A business process transforms an input to a more valuable output. The acronym SIPOC (supplier, input, process, output, and customer) is often used to define the main components of a business process. All work is executed by an organization through business processes linked together to form business systems. At BEM, we define 12 standard business systems, regardless of company size, industry, or type.
5 Core Business Systems define the business processes necessary to deliver the organization’s value proposition. They include Sales & Marketing, Product Development, Operations, Procurement and Customer Service.
5 Resource Business Systems define business processes necessary to provide assets to execute work in the Core Business Systems. These include Finance, Facilities, Equipment, Employee, and Information technology.
The Executive Management System defines business processes that deliver strategy, M&A, governance, and oversight.
The Improvement Management System defines business processes that manage organization feedback and improvement.
So what is a Value Stream?
A Value Stream is a series of business processes that align to create a flow of products or services delivered through the Core Business Systems (value proposition) or through the Resource Business Systems (life cycle management of assets). While Value Stream is typically associated with Supply Chain, in fact, there are several Value Streams within any organization.
Value Streams delivered through the Core Business Systems include examples such as these below.
- Fulfillment, order to cash.
- Procurement, procure to pay.
- Customer, pursuit to separation.
- Product, concept to end of life.
- Vendor, pursuit to separation
Value Streams delivered through the Resource Business Systems include examples such as these below.
- Employee, recruitment to termination
- Facilities, acquisition to disposition.
- Equipment, acquisition to disposition.
- Information Technology, acquisition to disposition.
- Cash, receipt to disbursement
A simple example of the Employee Value Stream.
The Employee Value Stream (EVS) is a series of 8 business processes that begin with a plan to hire a new employee and end with the off boarding of that employee.
Delivers qualified candidates ready to receive an offer to fill new hire requirements.
Delivers candidate offers, negotiates compensation and terms, and either hires or not.
Sets-up and assimilates new employees into the company.
Pays employees accurately, timely and complete.
Educates, enrolls and administers employees’ enrollment in available benefits.
6. Performance Management
Provides knowledge, direction, measurement, and feedback to deliver and maintain satisfied, effective and high performing employees.
Develops employees to their fullest capability throughout their careers with the company.
8. Off Boarding
Ends employees’ careers with the company.
A Value Stream assessment is an excellent approach to studying the connectivity of business processes and the extent to which each business process serves a larger enterprise purpose. Studying Value Streams allows the analyst to assess cause and effect relationships that are often far apart in the organization workflow. The enterprise that manages Value Streams well creates a long-term competitive advantage.