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The Effects of Process-Oriented Organizational Design on Firm Performance

This article briefly summarizes the study “The Effects of Process-Oriented Organizational Design on Firm Performance”, by M. Kohlbacher and H. A. Reijers, which will be published in the Business Process Management Journal.

The study investigates which process management components (i.e. process design and documentation, management commitment towards process management, process ownership, process performance measurement, corporate culture in line with the process approach, application of continuous process improvement methodologies, and organizational structure in line with the process approach) are important for improving customer satisfaction, product quality, time-to-market speed, delivery speed, delivery reliability, and financial performance.

The empirical findings of the study reveal that

  • process performance measurement is important for improving product quality.
  • a process-oriented organizational structure is important for improving time-to-market speed.
  • the application of continuous process improvement methods is important for improving financial performance, and
  • a culture in line with the process approach is important for improving customer satisfaction, delivery speed, delivery reliability, and financial firm performance.

The paper will be published in the next issue of the Business Process Management Journal (Vol. 19, No. 2, 2013).

The Effects of Process Orientation on Customer Satisfaction, Product Quality and Time-Based Performance

This article is a brief summary of the paper “The Effects of Process Orientation on Customer Satisfaction, Product Quality and Time-Based Performance” by Kohlbacher M., presented at the 29th Annual International Conference of the Strategic Management Society in Washington D.C., October 2009 (http://dc.strategicmanagement.net). The work focuses on the question whether there is a positive relationship between process orientation and customer satisfaction, product quality, time to market, delivery time and delivery reliability. The paper also investigates whether these relationships depend on firm size or on manufacturing process type (batch/line vs. project/jobbing producers). The study uses a sample of more than 120 Austrian manufacturing companies. The findings indicate that process orientation has a significant positive effect on customer satisfaction, product quality, time to market, delivery time and delivery reliability. Another finding is that firm size does not moderate these relationships. Therefore, process orientation should not be branded as an organizational approach only for large firms as the positive relationship between process orientation and firm performance also holds for medium-sized firms. Neither does the manufacturing process type moderate these relationships, i.e. process orientation leads to better performance not only for batch/line producers, but also for project/jobbing manufacturers. The paper is available here.

The Perceived Effects of Business Process Management

This article is a brief summary of the paper “The Perceived Effects of Business Process Management” by Kohlbacher M., presented at the IEEE International Conference in Toronto, September 26-27, 2009 (TIC-STH 2009).

The paper empirically explores the outcomes of business process management by conducting interviews with a total of 44 process-oriented firms. Organizations were asked about the perceived benefits of business process management (BPM).

The effects most often reported are:

  • BPM leads to better transparency: 18 respondents (that is 40.91% of the total respondents) stated that by applying BPM, the organization and/or business processes became more transparent and understandable. This leads to better identification of organizational problems and their causes.
  • Nine respondents (that is 20.45%) reported that process-oriented organizational approach leads to clear responsibilities because of the process owner role terminating many unclarities caused by fragmented and/or blurry accountability.
  • Eight respondents (that is 18.18%) refer to the gained efficiency/productivity due to BPM. Non value-adding activities are better identified and can be called into question.
  • Seven respondents (that is 15.91%) reported that BPM brings clear structure and organizational interfaces.

Other benefits reported include improvement of product quality, throughput time reduction, better customer orientation, etc.

The Effects of Process Management: A Literature Review

This article is a brief summary of the paper “The effects of process orientation. A literature review” by Kohlbacher M., to be published in the Business Process Management Journal, vol. 16, issue, 1, 2010. The paper examines the literature to review studies that report about the influence of process orientation on organizational performance. Studies were classified into statements without straight empirical support, quantitative studies, and case studies. A total of 26 studies were identified that report about effects of process orientation on organizational performance. Studies where positive effects are obtained are predominant.

According to the results of the paper, the effects most often reported are

  • speed improvements (most often in terms of cycle time reductions), reported by 14 studies
  • increase of customer satisfaction, reported by 11 studies
  • improvement of quality (most often in terms of product quality), reported by 10 studies
  • reduction of cost, reported by 10 studies
  • improvement of financial performance (e.g. in terms of sales, profits or profitability), reported
    by 8 studies