Optimizing Business Processes: Operations, Customers, and Risk
Business Process Optimization
Among the processes discussed are:
- Operations Management
- Customer Management
- Process Innovation
- Regulatory and Legal Processes
The processes described address two fundamental concepts of the company’s strategy:
- The processes produce and deliver value to its customers.
- Process improvement reduces costs, contributing to the financial perspective.
Operational Management Processes
Operational management processes are the primary processes by which firms produce their products and services and deliver them to customers.
Four Operational Management Processes:
- Develop and maintain relationships with suppliers.
- Producing goods and services.
- Distribute goods and services.
- Managing risk.
One of the main objectives of managing relations with suppliers is the “reduction of total cost of ownership,” understood not only as the supplier’s price but also including these additional costs:
- Jobs in design
- Realization of orders
- Material reception issues
- Material inspection issues
- Material return issues
- Transfer of materials
- Paying for the materials
Supplier Management
[Photo 1: Supplier Management]
Produce Goods and Services
[Photo 2 and 3]
Distribute Products and Services to Customers
The goal is to lower the total cost to customers through low cost, high quality, and timely delivery.
Distribute Goods to Customers
[Picture 4: Distribute Goods to Customers]
Risk Management
Risk management is the responsibility for various corporate aspects with a clear impact on value creation. Key aspects include:
- Reduced internal costs associated with financial difficulties.
- Reduced risk for investors with undiversified portfolios.
- Tax reduction.
- Reduction in the cost of capital.
- Financing investment projects.
Objectives and indicators of risk management, according to Kaplan and Norton (2004):
[Photo 5: Managing the Risk]
Customer Management Processes
The customer management processes help the company to acquire, maintain, and increase lasting and profitable relationships with target customers.
Four Basic Management Processes:
- Target customers.
- Acquire customers.
- Retain customers.
- Establish customer relationships.
The Process of “Selection of Customers”
(What benefits do customers seek in our products or services or in relations with our company?)
- Benefits sought: price, quality, service, brand, etc.
- Fidelity: none, moderate, strong, committed.
- Attitude: dissatisfied, satisfied, delighted.
- Intensity of use: much, little, none.
It is common to perform segmentation based on easily observable features, including:
- Demographic factors: age, income, wealth, gender, occupation, ethnicity.
- Geographical factors: born, region, urban or rural location.
- Lifestyle factors: values oriented towards luxury, and so on.
Objectives and indicators for customer selection processes:
[Photo 6: Selection of Clients]
The Process of “Customer Acquisition”
Objectives and indicators of the customer acquisition process:
[Photo 7: Customer Acquisition]