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A Simulation Based Framework for Business Process Design Projects

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Step 7: Process Modeling and Simulation. Step 8: Implementation of the New Process Design ... Pilot projects or process modeling techniques ... – PowerPoint PPT presentation

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Title: A Simulation Based Framework for Business Process Design Projects


1
A Simulation Based Framework for Business Process
Design Projects
  • Chapter 3
  • Business Process Modeling, Simulation and Design

2
Overview
  • 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

3
A Simulation Based Framework for BPD Projects
4
Case 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

5
Case 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.
6
Case 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

7
Case 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.

8
Process 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?

9
Obtaining 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

10
Evaluation 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?

11
Technology as a Mechanism to Break Rules and
Compromises
12
Acquiring 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

13
Understanding 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

14
Activities 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

15
High 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
16
Activities 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

17
Understanding 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!

18
Creative 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

19
Illustration Process Evolution (I)
  • Two pieces of plastic are given to you with
    instructions to arrange them in an easily
    described shape

20
Illustration Process Evolution (II)
  • Then a third piece is added still the objective
    is to build a simple shape

21
Illustration Process Evolution (III)
  • Two more pieces are added, but very few people
    are able to incorporate these and still obtain a
    simple shape

?
22
Illustration Process Evolution (IV)
  • Considering the pieces independently of the
    sequence by which they appear leads to a much
    better solution!

23
Benchmarking
  • 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

24
Business 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

25
Business Process Benchmarking (II)
The 5w2h framework
26
Design Principles
General people-oriented and conceptual process
design principles
Coordination of activities, simplification of
flows, elimination of waste and rework
27
Ten 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

28
Ten 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

29
Ten 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

30
Seven Workflow Oriented Design Principles
  • Stems from the field of industrial engineering
  • Successfully used for designing manufacturing
    systems for decades

31
Process 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

32
Process 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

33
Process 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

34
Implementation 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

35
Implementation 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

36
Final 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
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