Title: A Simulation Based Framework for Business Process Design Projects
1A Simulation Based Framework for Business Process
Design Projects
- Chapter 3
- Business Process Modeling, Simulation and Design
2Overview
- The Overall Framework
- Step 1 Case for Action and Vision Statement
- Step 2 Process Identification and Selection
- Step 3 Obtain Management Commitment
- Step 4 Evaluate Design Enablers
- Step 5 Acquire Process Understanding
- Step 6 Creative Process Design
- Benchmarking
- Design Principles
- Step 7 Process Modeling and Simulation
- Step 8 Implementation of the New Process Design
3A Simulation Based Framework for BPD Projects
4Case for Action and Vision Statements (I)
- A clear message about the need for change and
where the change is going to take us is necessary
for successfully selling the redesign concept to
the companys employees - Case for Action
- Here is where we are as a company and this is why
we cannot stay here - Five major elements build an effective
argumentation - Business context what is important and what is
changing - Business problems source of the companys
concern - Marketplace demand performance standards
demands to meet - Diagnostics why are we unable to meet the posed
demands - Cost of inaction consequences of not changing
5Case for Action and Vision Statements (II)
- Example Case for action in a pharmaceutical
company
We are disappointed by the length of time we
require to develop and register drugs in the
United States and in major international
markets. Our leading competitors achieve
significantly shorter development cycles because
they have established larger-scale,
high-flexible, globally integrated RD
organizations that operate with a uniform set of
work practices and information systems. The
competitive trend goes against our family of
smaller, independent RD organizations, which are
housed in several decentralized operating
companies around the world. We have strong
competitive and economic incentives to move as
quickly as possible toward a globally integrated
model of operation. Each week we save in the
development and registration process extends the
commercial life of our patent protection and
represents, at minimum, an additional 1 million
in annual pretax profit for each drug in our
portfolio.
6Case for Action and Vision Statements (III)
- Vision Statement
- This is what we as a company need to become
- Should include both quantitative and qualitative
statements - Need not be excessively long but should not be
simplistic
7Case for Action and Vision Statements (IV)
- Example Vision Statement in a pharmaceutical
company
- We are a worldwide leader in drug development.
- We have shortened drug development and
registration by an average of six months. - We are acknowledged leaders in the quality of
registration submissions. - We have maximized the profit potential of our
development portfolio. - We have created, across our operating companies,
a worldwide RD organization with management
structures and systems that let us mobilize our
collective development resources responsibly and
flexibly. -
- We have established uniform and more disciplined
drug development, planning, decision-making, and
operational processes across all sites. - We employ innovative technology-based tools to
support our work and management practices at all
levels and between all RD sites. - We have developed and implemented common
information technology architecture worldwide.
8Process Identification and Selection
- Process selection is critical for the success of
a design project - Core processes have the highest impact on overall
performance but are also more costly and risky to
change - The implementation tactic cannot be ignored, even
due to budget constraints - Useful criteria for prioritization of projects
are - Dysfunction
- Importance
- Feasibility
- Other relevant screening issues/questions are
- What are the projects scope and costs involved?
- Can a strong and effective team be formed?
- Is it likely to obtain strong management
commitment? - Can other programs (e.g. continuous improvement)
be used instead? - Is the process obsolete or the technology
outdated?
9Obtaining Management Commitment
- Top management must set the stage both for the
design project and the subsequent implementation - Without top management support the improvement
effort is bound to fail - The more profound and strategic the change is the
more crucial the top management support becomes
- Commitment assumes understanding and cannot be
achieved without education - People are more likely to be fearful and
resisting change if there is a lack of direction
and they do not understand the implications of
the change - Occurrence of resisting change issues is
particularly prevalent in rapid revolutionary
change scenarios
10Evaluation of Design Enablers
- New (information) technology is an essential
design enabler - but could also reinforce old ways of thinking
- Automation ? redesign
- Do not look for problems first and then the
technology to fix them - Evaluating new technology needs inductive
thinking - New technology should not be evaluated within the
structure of the existing process - New technology enables us to break old rules and
compromises - To avoid the automation trap the question to ask
is - How can new technology enable us to do new things
or to do things in new ways?
11Technology as a Mechanism to Break Rules and
Compromises
12Acquiring Process Understanding
- Subtle difference between redesigning an existing
process and designing a new currently
non-existing process - In both cases we need to understand the purpose
of the process and what the customers desire from
it - If the process exists, we need to understand what
it is currently doing and why it is
unsatisfactory - Business Process Benchmarking may be a useful
tool - To gain process understanding
- To inspire creative new designs
13Understanding the Existing Process
- Questions the design team needs to answer
- What is the existing process doing?
- How well does it perform?
- What are the critical issues that impact the
process performance? - The redesign team must understand the process but
should not overanalyze it in order to avoid
analysis paralysis - Becoming so familiar with the process it is
impossible to think of new ways of doing it - Essential activities for building process
understanding - Configure the redesign team
- Build a high level process map
- Test the initial scope and scale
- Identify the process owner
14Activities for Building Process Understanding (I)
- Configure the redesign team
- A mix of business insiders (managers and workers
directly involved in the current process) and
business outsiders (consultants and employees not
involved in the process) - Build a high level process map
- Neither a low level flow chart nor an
organizational chart - Shows interactions between sub-processes, not the
flow of data - Focuses on customers and business outcomes
- Objectives
- 1. Build common understanding 4. Use a cross
functional vocabulary - 2. Highlight critical sub-processes 5. Test
initial scope and scale - 3. Identify key interfaces 6. Pinpoint
redundancies and waste
15High Level Process Map for a Telecom Company
Mass Markets Service Delivery
Service Assurance
Local Network Operations
Customers
Capacity Provisioning
Customer Transactions and Billing
Carrier Service Delivery
Markets Planning
16Activities for Building Process Understanding
(II)
- 3. Test the initial scope and scale
- Self examination
- Environmental scanning/benchmarking
- Customer visits
- 4. Identify the process owner
- The person that will take responsibility and be
accountable for the performance of the new process
17Understanding the Customer
- The customer end is the best place to start
understanding a business process - What are the customers real requirements?
- What do they say they need and what do they
really need? - What problems do they have?
- What do they do with the process output?
- The ultimate goal with a business process is to
satisfy the customers real needs in an efficient
way!
18Creative Process Design (I)
- Designing new processes is more of an art than a
science - Cannot be achieved through a formalized method
- Most existing processes were not designed they
just emerged as new parts were added iteratively
to satisfy immediate needs - The end result of any design is very much
dependent on the order in which information
becomes available - Inefficient processes are created when iterative
design methods are applied
19Illustration Process Evolution (I)
- Two pieces of plastic are given to you with
instructions to arrange them in an easily
described shape
20Illustration Process Evolution (II)
- Then a third piece is added still the objective
is to build a simple shape
21Illustration Process Evolution (III)
- Two more pieces are added, but very few people
are able to incorporate these and still obtain a
simple shape
?
22Illustration Process Evolution (IV)
- Considering the pieces independently of the
sequence by which they appear leads to a much
better solution!
23Benchmarking
- Comparing the firms/processs activities and
performance with what others are doing - In the same company, in the same industry or
across industries - Every benchmarking relationship involves two
parties - The initiator firm who initiates contact and
observes (the pupil) - The target firm (or benchmark) who is being
observed (the master) - Fruitful benchmarking relationships are usually
characterized by reciprocity - Two basic benchmarking purposes
- To assess the firms/processs performance
relative to the competition ? identify
performance gaps and goals - To stimulate creativity and inspire innovative
ideas for how to do things better, i.e. improve
process designs process performance - For BPD projects both purposes are relevant
24Business Process Benchmarking (I)
- Focus on how things are done
- Typically the most involved type of benchmarking
- The underlying idea is to learn and be inspired
by the best - The best in a certain industry (best-in-class
benchmark) - The best across industries (best-of-the-best
benchmark) - Generally, the further away from the firms own
industry that the design team goes - Higher potential for getting breakthrough design
ideas - More difficult to identify and translate
similarities between processes - After choosing a target firm a good starting
point for a business process benchmarking effort
is the 5w2h framework (Robinson 1991) - Can also be used to understand an existing
process to be redesigned
25Business Process Benchmarking (II)
The 5w2h framework
26Design Principles
General people-oriented and conceptual process
design principles
Coordination of activities, simplification of
flows, elimination of waste and rework
27Ten Conceptual Design Principles (I)
- Organize work around outcomes not tasks
- Focus on horizontal integration of activities
- Eliminates unnecessary handoff and control steps
- Process complexity is reduced while activity
complexity grows - This integration approach often referred to as
case management - Let those who use the process perform the process
- Work should be carried out where it makes most
sense to do it - Risk of coordination inefficiencies due to
excessive delegation decreases - Merge information processing and data gathering
activities - The people collecting the data should also
process it into information - Reduces the risk of errors and incorrect
information - 4. Capture information once at the source
- Reduces costly reentry and frequency of erroneous
data - Speeds up the process, increases the quality of
information and reduces costs
28Ten Conceptual Design Principles (II)
- 5. Put the decision point where the work is
performed and build control into the process - Case management compresses processes horizontally
and employee empowerment compresses them
vertically - Workers are taking over previous management
responsibilities - Treat geographically dispersed resources as
though they were centralized - IT breaks spatial compromises through virtual
co-location - Geographically disbursed resources should not
constrain the design team to only consider
decentralized approaches - Link/coordinate parallel activities instead of
just integrating their results - If parallel activities are operated independently
? operational errors are not detected until the
outcomes are integrated - Reduces the amount of rework
29Ten Conceptual Design Principles (III)
- 8. Design the process for the dominant flow not
for the exceptions - Reduces the risk of fragmentation and overly
complex processes with inherent coordination
problems - 9. Look for ways to mistake-proof (or fail-safe)
the process - Design so that certain critical errors cannot
occur - Mistake-proofing Poke Yoke
- Examining interactions to avoid sub-optimization
- By neglecting interactions, isolated improvements
to sub-processes will lead to sub-optimal
solutions - Known in systems theory as disjointed
incrementalism
30Seven Workflow Oriented Design Principles
- Stems from the field of industrial engineering
- Successfully used for designing manufacturing
systems for decades
31Process Modeling and Simulation (I)
- Conceptual process designs need to be tested
before they are implemented in full scale - Pilot projects or process modeling techniques
- Business processes are often too complex and
dynamic to be analyzed only with simple tools
like flowcharts and spreadsheets - Discrete event simulation is a powerful and
realistic tool to complement the more simplistic
methods - Allows exploration of the redesign effects
without costly interruptions of current
operations - Helps reduce the risks inherent in any
design/change project - Compared to pilot projects simulation is faster
and cheaper - Simulation not good for capturing soft people
issues and attitudes - ? Simulation and pilots complement each other
32Process Modeling and Simulation (II)
- A discrete event simulation model mimics the real
world but in compressed time - Focus only on events when the state of the system
changes and skips the time between these events - Basic steps in evaluating a process design
through discrete event simulation - Building the simulation model
- Running the simulation
- Analyzing performance measures
- Evaluation of alternative scenarios
33Process Modeling and Simulation (III)
- Advantages with discrete event simulation
- Promotes creativity by enabling easy testing of
ideas - Captures system dynamics but avoids disturbances
of current process - Can capture interactions between sub-processes
- Mitigates the risk of sub-optimization
- Graphical reporting features promotes better
process understanding and facilitates
communication - The quantitative nature brings a sense of
objectivity into the picture
34Implementation of the Process Design (I)
- Detailed implementation issues beyond the scope
of the design project - High level implementation issues need to be
considered when selecting a process to design - No point in designing a process which cannot be
implemented - Crucial high level implementation issues
- Time
- Cost
- Improvement potential
- Likelihood of success
35Implementation of the Process Design (II)
- Conceptually an implementation strategy can be
characterized as revolutionary, evolutionary or
on a continuum in between - A rapid revolutionary approach tends to require
more external resources - Regardless of the implementation tactic important
factors for a successful implementation are - Strong leadership
- Buy-in from line managers and employees
- Training of the workforce
36Final Notes
- Important to reflect on what can be learned from
a given design and/or implementation project - What worked, what didnt and why?
- What were the main challenges?
- What design ideas didnt work out in practice and
why? - The process of designing and implementing new
process designs also needs improvement - Sharing experiences and collecting feedback is
key to any improvement effort