Control Based Processes
February 12, 2025
Inventory management as well as Supply chain operations are often overlapping and hold the key to the success of sales operations. In all of the businesses be in automobile, manufacturing, pharma or retail industry, status of inventory reflects the health of the business. Inventory operations have two key elements namely Inventory System and Physical operations. […]
Communications planning involves identifying the information and communication needs of the stakeholders. This includes determining what needs to be communicated, to whom, when, with what method and how frequently. This is a very proactive approach. The PMBOK guide often suggests work to be done in a more structured way than many project managers previously thought […]
The US Fed and Tapering of Quantitative Easing (QE) The recent announcement that the United States Federal Reserve was thinking of tapering the Quantitative Easing program or QE immediately spooked the stock markets, which went into free fall. Mind you, this was not the actual tapering off the program but just a line of thought. […]
In any company inventory management is one area that the managements always focus on when it comes to improving business efficiencies and cutting costs. An inventory reduction drive always yields results, which are visible and releases cash back into business. Does this mean that inventory management is inefficient? The answer can be a yes and […]
Introduction For efficient, effective and economical operation in a manufacturing unit of an organization, it is essential to integrate the production planning and control system. Production planning and subsequent production control follow adaption of product design and finalization of a production process. Production planning and control address a fundamental problem of low productivity, inventory management […]
The Wealth of Nations by Adam Smith is perhaps one of the most influential books on Economics in all history. However, not many people know that it is in this book that the idea of improving processes to increase productivity and therefore profit was born.
Although Adam Smith called it “division of labor” and not business process management, he was referring to the same idea. The concept is illustrated with the help of a pin factory example as follows:
Adam Smith spoke about an old pin factory where each laborer would produce the whole pin i.e. from raw material to finished product himself. Smith realized that a lot of time of such a laborer was spent in moving from one job to another and switching tools required for different jobs. This time, he concluded, was being spent in an unproductive manner.
He then saw that in the same factory, when different people were doing different activities i.e. one man was drawing the wire, the second was shaping it, the third making only pin heads and the fourth assembling the pin to complete the product, this time was being used much more effectively. Productivity went through the roof and costs were cut into a fraction of what they were. The concept of process was born and was taking the developed western world by storm.
Adam Smith also realized that such simplification of individual tasks made it possible for the workers to increase their dexterity. The productivity increased even more as workers went faster up the learning curve. Lastly as the jobs were being reduced to simple tasks, it gave an impetus to mechanization. It is much simpler to make a machine to do one part of the process, rather than to make a machine to do the entire process.
The above example by Adam Smith showed that it was possible to increase the productivity by a factor of 10 or more if processes were efficient enough. Corporations of the day realized this revolutionary idea and soon it became the bedrock of the industrial revolution. All business endeavors today try to compete with each other by building more efficient processes to meet the needs of their customers. Every Fortune 500 companies today claim to be process driven. The study of processes has today become a separate science which we call Business Process Management (BPM).
The idea of processes might be old, but it is still very much valid. Almost all business organizations that have become big have adopted the process paradigm. Some of the famous names are as follows:
These examples show how some entrepreneurs learned the power of processes and later unleashed them to create history. Each of these entrepreneurs is a first generation entrepreneur but was able to amass far more wealth than many rich families had done over the period of many years. Process management and improvement therefore remains an important tool and organizations of all sizes pay attention to maintain and improve it. They know it can make or break their future.
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