Title: T4. Enterprise systems analysis and improvement
1T4. Enterprise systems analysis and improvement
- Chin-Sheng Chen
- Florida International University
2T4. Enterprise systems analysis and improvement
- Classic enterprise operations
- The diamond
- PDCA
- DMAIC
- PFMEA
- BPR
3Classic Enterprise Operations
- Source
- The Wealth of Nations
- By Adam Smith
- Principles
- Division of labor
- Economies of scale
- Hierarchical control
4The business system dynamics (diamond)
- Values and beliefs
- Business processes
- Jobs and structures
- Management and measurement systems
5The PDCA Cycle (ISO 9000)
6TQM/Lean 6 Sigma (DMAIC)
- Define
- Measure
- Analyze
- Improve
- Control
7PFMEA
- Process Failure Mode and Effects Analysis (PFMEA)
for process analysis - A structured methodology to assist engineers in
identifying potential failure modes for a new or
changed business process, typically applied to
study of a manufacturing process.
8Business process reengineering (BPR)
- Reference
- Reengineering the Corporation by M Hammer and J
Champy, 2009 - Definition
- Fundamental rethinking and radical redesign of
business processes to achieve dramatic
improvement in critical, contemporary measures of
performance, such as cost, quality, service, and
speed.
9Four key words in enterprise re-engineering
- Fundamental
- Radical
- Dramatic
- processes
10Business processes
- A business process is a set of organized
activities - for a business objective or
- That delivers value to a customer.
- Enterprise operation is a business process
- A process may have sub-processes
- Processes are usually invisible, unnamed, and
unmanaged - Because like-activities are grouped into
functional departments - And processes go through various departments.
11Typical business process types
- Manufacturing
- From procurement to shipment
- Product development
- From concept to prototype
- Concept formulation
- From need to concept design
- Order fulfillment
- From order to payment
- Service
- From inquiry to resolution
12Business process re-engineering cycle
- Identify processes
- Review, update, and analyze as-is.
- Design to-be
- Test and implement to-be
13An Re-engineering example - Ford Motors (1)
- Background
- Accounts payable department of 500 workers in
80s - Set a goal to reduce 20 head counts
- It acquired 25 interest in Mazda at the time and
found out it had only five workers.
14An Re-engineering example - Ford Motors (2)
- Effort
- Re-engineer the process (not an org. unit) of
procurement (including the accounts payable) - Eliminate invoice via an on-line database,
- so that payment authorization is shifted to the
receiving dock - from the account payable, who had to match PO
with invoice and receiving documents.
15An Re-engineering example - Ford Motors (3)
- Result
- The new process
- A buyer in the purchase department issues a PO to
a vendor and enters it to an online database. - Vendors send goods to the receiving dock
- At the dock, a receiving clerk checks at the
computer terminal if the received shipment
correspond to an outstanding in the database. - If so, the goods are recorded and the computer
will automatically issue and send a check to the
vendor at the appropriate time. - It ended up with 125 workers in vendor payment at
the end. - Handling only exceptions (Pareto 80-20 rules)
16An Re-engineering example - Ford Motors (4)
- Lessons learned
- Reverse the industrial revolution (division of
labor) - Flatten the organization to eliminate
fragmentation and bureaucracy - Process orientation
- Ambition
- Rule-breaking
- Creative use of information technology
17Information Technology BPR enabler
- Shared database
- Expert systems
- Telecommunication networks
- Decision support tools
- Portable wireless data communication
- Interactive videodisk
- Automatic ID and tracking systems
- High performance computing
18Common themes in re-engineered processes
- Several jobs are combined into one
- Workers make decisions
- Processes have multiple versions
- Work is performed where it makes the most sense.
- Checks and controls are reduced
- Reconciliation (consolidating redundant papers)
is minimized. - Hybrid centralized/decentralized operations are
prevalent.
19Changes in re-engineered business processes
- Work units changes from functional departments
to process teams - Jobs change from simple to multi-dimensional
work - Peoples role change from controlled to
empowered - Job preparation changes from training to
education - Focus of performance measures and compensation
shifts from activity to results - Advancement criteria change from performance to
ability - Values change from protective to productive
- Managers change from supervisors to coaches
- organizational structures change from
hierarchical to flat - Executives change from score keepers to leaders
20What re-engineering is NOT
- Automation
- More efficient way of doing wrong things
- Software re-engineering
- Use more sophisticated computer system)
- Downsizing
- Reduce capacity to meet lower demand
- Other re-s
- Restructuring
- re-organizing
- Flattening
- De-layering
- Quality improvement (TQM)
- Kaizen continuous incremental improvement
21Who re-engineer
- leader
- steering committee
- reengineering czar
- reengineering team
- process owner
22Three criteria to identify re-engineering
opportunities
- Dysfunction
- the processes that are in deepest trouble
- Importance
- the processes with the greatest impact on the
companys customers - Feasibility
- the processes most susceptible to successful
redesign
23Broken processes (1)
- Observation
- extensive information exchange, data redundancy,
and re-keying - Problem
- arbitrary fragmentation of a natural process
- Solution
- consolidate fragmented tasks, when feasible
24Broken processes (2)
- Observation
- inventory, buffers, and other assets
- Problem
- system slack to cope with uncertainty
- Solution
- structure processes such that suppliers and
customers plan and schedule their respective work
together.
25Broken processes (3)
- Observation
- High ratio of checking and control to value
adding - Problem
- Fragmentation
- Solution
- Eliminate managers mistrust and incompetence
that come from fragmentation
26Broken processes (4)
- Observation
- rework and iteration
- Problem
- inadequate feedback along chains
- Solution
- eliminate mistakes
27Broken processes (5)
- Observation
- complexity, exceptions, and special cases
- Problem
- growth onto a simple base (simple process grows
complex). - Solution
- develop simple processes with decision points
28Important business processes
- From customers point of view
- product quality and features
- product cost
- on-time delivery
- Customer service
- Product life cycle
29Factors for choosing feasible processes for
re-engineering
- Likelihood of success
- Commitment of the process owner
- Strength of the re-engineering team
- Cost
- Lead time
30The re-engineering process
- identify a process to reengineer
- understand the current process
- what and why including input output, but not
how - understand how the customer uses the output of
the process - by watching how it does
- Redesign
- try to avoid benchmarking, as it may limit the
teams innovation
31BPR Principles
- Work is best organized around outcomes, not tasks
- As few people as possible should be involved in
the performance of a process - Identify and destroy assumptions
- Look for opportunities for creative application
of information technology
32Additional BPR principles as role players
- You dont need to be an expert to redesign a
process - Being an outsider helps
- Your have to discard preconceived notions
- Its important to see things through the
customers eyes. - Redesign is best done in teams.
- Your dont need to know much about the current
process - Its not hard to have great ideas
- Redesign can be fun.
33Avoidance in BPR (1)
- Try to fix a process instead of changing it
- Dont focus on business processes
- Ignore everything except process redesign (as it
affects others). - Neglect peoples values and beliefs
- Be willing to settle for minor results
- Quit too early
- Place prior constraints on the definition of the
problem and the scope of the reengineering effort - Allow existing corporate cultures and management
attitudes to prevent reengineering from getting
started. - Try to make reengineering happen from the bottom
up.
34Avoidance in BPR (2)
- Assign someone who doesnt understand
reengineering to lead the effort - Skimp on the resources devoted to reengineering
- Bury reengineering in the middle of the corporate
agenda - Dissipate energy across a great many
reengineering projects - Attempt to reengineer when the CEO is 2 years
from retirement - Fail to distinguish reengineering from other
business improvement programs - Concentrate exclusively on design
- Try to make reengineering happen without making
anybody unhappy - Pull back when people resist making
re-engineerings changes - Drag the effort out (should not longer than 12
months)
35Nature of the business environment
- Knowledge intensive product/service
- Innovation
- Consumers market
- Individuality
- Mass customization
- Very dynamic and short product lifecycle
- Concurrent engineering/operations
- Highly mobile labor market
- Agile manufacturing
- Free product or service
36Enterprise characteristics
- Innovation
- First in the market (market pre-emption)
- Mass customization
- Quick response
- No inventory
- Virtual resources (collaborative via SCM)
- Scalability
- Agility
- Process knowledge management
37Business process intelligence
- Business knowledge
- Product mfg. process
- Production
- Business process
- Business process knowledge mgt.
- Knowledge warehouse ( ISO) vs.
- Process embedded with knowledge