Lecture 8 Process Redesign II
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1 MTAT Business Process Management Lecture 8 Process Redesign II Marlon Dumas marlon.dumas ät ut. ee 1
2 Process redesign Process identification Process architecture Conformance and performance insights Process discovery As- is process model Process monitoring and controlling Process analysis Executable process model Process implementation To- be process model Process redesign Insights on weaknesses and their impact
3 Process redesign approaches Exploita)ve Redesign (transac)onal) Doesn t put into ques.on the current process structure Seeks to iden.fy problems and resolve them incrementally, one step at a.me Example: Heuris)c redesign Explora.ve Redesign (transforma.onal) Puts into ques.on the fundamental assump.ons and principles of the exis.ng process structure Aims to achieve breakthrough innova.on Example: Business Process Reengineering (BPR)
4 Heuris.c process redesign Transac)onal: changes the as is process incrementally Inward- looking: operates within the scope and context of as is process Analy)cal: based on redesign heuris.cs that strike tradeoffs between: Cost Time Quality Flexibility 4
5 The Devil s Quadrangle Cost Time Flexibility Quality
6 Flexibility Ability to react to changes in: Workload Customer demands and expecta.ons Resource and business partner availability and performance Example: Following natural disasters (e.g. storms), the number of home insurance claims increases by tenfold To address this surge, flexibility is required at: Resource level: Staff redeployment, faster performance Process level: Performing tasks differently to speed up the front- end Management: Relaxing business rules and controls where possible
7 Redesign heuris.cs Task- level Task elimina.on Task composi.on Triage Flow- level Re- sequencing Parallelism enhancement Process- level Specializa.on & standardiza.on Resource op.miza.on Communica.on op.miza.on Automa.on 7
8 Task- level redesign heuris.cs 1. Task elimina.on 2. Task composi.on and decomposi.on 3. Triage 8
9 H1. Task elimina.on Eliminate non- value- adding steps wherever these can be isolated Forward, send, receive, Consider reducing manual control steps (checks & approvals) by: Skipping them where feasible Replacing them with sta.s.cal controls Par.ally or fully automa.ng them + Statistical Control 9
10 H1. Task elimina.on Consider trade- off between the cost of the check and the cost of not doing it Examples: Procure- to- pay process: Some types of employees are empowered to trigger isolated purchases below $500 without supervisor approval Order- to- cash process: Invoices from trusted suppliers under $1000 are not checked on a one- by- one basis (T+, C+/-, Q-) 10
11 H2. Task composi.on Consider composing two tasks to eliminate transporta.on and reduce context switches Or spli`ng a task into two and assign to separate, specialized resources
12 H2. Task composi.on and decomposi.on Composi.on example: Procure- to- pay process: Merging two checks: ``necessity of purchase check and ``budget check ) Decomposi.on example: Make- to- order process: Separate a single thick prepare quote task into prepare bill of materials, prepare produc.on plan and es.mate costs and delivery.me Composition: (T+, C+/-, F+) Decomposition: (T-, C+, F-) 12
13 H3. Triage Specialize a task: divide a general task into two or more alterna.ve tasks Generalize tasks: integrate two or more alterna.ve tasks into one general task
14 H3. Triage Specializa.on example: Procure- to- pay process: Separate approvals of small purchases, medium- sized purchases and large purchases Generaliza.on example: Make- to- order process: Integrate quote prepara.on for two product lines into one single task Specialization: (T+, C+/-, F-) Generalization: (T-, C+/-, F+) 14
15 Flow- level redesign heuris.cs 1. Re- sequencing 2. Enhance parallelism 15
16 H4. Re- sequencing Re- order tasks according to their cost/effect ra.o to minimize over- processing Postpone expensive tasks that may end up not being necessary un.l the end Put knock- out checks first in order to iden.fy problems early 16
17 H4. Re- sequencing Examples: Make- to- order process: If prepare produc.on plan is.me- consuming, postpone it un.l afer the quote price has been tenta.vely accepted by the customer Procure- to- pay process: If necessity of purchase check leads to 20% of know- outs and budget check leads to 2%, check ``necessity of approval first (T+,C-) 17
18 H5. Enhance parallelism Parallelize tasks where possible in order to reduce cycle.me 18
19 H5. Enhance parallelism Examples: Procure- to- pay process: Parallelize budget approval and necessity of purchase approval Make- to- order process: Afer prepare bill of materials, perform prepare produc.on plan and es.mate costs in parallel (T+,C-) 19
20 Process- level redesign heuris.cs 6. Process specializa.on and standardiza.on 7. Resource op.miza.on 8. Communica.on op.miza.on 9. Automa.on 20
21 H6. Process specializa.on/standardiza.on Process specializa.on One process is split into mul.ple ones: by customer class, by geographic loca.on, by.me period (winter, summer), etc. Resources are split accordingly Process standardiza.on Two processes are integrated Resources are pooled together
22 H6. Process specializa.on & standardiza.on Specializa.on example: Procure- to- pay process: One process for materials purchasing and one process for MRO (Maintenance, Repair and Opera.ons) purchasing Claims handling process: One claims handling process for the storms season (peak) and one for the regular season. Standardiza.on example: Claims handling process: Integrate claims handling for motor insurance and personal insurance. Specialization: (C+, Q+/-, F-) Standardization: (C-, Q+/-, F+)
23 H7. Resource op.miza.on Use resources of a given type as if they were in one room Avoid one group of people overloaded and another (similar) group idle Let people do work that the are good at However, avoid inflexibility as a result of specializa.on When alloca.ng work to resources, consider the flexibility in the near future Allocate work to specialized resources first Avoid setups as much as possible Chain mul.ple tasks where possible Batching
24 H7. Resource Op.miza.on Resource integra.on: Claims handling process: Share resources across different types of claims (e.g. motor and personal insurance). Batching: Claims handling process: Batch all claims for a given geographic area and assign them to the same resource. (T+, C+, F+/-)
25 H8. Communica.on op.miza.on Automate handling, recording and organiza.on of messages Monitor customer interac.ons, record excep.ons Op.mize Number of interac.ons with customers and business partners Timing of interac.ons Type of interac.on (synchronous vs. asynchronous) (T+,Q+,C+/-,F-)
26 H8. Communica.on op.miza.on Op.mize number of interac.ons Gather sufficient informa.on to get to the next milestone Op.mize the type of interac.on Synchronous interac.ons effec.ve to resolve minor defects Asynchronous to no.fy, inform, resolve major defects, request addi.onal informa.on to reach next milestone 26
27 H8. Communica.on op.miza.on Op.mize.ming of interac.ons: Back- loaded process: Bulk of informa.on exchange and processing happens downstream Prescrip.on handling at CVS Pharmacy in early 2000s Front- loaded process: Bulk of informa.on exchange and processing happens upfront Complete- kit concept 27
28 H8. Communica.on Op.miza.on Complete- Kit Concept Work should not begin un6l all pieces necessary to complete the job are available Principles for complete- kit process design: Provide complete and easy- to- follow instruc.ons for those who will ini.ate the process. If a process cannot start, the client should be no.fied of all defects that could be reasonably iden.fied at the onset of the process. Consider the tradeoff between incomplete- kit process ini.a.on vs. roundtrip to revise and resubmit a request
29 H9. Automa.on Use data sharing (Intranets, packaged enterprise systems) to: Increase availability of informa.on to improve visibility and decision- making (subject to security/privacy requirements) Avoid duplicate data entry and transporta.on Use network technology to: Replace physical flow (e.g. paper documents) with informa.on flow Enable self- service via e.g. online forms and Web data services
30 H9. Automa.on Use tracking technology to iden.fy and locate materials and resources Iden.fica.on: Bar code, RFID Loca.on: GPS, indoor posi.oning Use business rules technology to automate informa.on processing tasks (incl. decisions) Automate end- to- end processes (T+,C+/-, Q+/-, F-)
31 Classwork Equipment rental process
32 Redesign heuris.cs Heuris.c 1 I1. Eliminate request approvals for small equipment I2. Replace approval with empowerment & stat. controls Heuris.c 2 I3. Compose equipment selec.on, availability check and rental request crea.on Heuris.c 6 I4. Separate process for small vs. large equipment, streamline small process
33 Redesign heuris.cs Heuris.c 8 I5. Inform site engineer when equipment dispatched I6. Ask site engineer if extension required Heuris.c 9 I7. Use self- service for equipment search and availability checking I8. Use process automa.on to coordinate handovers
34 Consolida.on: PICK chart Difficulty EASY to implement BIG payoff Implement I2: Stat control I3: Compose Challenge Impact SMALL payoff Possible I1: Eliminate small Kill HARD to implement I7, I8: Automate I5, I6: Inform I4: Specialize
35 Redesign output: to- be process model
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