What is a core process?
Core processes are the strategically important processes in a company. You decide whether a customer is satisfied or churns. An example: At a software company, the delivery of new functions is a core process. If it goes badly, the customer notices it immediately.
Core processes are derived from a company’s core competencies. They start with the customer and end with the customer. This is exactly what distinguishes them from pure administrative tasks in the background.
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The term is also clearly defined in quality management. A good definition is provided by the book “Quality Management: Terms and Definitions” by TÜV SÜD Akademie GmbH (12th edition 2017, according to ISO 9001:2015). A general definition of the generic term business process can also be found in the Gabler Wirtschaftslexikon, one of the best-known German business reference works.
“Coreprocess – process that is strategically important taking into account the company’s orientation and contributes significantly to business success. Core processes are characterized by the following aspects: Value creation, the (external) customer is at the beginning and end of the process, they contribute significantly to the company’s success and customer satisfaction, they have direct customer relevance and direct customer impact, the Customer is willing to pay for the output of the process.”
In the end, one thing counts for us in consulting: the customer’s wishes and their fulfilment. That’s why we attach so much importance to this topic in process analyses.
What are the core processes in a company?
Typically, these areas are part of a company’s core processes:
Purchasing is a core process for many companies. For example, a mechanical engineering company negotiates steel prices with suppliers, manages contracts and optimizes its supply chain. If this goes badly, the costs rise immediately and the delivery date is jeopardized.
Production is also almost always part of it. It’s about planning, the use of resources and quality control. For example, a manufacturing company loses orders if production planning does not match demand.
Sales and marketing are also included. This is about the sale itself, but also about customer loyalty and the right sales planning. An example: A B2B retailer loses customers if its sales planning does not match the actual demand.
Customer service is the most important core process for many service providers. This includes customer inquiries, complaint management and technical support. For example, a software vendor loses trust when support requests go unanswered for days.
Example: The core process “customer support” at a software manufacturer
Customer reports a problem
Team assesses urgency
Error is analyzed and corrected
Solution is being examined
Customer receives answer and solution
The process starts with the customer and ends with the customer – which is exactly what makes it the core process.
Finance and accounting processes can also be a core process, especially for banks and insurance companies. This includes accounting, invoicing, and payment processing. An example: A bank loses customers when transfers are unreliable.
These core processes can vary depending on the type of business. A company may also have specific industry-specific processes that are relevant to its business model. The identification, optimization and continuous improvement of core processes is crucial to increase the efficiency, quality and competitiveness of a company.
Why is it important to designate the core processes?
Business process management in practice
Each company must focus on developing these core processes so that it can fully exploit its competitive skills in process performance. Depending on the competitive strategy, there are different requirements for organisation and processes. Management’s naming of core processes has numerous advantages. Communication is greatly facilitated and the project team can focus better. A lack of analysis of the business processes at the beginning of the introduction of ERP, CRM, SCM and SRM systems usually leads to inefficient communication between the departments and the project team, the project quality suffers and customer expectations remain unfulfilled .
Knowledge of core processes has 3 key benefits
Knowledge of the core processes has the following 3 advantages for a company:
- Streamlined and clearer core and support processes by separating support processes
- Quality improvement as employees focus on and optimize core competencies
- Potential for savings in support processes – feasible through more efficient organization of the process
Documentation of core processes – goals
- Targeted introduction of ERP, CRM, SCM or SRM systems
- Facilitating:
- Transfer business processes to other locations
- Employee training and induction
- Communication
- Transparency for employees, customers and suppliers
- To avoid loss of knowledge (e.g. through employee departure)
- Determination of process key figures and monitoring of process performance
- Preparation / implementation of a business process optimization
Core Process – Characteristics & Influencing Factors
A core process has 3 characteristics
- high strategic importance
- Cross-location to traditional departments
- enormous reach: – from the interface with suppliers to interfaces with customers; the process starts with the customer and ends there again
Procedure for determining the core processes
Analysis of:
Business/competition strategy
Strategy includes two perspectives
– Market-oriented view: market competencies (cost leadership vs. differentiation)
– Resource-based view: core competencies
Depending on the competition strategy, different
– Efficiency criteria and success factors
– Requirements for organization and processes
- Business model (relationships with business partners)
- List of the main processes
- Determination of Strategic Relevance: Core Processes – Support Processes
Criteria for the identification of core processes
- Direct reference to core competencies
- Strategically crucial
- Making a perceptible customer benefit
- Establishing a sustainable competitive advantage
- Focus on external beneficiaries (immediate market contact)
Questions for the identification of core processes
- Who is the target group / target market for the result of the process?
- What offer do we have for this target group?
- How does our offer stand out from the competition?
- What is the competitive advantage?
- What proportion of the processes is in the company’s success (turnover, margin, etc.)
- What is the strategic significance of the process for the business?
- How often is the process?
This approach coincides with the recognized standard works on business process management, such as Schmelzer and Sesselmann, “Business Process Management in Practice” (Hanser Verlag), and Gadatsch, “Basic Course Business Process Management” (Springer Vieweg).
Frequently asked questions about core processes
What distinguishes a core process from a support process?
A core process has direct contact with the customer and creates added value. A support process such as internal IT or human resources only provides support in the background.
How many core processes does a company typically have?
Most companies get by with three to seven core processes. More processes usually make the control system confusing.
Who determines the core processes in a company?
As a rule, the management makes decisions together with the process management, often supported by external consulting.
