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  • 7/30/2019 four vs


    Pondering on Processes: A Case of Four Vs

    Published : 12:00 am July 18, 2a011 | 1,098 views | No comments so far | |

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    Processes are everywhere. They are the building blocks of all operations, and their

    design will affect the performance of the whole operation and, eventually, thecontribution it makes to the organisational results. People drive processes.Processes ensure performance. Thus, pondering on processes will offer us insightsas to how to achieve better results in a consistent manner. Todays column attemptsto do so.OverviewProcesses are the fundamental building blocks of all organisations. Both processunderstanding and process improvement form the lifeblood of organisations.Processes transform inputs, which can include actions, methods and operations, intooutputs. They are the steps by which we add value, and it should be the aim ofcustomer focused organisations, for these outputs to satisfy or exceed the needs

    and expectations of their customers.Central to understanding the processes perspective is the idea that all processestransform inputs into outputs. Put simply, processes take in a set of input resources,some of which are transformed into outputs of products and/or services and some ofwhich do the transforming.According to, a process is a sequence of interdependent andlinked procedures which, at every stage, consume one or more resources (employeetime, energy, machines, money etc.) to convert inputs (data, material, parts, etc.) intooutputs. These outputs then serve as inputs for the next stage until a known goal orend-result is reached.Processes can vary to cover simple to complex operations. Converting clay into a

    brick can be one example. Processing paperwork to grant a loan can be a more acomplex example. Converting crude oil petrol with the involvement of a refinery canbe even a more complex example. Knowingly or unknowingly we engage inprocesses all the time.

    Figure 1 contains a basicthree stage process, comprising input, throughput and output.No one, in any function or part of the business, can fully contribute to itscompetitiveness if the processes in which they work are poorly designed. It is notsurprising then that process design has become such a popular topic in themanagement press and among consultants. It is worthwhile examining the design ofprocesses. This is primarily concerned with how processes and the resources theycontain must reflect the volume and variety requirements placed on them.

    Four Vs for ProcessesAll processes differ in some way, and to some extent, all processes need to be
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    managed differently. Some of the differences between processes are technical inthe sense that different products and services require different skills andtechnologies to produce them. However processes also differ in terms of the natureof demand for their products or services.Four characteristics of demand in particular have a significant effect on how

    processes need to be managed: The volume of the products and services produced The variety of the different products and services produced The variation in the demand for products and services The degree of visibility that customers have of the production of products and

    services.Lets discuss the above four Vs of processes in detail.

    I.VolumeProcesses with a high volume of output will have a high degree of repeatability. Thatmeans the same thing is happening over and over again. Producing biscuits,batteries or even books can be such examples.

    As tasks are repeated frequently it often makes sense for employees to specialise inthe tasks they perform. This allows the activities to be streamlined. It involvesformulating standard procedures and set down in a manual with instructions on howeach part of the job should be performed. Also, because tasks are systemised andrepeated, it is often worth developing specialised technology that gives higherprocessing efficiencies.In contrast, low-volume processes with less repetition cannot specialise to the samedegree. Employees are likely to perform a wide range of tasks, and while this may bemore rewarding, it is less open to systemisation. Nor is it likely that efficient, high-throughput technology could be used.The implications of this are that high-volume processes have more opportunities toproduce products or services at low-unit cost. So, for an example, the volume andstandardisation of large fast-food restaurant chains such as MacDonalds or KFCenables them to produce with greater efficiency than a small, local cafeteria or arestaurant. The implications can be even at country levels with regard to theircompetitiveness. Apparel industry in China, thriving on volumes is one suchexample.

    2.VarietyThis V is all about diversity. Processes that produce a high variety of products andservices must engage in a wide range of different activities, changing frequentlybetween each activity. They must also contain a wide range of skills and technology

    sufficiently general purpose to cope with the range of activities and sufficientlyflexible to change between them. A high level of variety may also imply a relativelywide range of inputs to the process and the additional complexity of matchingcustomer requirements to appropriate products or services. So, high-varietyprocesses are invariably more complex and costly than low-variety ones.For an example, a taxi company is usually prepared to pick up and drive customersalmost anywhere (at a price); they may even take you by the route of your choice.There are an infinite number of potential routes (products) that it offers. But its costper kilometre travelled will be higher than for a less customised form of transportsuch as a bus service.Sri Lankan apparel industry thrives on variety. As opposed to high volume

    processes, it has developed processes to accommodate variety, in catering forniche markets.

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    3.VariationThis is a challenging aspect of a process. Processes are generally easier to managewhen they only have to cope with predictably constant demand. Resources can hegeared to a level that is just capable of meeting demand. All activities can beplanned in advance. By contrast, when demand is variable and/or unpredictable,

    resources will have to be adjusted over time. Worse still, when demand isunpredictable, extra resources will have to he designed into the process to provide acapacity cushion that can absorb unexpected demand.Lets take a simple example. Demand for certain products go up during festiveseasons. Processes involved with supplying them to markets should gear to face thisvariation. Another example can be processes that manufacture high-fashiongarments. They will have to cope with the general seasonality of the garment markettogether with the uncertainty of whether particular styles may or may not provepopular.Operations that make conventional business suits are likely to have less fluctuationin demand over time, and be less prone to unexpected fluctuations. Because

    processes with lower variation do not need any extra safety capacity and can beplanned in advance, they generally have lower costs than those with higher variation.We see both scenarios in Sri Lanka giving headaches to many managers.

    4.VisibilityProcess visibility is a slightly more difficult concept to grasp. It indicates how much ofthe processes are experienced directly by customers, or how much the process isexposed to its customers. Generally processes that act directly on customers (suchas retail or healthcare processes) will have more of their activities visible to theircustomers than those that act on materials and information. However, even materialand information transforming processes may provide a degree of visibility to thecustomers.For example, parcel distribution operations provide Internet-based track and tracefacilities to enable their customers to have visibility of where their packages are atany time. Low-visibility processes, if they communicate with their customers at all, doso using less immediate channels such as the telephone or the Internet.Many operations have both high- and low-visibility processes. This serves toemphasise the difference that the degree of visibility makes. Lets take the case ofan airport. Some of its processes are relatively visible to its customers (check-indesks, information desks, restaurants, passport control, security staff, etc). Suchemployees operate in a high-visibility front-office environment. Other processes inthe airport have relatively little, if any, customer visibility (baggage handling,

    overnight freight operations, loading meals on to the aircraft, cleaning, etc.). Werarely see these processes but they perform the vital but low-visibility tasks in theback-office part of the operation.As we know, back office is as important as the front office, in order to offer anintegrated service to the customer. Is it really the case in Sri Lanka? We have heardmany cases with regard to poor hygienic conditions of hotels and restaurants with anattractive entrance. High-visibility process has an indirect control where theshortcomings can be spotted easily.From Four Vs to one Big VWe looked at volume, variety, variation and visibility. All these four aspects should becarefully dealt with in ensuring process excellence. It includes higher efficiency,

    faster cycle time and higher overall productivity. In essence, adding value toorganisation. As the competitive business world increasingly demands, value

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    creation is the only survival path. Four Vs of processes, once aligned andappropriately tuned, should ensure value creation.Way ForwardThe above four Vs have a particular relevance to Sri Lanka. We are in the thresholdof business expansions, especially in the areas such as tourism. Right people

    handling the right processes in producing right results will be increasingly important.Process excellence will be one critical success factors in ensuring economic growth.Hence, the time is ripe to reflect on processes that we manage. Four Vs will offer usinsights for improvements. Choosing the V that needs more focus and attentioncould be the way forward in order to strengthen the processes.(Dr. Ajantha Dharmasiri is a learner, teacher, trainer, researcher, writer and a thinkerin the areas of human resource management and organisational behaviour. He canbe reached on [email protected].)