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James Brimson in his book "The Handbook of
Process-based Accounting, Leveraging Processes to Predict Results
published by American Institute of Certified Public Accountants, says:
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"process management
is continuously improve (change) the processes and activities of an
organization to effectively and efficiently meet or exceed changing
customer requirements
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Achieved by
progressively implementing many changes to ensure the process is made
better than its previous performance.
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Activities and
processes have process controls in place to monitor the process as it is
being performed.
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Cost must be viewed
in terms of used and unused capacity cost rather than traditional fixed
and variable distinction. Separating used and unused component enables
management to understand root cause of problem rather than burying the
variance in the wrong place."
Very successful organizations have found that you can only improve so much if
you continue to focus just on improving activities within a department or cost
center. Just like in a real race, the least efficient
portion
of the race is the
hand off between runners. Likewise the
least efficient portion of any organization is the
handoffs between departments, cost centers, vendors, and customers.
Process management starts with processes rather than cost centers or
functions as the basic building blocks. The management process is
totally focused on processes. Everything from planning and budgeting to
performance management are focused on management.
The various links to the right will give the reader insights into the
various components of Process Management.
However, the basic premise of process management is that processes are a
better way to manage an organization because they follow all the steps from
start to finish of a process so that the organization does not sub-optimize.
As one of our clients founds, that improvement in one cost center may in
fact reduce quality and increase cost for the entire organization.
An insurance company had a performance measure to answer all claims calls
in 6 minutes. After some effort they were able to achieve this performance
measure. However, they achieved this performance by not completing all the
information that was required. A higher paid claims adjuster had to call
back the person making the claim. This was more expensive because of the
extra time required by the higher paid person. Also, the delay caused hard
feelings for some people filing the claim resulting in more lawsuits.
By changing the performance measure to focus on the entire process, the
company was able to reduce the total cost of the process as well as to
improve customer satisfaction. Think about how often this type of cross
functional handoffs negatively impact your organization.
Read more about these business process management system topics by
clicking the various links to your right.
Call John Antos, Jim Brimson or Pat Dowdle at
972.980.7407 to find out how Business Process Management can help you
achieve your goals.
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