IST 301 Business Process Modeling TITAN CASE STUDY

Transcription

1 IST 301 Business Process Modeling TITAN CASE STUDY 1. Company background Titan Framistat is a family-owned firm that was established in 1915 by G.W. Titan to supply high-value sports bicycles to the retail industry and directly to consumers. Titan has remained a niche supplier since then and also supplies parts of its products to other equipment manufacturers (OEMs). The firm has enjoyed long-term business associations based upon four generations of personal relationships between Titan family members and retail industry leaders. 2. Current environment Recent changes in commercial practices are threatening Titan s position in its markets. Competitive pressures, industry overcapacity, Internet purchasing practices, and just-intime inventory management have eroded Titan s sales and profit margins. Ed Titan, the current CEO, has been troubled by the company s latest two strategic forecasts, which show declining sales in a flat market. Ed s IBM representative has shown him that Titan Framistat has many antiquated processes that cause delayed shipments, excessive raw-stock inventories, reduced product quality, and high rework costs. As a result, Ed has become convinced that Titan requires the revision of all its major business processes from the order process to the shipping and receivables collection processes if it is to survive. Ed has chosen to test IBM s proposed processredesign approach with the Sales Order process, which has been used since The only change to the process since then was the incorporation of a fax machine into the credit-rating process in Titan s Process overview The order processing consists of one high-level process and three subprocesses: High-level Sales Order process: Take customer order Obtain credit information Review credit The Sales order process consists of the process of taking the customer s order over the phone, and checking for credit being available for that customer. If credit is available, the order is fulfilled by issuing a work order. If credit is not available, then the process of obtaining the credit information is followed, where ratings are obtained from a credit rating agency. Upon receiving the report with risk classifications of high, medium and low, a process of reviewing credit is followed. This has several possible routes. If the risk is low, then the order is processed. If the risk is high, then the order is rejected. When there is a medium level of risk, a manager does some more checking and decides whether to accept the order or reject it. All Titan sales order and related forms are hand-written, which sometimes causes significant misinterpretations. The inter-office mailing system has two pick-ups and deliveries daily at four-hour intervals. The sales, order-processing, and accounting 1

2 organizations work one shift daily between 8:15 AM and 5:15 PM Monday through Friday. A sales order that is received on a Friday afternoon is usually approved by the end of business on Tuesday. With the exception of the addition of a fax machine in 1989 to the process in which credit rating is obtained from credit rating agencies, Titan s Sales Order process has remained a manual process since it was last revised in Employees prepare all forms by writing information on preprinted forms and sending the completed forms with copies of supporting forms in the inter-company mailing system to the next function in the process. In the era of online buying and business-to-business (B2B) e-commerce, Titan accepts only telephone orders between 8:15 AM and 5:15 PM in its time zone and only between Monday morning and Friday afternoon. Although some of its offerings are attractive to other automotive equipment manufacturers (OEMs), Titan s sales to the OEM sector are miniscule. Titan s BPR team learned that many suppliers and retailers consider Titan to be a difficult company to deal with because they have either heard of or had trouble in placing an order with Titan. Titan s accounting organization is responsible for assessing the credit worthiness of each customer upon receipt of an order. Accounting requests an outside creditreporting organization to prepare a credit-risk analysis from the information that Titan supplies. An order-processing clerk prepares a paper form that contains relevant sales information that includes the customer s name, customer-contact information, model number, quantity, unit cost, sales representative s ID and promised delivery date. The order-processing clerk usually verifies the information with the customer s purchasing agent before sending the sales-order form in an inter-office mailing envelope to the accounting clerk. The accounting clerk prepares a credit-rating request containing the customer s name, customer-contact information, and order amount, and faxes the request and a sales-order copy to the outside credit-reporting agency. The reporting agent assigns a low, medium, or high risk to the customer s purchase request and faxes a copy of its rating to Titan s accounting clerk within two hours. Titan s accounting clerk prepares a new, updated sales order that contains the credit-rating information and sends it in an inter-office mailing envelope to the accounts receivable clerk. 4. Detailed Description of TITAN s Sales Order Processing Process High-Level Sales Order Process The high-level sales order process includes three sub-processes: Take Customer Order Process Obtain Credit Info Process Review Credit The details of these processes are given below. The output of the take customer order process is the sales order with customer credit information. There are two alternatives: the customer has credit line available (20%) with TITAN or not available (80%). If a customer has credit line available, then the order processing clerk completes order details by adding customer credit information and stating that the sales order is accepted. The task of completing order details usually takes 10 min in elapsed time and 3 minute in 2

3 working time. Then, the order processing clerk sends the accepted sales order to shipping (via inter-office mail which usually takes 4 hours) where the shipping clerk issues the work order and sends to manufacturing via inter-office mail. The task of issuing the work order takes 15 minutes in elapsed time and 10 min in working time. If a customer does not have credit line available, then the customer s credit info is obtained as described in the Obtain Credit Info Process (see below). The output of the Obtain Credit Info Process is a credit report, which is then sent to the Review Credit Process. The details of this process are also given below. The output of the Review Credit Process is the sales order with either accepted or rejected status depending on the customer s credit worthiness. In both cases, the sales order is sent to shipping via interoffice mail. In shipping, if the sales order has rejected status, then the shipping clerk writes an order rejection letter instead of issuing a work order (5 minutes elapse time and 3 min work time), and then sends the letter to customer via the US postal system, which usually takes 1 days. Take Customer Order Process The Take Customer Order process starts when a customer calls to place a new order. It usually takes 1 min to transfer the customer s call to an order processing clerk. The order processing clerk takes the calls, enters order information, and produce a sales order document, which usually takes 10 min in elapsed time and 5 min in working time. Then, the order processing clerk checks for credit line availability of the customer, which usually takes 1 hour in elapsed time with 5 min in working time. The output of this process is the sales order with credit information attached. Obtain Credit Info Process Titan s accounting organization is responsible for assessing the credit worthiness of each customer upon receipt of an order. If a customer has no credit line available with TITAN, the order processing clerk creates a credit request form (5 min elapsed time and 1 min working time) and sends it to accounting via inter-office mail. Then, an accounting clerk receives this credit request form and prepares a credit report request (15 min elapsed time and 5 min working time) and faxes it to the credit agency. The fax is received by the credit agency usually in 10 min. The credit agency prepares the credit report and faxes it back to the accounting clerk in two hours. Review Credit Process When the credit report arrives from credit reporting agency, the accounting clerk prepares a new, updated sales order (30 min elapsed time and 10 min. working time) that contains the customer credit-rating information. The historical data indicates that 20% of new customers have Low Risk, 60% Medium Risk, and 20% High Risk. 3

4 If the credit rating is Low Risk, then the accounting clerk completes the order details (10 min elapsed time and 3 min. working time) by adding the accepted status to the sales order. Then, the completed sales order with accepted status is sent to shipping. If the credit rating is Medium Risk, then the accounting clerk prepares a customer credit review form (10 min elapsed time and 3 min. working time) and sends it to the accounting manager to review via inter-office mail. The accounting manager reviews the customer profile (3-hour elapsed time and 30 min. working time) and decides if the order should be accepted or rejected. Historical data indicates that 50% of sales orders reviewed by the accounting manager are rejected. If the sales order is rejected, then the accounts receivable clerk completes the order details (10 min elapsed time and 3 min. working time) by adding the rejection status to the sales order. If the sales order is accepted, then the accounts receivable clerk completes the order details (10 min elapsed time and 3 min. working time) by adding the accepted status to the sales order. In both cases, the completed sales order is sent to shipping via the inter-office mail. If the credit rating is High Risk, then the accounts receivable clerk completes the order details (10 min elapsed time and 3 min. working time) by adding the rejection status to the sales order. Then the completed sales order is sent to shipping via the inter-office mail. Deliverables 1. Process model with three sub-processes and a main process. Copy and paste the main process and subprocesses to MSWord. In addition, find cases cycle times, process cycle tines, costs, and resource labor times and them to your MSWord document. Upload the final MSworld document to ANGEL 3. Zip your folder and upload to ANGEL 4

5 Roles Role Name Standard cost/week Appendixes Accounting Clerk 500 Accounting Manager 1000 Order Processing Clerk 500 Shipping Clerk 500 Phi Types Phi Name Category Phi Type Sales Order Paper Document Paper Form Work Order Paper Paper Document Paper Form Rejection Letter Paper Document Mail Credit Report Other Fax Phone Order Other Phone Customer Credit Review Form Paper Document Paper Form Credit Report Request Other Fax Customer Credit Review Form Paper Document Paper Form Media Types Start Object End Object Media Name Duration Customer Enter Order Call Transfer 1 m Information Complete Order Details Issue Work Order Inter-Office Mail 4 h Create Credit Request Form Request Credit Info Inter-Office Mail 4 h Request Credit Report Prepare Credit Report Fax 10 m Prepare Review Form Review Customer Inter-Office Mail 4 h Profile Reject Customer Order Notify U.S. Postal System 1 day Customer 5

6 Numb er Task/Process Object Role Organization Unit Function Input Phis Output Phis Name State Name State 1 Take Customer Order (As-Is)--00 Sales Order--00 With Credit Information 1.1 Enter Order Information-00 Order Processing Clerk Order Processing Sales Phone Order--00 Sales Order--00 Filled Without Credit Information 1.2 Check For Credit Availability-00 Order Processing Clerk Order Processing Sales Sales Order--00 Filled Without Credit Information Sales Order--00 With Credit Information 2 Obtain Credit Info (As-Is)--00 Sales Order--00 With Credit Information Credit Report Create Credit Request Form--00 Order Processing Clerk Order Processing Sales Sales Order--00 With Credit Information Credit Request Form Prepare Credit Report Reques--00 Accounting Clerk Administration Accounting Credit Request Form--00 Credit Report Request Complete Order Details--00 Order Processing Clerk Order Processing Sales Sales Order--00 With Credit Information Sales Order--00 Accepted 4 Review Credit (As-Is)--00 Credit Report--00 Sales Order--00 Accepted 4.1 Update Sales Order--00 Accounting Clerk Administration Accounting Credit Report--00 Sales Order--00 With Customer Credit-Rating 4.2 Prepare Review Form--00 Accounting Clerk 4.3 Review Customer Profile--00 Accounting Manager Administration Accounting Sales Order--00 With Customer Credit-Rating Administration Accounting Customer Credit Review Form- -00 Customer Credit Review Form Complete Order Details--00 Accounting Clerk Administration Accounting Sales Order--00 With Customer Credit-Rating Sales Order--00 Accepted 4.5 Complete Order Details--01 Accounting Clerk Administration Accounting Sales Order--01 Accepted 4.6 Complete Order Details--02 Accounting Clerk Administration Accounting Sales Order--02 Rejected 4.7 Complete Order Details--03 Accounting Clerk Administration Accounting Sales Order--00 With Customer Credit-Rating Sales Order--03 Rejected 5 Issue Work Order--00 Shipping Clerk Shipping Distribution Sales Order--00 Accepted Work Order Issue Work Order--00 Sales Order--00 Accepted 5 Issue Work Order--00 Sales Order--01 Accepted 6 Write Rejection Letter--00 Shipping Clerk Shipping Distribution Sales Order--02 Rejected Rejection Letter Write Rejection Letter--00 Sales Order--03 Rejected 6