Transformation Process Model in Business Operations

Business processes in every sector can follow a basic “transformation process” model. This applies to sectors ranging from manufacturing or healthcare through to retail or tech. It is as fundamental as they come. Everyone starting out as an operations manager should grasp it because it cuts across all industries and business types.

Every operation produces and delivers products and service by converting inputs to outputs in an ‘input transformation output’ process. This simple process transformation model is the base of all the operations. So what are operations? In the context of Orchid, we could say operations take some set of resource inputs. They transform these resources or transform the inputs themselves. This process results in outputs of services and goods.

All operations work this way (as input –> transformation –> output), but they vary in what it is doing. Take a hospital and a car factory, for instance: From far off, the two may look identical. But on closer inspection clear differences emerge. One is a service operation, which provide ‘services’ to convert patients’ physical or mental state of health. The other is a division of labour facility which makes and ships products.

Inside each operation is also different. The hospital includes diagnostic and patient care facilities, as well as treatment rooms. The car factory comes with machines that shape metal and move it down assembly lines. The crucial distinction between these two … is the form of its input. The hospital’s customers, the patients, are part of the input to the operation. They are also in the output. The car factory turns raw materials such as steel, plastic, fabric and tires into finished vehicles.

Inputs to the process – transformed resources in transformation process model

One set of inputs to any operation’s processes are transformed resources. These are the resources that are treated, transformed or converted in the process. They are usually a mixture of the following:

Materials – operations that process materials could do so to transform their physical properties (shape or composition, for example). Most manufacturing operations are like this. Other operations process materials to change their location (parcel delivery companies, for example). Retail operations, do so to change the possession of the materials. Finally, some operations store materials, such as warehouses.

Information – operations that process information do so to transform their informational properties. They can change the purpose or form of the information. Accountants perform this task. Some change the possession of the information: for example, market research and social media operations aggregate and sell information. Some store the information, like archives and libraries. Finally, some operations, like telecommunication companies, change the location of the information.

Customers – operations that process them may change their physical properties like hairdressers or cosmetic surgeons. Hotels accommodate customers, while airlines and transport shift their locations. Hospitals alter their physiological state, and entertainment services transform their psychological state. However, customers can also be active participants; they create the atmosphere in restaurants and enrich learning environments in education.

Inputs to the process – transforming resources

The other set of inputs to any operations process are transforming resources. These are the resources that act upon the transformed resources. There are two types, which form the ‘building blocks’ of all operations:

▶ facilities – the buildings, equipment, plant and process technology of the operation;

▶ staff – the people who operate, maintain, plan and manage the operation. (Note we use the term ‘staff’ to describe all the people in the operation, at any level.)

The exact nature of both facilities and staff will differ between operations. To a five-star hotel, its facilities consist mainly of ‘low-tech’ buildings, furniture and fittings. To a nuclear-powered aircraft carrier, its facilities are ‘high-tech’ nuclear generators and sophisticated electronic equipment. Staff will also differ between operations. Most staff employed in a factory assembling domestic refrigerators may not need a very high level of technical skill. In contrast, most staff employed by an accounting company are, hopefully, highly skilled in their own particular ‘technical’ skill (accounting). Yet although skills vary, all staff can make a contribution.

A key distinction to note is between ‘front-office’ and ‘back-office’ transformation. The ‘front-office’ involves processes that interact with customers, while ‘back-office’ operations support the front office without direct contact with customers.

Outputs from the process

Operations create products and services, which are often viewed as distinct. Products are tangible items like cars, newspapers, or meals, while services involve the activities of using those products. Many services do not rely heavily on physical items. Similarly, some products come with little service. Most operations involve a mix of both, even if one is more dominant. For example, consultancies provide reports, hairdressers sell hair products, and food manufacturers offer preparation advice for their items.

This input-transformation-output framework provides operations managers with a analytical lens for evaluating any business operation. Whether analyzing a consulting firm, e-commerce platform, or pharmaceutical company, grasping how each organization acquires inputs is essential. Executing transformation processes and delivering outputs are crucial for strategic decision-making. These elements contribute to operational excellence.