Block 2.

Operations Management
Unit 3

Operations & Service Management

Definition and Design of

Processes
Index
Key ideas 3
3.1. Introduction and Objectives 3
3.2. BPM - Business Process Management 4
3.3. Maturity of processes 15
3.4. Bibliographical references 21

In Deep 22

Test 23
 Key ideas

3.1. Introduction and Objectives

Regardless of the efforts of operations management to design and implement

exemplary business processes, reality is often below their expectations.

Managers either do not use all the proposed processes, or do not use them
correctly. Some use the processes sporadically. Others modify them to adapt to
their own needs. Others ignore them altogether and choose to use their own
processes, which they believe are much better than those designed by the
organization. Risk underlies many of these decisions. Process managers would
prefer to use the tried and true methods rather than exposing the project to
added risk by using unknown processes. Their reluctance is obvious and
management has to find a way to gain that acceptance.

Today, having an integrated and fully implemented process within the organization
represents a significant achievement. However, this should be only an intermediate
goal. The long-term objective is comprehensive development, with continuous
improvement processes and an integrated portfolio of management processes.
This, of course, implies a cultural change. When teams begin to use these defined
processes, they must learn to identify deficiencies and should feel free and
motivated to transmit and scale these deficiencies as part of the continuous
improvement process. Management will take the comments into account, make the
required improvements, and the learning and implementation cycle will continue.
Therefore, in addition to the implementation of a series of management processes
within the organization, the final objective must be to achieve a certain level of
adoption.

Operations and Logistics Management

3
Unit 3. Key ideas
Business process management and performance management merge as the
organization begins to be recognized as a system of interrelated processes whose
performance must be balanced, and which must be the focus of strategic
objectives.

In contrast, those involved in corporate performance management are increasingly

realizing that it is the performance of business processes that must be the focus of
attention in order to realize the true benefits of a performance management
initiative. New and emerging technologies are a great ally for successful and
sustainable programs in both disciplines and integrate the capabilities of
management methods to move up the maturity ladder in the implementation of
these practices.

When an organization seeks to improve its management practices and processes, it

requires a formal and planned approach. This can be provided by business process
management (BPM).

The main objectives for this teaching unit are:

 To develop business process management (BPM) as a fundamental discipline to

optimize an organization's operations through continuous improvement.
 To identify the maturity status of the management processes within an
organization.

3.2. BPM - Business Process Management

Business Process Management (BPM) is a management discipline that treats

business processes as assets. It cannot be considered a methodology. It assumes
that organizational objectives can be achieved through the analysis, modeling,
design, automation, monitoring and optimization of business processes. It is

Operations and Logistics Management

4
Unit 3. Key ideas
therefore important to understand what a business process is. A business process is
understood as a sequence of activities with a temporal order, which results in a
product, service or result that adds value to the organization and facilitates the
definition of performance measures as a tool for continuous improvement.

The objective of business process management (BPM) is to advance the continuous

improvement of the organization, the objectives of a BPM implementation range
from the strategic goals of the organization to the goals of individual processes.
BPM is not a goal in itself, but a means to an end.

Did You Know...

There is a Business Process Management Knowledge Guide (BPM CBOK®) published by
The Association Of Business Process Management Professionals International that
outlines the fundamental knowledge, skills and competencies of BPM professionals.

https://www.abpmp.org/

Principles of business process management (BPM)

 Training. BPM should be developed taking into account the specific capabilities
of each organization.
 Communication. Access to information by all involved favors the good
performance of BPM, it is important to have a common language and
understanding of BPM.
 Context. It is essential for the BPM to fit the organization and not the other way
around.
 Continuity. BPM is here to stay, therefore, it should be implemented in the long
term and not as an isolated project.
 Holistic. BPM cannot be treated as an isolated system, but must be implemented
throughout the entire value chain of the organization in order to exploit it
efficiently.

Operations and Logistics Management

5
Unit 3. Key ideas
 Institutionalization. BPM must be part of the organizational structure and be
fully integrated.
 Participation. The commitment, involvement and motivation of all the
participants engaged in the BPM is fundamental to its success.
 Purpose. The BPM discipline must always have value creation as a reference.
 Simplicity. BPM should help to prioritize the most significant and impactful
processes, simplifying operations and focusing on what is most important.
 Technology. BPM favors the implementation of new technological solutions in
the organization, but the choice of these tools must be studied in depth and
always without losing sight of the business objectives.

BPM Life Cycle

Business process management is implemented through a life cycle, initially

introduced in 2003 by Howard Smith and Peter Fingar, in which several phases are
developed. Howard Smith and Peter Fingar initially broke it down into strategy,
execution and results. Today, this life cycle has been modified into different
variations.

Operations and Logistics Management

6
Unit 3. Key ideas
One of the most widely accepted variations is as follows:

Phase 1: definition

Strategic planning

One of the fundamental characteristics of BPM is its alignment with business

strategy. This is the main difference between BPM and "process management".

In process management, the objective is to seek an ongoing improvement of

current processes, without questioning whether those processes are suitable for
the achievement of business objectives.

This additional stage in the BPM life cycle is key to a successful development. In
this stage we will decide which improvement scenarios we are going to implement

Operations and Logistics Management

7
Unit 3. Key ideas
and therefore where we will make the necessary investments, always taking into
account the strategic objectives of the business and its indicators (KBIs - Key
Business Indicators). We will thus achieve an integrated and aligned management
system for the organization.

Analysis and modeling

Process analysis involves an understanding of the business processes, including the

efficiency and effectiveness of the current processes.

Process analysis provides an understanding of the activities and measures the

results of those activities in relation to their contribution to the achievement of
the organization's strategic objectives. This makes it possible to prioritize the
business processes with the greatest impact on the achievement of short, medium
and long term goals.

Process analysis can be performed using different techniques, operational

frameworks, methodologies or best practices. Mapping, interviews, simulations,
etc. can be used. It often includes a study of the business environment, the
organizational context of the process, factors contributing to the operating
environment, industry or sector specific characteristics, regulatory entities,
government and/or competition.

The analysis team documents the business environment and creates models to
illustrate the workflow of the various activities involved in each process and their
relationship with the environment in which it operates. Then, the team uses this
information to identify opportunities for process improvement or redesign.

The purpose of process modeling is to create a representation of each process in

order to accurately and completely describe them. Therefore, the level of detail
required for each model can vary significantly depending on the expectations of the

Operations and Logistics Management

8
Unit 3. Key ideas
modeling project. A simple diagram may be sufficient for one project, while a fully
developed model may be required for another.

In order to model business processes we need to know the difference between

Procedure and work Instruction. While a procedure details how to execute a
process, a work instruction defines how to execute a task. The procedure must
follow current legislation, corporate policies or industry standards, while the work
instruction details the steps to follow to achieve our product based on the best
practices identified in the organization. Both will be mandatory in BPM modeling.

In Deep

Business Process Model and Notation (BPMN)

The Business Process Model and Notation (BPMN) is a standard for

business process modeling in BPM that provides a standardized
graphical notation for specifying business processes.

Figure 2. Example of a BPMN model. Source:

https://www.flokzu.com/blog/es/bpm_es/que-es-bpmn/

Related topics: BPMN modeling.

Operations and Logistics Management

9
Unit 3. Key ideas
 You can check In deep section to expand your knowledge on this
subject.

Phase 2: implementation

BPM design

Process design is the intentional and thoughtful planning of how business

processes flow, interact, are measured, governed and managed.
Process design involves creating
Did You Know...
specifications for business processes The BPM engine is not absolutely essential.
within the context of business goals Today there are a multitude of technological
solutions to make this process much
and process performance objectives. It
simpler, reliable and convenient for
also provides guidance as to the way organizations, but BPM can be successfully
the activity flows, how procedures are implemented without having a BPM suite. In
such a case, there would be only one
applied and how applications, execution phase and the responsibility for
technology platforms, resources and following the model would be on the
participants.
operational controls interact with
other internal and external processes.

Processes are made up of groups of activities performed by humans and/or

machines to achieve objectives. They are triggered by specific events and can have
one or more outcomes that may result in the termination of the process or its
transfer to another interrelated process crossing any functional boundary necessary
to deliver a product or service.

The following are some recommendations for defining processes:

 Design around value-added activities.

 Carry out work where it makes the most sense.
 Create a single point of contact for the customer.
 Reduce handoffs and batch sizes.

Operations and Logistics Management

10
Unit 3. Key ideas
 Redesign the process before considering automation.
 Design with the desired KPIs in mind.
 Standardize processes.

Automation and integration

The BPM engine makes it easier to automate business processes and integrate them
into the organization on the basis of the designed processes.

Currently, a multitude of technologies are used to carry out this automation, and
the term Intelligent Automation, which consists of automating the company's
processes, both at the corporate level with BPM and at the task level supported by
Artificial Intelligence (AI), is gaining popularity. Intelligent Automation is a term that
describes a holistic solution to organize users, tasks, systems and robots depending
on the current needs by using Machine Learning to automatically make decisions.

It also integrates the designed system with existing applications, systems, services
and data by connecting process owners and their roles with the BPM.

Phase 3: evaluation

Monitoring

The measurement of process performance is conducted in this stage. It consists of

the formal and planned monitoring of each process, during which results are
tracked to determine the effectiveness and efficiency of the process. This
information triggers decisions to improve or eliminate existing processes and/or
introduce new processes to meet the organization's objectives.

The ability to support the measurement of process performance and the

subsequent evaluation of results is related to the level of maturity of an

Operations and Logistics Management

11
Unit 3. Key ideas
organization's process management. The different levels of maturity that can be
found in process management are discussed later.

Many organizations use Balanced Scorecards (BSC) to monitor the performance of

different processes. These scorecards help in decision making and are also
commonly referred to as Business Intelligence (BI). BI is concerned with addressing
process performance management within a business context, which facilitates
alignment with KBIs.

The Process Performance Indicator (PPI) is derived from the process objectives and
allows the process owner to monitor performance in terms of time, cost, capacity
and quality.

Optimization

The continuous search for improvement results in a systematized way of optimizing

the processes of the organization. By using continuous improvement tools and
methodologies, such as Lean, Six Sigma, TOC or TQM, the organization establishes
its Business Process Improvement (BPI) optimization system. This usually results in
an initiative or project to improve a particular process to align with the strategy of
the organization and customer expectations.

BPM can also be measured as a holistic system, as a cumulative result of

improvement initiatives. This outcome, referred to as Enterprise Process
Management (EPM), can include strategy, values, culture, structures, roles, etc. The
degree of progress achieved can be assessed by the process management maturity
level (CMMI), which will be described below.

Operations and Logistics Management

12
Unit 3. Key ideas
Benefits of a BPM

The benefits of business process management are very significant and cover the
organization itself, the customers, the employees and the people in charge. Some of
the most important are:

 Decrease in error rates.

 Reduction of process costs.
 Reduction of process times.
 Decrease in complaints.
 Increased leadership and accountability for continuous improvement.
 Increased operational efficiency.
 Increased customer satisfaction ratio.

In Deep

BPM SUCCESS STORIES

A good way to understand the benefits that BPM can bring to an

organization is to take a closer look at some success stories.

You can check the In Deep section to expand your knowledge on this
subject.

You can check In deep section to expand your knowledge on this subject.

Operations and Logistics Management

13
Unit 3. Key ideas
 Video 1. BPM Basics: An Introduction to Business Process Management.

Access the video through the virtual classroom or from the following website:
https://www.youtube.com/watch?v=hAsRTy7UlN4

Example of when to use a BPM (Business Process Management) system. A good

BPM (Business Process Management) would avoid all this lack of efficiency and
would optimize the company resources with big cost savings.

Video 2. Example: when to use BPM (Business Process Management).

Operations and Logistics Management

14
Unit 3. Key ideas
 Access the video through the virtual classroom or from the following website:
https://www.youtube.com/watch?v=UhyoIRbkXrQ

Key Concepts

 BPM does not consist solely on the isolated application of information

technology. A good BPM engine will help you design and integrate a BPM, but a
holistic consideration of the management discipline is necessary.
 Business process management (BPM), unlike process management, incorporates
strategy to its approach in order to align the main business objectives with the
operations of the organization.
 The life cycle described allows us to break down the implementation of a BPM in
the organization into phases, namely the definition, implementation and
evaluation of the different processes.

3.3. Maturity of processes

Capability Maturity Model Integration (CMMI)

Capability Maturity Model Integration (CMMI) is a process maturity approach that

can be used for a process, project or company. CMMI helps those responsible for
each process to structure process performance management with the goal of
achieving consistently high levels of maturity. This model is a registered patent by
Carnegie Mellon University. Its most recent version, CMMI 2.0, was published in
2018. This version integrates into a single standard the previous models into which
CMMI was divided:

 CMMI for Development: dedicated to product and service development

management.

Operations and Logistics Management

15
Unit 3. Key ideas
 CMMI for Acquisition: dedicated to procurement management.
 CMMI for Services: dedicated to service management (similar to ISO 20,000).

The five-scale classification is typically less prescriptive than other standards, but
can be used as a general discussion guide in the appraisal of a specific process area
or business maturity.

CMMI defines five maturity levels:

Figure 3. CMMI maturity levels.

Initial

At this level, there are no standards and project management processes are ad-
hoc. The practices followed in other projects may be known to a certain extent, but
their implementation is entirely at the discretion of the project manager. This does
not imply that projects will fail or be subject to poor management. In fact, these
may be excellent practices, but there is no organized way to share them outside of
their environment.

The main generic objectives at this level are:

 Complying with specific performance objectives.

The characteristics of this maturity level are:

 There is no defined and documented process.

 The processes are carried out on an ad hoc basis.

Operations and Logistics Management

16
Unit 3. Key ideas
Managed

A managed process is a process that is planned and executed in accordance with an

established policy. It employs qualified people, involves stakeholders, is monitored,
controlled, reviewed and evaluated to complement the process description.

A fundamental distinction between an initial process and a managed process is the

fact that the process is managed. The process is planned and its performance is
benchmarked against the plan. Corrective actions are implemented when actual
results and performance deviate significantly from the plan. A managed process
achieves the objectives of the plan and is institutionalized for consistent
performance.

The main generic objectives at this level are:

 To establish and maintain an organizational policy for planning and performing

the process.

The characteristics of this maturity level are:

 The existence of defined and documented processes that are objectively

evaluated.
 The process is monitored and checked for compliance with the plan and
appropriate corrective actions are taken.

Defined

A defined process is a managed process that conforms to the set of standard

processes in accordance with the conformance guidelines of the organization; it has
a maintained process description; and contributes work products, measures and
other process information enhancements to the organizational process assets.

Operations and Logistics Management

17
Unit 3. Key ideas
A defined process differs from a managed process in its level of detail, a more
rigorous implementation and the scope of application of its process descriptions,
standards and procedures. At the previous level (managed process), the process
descriptions, standards and procedures are applicable to a particular project,
function or organization. As a result, the managed processes of two projects in the
same organization may be different.

The main generic objectives at this level are:

 To establish and maintain the description of a defined process detailed at its

level.
 To collect results, measures, and improvements resulting from the planning and
execution of the process to support the future use and improvement of the
processes and process assets of the organization.

The characteristics of this maturity level are:

 The existence of a defined and documented end-to-end process that is used

throughout the organization.
 The presence of process templates that can be adapted as needed.

Quantitatively managed

A quantitatively managed process is a defined process that is controlled by

statistics and other quantitative techniques. The quality of the product or service
and the performance attributes of the process are measured and controlled during
implementation.

Operations and Logistics Management

18
Unit 3. Key ideas
The main generic objectives at this level are:

 To establish and maintain quantitative objectives for the process, which address
the quality and performance of the process based on customer needs and
business objectives.
 To stabilize performance to achieve the established quantitative quality and
performance objective for the process.

The characteristics of this maturity level are:

 The process is broadly integrated into the organization, across all business areas
and practices.

Optimized

At this level, quantitatively managed processes are modified and adapted to meet
current and future business objectives. Processes at this level focus on
continuously improving process performance through both incremental and
innovative technological improvements. Process improvements are selected based
on their contribution to the strategic objectives of the organization.

A fundamental distinction between a quantitatively managed process and a process

at this level is that these processes are continuously improved by addressing the
causes of process variability. Although a managed process may produce predictable
results, the results may be insufficient to achieve the process improvement
objectives of the organization.

The main generic objectives at this level are:

 To ensure continuous process improvement aimed at meeting the strategic

objectives of the organization.

Operations and Logistics Management

19
Unit 3. Key ideas
 To identify and correct the root causes of defects and other problems in the
process.

The characteristics of this maturity level are:

 Project performance is collected and used to systematically identify areas for

improvement.
 There is an ongoing program to collect and continuously analyze the process
performance data and use it to improve the process.

Project Management Maturity Model (PMMM)

Following the five evolving maturity levels of the CMM® Model, PMMM examines
the development of maturity across the ten knowledge areas of the PMBOK® Guide.

PMMM can therefore be understood as an adaptation of the CMMI model that

integrates two industry-leading standards for project and process management, the
PMBOK® and CMM® Guide, respectively, to provide a comprehensive, simple and
easy-to-follow blueprint for advancing project management maturity.

PMMM takes these standards to the next level of development by defining a

separate model for the process and the practice of project management.

Figure 4. PMMM maturity levels.

Operations and Logistics Management

20
Unit 3. Key ideas
Key Concepts

 There are five levels of maturity in terms of process management within an

organization.
 Maturity in process management is acquired over time and is key to the
development of the organization.
 A specific model for the evaluation of project management maturity, called
PMMM, has been developed based on the model introduced by CMMI.

3.4. Bibliographical references

Robledo, P. (2017). Not enough with an independent Management of a Process.

Albatian. https://albatian.com/en/blog-ingles/not-enough-with-an-independent-
management-of-a-process/

Operations and Logistics Management

21
Unit 3. Key ideas
 In Deep

Business Process Model and Notation

BPMN 2.0 Tutorial and Examples

Manning, K. (2020, August 13). BPMN 2.0 Tutorial and Examples. ProcessMaker.
https://www.processmaker.com/blog/bpmn-2-0-tutorial-and-examples/

In the following web article you can find part of a BPMN 2.0 tutorial, including
understanding BPMN Symbols and Diagrams.

BPM success stories

Ultimus

This website provides some great stories of a BPM successful implementation

where you can learn more about BPM benefits.

Access the website through the virtual classroom or through the following link:
https://www.ultimus.com/results-case-studies

Operations and Logistics Management

22
Unit 3. In Deep
 Test
1. Business Process Management (BPM) is a good management methodology.
A. True.
B. False.

2. Which of the following is not a principle of Business Process Management?

A. Context.
B. Technology.
C. Progress.
D. Communication.

3. Which of the following is not a phase of the BPM life cycle?

A. Definition.
B. Implementation.
C. Evaluation.
D. All of the above are phases of the BPM life cycle.

4. What is the difference between a procedure and a work instruction?

A. A procedure details how to execute a process while a work instruction
defines how to execute a task.
B. A procedure details how to execute a task while a work instruction defines
how to execute a process.
C. A procedure is mandatory in the BPM model while a work instruction is not.
D. All the previous answers are incorrect.

Operations and Logistics Management

23
Unit 3. Test
5. Which of the following statements is false?
A. The purpose of process modeling is to create a representation of each
process in order to accurately and completely describe them.
B. A BPM engine is absolutely essential.
C. Process design involves creating specifications for business processes
within the context of business goals and process performance objectives.
D. When defining a process it is advisable to create a single point of contact
for the customer.

6. At what point in the BPM life cycle is process performance measured?

A. Automation and integration.
B. Optimization.
C. Monitoring.
D. None of the above.

7. Which of the following is a benefit of Business process management?

A. Decrease in process cost and time.
B. Increased operational efficiency.
C. Increased customer satisfaction
D. All of the above.

8. Process management and business process management refer to the same

concept.
A. True.
B. False.

9. What management maturity process may your organization be in?

A. Initial process.
B. Managed process.
C. Defined process.
D. Any of the above.

Operations and Logistics Management

24
Unit 3. Test
10. What is the adaptation of the CMMI model to project management known as?
A. PMI.
B. PMMI.
C. CMM.
D. None of the above.

Operations and Logistics Management

25
Unit 3. Test