Understand your Business processes
Description
A business process represents a specific business need or goal, such as hiring an employee, processing a sales order, or reimbursing a business expense. Business processes are broken down into logical steps called activities, each of which can comprise one or more tasks. Tasks are assigned roles that determine which participants will perform the tasks. The transitions between activities determine the order in which they are performed and the basic workflow for the process.
WorkSpace lets you interact with business processes based on your assigned roles within your company.
Transcript
Understand your Business Processes
The Context
Businesses are faced with customers who demand
more:
Quality of service
Responsiveness
Value for money
Personalization
To deliver on this, an enterprise needs to function
in an integrated manner across functional
boundaries
It is precisely to address the need to move from
piece-meal solutions to integrated systems that
ERP was introduced
Yet………
• There are many cases of companies which have
begun ERP implementation, but dropped it midway
• There are many incidences of companies where the
expected business results have not materialized
• Deloitte Survey: After ERP systems went live, one
in four firms suffered some performance drop
The Issues
• An ERP solution is a technology enabled business
solution
• The organization’s business processes may not be
ERP ready
• Clients with fundamental business problems expect
ERP to function as an expensive (but effective)
magic wand
• Systems cannot function in isolation of people,
process and structure issues
• What is optimal for a part may be sub-optimal for
the whole
The Full Picture….
Systems
People
Structure Process
The Model Transformation Process
Input OutputTransformation
Transformed
Resources
Transforming
Resources
Goods
Services
A business process is initiated by an EVENT (Trigger), consumes
RESOURCES, performs ACTIVITIES and produces Goods and
Services
The Various Transformation Routes
Transformed Resources-
•Material
•Information
•Customer
Location Change
Possession Change
Storage Change
Reconfiguration
Physical Conversion
Transforming Resources-
•Facilities
•Human Resources
Business Processes
“It is possible to group processes in an organization
into a small number of business transformations”
There are three types of Business Processes-
End-to-End Process
Funnel Process
Composite Process
Sample Process Breakdown
Business Process
Process Element
Activities
Tasks
Concise
Manageable
Definable
Properties of the Process Elements
•Value Chain (Value adds vs. Non-value adds)
•Variability (Controllable vs. Uncontrollable
causes)
•Measurement
•Logical Network
•Ownership
•Automation (Simple & Integrated)
Process Element
• A series of activities that transforms an
• Should be judged by its contribution to achieving
business strategy.
OUTPUTINPUT
(product/service)
Reengineering Activity Based
Industrial/organisational
Psychology based
Function Function Function
Departments Departments Departments
Business Process Business Process Business Process
Sub Process Activity Duties
Tasks Tasks Tasks
Operation Steps Operation Steps Action Steps
Types of Process Performance
Measures
• End of process- originate primarily from
customer requirements
• Functional boundaries- at point of interface
between various functions.
• Major sub product – identifying problems at
sub process level that constitute the final
process
• Variances – unplanned “break points”.
What To Measure?
• Cycle time: Total elapsed time to complete a
specific process.
• Costs: Calculated by aggregating all costs
within a process
• Quantity: Counts the number of “units”
processed within a certain period of time
• Quality: Measured by degree of meeting
customer’s desired product/service attributes
(e.g.. Six Sigma standards)
• Customer user standards: Includes service
level agreements and standard operating
procedures
Ways To Develop Process
Performance Mapping
•Process Maps
•Activity Charts
•Task Analysis
Process Maps
A Process map helps to identify the
critical activities within a process
• Map from customer to the job that which is
most critical to the customer and then to
other supporting jobs.
• Indicate boundary crossings (between jobs,
departments, organisation, etc.)
• Map the task in process from left to right,
following the continuum of time.
• Tasks appearing under each other indicate
that they can be undertaken simultaneously
Process Maps
Steps and information sources used
A) Map from customer down-customer, stakeholders
B) Identify process starts and stops- process owners
C) Identify activities (tasks) and boundary crossings
Process Maps
Steps and information sources used
D) Identify hand-offs and bottlenecks- stakeholders
E) Estimate cost of each activity- finance,
stakeholders
F) Standardise performance measures- management,
process owners
Activity Charts
• Show relationship between activity in process and
related systems/sub systems
• Provide more explicit information-help to develop
better performance measures
• Can be used in conjunction with process maps to
identify and ultimately reduce number of
boundary crossings
Sample Activity Chart
Activity:
Taking customer order
Relationship:
Customer
Greet customer
Ask for first and last name
Ask for order
Ask for item characteristics
Ask for credit/ATM card number
Verify card number
State order number
Inquire about additional items
Offer sales items
Indicate delivery dates
Thank customer for order
Sample Activity Chart
Activity:
Taking customer order
Relationship:
Order Entry System
Log in names
Check availability
Log- in order
Verify order
Number of screen accessed
Sample Activity Chart
Activity:
Taking customer order
Relationship:
Credit System
Input card number
Verify card number
Verify credit availability
Task Analysis
• Provide a comprehensive listing of task-level
details
• Graphic illustration of work flow across a process
• It does not add any additional information about
the process itself.
Sample Task Analysis
Some of the activities Task symbols
Greet customer
Ask for order
Ask for credit/ATM card #
Verify card number
Pick and pack order
Move to shipping
Ship
Inquire/state
Transport
Perform
Inspect
Input
Gap Analysis
a) Compare performance measures and identify
gaps in terms of:
• Current vs. ideal
• Current vs. benchmark (ERP)
b) Compare process to process through:
-Activity charts
-Cause effect diagrams
-Pareto analysis
c) Identify actions to bridge gaps
Benchmarking:The Paradigm Shift
Companies are looking for a
direct support for their
Objectives
Priorities
Mission
Goal achievement
approach
Problem Solving
Approach
What is asked from Benchmarking?
To break the ideology of not learning from others
To search for and implement the best practices of –
• Competitors
• Industry leaders
To understand and prioritise the processes that will
have the greatest impact on the company’s objectives
by-
• Management consensus
• Contribution to a major goal
• Rank-Order methods followed
To gain superiority and become new benchmarks.
Benchmarking Tasks
Management
Process
Establish Support Sustain
User Process “A N- step Process”
“Benchmarking is an organization wide
phenomenon and needs to be driven with
strong management support.”
Benchmarking Targets
• Benchmarking should be conducted on
Products and Services
(E.g Product Planning, Design and Development)
Business processes
Performance Measurement Tools
Types of Benchmarking
• Internal (In- house learning)
• Competitive (From the same industry)
• Functional (From outside the industry but with
similar processes)
• Generic
Focus levels of Benchmarking
• Strategic
(In a Scanning Mode)
Technological Direction
Industry Trends
Investment Selection
Competitive Products and Services.
• Operational
(Realigning processes to become the ‘vendor of
Choice’)
The Benchmarking Process
•What is Supplied •Sequence of Work-
Steps
•Best practice at each
Step
•What is Delivered •Performance
Measures
Inputs Work Process Outputs Results
Feedback
5-Phase of Benchmarking Process
• Planning
• Analysis
• Integration
Decide-What to Benchmark
Identify-Whom to Benchmark
Plan- Which best practices
Determine- Current performance gap
Project- Future performance levels
Communication-gain Acceptance
Revise-Performance Goals
5-Phase of Benchmarking Process
• Action
• Maturity
Develop- Action plans
Implement- Actions and monitor Progress
Determine-when leadership position is
attained
Assess- Benchmarking as an ongoing
process
Elements of a Work Process
• Results
Critical performance measures serving as a report card
• Outputs
What is products and delivered to the customer
• Process
The decision points, handoffs and practices
Steps = What is done
Practices = How it is done
• Inputs
Items provided by suppliers that go into the work process
Benchmarking Matrix
Known Unkno
wn
Implemented Not
Implemented
Known Implemented
Not
Implemented
Unknown
Subject Company’s Best practices
Business process Re-engineering
• What is Re-engineering???????
NO
Patchworks!!!!
It’s
“Starting
All
Over Again”
It’s the process of reinventing a company…….
Defining Re- engineering
• It is-
“The Fundamental rethinking and Radical
redesign of business Processes to achieve
Dramatic improvements in critical,
contemporary measures of performance,
such as Cost, Quality, Service and Speed.”
Key Words
• Fundamental
– Begin with no Assumptions and no Givens
– Ignore what is and concentrate on what should be
– Why we do what we do?? Why we do it the way
we do????
• Radical
– Getting to the root of the things
– Its about Business Reinvention and not about
Business Improvement/Enhancement/Modification
Key Words
• Dramatic
– Its about Quantum Leaps and not about
Marginal or Incremental Improvements
– Should be undertaken when there is a need of a
Heavy Blasting
• Processes
– Focus on processes and not on tasks/jobs/people/
structures
– The process is right only if it delivers the
promised
Case of IBM Credit
• Reinventing the process of credit issuance…
Original IBM Credit Re-engineered IBM Credit
Field sales person
Call Logger
Credit Worthiness Checker
Business Practices Department
Pricer
Dispatch Clerk
Field sales person
Deal Structurer
Specialists
Case of IBM Credit
• What they achieved??
– 90% reduction in cycle time (7 days to 4 hours)
– Hundred-fold improvement in productivity
– A head- count reduction
• How they did that??
– They improved the process of Credit issuance
and not the task of credit checking……
– They shattered the assumption that they need
specialists to perform specialized tasks……
– They cleared all redundancies from the process
Case of Ford Motor
Original Ford Re-engineered Ford
procurement process procurement process
Purchasing
Department
Receiving Dock
Purchasing
Department
Vendor
Accounts
payable
Receiving Dock
clerk
Online
database
Vendor
Case of Ford Motor
• Mazda made them re-engineer the “Accounts
payable” department…..
– The department could not be re-engineered but what it
does could be..!!!
– So they eventually reengineered the process of
“Procurement”
• The ground Rule of
“We pay when we receive Invoices”
was replaced by
“We pay when we receive the Goods”
Case of Kodak
Original Product Re-engineered Product
Development Process Development Process
Sequential/
parallel
Body Designers
Shutter Designers
Film advance
mechanism designers
Manufacturing Engineers
Tooling Engineers
Design Groups
Integrated
Product
design
Database
Case of Kodak
• Re-engineering the product development
process…..
• How they did it??
– By “Concurrent Engineering”
• What they achieved??
– Cut down the product development time from 70 weeks
to 38 weeks
– Involvement of Tooling Engineers in the design,
ensured easy and inexpensive manufacturing
– 25% reduction in costs……
What needs to adapt?
Business processes or ERP software!!
• Research findings on “reengineering policies”
of firms-
– Choose applications that fit their business and
customise a bit – 37%
– Customise applications to fit their business – 5%
– Reengineer business to fit application – 41%
– No policy – 17%
When is “AS IS” model needed?
“As Is” requirement
analysis is not necessary
“As Is” requirement
analysis is critical
ExtensiveMinimal
EXTENT OF CHANGE
Potential problems of using “AS IS”
Model?
Lost chance to choose
software that meets
needs
Potential to back slide
to existing processes
Minimal Extensive
TightFit
EXTENT OF CHANGE
What kind of “TO BE” model is
needed?
“To Be” analysis is clean
sheet reengineering
“To Be” analysis is
technology enabled
portfolio choice
Minimal Extensive
TightFit
EXTENT OF CHANGE
Small-r versus Big-R reengineering
“Big R”
“Small r”
Minimal Extensive
EXTENTOFCHANGE
EXTENT OF CHANGE (SOFTWARE)
Failure or Success!
Potential project
failure?
Potential project
failure?
High probability of
success
Potential project
failure?
Minimal Extensive
Minimal
EXTENT OF CHANGE (SOFTWARE)
EXTENTOFCHANGE
NOTE
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