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 [1]. 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 [2]. The author is close to the point of view of V. Deming who considers business processes as any type of activity in an organization [3].

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 competitiveness:

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 enterprise.

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) [4].

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 [5].

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 satisfaction).

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 [6].

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" [7].

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;

- Leadership;

- 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 interrelated requirements:

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, graphics, etc.

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.


1. Hammer M., Champie J. Reengineering Corporation; per. from English. - SPb.: Publishing house of S.-Petersburg. University, 1997.

2. Porter M.E., Millar V.E. How Information Gives You Competitive Advantage // Harvard Business Review. 1985. No.85. (July-August). - R. 149-160.

3. Deming W.E. Quality, productivity and competitive position. - Cambridge, MA: Massachusetts Institute of Technology, Center for Advanced Engineering Study, 1982.

4. Kondratyev V.V., Kuznetsov M.N. We show business processes. - M.: Eksmo, 2007.

5. Butch O.V. Process approach to enterprise management: business process outsourcing // MSTU Bulletin. 2008. T. 11. No.2. - P. 264-267.

6. Robson M. Practical Guide to Business Process Reengineering / M. Robson, F. Ullah; per. from English by ed. N.D. Eriashvili. M.: Audit; UNITI, 1997.

7. Bratymov O.V., Gorsky Yu. M., Delyagin M.G., Kovalenko A.A. The practice of globalization: the game and the rules of the new era. - M.: Infra-M, 2000.

Table of contents: The Kazakh-American Free University Academic Journal №11 - 2019

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