Business Process

A business process is a set of activities an organization performs on a repetitive basis as part of its strategy to implement its mission. Business processes typically deal with physical goods, services performed on physical goods, or services that deal entirely with information. There are six major types of business processes based on the relationship between the materials, services, and information being manipulated:

• Extractive processes—These processes deal with removing physical goods from the environment, such as mining, oil and gas, and forestry and agriculture. These processes deal with tradeoffs between effectiveness of the extraction process and the use of resources, as well as side effects to the environment.

• Conversion processes—These processes deal with converting physical materials from one form to another. This includes all the traditional manufacturing processes such as smelting, casting, milling, extruding, cutting, bending, welding, plating, and so on. It also includes construction processes and most power generation processes (the conversion of material to energy).

• Transportation processes—These processes involve the physical movement of physical items (goods as well as people). This includes the traditional macrolevel transportation activities (airlines, trucking, railroad, shipping), as well as intraplant transportation, such as conveyor belts and cranes.

• Facility services—These are services performed on a facility to make it of continuing use to an enterprise or the public, including janitorial services, maintenance, and repair.

• Personal services—These are services performed on people, including health care, grooming (haircutting, manicure), and entertainment.

• Information processes—These processes involve the manipulation of information. This includes processes that are not currently automated, such as engineering, law, and medicine (other than specific interventions), as well as most administrative and clerical tasks.

Business processes are end-to-end strategies for dealing with a particular type of event, and they encompass many different specific processes. The reason for separating them is that each has different characteristics in terms of the way it consumes resources and the effect of capital investment on the improvement of throughput and resource usage.

Most businesses are involved in a Darwinian struggle with their peers to deliver the best end result with the least use of resources. How they do this depends on how they constitute their business processes. One strategy is to reconfigure their processes to use less valuable resources. A more common strategy is to automate the most frequently occurring processes. In the case of manufacturing, automation is the process of replacing manual labor with machine-powered labor.

Much of this book concerns how making capital investments in information processes can yield high returns, but only if we learn the lessons of flexible versus rigid automation, as has been discovered in the world of manufacturing.