Is it important to align your processes with you company’s strategy?
The answer is: of course. However, this is something that for many process owners is difficult to understand and to implement.
Also, this answer does not mean that the Purchasing Process will change his objective of “timely providing materials and services required by the different areas of the company”, however, the emphasis or the internal requirements for this process could be impacted by the global strategy of your company.
Process Alignment
When you identify and document your internal processes, most probably you will create a data sheet containing the definitions and the different elements of this process:
Process Name, Process Owner, Objectives, Risks, Scope (where it starts and ends), Subprocesses, Inputs and Outputs, KPIs, Controls, Mechanisms (required resources), Policies & Procedures and other documentation.
Using an ICOM Diagram:
Something very important to understand from this list of process attributes is that Objectives, Risks, KPIs, Controls and Mechanisms are Strategy Related, and most probably will be affected or modified when your global strategy changes.
Process Objectives: The first element you should align in your process is its Objectives. Using the Purchasing Process as an example, let’s assume that the general strategy has changed to provide the lowest product prices in the market for your customers. Then, it definitely requires you to have very low costs too (probably the lowest). For this, the Purchasing Process must achieve and additional objective to continuously decrease its Costs.
Process Risks: The risks in a process are those events that could prevent the process to achieve its objectives, in this case, if an objective of the purchasing process is to continuously decrease its costs, the associated risks will be related to not being able to manage internal and external factors that increase the supply chain costs. You should be aware of those risks and manage them.
KPIs: Due to these objective changes, you will also need to include new KPIs defined in terms of the cost of the supply chain, for example: Freight Cost Per Unit, or other significant indicator that make sure you are monitoring your process costs.
Controls: If a process cost reduction has become one of your main objectives, most probably you will need to include additional controls to make sure you are getting the best costs in every purchase. For example, usually companies set a policy of having at least 3 vendor quotations to make sure they are getting the best prices in that purchase. If you did not have this type of control in place, you should now need to implemented one under the new cost reduction strategy. Or, if you have one set for the more expensive items, maybe you would need to reduce the minimum value to apply this control.
Mechanisms: Mechanisms are related to the resources (systems, people, tools, etc.) required to operate your process. If your process objectives and controls have changed, most of the time you will need to implement new systems or tools to be able to apply those controls. For example, if you usually did not compare vendor quotations, maybe you will need a new system (or service) to perform this comparison.
IN CONCLUSION
When you amend your global strategy, it is very likely that you will modify the business requirements to your internal processes.
To align your processes with this new strategy, you will need to review and adjust its Objectives, Risks, KPIs, Controls and Mechanisms.
This is a very dynamic activity. Every project owner needs to be aware of it and check, at least once a year, that the defined objectives for its processes are aligned with the company’s global strategy. If they are not, implement the required changes to align the process objectives with the new business strategy under a continuous improvement approach.
Juan Pablo Franco
General Manager
