W13 - Supply Chain BPR

The objective of supply chain management is to provide a high velocity flow of high quality, relevant information that enables suppliers to provide for the continuous and exactly timed flow of materials to customers. Supply chain excellence requires standardized business processes supported by a comprehensive data foundation, advanced information technology support and highly capable personnel. It needs to ensure that all supply chain practitioners actions are directed at extracting maximum value. The concept of supply chain management has received increasing attention from academicians, consultants, and business managers. Many organizations have begun to recognize that supply chain management is the key to building sustainable competitive advantage for their products and/or services in a gradually crowded marketplace. Supply chain management has been considered as a critical strategy for effectively competing in the 21 century. 

Successful companies recognizes that with effective supply chain management they are not only be able to reduce production cost by eliminating non-value added activities, but also to create a new set of market capabilities that are difficult to replicate. However, implementation of a successful supply chain may encounter resisting forces that include lack of supply chain management actor’s support, insufficient measurement and information systems, and organizational culture. Thus, successful supply chains can create value contingent on their ability to overcome resisting forces through various mechanisms, and BPR may be one of them.

Most organizations have a traditional supply chain strategy. In this strategy, each department has its own workspace, and interaction is usually present within department. It has been found that within a company whose strategy is of such a traditional form much of the work being executed is non-value-adding. By this, a significant number of the tasks which are carried out are performed more out of procedure than necessity and, had they have been removed, effective output and the general running of the company would not suffer. On the contrary, in fact, removing some tasks or processes may be beneficial to companies.

Over a decade ago, a few companies had been seen to be aware of this and consequently restructured their supply chain to address this matter. In the establishment of an effective supply chain management, the key factor is the need that focusing on building the relationship and creating values. After that, the enterprise can become more agile, responsive, and competitive. One of the most important things in understanding how to build effective supply chain management is to understand of the time dimension of the supply chain. In the supply chain, time-based resource management is being more and more recognized. Research indicates that it is not uncommon for the time spent actually “adding value” i.e. doing things that a customer is willing to pay for, to be as little as one tenth of 1%. Value-adding time is characterized using three criteria:

1. Whether the process is physically changing the nature of the consumable item (i.e. the customer’s product/service); 
2. Whether the change to the consumable item produces something that the customer values or cares about and may be willing to pay for; 
3. Whether the process is right first time, and will not have to be repeated in order to produce the desired result that is valued by the customer.

Non-value adding activity can be split into three categories: queuing time, rework time and time wasted due to management decisions. A time-based process map can be used to gain transparency of the value adding and non-value adding activities. This map also enables the user to gain transparency of the supply chain process.

The emphasis in BPR is put on changing how information transfers are achieved. A necessary, but no means sufficient condition for this is to implement new IT which enable efficient and cheap information transfer. Hence, IT support is not enough as deep structural and organizational changes are needed to fully realize the potential benefits of applying new IT.

Effective supply chain management is critical advance for supply chain competitiveness. Not surprisingly, IT sits at the heart of this advance. Specific technologies may vary from company to company, but the underlying principles remain the same: to create seamless pipeline where product is handled minimally but moves at maximum velocity. The results is a supply chain that can be managed according to approach where the customer order is a starting point, and works down the rest of the chain are such to eliminating waste and trimming processes that do not add value along on the way.

Source / Reference:

1) Bosilj-Vuksic V, Stemberger IM, Jaklic J, Kovacic A (2002). Assessment of E-Business transformation using simulation modelling. Simulation 78(12): 731-744

2) Cheung Y, Bal J (1998). Process analysis techniques and tools for business improvement. Bus. Proc. Manage. J. 4(4): 274-290


3) Migiro SO, Ambe IM (2008). Evaluation of the implementation of public sector supply chain management and challenges: A case study of the central district municipality, North west province, South Africa. Afr. J. Bus. Manage. 2(12): 230-242.

W8 - Redesign Process

Re-engineering business processes means tossing aside existing processes and starting over. Business process redesign (re-engineering) is defined as “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as costs, quality and speed”. This definition contains four key words:  

Fundamental

Reevaluate the primary goals of the company, ignoring rules and assumptions formulated in the past.

Radical

Do not try to improve the existing situation, invent completely new ways of accomplishing work.

Dramatic

Do not use business process redesign to obtain marginal improvements, aim at order-of-magnitude improvements.

Process

Focus on the business processes instead of organisational structures.

What are the prime objectives of a company or business unit? An attempt to re-engineer a business process should always start with this question.

When we have determined what a company should do, we have to determine how to do it. Again we should not be hampered by existing rules and assumptions. Processes, not organisations, are the object of BPR. Processes in a company correspond to natural business activities, but they are often fragmented and obscured by organisational structures. If we have found a process to be redesigned,we should give this process a name and determine the input and output of the process. Then we determine the work that has to be done between the start and finish of the process, i.e. all the required steps are identified. We can think of a such step as a task or an activity. Then we determine the ordering of these steps. A number of guidelines are given to support this activity:

1. The steps in a process should be performed in a natural order.
2. Avoid fragmentation of related activities.
3. If possible, several steps are combined into one.
4. If possible, tasks are allowed to be executed in parallel.
5. Avoid complex processes to cope with complex activities.
6. Reduce checks and controls as much as possible.
7. Make processes generic, i.e. use multiple versions of the same procedure.
8. Check whether modern information technology allows you to omit steps.

The result of applying these guidelines will be a partially ordered set of tasks of steps. We will use the term procedure to refer to this result.

Finally,we have to decide who is going to do the work and in what order. By allocating resources (often employees) to tasks, we are scheduling the business process. We can use advanced scheduling techniques to optimize this allocation. However, in practice simple and robust heuristics are more appropriate. Therefore, we list a number of guidelines to support the construction of these heuristics.

1. Reduce the number of people involved in the execution of tasks related to one job. Thus avoiding communication and set-ups.
2. Tasks are performed where they make the most sense.
3. There should be a balance between specialisation and generalisation.
4. There should be a balance between centralization and decentralization.

Source / Reference:

1)  M. Hammer and J. Champy, "Re-engineering the corporation", Nicolas Brealey Publishing, London, 1993

2)  T. H. Davenport, "Process Innovation: Re-engineering Work Through Information Technology", Boston: Harvard Business School Press, 1993

W7 - BPR Methodologies (2)

As-Is business process modeling phase represents one of the core activities of the entire research work. Appropriate modeling methods need to be evaluated to describe the different levels and to determine the details of the enterprise business processes. Each method has its own strengths and weaknesses, and describe the different business scenarios. In addition, the model generated using different methods need to be integrated.

The main task of this stage is to simulate the entire enterprise activities. The resulting workflow model clearly shows each department or production activities in the field, and how they affect each other. The experience gained in the project from a similar industry a lot of modeling skills. Comprehensive model of the current business practices, which provides the analytical framework of a business process, materials and information flow.

Analyzing the current practice results in identifying opportunities for improvement field. Improvement of the common areas is to remove redundant or non-value-added tasks, the same information, which may cause the error, unity and summed up the common tasks that occur in different sectors, multiple-entry and redundant intermediate report. Reorganization of human resources is necessary in order to rationalize the workflow of the entire enterprise, thus shortening the process cycle time.

The core activities at this critical stage is to produce future or "To-BE" model to describe how the hosting business in the future. Also identified the main processes of these models need the support of the IT system functions in order to achieve the goals of the company.

A major outcome of this research is the "best practices" model for the development of specific vertical industries. Subsequently, these models can be used as a knowledge base to guide the new business process reengineering practitioners and businesses to provide business process improvement roadmap.

A formal method for business process reengineering has been developed. The main purpose of this approach is to help companies streamline their business processes, according to each company's goal.
Lead to re-design the business process flow business model, and then use the benchmarks and assessments of off-the-shelf enterprise-class IT software to determine how they adapt to the corporate strategy and objectives.

Source / Reference:

1)  S. M. Bitzer, "Workflow Reengineering: A Methodology for Business Process Re-engineering with Workflow Management Technology", Masters Thesis, Naval Postgraduate School, September 1995

2)  T. H. Davenport, "Process Innovation: Re-engineering Work Through Information Technology", Boston: Harvard Business School Press, 1993

W7 - BPR Methodologies (1)

The basic strategy has not changed over the years to provide better quality and faster and cheaper rate of innovation leading product manufacturing companies. However, the implementation of this strategy, especially in business processes and the underlying software and hardware infrastructure has undergone great changes due to rapid developments in technology, most notably, the Internet and Web technologies. This means that the standard and flexible way to adjust the ever-changing business processes and IT infrastructure to the needs of the enterprise strategies and objectives. Any change in the latter must reflect the rapid and effective management of upstream and downstream.

Comprehensive BPR method is knowledge-intensive, difficult to formalize. It requires knowledge of BPR tools and methodologies for the use and function of off-the-shelf IT companies, such as enterprise resource planning (ERP) system, can provide sufficient depth of knowledge. Because it relates to an enterprise's business process re-engineering, industry-specific domain knowledge is clearly an asset.

The preparatory phase of the project, involving enterprises to achieve a good initial understanding of their needs and requirements in order to get the scope, budget and time. In addition, the allocation of time is crucial for planning the tasks in the first stage of the project, such as the schedule of meeting and presentations.

The discovery phase of the project involved in the business and production objectives,strategies and practices, current and future requirements, problems encountered and any other information that will help ensure the future success of the design, collection and analysis of the company's information systems.


The development of template is to ensure that only relevant and useful information is extracted. These templates include industry-specific survey which  involving the processing, marketing, cost estimation, and other off-the-shelf software package to provide the general features of the support of business processes, such as business-related functional areas.


The phase of collecting the user requirements involving the collection and consolidation user needs from various groups in  the meeting. Therefore, these requirements cover the main features of the entire enterprise. The needs of users, including the current requirements, as well as the sense of the future needs of the enterprises, to improve competitiveness. In some cases, these needs is the wishes of the user that need to be further discussed in detail in the next phase. This stage, involving various departments and industry-specific vertical and mapped to the typical user of the system specifications required template.

Source / Reference:

1)  S. M. Bitzer, "Workflow Reengineering: A Methodology for Business Process Re-engineering with Workflow Management Technology", Masters Thesis, Naval Postgraduate School, September 1995

2)  T. H. Davenport, "Process Innovation: Re-engineering Work Through Information Technology", Boston: Harvard Business School Press, 1993

W5 - BPR Basic

Over the past decades there has been an increasing interest in Business Process Re-engineering (BPR). So what is this BPR, which has been talked about so much in these last years? BPR is:
The critical analysis and radical redesign of business processes to achieve dramatic, breakthrough improvements in performance of the organization. (combination of definitions)


BPR is about evaluating the several processes, which comprise an organization, searching for possibilities to improve the overall performances of these processes and implementing these changes successfully within an organization. BPR thus can be seen as a change effort with the main purpose of improving the execution of processes. 


Because of the importance of successfully implementing the changes in an organization, BPR methodologies have been developed to make sure that the change effort does not bring the organization in danger of continuing their operations. Several methodologies have been more or less successful in recent years but there still seems to be room for improving methodologies, because a lot of BPR efforts still fail.


A business process is often considered to be an essential part of an organization. It is that around which an organization revolves. A definition of a business process is a set of activities, which are related to each other and must be executed in some order, to accomplish a business objective. A process consists of something that goes in (input), which is transformed to get the desired outcome (output).


Re-engineering can be seen as the redesigning of the business processes, usually with the goal of improving the efficiency and effectiveness of those processes. It is not something new, since organizations always have sought to improve efficiency and effectiveness. If done incorrectly, the re-engineering of a business process can bring the existence of an organization into jeopardy. Thus re-engineering has always been something much spoken about, but only recently methodologies have been developed to be more successful in the process of it.

Source / Reference:

1)  "Hammer, M., 1990, "Re-engineering work, don’t automate, obliterate", Harvard Business Review, Vol. 68, No. 4, pp. 104-112

2)  Teng, J.T.C. et al., 1994, "Business process re-engineering: charting a strategic path for the information age", California Management Review, Vol. 36, No. 3, pp. 9-31

W4 - Strategic Alliance Model

Source / Reference:

1)  "Strategic Alignment: Leverage Information Technology for Transforming Organizations" by J. C. Henderson and N. Venkatraman, 1993

2)  "IT-Enabled Business Transformation: From Automation to Business Scope Redefinition" by N. Venkatraman, 1994

Subject:

In Lect 4 - Which alignment perspective is best?

Response:

In my opinion, there is no 'the best' strategic alignment model (SAM). In fact, those alignment perspectives should be used according to certain situations and natures which may involve different types of business and technology. Usually, most of the alignment models are based on the organisational structure and their objectives. SAM concentrates the alignment at the core of organisations' requirements and focuses on the relationship between strategy and technology.

For instance, for Strategy Execution, it is the most common and widely understood alignment perspective with classic, hierarchical view of strategic management which may be suited to different industries or organizations. "Execution is a discipline, and integral part to strategy. ... Execution requires a comprehensive understanding of a business, its people and its environment – and the leader is only person in a position to achieve that understanding." And so, only the top management has the ability to be the leader and play the important role, that is the strategy formulator. The IT management can only be the implementer that use the professional knowledge to operate in coordination what the top management planned and proposed. In this perspective, the leading role is business strategy and the impacting role is business infrastructure. It focuses on IT planning or change of the business.

For Technology Potential, it is also driven by business strategy and the impacting role is IT strategy. This alignment perspective is not constrained by the organization structure. It shows the value of IT which is also the main contribution to the final product or service of the business. The relationship between the business and the customers is vital in this perspective.

For Competitive Potential, the leading role is IT strategy and the impacting role is business strategy and  business infrastructure. This perspective concentrates on how the emergence of new technologies can affect and derive new business strategies which can also bring a new competitive advantage to the business in the marketplace.

For Service Level, the leading role is IT strategy and IT infrastructure. For the impacting role is business infrastructure. How IT can improve the delivery of the products and services is the main focus of this perspective. Besides, it evaluates the value that the improvement of the business' processes.

Those perspectives are used to evaluate the alignment of a particular organization which indicate the performance of business processes, information technology, and cooperation inside the organization. Companies may lose the competitiveness if they are misaligned.

The SAM is only a tool that can be used to determine the alignment, such as  the strengths and  weaknesses of the company, the opportunities and threats of the business. Once the company’s alignment perspective has been indicated and identified, it should determine the future development plans and formulate the new business strategies that can lead to a long-term success. Through continuous revaluations and adjustments, company may achieve the ultimate success in the industry.