Businesses take in inputs from suppliers. Value is added to those inputs through an internal process which provides outputs to customers.
One has to consider all the “moving parts” of the organizational system.
VALUE ADDING PROCESS
Transforming Inputs to Outputs
Tools; Enabling Systems; Skills; Structure; Style; Symbols
Goods / Services
Profits / Losses
Waste / Pollution
(McShane, 2005. p.22) Italicized words added by the author
A SIPOC diagram is commonly used. The initials SIPOC are used to abbreviate Suppliers, Inputs, Process, Outputs, and Customers. Note that in using this model, the input of purchased finished material is included under Raw Materials.
You’ll note that I added the words “Tools; Enabling Systems; Skills; Structure; Style; Symbols” with the Value Adding Process of the SIPOC diagram. The value-adding process is one that transforms inputs to outputs.
The enabling systems are all of those that are required to run the business and employ people; for example, human resources, administration, and financial reporting. Those processes do not directly contribute to producing the products. However, processes do not execute themselves – they need great people to execute them.
Tools are needed for the execution of processes. The employment of humans demands that we place them in organizational structure, give them the skills they need to do the work, use a behavioral style consistent with our stated values, and provide symbols to represent the values and identity of the organization.
A systemic solution is based in the idea that the organization is an “open system.” Open systems are affected by things outside the system and the system can affect the things outside of it. Every person, department, and organization should be viewed as an open system.
A systemic solution also includes consideration and impact to all the internal elements of the organization as a system including:
|BUSINESS SYSTEM: Aligning operations with the core competencies or capabilities, vision, and strategy of the organization.|
|WORK SYSTEM: Processes & Tools|
|HUMAN SYSTEM: Structure, Systems, Skills, Style, and Symbols|
Outputs of the processes include: Goods and services; Employee Behavior; Profits or Losses; and Waste or Pollution. Those outputs go to customers.
There may be a variety of “value-adding processes” being executed, simultaneously. Inputs may be exclusive to only one process, or used by several. Typically, the outputs are only generated by one process.
ABOUT THE AUTHOR: Mr. Czerniak retired after a successful career that culminated in fifteen years of experience as an internal consultant and “change agent.” He is currently an Expert-in-Residence at the Macomb-Oakland University Incubator and a volunteer with the Michigan Floral Association and the Troy Historic Village and Historical Society.
REFERENCES: 1) McShane, S.L., Von Glinow, M.A., (2005). Organizational behavior: emerging realities for the workplace revolution (3rd ed.). New York: McGraw-Hill 2) Miller, L. M., Uhlfelder, H. F. PhD (1997) Change Management: Creating the Dynamic Organization through Whole System Architecture. Miller/Howard Consulting Group, Inc., Atlanta, GA.