Managing Business Processes: Design and Improvement Cheng Li, Ph.D. California State University, Los Angeles January 2001
Dec 22, 2015
Managing Business Processes: Design and Improvement
Cheng Li, Ph.D.
California State University, Los Angeles
January 2001
The Process Focus
• The changing emphasis of management practices: from individual activities to process
• Background:– Local optimization is inadequate.– Activities are increasingly integrated.
What is the business process approach?
• A work process: a set of related activities that adds value and provides a service to a customer.
• The process focus:– integrative– cross-functional– customer orientation
What is covered?
• Business Process Improvement
• Business Process Modeling
• Process Structure
• Total Quality Management
• Business Process Reengineering
Business Process Improvement
What is business process improvement?
• Process Improvement: how to do our work better in terms of customer satisfaction, cost reduction, and self-fulfillment, etc.
• Related Process Management Theories:– Reengineering (Michael Hammer)– Continuous improvement or TQM– BPI: Business Process Improvement (James
Harrington)
The Four Phases of Process Improvement
• Description
• Analysis
• Design
• Implementation
Process Description
• Customers
• Activities– Primary (value-adding) activities– Supporting (non-value-adding) activities
• Work flow
• Policies and constraints
• Output: process flowcharts & description
Process Analysis
• Identify potential improvement areas– sources of information: internal and external – problems and causes
• Identify related work processes and prioritize improvement projects
• Output: major problems, causes of the problems, targeted work processes
Process Design• Customer requirements
– e.g. telephone repair: short down time, when it can be repaired, convenient hours, short waiting time
• Design parameters– e.g. telephone repair: training of the operators,
computer systems, # technicians
• Relationships between requirements and parameters
QFD: Quality Function Deployment
• Example: a relationship matrix
Training Computer System
#Technicians
Down Time WEAK WEAK
When STRONG STRONG
Convenience STRONG
Process Design (cont.)
• Generating ideas
• Evaluating alternatives
• Designing the new process
• Setting policies and controls
• Other issues: feedback mechanism, justification of the new process
Implementation
• Planning
• Work process changes
• Policy changes
• Organizational changes
• Training
• Promotion and education
Business Process Modeling
Business Process Modeling
• Description of the Process– Flowchart: procedures, policies and constraints– Data on process flow
• Queuing Theory
• Simulation
Basic Techniques: Process Flowchart
• e.g. student registration process– get a copy of class schedule– select classes, consult advisor if necessary– make payment– wait for authorization: pin number, time
window– call the system– register, etc.
Process Flowchart: symbols• Examples:
Action/Operation
Decision (If …)
Delay
Transportation
Process Modeling Languages
• Process Modeling Languages
• QPL: Quality Process Language by Gary Born
Process Modeling Languages
• Process, input, output, the process owner, and authorities
Evaluate Bids----------------
Purchasing Officer
list of bidslist of bids
Selected supplier
Quality Process Language
• Unchanged and Changed Output:– list of bids: unchanged– selected supplier: changed
Evaluate Bids----------------
Purchasing Officer
list of bidslist of bids
Selected supplier
Quality Process Language
• Process Owner: a person or a machine responsible for execution of processes
Evaluate Bids----------------
Purchasing Officer
list of bidslist of bids
Selected supplier
Quality Process Language
• Process Owner: variable
Choice of purchasing officer
Evaluate Bids----------------
Purchasing Officer
list of bidslist of bids
Selected supplier
Quality Process Language
• Authorities: provide rules and guidance on how to process information
Purchasing procedures
Evaluate Bids----------------
Purchasing Officer
list of bidslist of bids
Selected supplier
Modeling Information
• Information is the link between processes.
• Classifying information based on versions to keep.
• Channel: temporary
• Information Store: only the current version
• Archive: current and previous versions
Modeling Information• Symbols:
I channel
Information Store
Archive
Queuing Theory
• System Characteristics– Population source: finite, infinite– No. of servers– Arrival and service patterns: e.g. exponential
distribution for inter-arrival time– Queue discipline: e.g. first-come-first-serve
Queuing Theory
• Performance Measurement: e.g. infinite source, single server, exponential inter-arrival and service times, first-come-first-serve:– System utilization– Average no. of customers: in line and in system– Average waiting time: in line and in system
Queuing Theory
• Procedure:– describe the process– collect data on incoming and service patterns– find formulas and/or tables, software to
calculate performance measures
Process Structure
Strategic Positioning through Process Structure
• Complexity:– e.g. preparation process:
fast food vs. gourmet food
• Divergence: degree of customization, the amount of discretion or freedom allowed– e.g. H&R Block vs. CPA firms– e.g. Options for Mercedes vs. for Camry
Competitive Advantages through Process Structure
• Competitive Advantages
• Competitive Strategies
• e.g. Sam’s Club vs. Nordstrom– layout, selection, service process, personnel
• Competitive Strategy and Structural Positioning
Example: Structural Alternatives for a Family Restaurant
Lower
• no reservations
• self-seating, menu on board
• customer fills out form
• pre-prepared, no substitute, limited to 4 choices
Currenttake reservationseat guests, give menusServe water and breadTake ordersPrepare orders:
salad (4), entrée (15)
Higherspecific table selectionrecite menu, describe entrees and specialsassortment of hot breadsat table, taken personallyindividually prepared
Generic Approaches to Service System Design
• Production Line Approach– limited Discretionary Action of Personnel– division of labor– substitution of technology for people– service standardization
Generic Approaches to Service System Design
• Customer as Coproducer– substitution of customer labor for provider
labor– smoothing service demand
Generic Approaches to Service System Design
• Customer Contact Approach– Degree of customer contact– Separation of high- and low-contact operations
Total Quality Management
TQM/Continuous Improvement
• The Concept of Total Quality
• The Dynamics of Quality Improvement: continuous improvement vs. tradeoff balancing
• Employee Involvement
• Emphasis on Customer Satisfaction
Statistical Process Control
• Emphasis on the process instead of the product/material
• Focus on “prevention”
Statistical Process Control
• Control Charts:– Mean Chart– Range Chart– p-Chart– c-Chart
• Process Capability
• Process Capability Index
Other TQM Tools
• Check sheet
• Scatter diagram
• Histogram (frequency)
• Pareto chart
• Control chart
• Cause-and-effect diagram
Business Process Reengineering
Business Process Reengineering
• Evolution vs. Revolution
• Bottom-up vs. Top-down
• Break the routine:– habits– assumptions– values
Reengineering: Assumption Busting
• Problem: a specific performance shortcoming of the process
• Rule: A specific aspect of the process design that causes the problem
• Assumption: a belief about the environment that gives rise to the rule
Reengineering: Assumption Busting
Example:• Problem: Customers don’t know when the
repair can be done.• Rule: The operator does not have the
authority to schedule technicians.• Assumption: The operator does not know
where the problem is and does not have information about technicians’ schedules.
Overcoming Resistance to Change
• Resistance is natural and inevitable: expect it• Resistance doesn’t always show its face: find it• Resistance has many motivations: understand it• Deal with people’s concerns rather than their
arguments: confront it• There’s no one way to deal with resistance:
manage it
The Key Mechanisms for Overcoming Resistance
• Incentives: positive and negative
• Information: dispel uncertainty and fear
• Intervention: one-on-one connections
• Indoctrination: make change seem inevitable
• Involvement: make people part of the effort
The Ten Principles of Communications
• Segment the audience
• Use multiple channels
• Use multiple voices
• Be clear
• Communicate, communicate, communicate
The Ten Principles of Communications (cont.)
• Honesty is the only policy
• Use emotions, not just logic
• Heal, console, encourage
• Make the message tangible
• Listen, listen, listen
The People Side of Processes
• People are the most important asset
• Empowerment– a sense of achievement in what is accomplished
– a sense of control over the means of production
– a pace of work which is appropriate for both the worker and what is produced
The People Side of Processes
• Csikeszentmihalyi (1990): elements of enjoyable work:– capable of completing the task and allowed full control– able to concentrate entirely on the work in hand– clear goals– immediate feedback– deep involvement: free from everyday worries, unaware of
time– “Our sense of self disappears, only to return with added
strength when the task is finished.”
The People Side of Processes
• Consultation: part of empowerment• Teamwork:
– size: small enough so that individual effort can make a difference
– organization
– conflict resolution
– responsibility and authority
– team dynamics
– cultural background