Process excellence can be as simple as efficiency and effectiveness in processes. To quote the late management guru Peter F. Drucker, "Efficiency is doing things right; effectiveness is doing the right things." In a service process such as a help desk, for example, process efficiency may be a measurement of how long it took for someone to resolve the issue from the time a trouble ticket was opened. Process effectiveness would be how well the problem was solved and/or customer satisfaction measurements. While outlining the 10 ways process excellence impacts CPM, you can clearly see the role of process efficiency and effectiveness measurements.
1. Innovation Processes. Innovation and creativity in companies are considered to be spontaneous and not subject to the process approach. Nothing could be farther from the truth. Organizations that have harnessed their employees' creativity and innovation quite often have very clearly articulated formal processes or well-understood informal ones. Methodologies such as the Phase Gate Methodology take many ideas from research and development (R&D) through a brainstorming stage to product development to manufacturing and provide formal process frameworks for innovation and new product development. Here the efficiency measures would be how many new ideas flowed from R&D to successful product development and how fast? Effectiveness measures would be how successful these were at satisfying the sales and financial performance goals of the company. The Apple iPod is an excellent example of how a single product could shift the sales and financial performance of the company. Innovation processes in a company address the question, what happens if an employee or a group of employees has a new idea for a product or a service? Is there a formal way for these creative ideas to be considered, analyzed and good ones tried out? Innovation processes are the key determinant of future CPM. They establish far in advance what the sales and financial performance of a company is going to be. (See Figure 1.)
Figure 1: Processes Impact Business Performance Management
2. Product Development and Manufacturing Processes. IKEA, the global retailer, considers how to ship a product across continents even before they decide whether to carry it in their stores worldwide. The ability to ship a product easily is a key requirement for them to sell one. The product needs to be easily packed in compact, rectangular boxes that can be stacked in shipping containers to be sent worldwide in cargo ships.
Design for manufacturability is a key process in the semiconductor industry. Design for serviceability is a main consideration when designing automobiles or large consumer products such as washers and dryers. These impact the sales and financial performance of companies for many years to come. Product development and manufacturing process efficiency measures are critical in chip design. You are in a race to the finish line with your competitor at any time because Moore's law states that the number of transistors in a chip and, hence, its capabilities and speed double every year. Semiconductor effectiveness measures could be the manufacturability or yield of the product. In consumer products, the initial quality and serviceability needs to be designed during the product development process. These translate to better reliability and customer satisfaction and affect sales performance directly. Repair costs during the warranty period and product recall costs could significantly affect the financial performance of a company if not enough attention is paid to the product development and manufacturing processes at the time a product is designed. These processes can affect the sales and financial performance of the company adversely if enough attention is not paid to them during the product development and manufacture setup processes.
3. Marketing Processes. The four P's of marketing: price, product, place (distribution strategy) and promotion lead to many marketing processes such as brand building, competitive positioning, advertising and channel development during the introduction of a new product or subsequent modifications or releases. All of these processes affect sales performance and the financial performance of the company for a long time to come. Efficiency metrics would measure the time taken for these processes to be performed, while effectiveness metrics are measured by methods such as testing advertising recall using surveys, customer or prospect focus groups, etc. Marketing processes are performed repeatedly. They can be the redesign of a logo, new boxes in which the product is shipped or the general positioning of the company. Intel just switched from their "Intel Inside" positioning to "Leap Ahead" to coincide with the many new markets they want to enter, i.e., mobile phones and small handheld computers. Billions of dollars are spent on marketing processes, and they are subject to efficiency and effectiveness measurements as much as other processes within the company.
4. Sales Processes. Lead generation processes using direct mail, telemarketing efforts and direct sales processes are all sales processes that influence sales performance directly. Channel and partnership development are other such processes. Studies have shown that it costs more to acquire a new customer than to sell more to an existing customer. Sales processes should include systematic follow-up and need assessments with existing customers. Efficiency measures pertain to new leads generated, old leads followed up and time taken for these activities. Effectiveness metrics compare sales generated per lead in currency terms and number of leads that resulted in a sale compared to total number of leads generated. Sales force automation software solutions provide a number of these capabilities already in addition to the ability to present these process metrics in dashboards.
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