Meltem Özturan BP - CIS : Business Processes
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1 Meltem Özturan 1 What is Business Process? A business process is a set of activities with logical interdependencies, performed to create a set of valuable output by using the resources of the company and serve them to internal and external customers. Input Process Output 2 1
2 Basic Properties of a Business Process? Resources Existence of a trigger condition Existence of internal and external customers Existence of a responsible person Repeatability Measurability Structural independence 3 Business Process Classifications Classification 1 Processes for external customers Processing of activities to produce an output for the external customers in the market Processes for internal customers Processing of activites to produce an output required by the departments and executives within the organization so as to achieve the organizational goals and efficient processing Classification 2 Basic Processes Processes that start due to an external customer request. Managerial Processes Processes that take place to fulfill the organizational goals such as setting targets, screening the performance measures, preparing reports for the executives, etc. Support Processes Processes that take place to support an ongoing basic process such as stock replenishment processes, cleaning and maintenance processes. 4 2
3 Critical Activity Activites or processes that primarily affect the main output of the organization. These should be restructured, reengineered in the first place. A delay in a critical activity causes a delay in the whole process completion time. In parallel activities, the activites on the longest path are critical. Critical Process1 (5 min) Process 2 (3 min) Critical Process 3 (6 min) 5 Process Hierarchy Basic processes can be divided into managable subgroups to form sub processes, sub-sub processes and activities in an hierarchy. An activity is the smallest component of a process that can not be further divided into sub processes. Basic process: Meal delivery process in a fast food restaurant Recieve the order Prepare the meal Deliver the meal Basic process: Cargo delivery process Recieve cargo from customer Send cargo to the distribution center Deliver cargo to the address 6 3
4 Process Hierarchy Basic Process Model: New Product Development Do market research Design the product Develop the production processes Introduce the product to the market Sub Process Model: Introduce the product to the market Prepare the sales s Train the sales staff sales (pilot sales) market sales Sub-sub Process Model: market sales Design the product flyer Approve the content Design the artistic format Print the flyer Print the flyer 7 Process Maps A process map is a visual representation of a series of connected activities that, when strung together, deliver a meaningful outcome to the client/customer. A process map is composed of sub processes or activities that add value to the next step in the process. Each activity is composed of a series of tasks, that are used to define the activity. Each activity should start with an action verb that demonstrates doing or performing something. Examples of action verbs include words like develop, approve, update, run, and communicate. 8 4
5 Process Maps Process interactions are defined usually by the use of process maps generated by using a set of symbols. Beginning/end of the process Data On page reference Process/activity Document Off page reference Decision Screen input-output Process connector Name of the data Process that is also used by other processes Data base input-output input-output connector Process Maps Not healthy Take samples Take to laboratory Analyze Decision? Healthy Example A Product Quality Test Process in a Fast Food Restaurant Fail Prepare a fine Prepare an approporiate condition Pass Send to approval 5
6 Process Maps Sometimes two or more groups of people are responsible for the activities. In representation, a process map may include several cross functional bands, one for each responsible person/department. In a cross functional process map, it is easy to see when responsibility for a step in a process moves from one department to another, known as handoffs. Process Maps Test Team Member Laboratory Analyst Take samples Example A Product Quality Test Process in a Fast Food Restaurant Take to laboratory Handoff Not healthy Analyze Decision? Healthy Fail Prepare a fine Prepare an approporiate condition Pass Send to approval Handoff 12 6
7 CourseWork Consider the registration process that you follow at the beginning of every semester. 1.Describe its resources, inputs, trigger condition, customers (internal/external), responsible person, repeatability, measurability, structural independence, output 2.Model the registration process as a process hierarchy 3.Draw the process map for the registration process 13 Key Performance Indicators (KPI) Performance measures called key performance indicators (KPI) are developed to evaluate the processes from different aspects. The performance of the processes should be continually observed with respect to these KPI s and ed periodically. In the next step, current performances should be compared with the target values that have been generated for these KPI s. Modifications are made in the process flow to improve the performance. 14 7
8 Effectiveness Measures the degree to which an output fulfills customer needs and requirements. Measures if the right output is provided at the right time, place and price. Can the process provide what is intended initially? Can more output be produced with the same input but with less defectives? Topics for Effectiveness Order fulfillment Being on time Customer complaints Defect rate Acting as planned Response time Service Level Classification of KPIs Effectiveness, Efficiency, Flexibility Measuring Criteria Amount delivered/amount ordered On time delivery rate Number of customer complaints Ratio of defectives Actual/planned Response duration Ratio of satisfied customer 15 Efficiency Classification of KPIs Effectiveness, Efficiency, Flexibility Measures how much resource are used to obtain a given output?. Measuring efficiency is more difficult than measuring effectiveness. Aim is to decrease the amount of resource used to produce the same output. Can the used resources be decreased by eliminating the non value adding activities? Topics for Efficiency Duration Cost Waiting time Production rate Measuring Criteria Process time for a unit production Unit production cost Waiting time between processes Production rate per unit time 16 8
9 Classification of KPIs Effectiveness, Efficiency, Flexibility Flexibility Measures the adaptability of the processes to the changing environmental conditions like special customer needs, new rules, regulations, emergency cases, etc. A flexible process can be performed in a different way in special cases. Flexibility is the most difficult performance to measure. Topics for Flexibility Special Customer Requirements Duration of special customer request Rejections of special request Extra resource requirement Extra processes required Measurement Criteria Number of special custmer requirements Process duration for special customer/standard customer Number of rejected special requests/all requests Extra resources required for a special request Number of activities required for a special request 17 Code: A standard code Name: Standard name of the process in the organization Aim: The aim of the process, indicating the type of output to be generated Classification: Process for Internal/external Customers; Basic/managerial/support process Owner: The person who is responsible for the process with sufficient authority Sup process(es): Process(es) that the current process is included in Sub processes and activities: Processes/acitivities included in the current process Trigger Condition: A condition that initiates an action Input Input Supplier Output Output Customer Resources: Types of inputs that already exist in the system Processes Affected Sup processes and the processes that come next Support and Managerial Processes Performance Measures Process Identification Form Aim Increase / Decrease Current Problems: Problems that have been encountered so far Processes Being Affected Previous processes and sub processes Unit Target Current Gap = Current- Target 9
10 Process Identification Form - Example Code: M101 Name: Product Quality Test Process in a Fast Food Restaurant Aim: Periodically checking if the quality of the food prepared in the restaurants conforms the standards Classification: Managerial process for internal customers Owner: Istanbul Municipality Department of Public Health Sup process(es): Fast-Food Restaurant General Quality Test Kitchen Environment Quality Test Product Quality Test Implementation of Quality Test Reports Sub processes and activities: See the attached process map Trigger Condition: of quality test period of Istanbul Municipality Department of Public Health Input Sample food Input Supplier Output Test team member Pass/fail Output Customer Istanbul Municipality Resources: Test team member, Lab. analyst, Lab. chemicals, Hygienic bag, Cooler, Lab materials Processes Affected Processes Being Affected Fast-food restaurant general quality test Kitchen environment quality test Implementation of quality test reports Sub processes and activities given in process map Support and Managerial Processes Supply of the resorces, determination of the KPIs, preparation of the test reports Performance Measures Aim Unit Target Current Gap Process duration Decrease Hour =2 Cost Decrease TL =80 Test count Increase # / Day =-20 Current Problems: It takes long time to go the lab. and long waiting time for the analyst Gap Analysis Gap > 0 Improvement needed Gap=Current-Target Gap < 0 Improvement needed 20 10
11 Course Work - Complete the below form for the registration process Code: Name: Aim: Classification: Owner: Sup process(es): Sub processes and activities: Trigger Condition: Input Input Supplier Output Output Customer Resources: Processes Affected Processes Being Affected Support and Managerial Processes Performance Measures Aim Unit Target Current Gap Current Problems: 21 11
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