Business Processes Intro Video • Effective business process management opens up the opportunity for enormoussavings of time and money • Supply chain managers are in charge of designing, managing, and improving this incredible series of interconnected processesthat tie together the supply chain from point-of-sale to suppliers worldwide • High quality business processes enable growth o Ex: McDonald’s, Starbucks, Dell, and Southwest know this • What is a Business Process? ● “Any activity or group of activities o that takes an input, o adds value to it, o and provides an output to an internal or external customer. ● Processes use an Organization’sresourcesto provide definitive results.” o Dr. H. J. Harrington - Business ProcessImprovement ● Step-by-step breakdown that aidsin providing high quality results on a consistent basis utilizing minimal resources. ● Business Processes = Recipes o Good recipes ▪ Understand the at-home cooks: Range of competency ▪ Anticipate their questions: Substitutions, Ingredients, Equipment ▪ Anticipate their problems: Provide solutionsfor errors ▪ Pictures and/or Video: Provides guidance during and upon completion ▪ Provide tips for full experience: Toppings, wine,salad, desert… A Good Process ● Good Intentions— Goal Oriented, Stakeholders considered, Effective and Efficient, Outputs are desired ● Reproducible Results— Documented and Easily Understood ● Measurable and Manageable— Entire system considered. Accountability, good metrics, easy to identify problems What Makes Up a Good Process? ● INTENTIONS and PARAMETERS were considered o STAKEHOLDERS and GOALS – Have a purpose. Who? What? And Why? o DEFINE VALUES – Defining message to employees and customers. o DEFINE SUCCESS – Be specific. How will success be measured? o EFFICIENT and EFFECTIVE – Can goals be achieved with minimal waste? o RELATIONSHIP to SYSTEM- Considers co-dependent processes. Big picture. ● STRIVES for REPRODUCIBLE RESULTS o DOCUMENTATION – “Written” step-by-step explanations available. Video? Audio? o EASILY UNDERSTOOD - Well defined job descriptions, job requirements o HIRING and TRAINING – Who will be hired? What will they need to succeed? o SCALE and CAPACITY – Under which demand conditions will this process work? o ADAPTABLE – Can the process adapt to changing needs? Changing environment? ● Can be MEASURED. Can be MANAGED. o MANAGEMENT - What do you and stakeholders want to manage? o INDIVIDUAL ACCOUNTABILITY - Someone is accountable for every step – Merit? Firing? o ORGANIZATIONAL ACCOUNTABILITY- Big picture taken into account. Considers co-dependent stakeholders and processes. Big picture. Business Processes: Fabric of the Organization Business Processes and Supply Chains ● Relationship to Supply Chain Management o Supply Chains are made up of a series of interconnected and interdependent processes o Each Process is a mini-supply chain – Managing Inputs and Outputs at a smaller scale ● Ties to Growth, Quality, Design and Improvement o Managing from a distance – Executive to Associate o Bigger requires better business processes - The more locations or larger the customer base for a company the more important the standardized processes that make up its operations - Wal-Mart, McDonald’s, Dell, etc. Key to franchising (Cut and paste businesses) o Top managers understand business processes - The more processes utilized by a company the more important it is to have managers that understand the importance of properly designing, effectively managing, and improving processes. ● Business Processes serve the Customer and the Organization Bad Business Processes Why do Bad Processes Exist? ● NEVER WAS GOOD o Ambiguity – Goals are not clearly understood. Laziness, Hubris, Lack of information o Misalignment– Goals and Actions not in alignment o Miscommunication – Employees do not understand goals, process… ● USED TO BE GOOD o Market Evolution – Customer’s needs have changed o Miscommunication – New employees do not understand goals, process… ● LIMITATIONS o Development of poor or limited processes - May result in limited capacity, inefficiency, confusion… o Lack of appropriate tools, technology… Cow Path Theory: Effective does not mean Efficient ● Why are most initial processes inefficient? How do typical processes develop? o Who was the developer? Development conditions? o Why weren’t inefficiencies addressed? Immediately? Later? o Why are some processinefficiencies sometimesrequired? Regulations? o Designing a Business Process ● Define Goals and Parameters 1. Goals, Values, Stakeholders – What needs to be accomplished? Who is involved? • First questionsto ask: What are the goals? Who are the stakeholders? 2. Block Diagram – A process is part of something bigger. Describe the system in which process will lie. 3. Establish the Scope – Define parameters of process. Beginning and End. ● Define Success 1. Define the Service – Get more specific. Establish exactly what process needs to accomplish 2. Measurement & Management Considerations – Metrics and Data. How will they be used? ● Build it, Test it, Improve It 1. Primary Steps Detailed – Begin to build the process steps 2. Develop a Process Map – Create a visual representation of the process 3. Evaluation, Testing – Evaluate the process before rolling out. Flowcharts and Block Diagrams • Block diagram is big-picture oriented o Purchasing, delivery,sales • Flowchart is very detailed o Ask customer-personal questions Block Diagrams ● Call Center Example – Block Diagram o Clothing purchased and priced; design catalog – style, ease, order info; distribute catalog; customer places order; pick, package, and labor order; support and returns Managing your Scope—Process Design or Consulting