Linking BPM and the Supply Chain

Transcription

1 Linking BPM and the Supply Chain Dr Antonie van Rensburg WITS Business School, Tel: +27 (0) (w) Fax: +27 (0) Cell : vanrensburg.a@wbs.ac.za BPM and the supply chain 1

2 Scope and Purpose of the presentation Business Processes and their supporting architecture forms the foundation of the Business Process Management implementation A high number of business process change projects fail in organisations All organisations have, or are part of a supply chain Effective and efficient operation of a supply chain is critical to the meeting an organisation s strategic objectives The purpose of this presentation is present the philosophy, principles and approach to define the appropriate baseline for Business Process Management in a Supply Chain BPM and the supply chain 2

3 This presentation aims to address Understanding of the organisation business process The approach to convert existing business processes and process objects into electronic processes and process objects for BPM implementation The key drivers that result in failing business process projects Raising process maturity in the organisation in order to ensure the success of BPM implementation in the supply chain of the organisation BPM and the supply chain 3

4 Content Part 0: Introduction Part I: Key Business Process Principles To Keep In Mind For A Successful Implementation Part II: What Do You Need To Know About BPM To Enable The Supply Chain Part III: Case Study: Paving The Way For A BPM Implementation Part IV: Conclusion BPM and the supply chain 4

5 PART O: INTRODUCTION Core Definitions for BPM and Supply Chain Management Overview of Business Process Management understanding Scope and status of Supply Chain Management BPM and the supply chain 5

6 Core Definitions BPM is the discipline of modeling, automating, managing and optimising business processes to increase profitability. Supply chain is the process that moves raw material to the final product in the hand of the end-customer. BPM and the supply chain 6

7 Major components of BPM Solutions Business Process Modeling and Analysis focuses on gaining a detailed understanding of business processes and the potential impact of changes to those processes Workflow automation focuses on automating human-centric processes Enterprise Application Integration focuses on the exchange of information between heterogeneous systems Business Activity Monitoring focus on analyzing the efficiency and effectiveness of business processes and activities BPM and the supply chain 7

8 Six Major Charactistics of BPM Initiatives (Ultimus) Convert paper-based business processes into electronic processes that eliminates paper forms, file folders, documents, and the inefficiencies associated with them. Completely automate steps by integrating with enterprise applications. Add intelligence to forms to reduce errors of omission (required data not filled out) or inaccurate data (e.g. pull part numbers from a database, rather than having a user enter it) Incorporate control features that ensure integrity of processes and compensate for human or system failure. Provide real-time feedback about the status of processes. Measure the time and cost of processes so that they can be optimised BPM and the supply chain 8

9 CONTEXT FOR SUPPLY CHAIN The role of supply chain management Current landscape on supply chain management in South Africa Factors to Consider in the Supply Chain BPM and the supply chain 9

10 Introduction (*) Flexible and responsive supply chain strategies are a critical prerequisite for enabling South African companies to enhance their international competitiveness. There is a growing perception that product based advantages are becoming less sustainable and more short term due to global information systems and that the competitive advantages of cost and service improvements are shifting to the supply chain. Business Day Thursday, March 3, 2005 BPM and the supply chain 10

11 Supply Chain Landscape (*) The 2005 study confirms last years predication that the short term objective of cost reduction and increases in supply chain efficiency was unlikely to be met without an integrated approach to supply chain management processes. This means that more integration between customers and suppliers information in a demand network needs to exist that will increase responsiveness to fluctuating demand. Critical that a greater alignment between the company strategy and the operational methods used to achieve strategic goals. * Supply Chain Foresight Study 2005 TerraNova On behalf of Barloworld Logistics BPM and the supply chain 11

12 Supply Chain Landscape (*) There was a hesitancy to tackle issues which requires a degree of integrated planning and execution across functions, such as planning, forecasting and other forms of collaboration There is a realisation that the integration of internal processes will enable the advantage through an improved and faster flow of market information, itself acquired through collaboration " An increase in the importance of the management of information, for example, points to a more integrated understanding of how strategy and operations can connect to improve the whole supply chain If the overall costs of the supply chain are underestimated, then the potential cost savings and the perceived improvements in service levels to be gained from any improvements in cost reduction will also be perceived to be small, with opportunities for improvement being overlooked * Supply Chain Foresight Study 2005 TerraNova On behalf of Barloworld Logistics BPM and the supply chain 12

13 Factors to consider in collaborative partnerships (*) Relational Integration Technology & Planning Measurement Integration Integration and and Flexibility Flexibility are are the the key key focus focus areas areas of of a a supply supply chain. chain. Customer Integration Internal Integration Material/ Service Supplier Int. Int. * Spalding, R and Van Rensburg, A (2005) MBA Research Project, WBS. BPM and the supply chain 13

14 Factors: Relational Integration Relationship prior to collaborative partnering process Resource availability Definition of exit procedures Information sharing between organisations Clear commitment, business vision Right governance structures in place Active senior sponsorship Cultural alignment of organisations Establishing trust through relational integration Close involvement of senior operations management BPM and the supply chain 14

15 Factors: Technology and Planning Flexibility of both companies information systems (IS) IS connectivity capability Co-ordinated planning Management and implementation capability of IS teams across organisations The level of collaboration prior and post partnering BPM and the supply chain 15

16 Factors Measurement Process performance measurement Seller-buyer focus on common performance metrics across organisations Clearly articulated objectives Customer Integration Level of sales channel segmentation Management velocity Sufficient capability in processes to provide support for channel co-ordination Relevancy BPM and the supply chain 16

17 Factors Internal Integration Strong internal process management Standardisation Structural flexibility Simplification Material/Service Provider Integration Operational alignment, structures and frameworks Ownership of infrastructure Clear commitment, business vision BPM and the supply chain 17

18 Part I: Principles for processes Introduction to Business Process Management non IT, but business Core Understanding of process, change and projects Project Organisation for process change BPM and the supply chain 18

19 An appropriate approach Value system: The very nature of changing an organisation's unique business processes prohibits a cook book approach Our aim: Use a framework based on principles to add value to business process management BPM and the supply chain 19

20 WHY CHANGE? PRODUCTIVITY ENHANCEMENT MARKET EXPANSION NEW MARKET Reduce the cost and improve the output of resources and processes To profitably grow the size of the market and expand share of it Profitably create new markets, and build new businesses BPM and the supply chain 20

21 Business Philosophies PRODUCTIVITY ENHANCEMENT MARKET EXPANSION NEW NEW MARKET Total Quality Management Just-in-time Concurrent Engineering Time Compression Management Business Process Re-engineering Knowledge Management Business Engineering Six Sigma BPM Collaboration Supply Chain Management BPM and the supply chain 21

22 Example (before) Portfolio Project Portfolio Business Case PRODUCT LINE NM BM Trading 15 % 50 % Consulting Services 35 % 40 % Retail Investments 12 % 13 % PROJECT Project X PERFORMANCE Time: 8-10 min Cost: R105k/m Risk: High Data Source 1 Reseller Retail Service Provider Network Support: Marketing & Sales Regional Office - Broker Broker HO Trading Room Data Source 2 Outsourced Software Support Data Feed & DSS Initiator Manual Transaction Feed Market place BPM and the supply chain 22

23 Example (After) Portfolio PRODUCT LINE NM BM Trading X % 50 % Consulting Services 35 % 40 % Retail Investments 12 % 13 % Project Portfolio PROJECT Project X Business Case PERFORMANCE Time: real time Cost: R30k /month Risk: Controllable Outsourced Software Support Network Market place Initiator Data Feed & DSS Transaction Feed Broker - gateway BPM and the supply chain 23

24 A formal definition for process change : Achieve breakthrough Cost Quality Time Service The method for moving from an AS-IS state into a TO-BE state to improve performance, by means of rethinking and redesigning current business processes. Going to the root of things Design of new value adding processes A process is a group of related tasks which creates value BPM and the supply chain 24

25 Core Understanding of process How do we change? What is the impact of change on the organisation? What is a process? What is the required journey? Walk the ladder of process engineering BPM and the supply chain 25

26 The Cycle of Change Set performance objectives Evaluate Establish baseline Implement Design Diagnose performance Evaluate improvement opportunities and investment options BPM and the supply chain 26

27 Impact of Change? Shareholder Structure demands requires Management Systems reinforces Processes fosters Products Customers Supports Supports enables enables Vendors & Partners Resources BPM and the supply chain 27

28 The scope of change : The Business Lifecycle BIRTH OF SYSTEM REVISE SYSTEM How do we manage growth and change over time? MANAGE THE SUPPLY CHAIN How do we manage the supply chain? How do we manage suppliers & purchasing? How do we forecast demand? How do we manage day-today activities of planning, scheduling and operations What are the strategy of the organisation? What are the objectives, goals and actions of the organisation? How do we manage implementation? DESIGN THE SYSTEM How much capacity? Where should operations be located? How will jobs be performed and measured? How will workers be compensated? How do we measure learning? PRODUCT DESIGN AND PROCESS SELECTION What is the form of the product? How do we design the service? How do we develop it? What technology do we require? How do we achieve quality? BPM and the supply chain 28

29 Process A process is a set of activities, which when executed, achieve a business outcome Processes cross functional and organisational boundaries The most interesting about a process is the outcome it produces Process Deliverable Outcome BPM and the supply chain 29

30 Journey of Change MANAGE CHANGE Educate, train, communicate, involve and do Educate, train, communicate, involve and do CHANGE ACTIVITES Innovate & Lead Innovate & Lead Implement & Manage Implement & Manage Improve & Do Improve & Do 2-3 months 6-12 months Release every 3 Case Case for for Action Action As-Is As-Is Vision Vision & TO-BE TO-BE Business Business Case Case Design Design Migration Migration Plan Plan Lab Lab Pilot Pilot Roll-out Roll-out Continuous Continuous Continuous Improvement Improvement Program Program Measures Measures Reward Reward & Recognition Recognition BPM and the supply chain 30

31 Discovering processes.. This side results in jobs and organisational structures that reflect natural work processes TO-BE Jobs Jobs Organisation Organisation Org Org Structure Structure AS-IS Jobs Jobs Processes are not considered when organisation change - thus leads to functional organisations Skills Skills Tasks Tasks Tasks Tasks skills skills Process Outcome Deliverables BPM and the supply chain 31

32 PROJECT ORGANISATION The Business Process Person Roles for process change Groups of tools & techniques Basic building blocks for success Program execution BPM and the supply chain 32

33 Project management Costing Strategic Process Planning Business Modelling The BP Person Workflow VISIONING LOGICAL ANALYSIS & DESIGN Facilitation Simulation Application Development PHYSICAL DESIGN IMPLEMENTATION Financial Engineering Business Architectures Organisational Development Strategy BPM and the supply chain 33

34 Roles for Process Change Visioning & Integration Process Analyst Implementation Logical analysis & Business Specialist Business Engineer Project Manager Process Engineer Physical Design Design BPM and the supply chain 34

35 Groups of Tools & Techniques Role Plays Problem Solving Group Group Techniques Focus Groups Facilitation Training workshops Integration Design Budgeting Process Strategy Resource Allocation Project Management Planning Thinking Project Planning QFD Improvement Techniques Best Practice/ Benchmarking Industry guru Business Architectures Business Modelling Value Chain Analysis Simulation Activity Based Costing Templates Surveys & Questionnaires BPM and the supply chain 35

36 Basic building Blocks Process-focused teams Capability development centres Coach Property Dev. Change leader SLD Process Strategy Dedicated leaders Agile technology BPM and the supply chain 36

37 RUNNING THE PROGRAM Sponsors Productivity XXX Market Exploitation XXX Steering Commitee Process-focused team New Market XXX Core Process Team Work Teams Specialist Teams Center of Excellence Financial Engineering Business Architectures OD Strategy Process Engineering Project Management BPM and the supply chain 37

38 PART II: Enabling Business Process Management BPM and the supply chain 38

39 Corporate Strategy Corporate Strategy Focus: Existence/Survival Life cycle SC Perspective Business Strategy Business Strategy Focus: Distinctive competence Cost leadership Product Differentiation Positioning Operations solution implementation lifecycle and business architecture Operations solution implementation lifecycle and business architecture Policies Business Architecture Functional Strategies Functional Strategies Marketing Finance Human Resources Operations Facilities Research & Development Focus: Competitive Priorities (Cost, Quality, Flexibility, Delivery) Innovate Design Implement Solution Design Design Rationale Rationale Structure Control Process Product Improve Operations Resource Supply Chain Functions and Delivery Channel Satisfied Customer BPM and the supply chain 39

40 Assessment of Process Capability LEVELS Level Level 55 OPTIMISED OPTIMISED Level Level 44 MANAGED MANAGED Level Level 33 DEFINABLE DEFINABLE Level Level 22 REPEATABLE REPEATABLE Level Level 11 INITIAL INITIAL CHARACTERISTICS Capability Capability exists exists for for continuous continuous improvement improvement of of process process performance. performance. Technology Technology and and process process improvements improvements are are planned planned and and managed managed as as ordinary ordinary business business activities activities Processes Processes are are quantifiable quantifiable and and predictable predictable within within measurable measurable limits.predict limits.predict trends trends in in process, process, product product and and service service quality. quality. High High quality quality processes processes - - process process capacity capacity can can be be managed managed and and root root causes causes of of errors errors effectively effectively addressed addressed Capability is standard and consistent. Process/software engineering and management activities Capability is standard and consistent. Process/software engineering and management activities are stable and repeatable. Common, organisation-wide understanding of activities, are stable and repeatable. Common, organisation-wide understanding of activities, roles and responsibilities exists in defined business processes. roles and responsibilities exists in defined business processes. An An effective effective process process which which is is practiced, practiced, documented, documented, enforced, enforced, trained, trained, measured, measured, and and able able to to be be improved improved Capability Capability is is a a characteristic characteristic of of individuals, individuals, not not the the organisation. organisation. Process Process can can be be repeated repeated if if same same competent competent individuals individuals are are assigned. assigned. Success Success depends depends on on competence competence and and heroics heroics of of individuals individuals BPM and the supply chain 40

41 Enterprise Portfolio Approach Why are we doing? Balanced Scorecard How are we doing? Decision Support Change Initiatives Business Engineering What should we be doing? Business Architecture What do we have? BPM and the supply chain 41

42 Balanced Scorecard The Business Vision management system which integrates an organisation s strategic operating objectives with balanced performance measures as a basis of monitoring planned achievement and an indication of future performance Financial Perspective If we succeed, how will we look to our shareholders? External Focus Internal Focus Profitability Growth Shareholder Value Customer Perspective To achieve our vision, how must we look to our customers? Price Service Quality Internal Perspective To satisfy our customers, at what processes must Cycle Time we excel? Productivity Cost People Perspective To achieve our vision, what culture and people will we need? Market Innovation Continuous Learning Intellectual Assets BPM and the supply chain 42

43 Decision Support Decision Support Systems, Tools and Techniques Top 80% Tariffplan Problems Warehouse DCC EEE BZZ CAA BUZ CCC OPERATIONAL SYSTEMS FINANCIAL SYSTEMS Source CUSTOMER SYSTEMS HR SYSTEMS BPM and the supply chain 43

44 Business Architecture DATA What FUNCTION How NETWORK Where PEOPLE Who When MOTIVATION Why TIME SCOPE (CONTEXTUAL) List of Things Important to the Business List of Processes the Business Performs List of Locations in which the Business Operates List of Organizations Important to the Business List of Events Significant to the Business List of Business Goals/Strat SCOPE (CONTEXTUAL) Planner ENTITY = Class of Business Thing Function = Class of Business Process Node = Major Business Location People = Major Organizations Time = Major Business Event Ends/Means=Major Bus. Goal/ Critical Success Factor Planner ENTERPRISE MODEL (CONCEPTUAL) e.g. Semantic Model e.g. Business Process Model e.g. Logistics Network e.g. Work Flow Model e.g. Master Schedule e.g. Business Plan ENTERPRISE MODEL (CONCEPTUAL) Owner Ent = Business Entity Reln = Business Relationship Proc. = Business Process I/O = Business Resources Node = Business Location Link = Business Linkage People = Organization Unit Work = Work Product Time = Business Event Cycle = Business Cycle End = Business Objective Means = Business Strategy Owner SYSTEM MODEL (LOGICAL) e.g. Logical Data Model e.g. "Application Architecture" e.g. "Distributed System Architecture" e.g. Human Interface Architecture e.g. Processing Structure e.g., Business Rule Model SYSTEM MODEL (LOGICAL) Designer Ent = Data Entity Reln = Data Relationship Proc.= Application Function I/O = User Views Node = I/S Function (Processor, Storage, etc) Link = Line Characteristics People = Role Work = Deliverable Time = System Event Cycle = Processing Cycle End = Structural Assertion Means =Action Assertion Designer TECHNOLOGY MODEL (PHYSICAL) e.g. Physical Data Model e.g. "System Design" e.g. "System Architecture" e.g. Presentation Architecture e.g. Control Structure e.g. Rule Design TECHNOLOGY CONSTRAINED MODEL (PHYSICAL) Builder DETAILED REPRESEN- TATIONS (OUT-OF- CONTEXT) Ent = Segment/Table/etc. Reln = Pointer/Key/etc. e.g. Data Definition Proc.= Computer Function I/O = Screen/Device Formats e.g. "Program" Node = Hardware/System Software Link = Line Specifications e.g. "Network Architecture" People = User Work = Screen Format e.g. Security Architecture Time = Execute Cycle = Component Cycle e.g. Timing Definition End = Condition Means = Action e.g. Rule Specification Builder DETAILED REPRESEN- TATIONS (OUT-OF CONTEXT) Sub- Contractor FUNCTIONING ENTERPRISE Ent = Field Reln = Address e.g. DATA Proc.= Language Stmt I/O = Control Block e.g. FUNCTION Node = Addresses Link = Protocols e.g. NETWORK People = Identity Work = Job e.g. ORGANIZATION Time = Interrupt Cycle = Machine Cycle e.g. SCHEDULE End = Sub-condition Means = Step e.g. STRATEGY Sub- Contractor FUNCTIONING ENTERPRISE Zachman Institute for Framework Advancement - (810) Copyright - John A. Zachman, Zachman International BPM and the supply chain 44

45 BUSINESS ENGINEERING FRAMEWORK Change Management Project Project Management Customer Interfaces BP BP Optimisation People People Decision & Control Control Business Architecture Product Workflow Resource Content Management BPM and the supply chain 45

46 How do we do it? Project Management MANAGE CHANGE Educate, train, communicate, involve and do Educate, train, communicate, involve and do CHANGE ACTIVITES Innovate & Lead Innovate & Lead Implement & Manage Implement & Manage Improve & Do Improve & Do 2-3 months 6-12 months Release every 3 Case Case for for Action Action As-Is As-Is Vision Vision & TO-BE TO-BE Business Business Case Case Design Design Migration Migration Plan Plan Lab Lab Pilot Pilot Roll-out Roll-out Continuous Continuous Continuous Improvement Improvement Program Program Measures Measures Reward Reward & Recognition Recognition BPM and the supply chain 46

47 Change Management Return (Margin) = Sales-COS= GM Overhead = NM Product/Service End-2-End Business Processes Complete supporting Business Architecture Required Change Objectives -Current level -Required level -Benchmarked level Projects Project Portfolio Management Required Resource BPM and the supply chain 47

48 Content Management Level Forms, Info Packs Product Design Content management Policies Financial Integration Workflow Engine Procedures Roles & Job descriptions System procedures Operational Training manual Automated Business Process Flow Business Process Optimisation Management Information Systems Financial System Master Data Debtors system CRM BPM and the supply chain 48

49 PART III: CASE STUDY INTRODUCTION CONTENT MANAGEMENT BPM IMPLEMENTATION BPM and the supply chain 49

50 PART IV: Conclusion Closing remarks Q&A BPM and the supply chain 50

51 Q&A BPM and the supply chain 51