Improving business processes of an industrial enterprise
Table of contents: The Kazakh-American Free University Academic Journal №11 - 2019
Kupina Kristina, Kazakh-American Free University, Kazakhstan
Sarsembayeva Gulnar, Kazakh-American Free University, Kazakhstan
Effective management of the production site is traditionally
regarded as a process based on the use of modern management technologies and
more advanced organizational forms. Analysis of theoretical and practical
materials of foreign and domestic scientists on the formation of an adequate
and adapted management system at industrial enterprises shows that the solution
of this problem is most often associated with the development and improvement
of business processes.
The theory of business processes appeared not so long ago with the
advent of the book by M. Hammer and J. Champi Corporate Reengineering: A
Revolution in Business. In the book the authors describe a business process as
a combination of various activities in which one or more resources are used at
the entrance and the output activity creates a product that represents value to
the consumer . At present, almost all of the world's leading companies have
adopted restructuring based on business processes and it is believed that even
a partial improvement in a company's business processes can lead to an increase
in the company's business efficiency from 10 to 20% while fundamental while
rethinking and a radical business process that provides a fundamental improvement
in key performance indicators suggests a dramatic increase in efficiency tenfold.
However in economics a look at business processes is ambiguous. M.
Porter and V. Millar consider that business processes are a set of steps
(types) of activity that begin with one or several inputs and end with the
development of products required for the client which satisfy their value,
durability, services and quality. Or - a complete flow of events in the
description of how the client begins initiates and terminates the use of the
business . The author is close to the point of view of V. Deming who
considers business processes as any type of activity in an organization .
Management at the level of the industrial enterprise based on the
process approach is a continuous implementation of a number of different
interrelated activities and general management functions. However it should be
noted that the performance of individual working and administrative functions
is also considered as a process, i.e. a common process is a series of
continuous actions that transform some resources, information, etc. into
relevant outputs, results. Management in general is a fundamental value and the
essence of the process approach.
The description of business processes in a company may be different
but the basis is concentrated on a clear structure of all interrelations of
participants in the processes of production activities. For example the
composition in an industrial enterprise should include: market research,
competitor analysis, demand monitoring, designing new types of products and
services, selection and monitoring of suppliers, product placement in
production, quality management, marketing, transportation, storage and
installation of products, corporate development. All of them can be divided
into subprocesses. In addition each business process should have a beginning -
an input, sequentially executed workflows and an end - an output.
By improving business processes in industrial enterprises we can
build a whole block of strategic advantages and achieve a higher level of
1. Management system based on business processes allows you to
quickly respond to the changes in the external environment;
2. Management becomes clear because it is possible to evaluate the
effectiveness at each stage of the production and economic activity of the
3. It allows you to use the process approach in accordance with the
requirements of ISO 9000.
All this proves that the process approach leads to a synergistic
effect in which the improvement of one of the business processes leads to the
improvement of the others.
In the context of a rapid increase in tension and instability of the
external environment a variety of market economy processes requires constant
adaptation of industrial enterprise management processes to market needs which
in turn requires a systematic improvement in management. Management improvement
should be aimed at optimizing the organizational structure of the company.
Analysis of economic sources shows that enterprises in Kazakhstan base their work on a functional principle and a bureaucratic hierarchical
structure that does not reflect the realities of the time. The organizations
transition to a process methodology for building management structures leads to
a fundamental improvement in the company's main performance indicators, the
creation of a more optimal management system and an increase in its flexibility.
A process-oriented management model (i.e., a business-oriented management
model) requires that business processes differ at the level of modern
requirements: to determine a specific type of work, define a beginning and an
end, find a process owner (who is responsible for the result) and determine
the desired result (including quality and efficiency indicators) .
One of the main tasks of the management system is the formation of
an organizational management structure or its adaptation to conditions and
tasks depending on the size of the enterprise, its goals, technology,
personnel, etc. The main elements of an organizational system are processes. A
significant part of researchers believes: If an enterprise successfully
carries out activities is present on the market then this means that its
processes are sufficiently effective and efficient. The only question is
whether the existing management system will ensure a stable to a certain extent
profitable functioning of an enterprise in a certain perspective. The process
approach in this case is a basic tool in a set of essential tools that a
manager can use. At the same time the issues of improving the business
processes of an enterprise are focal question .
According to the author the improvement of business processes is a
prerequisite for effective management in a dynamically changing external
environment since this process allows timely taking corrective and preventive
measures to eliminate negative factors as well as smoothing or mitigating cyclical
fluctuations in the external environment. The management of the enterprise, the
heads of departments and services should first of all take into account changes
in the innovation environment, the correlation of product quality with major
competitors, the presence of periods of growth or recession in the industry as
well as the imbalance in the economy. Process management in a changing market
environment requires that the owners of the processes promptly identify and
correct underdeveloped processes, breaking up large processes into smaller
ones. Conversely, the process owner can flexibly respond to the demands of the
time for the development of new adaptive processes that replace old ones if
necessary which do not meet the needs of the end user and do not ensure the
performance of achievements.
Currently some economists and scientists view the main trends in the
development of organizational management structures as a massive transition to
organic structures that make hierarchical pyramids flatter, reducing the
average level of leadership and developing horizontal links, concentrating on
team and target work instead of permanent departments, and autonomization
different business centers instead of traditional hierarchies. In addition one
of the most important management functions is strategic planning which analyzes
the strengths and weaknesses of the company. Based on this the management
decisions are developed and can unite the efforts of the entire workforce to
achieve the mission and goals of the company. Based on the mission, development
strategy and long-term goals you can determine the necessary business processes,
information and material flows as well as supporting their organizational structure.
Business processes in modern industrial companies play a central
role in building enterprise architecture. The organization management process
model has several advantages:
1) Allows you to link the activities of all structural areas of the
business object, ensuring business integrity and quick response to improving
the decision-making process, control, coordination and monitoring of various
parts of the organization;
2) The process approach facilitates the transition of the management
system to managing end-to-end business processes and offers various ways to
carry them out;
3) Transparency and openness of the process are achieved by the
ability to measure each value created (for example, the degree of customer
Mike Robson and Philip Ulla who believe that management based on
building business processes is one of the innovations that help exert the
greatest influence on wealth creation declare: There is no standard list of
processes and the organizations should develop their own last but not least
because it helps a deeper understanding of their own situation when it is
described in terms of processes. The description of business processes even at
the macro level often leads to remarkable results that allow deeper penetration
into phenomena. Relations and relationships that were ignored or not realized
suddenly turn out to be key to the effective functioning of the entire organization,
not to mention the processes to which they relate .
Industrial enterprises producing various goods and services are
considered as production systems that consume resources from the outside world,
transform them and get the product at the output. The entire production chain
consists of a series of processes that are constantly being modernized and
improved through the quality of the final results. The most frequently changed
are the following business processes: a quality management system, a personnel
management system, a financial management system, an information resources
management system, a security management system, a new project management
system, an environmental management system and a securities management system.
A process-based approach requires the development of a corporate
information system that allows functional units to coordinate their activities
more closely and respond to changes more quickly in order to organize business
processes more efficiently and to a greater degree be customer-oriented. With
the help of electronic document management you can collect information, compile
and populate network databases. For permanent external and internal impacts the
main task is to ensure the relationship between existing information flows, the
organization of work of all departments of an economic entity in the
"information space". For example, the use of a common database by the
department of the chief designer and the chief technologist of the enterprise
simplifies and speeds up the process of pre-production. Modern management
system using appropriate technical and software solutions implemented in many
industrial companies. Computer technology allows any user to quickly access the
necessary information, bypassing intermediaries which certainly improve the
quality of work.
With the introduction of advanced information technologies an
enterprise receives a powerful, ultramodern tool that can most effectively
solve complex problems in a situation of imbalance and enhance competitiveness
and stability in the market.
Changing not linearly but in steps the external environment of an
organization requires constant adjustment of management to solve more complex
problems in order to be effective which is mainly determined by the rationality
of the organizational structure because"... its no secret that the
organizational structure is as a rule a closely guarded trade secret because
production technology can be bought or thought out and the management
technology of a large organization can only be raised as a living being along
with the organization itself" .
By building a properly organized organizational structure using a
business process approach you can implement your chosen development strategy,
improve efficiency and stabilize your current business by reducing risks.
The requirement of high-quality processing of business processes is
also set forth in the requirements of the international standard ISO 9000
according to which the desired result is achieved more efficiently if actions
are controlled as processes. At the same time the process approach refers to
the use in the organization of a system of processes along with their
identification and interaction as well as the management of processes which
ensures continuity of control throughout the system and between individual
processes with their combination and interaction. The above-mentioned complex
of international standards brings together the world experience of many
successful companies in various industries. A feature of the ISO standard is
that first of all there are requirements for the company's management system
which must guarantee a high level of product quality.
The construction of a business process management system is based on
8 principles of quality management:
- Customer orientation;
- Attraction of personnel;
- Process approach;
- Systems approach;
- Continuous improvement;
- Making informed decisions;
- Mutually beneficial relationships with suppliers.
Compliance with these principles will allow industrial enterprises
to create a system for effective management of processes and ensure their
economic and social effect.
Quality management is a priority in many enterprises in different
countries in other areas of management a key component of competitiveness and
improving the efficiency of an organization.
Realization of total quality management at an economic facility is
possible only with effective management based on the fulfillment of two
Management activities must meet the interests and needs of the
enterprise which is possible due to the effective use of all the company's
resources and above all human resources.
Customer satisfaction in all respects.
These requirements are implemented during the execution of business
processes when each employee as a manufacturer of products and the consumer as
the executor of the next operation of the technological process. According to
the quality management system the basis of each process is the PDCA cycle:
Process Planning → Process Execution → Analysis of Process
Indicators → Process Adjustment.
It is also worth noting that each organization has a documented
description of key business processes which has been agreed and approved as a
standard. Process execution is also described in the form of text, tables,
The documented location (process map) describes the objectives,
scope, key characteristics of each process their criteria and settings, issues
of interaction with other departments of the enterprise, rights of the process
owner and personal responsibility.
So, the results of our research show that industrial enterprises are
developing in accordance with the general logic of development, constantly
improving their activities and increasing stability in conditions of
unpredictable changes in the external environment. The successful functioning
of a business unit is based on the implementation and quality implementation of
all components of a business process system whose individual performance should
be evaluated for a specific contribution to achieving the goals of the entire
organization. Thus the effectiveness of the company is achieved due to the
collective effect since the individual processes may vary. Competition. Thus
the effectiveness of the enterprise is achieved by a collective effect since
individual processes may vary in their effectiveness. In the current situation
of a sharp increase in competition the management of the industrial structure
is called upon to carry out adequate measures which make it possible to obtain
the greatest return.
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Table of contents: The Kazakh-American Free University Academic Journal №11 - 2019