Business & Management Systems: Scope of Transformation


The principles of operational excellence must be applied to all the business and management systems. The pie in the centre of the house represents the scope of transformation within an organization, including all basic customer-facing business systems and all management support systems. The systems associated with each of five typical business areas could include:

Product or Service Development

• Market segmentation and selection
• Research
• Development of products or services, processes and prototypes
• New product or service launch

Customer Relations

• Sales
• Advertising/ promotion
• Order processing and tracking
• Responsive/ flexible scheduling
• Invoicing and collections
• Warranty
• Product/ service development
• Business processes

Operations

• Product or service delivery
• Materials management
• Process engineering
• Maintenance
• Quality assurance and reliability
• Testing

Supply

• Supplier selection and qualification
• Supplier development and partnering

Administration

• Recruiting
• Compensation and benefits
• Training and employee development
• Employee relations and satisfaction
• Capital budgeting
• Budgeting
• Financial reporting
• Management accounting reporting
• Account receivable and account payable (A/R and A/P)
• Asset management
• Computer systems and support
• Computer application design and support
• Networking systems and support

Many, if not all, of these management support processes, are fundamentally non-value-added in a pure lean sense; that is, the customer would not pay extra for these. However, some part of each process is “necessary non-value-added work” that is currently vital to the proper functioning of the organization and the eventual effectiveness of the value-added processes, (i.e., a company needs to pay taxes), but the customer doesn’t necessarily get value from the process. Applying the principles to these processes will help to make sure that they are completed as quickly as possible with the fewest possible resources.

Principles of operational excellence should be applied conscientiously in all of these business and management support processes. As understanding deepens and application spreads throughout the entire enterprise, a consistent culture develops which is self-perpetuating and self-directing.

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