodology |
|
Governance |
Complex
projects and change initiatives’ management mechanisms. |
Process model Accountability Integration |
In order to drive efficiency,
results and deliver the right value to stakeholders, it was said that a
PM-based approach becomes a must for every organization. It should contemplate
enablers and capabilities, and an appropriate design/re-design. In the next
section, it will be covered a simple proposal for firms’ executives that are
looking to implement this methodology in every area, not only on the supply
chain side.
3. PROPOSAL: MAKING IT EASY
Processes must be approached holistically -not as a
separate or missing link- allowing the interconnections of enterprise’s
fundamental activities. Specifically, it is recommended a broader process-based
approach on every area of an organization, based on the five enablers and four
capabilities mention by Hammer, and considering disruptive modes of operations
and new methodologies. The final objective is to boost results, achieve
superior levels of performance, and give the right value to customers and
vendors.
In a
simpler way, a process denotes a sequence of activities and allows installing,
following and measuring an operation –seen as a set of activities- that will be
improved over time. The better content each part of the process has, the better
results that an organization will be capable to achieve. In this way and to
understand the process perspective it is suggested that the organization should
identify and profits from the following elements:
·
Development:
a) identify the objectives and activities that are part of them; their
components (inputs, outputs, suppliers, customers and documentation) and their
best possible content; b) establish clear flows with control points –based on
procedures and documentation- and key metrics, c) make trials before processes
are installed in order to assure its functionality. The main objective of this
step is to define value added activities -to the company and customers-, and to
assure that they correctly help the organization in its function.
·
Understanding:
every person -from the inside and outside of the organization- must
adequately understand the processes and their detailed information / function.
·
Well-functioning:
after implementation there are always errors and improvements that must
be considered. An ongoing review and adaptation is necessary to achieve higher
standards of service levels. That is why it is required an appropriate feedback
from every client and vendor of the process. The final objective is process
standardization.
·
Measuring: an
adequate scorecard should be developed in order to follow every important step
of the process. The final objective of this step is to achieve continuous
improvement and the desired results.
·
Management
role and support as OI and OE are process-based. In this sense, the
right administration implies to manage performance gaps in a given period of
time to guarantee –in a better way- the desired results.
Furthermore, the process concept is
not only related to production, warehouse, design or quality; it is connected
to every area of an organization including softer ones like marketing, strategy
or innovation. In fact, in a prior work[3]
it is explained the innovation process as a value chain -with associated
metrics- for better management, monitoring and assuring results. It is said
that the ultimate goal is to make a contribution to the innovation process and to
the growing wealth of organizations, either public or private.
It is understood that each step is
relevant in order not to lose the efforts that are done in prior step and to
implement as many ideas as possible. In addition, focus should be on bottle
necks that may be found and on the areas in which solutions are required. Finally,
the adequate understanding and management of these steps are directly connected
with the organization´s innovation and with the desired results.
In the following Figure 3, it is
shown the innovation process or value chain which is explained in detail in the
referenced book:
Figure 3: The
innovation process
As a conclusion of this section,
every job should have a process perspective –inputs, outputs, suppliers,
customers and documentation-, no matter the area of the organization we are
referring to. It assures an overall and detailed point of view on activities
and their value added to customers and vendors.
In the following Table it is shown a
summary of what was said before:
Figure 4: Process
4. FIELD WORK: SOME EXAMPLES
In the period December, 2017-March,
2018 and in order to expand the purpose of this work, it was performed a field
work in which were interviewed different top managers in Argentina. They
referred to their firms –national and multinational- and highlighted many of
the aspects pointed out in this study. They all asked confidentiality, both of
their identity and firms, because of companies’ policy reasons.
In the following paragraphs will be
exposed different examples obtained from the performed interviews.
4.1.
Warehouse
space shortage solutions - OE example
This case is referred to an Argentinean firm -founded at the beginning
of 1900- that started as a chain of household goods, migrating -over time- to the
sale of electrical appliances and technological items. Their motto is to be always
close to their customers.
At the end of 2016 they were stocking products in a 430.000 square
meters warehouse. As sales and inventories increased, they realized that they
couldn’t achieve past productivity levels because of the quantity of SKUs that
were being managed.
A SKU A/B/C analysis was performed noticing that customers’ offers were
among 50-60% of what was being commercialized. After different meetings with
the Sales people, they end up performing a sales plan that showed what was
going to be dispatched weekly to customers. This idea allowed to storage -in a
specific warehouse area- the offers that would be dispatched to customers
during the following week, saving a lot of time in picking activities.
Another way to solve warehouse space inconveniences was done by a
multinational company born in the midst of 1900 that manufactured footwear,
sportswear and other sport and fashion products of different brands.
After year 2010, it was add a new brand to their portfolio but the
warehouse did not have enough space to stock all the products that were being
sold. In order to take more advantage of the warehouse, the aisles were
shortened from 14 feet width to 6.56 feet, pick up machinery was changed and a
mezzanine was built in order to take advantage of picking activities.
4.2.
The
postal service - IO example
It was studied a group of Argentinean companies - born in the 1930
decade- specialized in logistic solutions to diverse activity segments. Up to
the 1990 decade, one of their most important revenues came from delivering mail
letters, but after that date and at the beginning of year 2000 -in Argentina-
the postal service begun to lose business momentum.
This situation led to reconsider what to do with all the people that
were working in the streets and they end up signing contracts with different
organizations in which they could give opportunities to these employees. For
instance: a) the Argentina Water Company for which they read the water meter of
each house to report the monthly consumption; b) With local governments, to make an inventory
of the shops’ advertising marquees to then verify their payment to the local
government; and c) National government, helping in the distribution of national
census letters.
Afterwards and thanks to e-commerce, the letters were turned into
packages, needing more square feet in their branches and building a web site to
help entrepreneurs to sell their products.
The
transformation of the last more than 80 years of existence led this firm to be
a logistic solutions’ provider all over the Argentinean territory with
information management on urgent shipments, certificates, collection management
and other related services.
4.3.
Process
example
The example referrers to a firm –born in 1975- that provided an integral
logistic for pharmaceutical products in Argentina. It is the largest drug
distributor in the country (+32%of the
market), in a territory of more than 3.7 million square kilometers and a
population of almost 41 million inhabitants. They provided storage, sale, billing,
distribution and collection to the pharmaceutical industry, allowing the
laboratory to be focused on the core of their business, and offering efficient
service, reasonable cost and strict compliance to international quality
standards.
In their main logistic processes they identified:
·
Internal and external customers, to which service was
offered. As an example and in the Reception process, the internal customers was
the Warehouse area -that wanted the products in good conditions to store them
in a timely manner- and the external customer was the customer who contracted
the storage and reception logistic services.
·
Internal and external vendors, to whom service was
required. As an example and in the Reception process, an internal vendor was
the Purchasing Department and the external one was the Logistic Department that
brought the products or the income Security.
4.4.
Process
enablers and capabilities - Example
These examples relate to the multinational company -born in the midst of
1900- that manufactured footwear, sportswear and other sport and fashion
products of different brands.
4.5.
Process
enablers were reviewed as follows:
·
The logistic processes were designed with the firm’s
functions, according to what the suppliers could commit and with the service
level that could be guaranteed to the clients.
·
The best people were assigned to each process /
activity considering skills and knowledge of each one. Training plans were
developed to help them to excel in their function.
·
Senior Executives were assigned to the main processes
in order to guarantee the intended results.
·
Technology has been a fundamental pillar as well as
the human resources system infrastructure. Also, the facilities and machinery
were improved in order to provide security to employees and products to
customers.
·
Metrics and control panels were developed to allow
measuring the results and evaluating processes level according to the intended
objectives. Problems and deviations were highlighted and corrected in a
continuous improvement process.
Process
capabilities were approached in the following way:
·
Leadership: a
top executive was appointed as the owner of the total logistic process improvement
and then other managers as processes’ key users.
·
Culture:
Previous paradigms had to be broken with respect to how work was done and how
to work as a team. The participants were convinced about the objectives, its
benefits and the way to go forward. Through different brainstorming
participants gave suggestions and new ideas which were used to adjust the
initial plans and have feedback on what was being done. The customer focus was
intensified as one of the fundamental objectives that came from new commercial
modes (e-commerce) or new products. A specific program -created by the company-
gave the basis to encourage new ways of doing business and embracing change; it
offered monetary incentives, based on impact and results.
·
Experience:
different trainings have been carried out, for example in project management
and in process design methodologies.
·
Governance: this
topic was not applicable to this company because there were no complex projects
implemented lately.
5. CONCLUSIONS
The game is also on the Operations’
field, highlighting OI, OE and processes. In addition, processes relate to better
ways of doing new or existing jobs in order to boost results, to improve
productivity and to have an impact on markets. OI –which proposes major changes
and superior performance- plays in the long run and with lower costs than other
ways that organizations utilize to drive growth. On the contrary, OE -which is
not enough to win open games-, refers to the short run and is easily copied by
others. As a result, OI implementation should be accelerated and inhibitors
should be surpassed, rethinking what is being done.
It is stated that a PM-based
approach is needed to transform every area of the organizations, concentrating
the management function on priority matters and productivity. In this sense, the
five process enablers, the four capabilities and the necessary supportive
environments mentioned in this work help to deliver the right value over time
and to discuss priority issues inside and outside organizations.
As a consequence, every area and
work of an organization should have a process-based approach (including softer
areas like strategy, marketing and innovation), assuring continuous improvement
and desired results, and taking into consideration the key processes’ elements
that were discussed in this study.
The field work performed showed that
there were national and multinational organizations in Argentina that made a
contribution to stakeholders taking into consideration a holistic process-based
perspective which is proposed in this work. OE and OI were being mostly applied
as it is stated by Hammer’s studies.
As a
consequence, the main conclusion of this study -referred to its hypothesis,
which is corroborated- says that the manager’s role is supported on a
relatively simple game called Process Management, (PM), studied by Michael
Hammer, and that it deals with performance gaps in a given period of time. In
this environment, OE, OI and processes’ understanding should be considered important
constituents of management activity.
It is referred that PM focuses on a relatively
simple game; so simple, that many organizations are not paying attention to it.
The reconsideration of this matter has become a managerial must in order to
achieve higher performance levels and a better customer value impact. Also, it
will depend on the level of confidence and acceptance of current processes and of
their possibilities in the future.
In other words, a processes-based
perspective not only allows a better performance levels and a higher customer
value impact but additionally it can be observed as a knowledge sharing
methodology inside and outside organizations, as knowledge does not belong to
any individual in particular but to the organizational heritage.
6. FUTURE WORK PROPOSALS
Future investigations may be focused on
different industrial sectors, countries and organizational areas; comparisons
may enhance the PM perspective and results. In addition, the study of best
practices on OE, OI and processes may help many more firms to drive a next
level of performance and market impact.
REFERENCES
HAMMER, M.
(2007) The Audit Process, Harvard
Business School Publishing Corporation,
USA: Boston.
HAMMER, M.
(2004) Deep Change: How operational
innovation can transform your company, Harvard Business School Publishing
Corporation, USA: Boston.
INVESTOPEDIA (2018) Operations Management, from http://www.investopedia.com/terms/o/operations-management.asp, retrieved 05/17/2017.
VILTARD, L. A. (2015) Innovación
organizacional: su comprensión, puesta en marcha como proceso y medición,
B. S. Lab., Italia: Avellino.