Process Taxonomy

In the early 1990's I was privileged to work with Robert Camp of Xerox, and a small group of American industry representatives in creating the International Benchmarking Clearinghouse, a part of the American Productivity & Quality Center in Houston, TX. The purpose of the organization was to identify ways in which best practices could be shared among American companies to further their competitiveness in the face of intensifying worldwide competition.

Camp had just written his seminal book Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance. Camp's book was followed by many others on benchmarking, and resulted in a flurry of benchmarking activity in America. Benchmarking is now part of most excellent company's toolbox of management techniques. We'll talk more about benchmarking in future posts.

A first step in the process was to identify the key processes that were part of the makeup of most organizations. Following is the "Process Classification Scheme" we came up with in early 1994.

"...1. Understand Markets and Customers

1.1 Determine customer needs and wants
·1.1.1 Conduct qualitative assessments
·1.1.1.1 Conduct customer interviews
·1.1.1.2 Conduct focus groups
·1.1.2 Conduct quantitative assessments
·1.1.2.1 Develop and implement surveys
·1.1.3 Predict customer purchasing behavior

1.2 Measure customer satisfaction
·1.2.1 Monitor satisfaction with products and services
·1.2.2 Monitor satisfaction with complaint resolution
·1.2.3 Monitor satisfaction with communication

1.3 Monitor changes in market or customer expectations
·1.3.1 Determine weaknesses of product/service offerings
·1.3.2 Identify new innovations that are meeting customers needs
·1.3.3 Determine customer reactions to competitive offerings

2. Develop Vision and Strategy

2.1 Monitor the external environment
·2.1.1 Analyze and understand competition
·2.1.2 Identity economic trends
·2.1.3 Identify political and regulatory issues
·2.1.4 Assess new technology innovations
·2.1.5 Understand demographics
·2.1.6 Identity social and cultural changes
·2.1.7 Understand ecological concerns

2.2 Define the business concept and organizational strategy
·2.2.1 Select relevant markets
·2.2.2 Develop long‑term vision
·2.2.3 Formulate business unit strategy
·2.2.4 Develop overall mission statement

2.3 Design the organizational structure and relationships between organizational units

2.4 Develop and set organizational goals

3. Design Product and Services

3.1 Develop new product/service concept and plans
·3.1.1 Translate customer wants and needs into product and/or service requirements
·3.1.2 Plan and deploy quality targets
·3.1.3 Plan and deploy cost targets
·3.1.4 Develop product life cycle and development timing targets
·3.1.5 Develop and integrate leading technology into product/service concept

3.2 Design, build, and evaluate prototype products or services
·3.2.1 Develop product/service specifications
·3.2.2 Conduct concurrent engineering
·3.2.3 Implement value engineering
·3.2.4 Document design specifications
·3.2.5 Develop prototypes
·3.2.6 Apply for patents

3.3 Refine existing products/services
·3.3.1 Develop product/service enhancements
·3.3.2 Eliminate quality/reliability problems
·3.3.3 Eliminate outdated products/services

3.4 Test effectiveness of new or revised products or services

3.5 Prepare for production
·3.5.1 Develop and test prototype production process
·3.5.2 Design and obtain necessary material and equipment
·3.5.3 Install and verify process or methodology

3.6 Manage the product/service development process

4. Market and Sell

4.1 Market products or services to relevant customer segments
·4.1.1 Develop pricing strategy
·4.1.2 Develop advertising strategy
·4.1.3 Develop market messages to communicate benefits
·4.1.4 Estimate advertising resource and capital requirements
·4.1.5 Identity specific target customers and their needs
·4.1.6 Develop sales forecast
·4.1.7 Sell products or services
·4.1.8 Negotiate terms
4.2 Process customer orders
·4.2.1 Accept orders from customers
·4.2.2 Enter orders into production and delivery process

5. Produce and Deliver for Manufacturing Oriented Organization

5.1 Plan for and acquire necessary resources or inputs
·5.1.1 Acquire capital goods
·5.1.2 Hire employees
·5.1.3 Obtain materials and supplies
·5.1.4 Obtain appropriate technology

5.2 Convert resources or inputs into products

· 5.2.1 Develop and adjust production process (for existing process)
· 5.2.2 Schedule production
· 5.2.3 Move materials and resources
· 5.2.4 Make product
· 5.2.5 Package and store the product
· 5.2.6 Stage the product for delivery

5.3 Make delivery
·5.3.1 Arrange product shipment
·5.3.2 Deliver products to customers
·5.3.3 Install (if specified)

5 4 Manage produce and deliver process
·5.4.1 Document and monitor order status
·5.4.2 Manage inventories
·5.4.3 Assure quality
·5.4.4 Schedule and perform maintenance
·5.4.5 Monitor environmental constraints

6. Produce and Deliver for Service Oriented Organization

6.1 Plan for and acquire necessary resources
·6.1.1 Hire employees
·6.1.2 Obtain materials and supplies
·6.1.3 Obtain appropriate technology
·6.1.4 Acquire capital goods

6.2 Develop human resources skills
·6.2.1 Define skill requirements
·6.2.2 Identify and implement training
·6.2.3 Monitor and manage skill development

6.3 Deliver service to the customer
·6.3.1 Confirm specific service requirements for individual customer
·6.3.2 Identify and schedule resources to meet service requirements
·6.3.3 Provide the service to specific customers

6.4 Ensure quality of service

7. Invoice and Service Customers

7.1 Bill the customer
·7.1.1 Develop, deliver, and maintain customer billing
·7.1.2 Invoice the customer
·7.1.3 Respond to billing inquiries

7.2 Provide after-sales service
·7.2.1 Provide post sales service
·7.2.2 Handle warranties and claims

7.3 Respond to customer inquiries
·7.3.1 Respond to information requests
·7.3.2 Manage customer complaints

8. Develop and Manage Human Resources

8.1 Create human resource strategy
8.2 Ensure employee involvement
8.3 Train and educate employees
8.4 Recognize and reward employee performance
8.5 Ensure employee well-being and morale
8.6 Manage relocation of personnel
·8.6.1 Manage movement of international personnel
·8.6.2 Manage movement of domestic personnel

9. Manage Information

9.1 Manage information systems
9.2 Evaluate and audit information quality
10. Manage Financial and Physical Resources

10.1 Manage financial resources
·10.1.1 Develop budgets
·10.1.2 Manage resource allocations
·10.1.3 Design capital structure
·10.1.4 Manage cash flow

10.2 Process finance and accounting transactions
·10.2.1 Process accounts payable
·10.2.2 Process payroll
·10.2.3 Process accounts receivable, credit, and collections
·10.2.4 Close the books

10.3 Report Information
·10.3.1 Provide external financial information
·10.3.2 Provide internal financial information

10.4 Conduct internal audits

10.5 Manage the tax function
·10.5.1 Ensure tax compliance
·10.5.2 Plan tax strategy
·10.5.3 Employ effective technology
·10.5.4 Manage tax controversies
·10.5.5 Communicate tax issues to management
·10.5.6 Manage tax records

10.6 Manage physical resources
·10.6.1 Manage facilities
·10.6.2 Plan fixed asset additions
·10.6.3 Manage risk

11. Execute Environmental and Management Program

·11.1 Formulate environmental management strategy
·11.2 Ensure compliance with regulations
·11.3 Train and educate employees
·11.4 Implement pollution prevention program
·11.5 Manage remediation efforts
·11.6 Implement emergency response program
·11.7 Manage government agency and public relations
·11.8 Manage acquisition/divestiture environmental issues
·11.9 Develop and manage environmental information system
·11.10 Monitor environmental management program

12. Manage External Relationships

·12.1 Communicate with shareholders
·12.2 Manage government relationships
·12.3 Build lender relationships
·12.4 Develop public relations program
·12.5 Interface with board of directors
·12.6 Develop community relations
·12.7 Manage legal and ethical issues

13. Manage Improvement and Change

·13.1 Measure and monitor overall organization performance
·13.2 Conduct quality assessment
·13.3 Benchmark performance
·13.4 Make process improvements
·13.5 Manage change
·13.6 Implement TQM..."

Most of the processes listed above apply to any organization, although some analogies must be drawn. Most certainly apply to SHOA. In the face of the recent emergence of China and India as key players in the world economy, American industry (and other American organizations) would do well to think about the system of production and distribution of products and services they provide to their customers.