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T4. Enterprise systems analysis and improvement


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Title: T4. Enterprise systems analysis and improvement

T4. Enterprise systems analysis and improvement
  • Chin-Sheng Chen
  • Florida International University

T4. Enterprise systems analysis and improvement
  • Classic enterprise operations
  • The diamond
  • PDCA
  • BPR

Classic Enterprise Operations
  • Source
  • The Wealth of Nations
  • By Adam Smith
  • Principles
  • Division of labor
  • Economies of scale
  • Hierarchical control

The business system dynamics (diamond)
  • Values and beliefs
  • Business processes
  • Jobs and structures
  • Management and measurement systems

The PDCA Cycle (ISO 9000)
  • Plan
  • Do
  • Check
  • Act

TQM/Lean 6 Sigma (DMAIC)
  • Define
  • Measure
  • Analyze
  • Improve
  • Control

  • Process Failure Mode and Effects Analysis (PFMEA)
    for process analysis
  • A structured methodology to assist engineers in
    identifying potential failure modes for a new or
    changed business process, typically applied to
    study of a manufacturing process.

Business process reengineering (BPR)
  • Reference
  • Reengineering the Corporation by M Hammer and J
    Champy, 2009
  • Definition
  • Fundamental rethinking and radical redesign of
    business processes to achieve dramatic
    improvement in critical, contemporary measures of
    performance, such as cost, quality, service, and

Four key words in enterprise re-engineering
  • Fundamental
  • Radical
  • Dramatic
  • processes

Business processes
  • A business process is a set of organized
  • for a business objective or
  • That delivers value to a customer.
  • Enterprise operation is a business process
  • A process may have sub-processes
  • Processes are usually invisible, unnamed, and
  • Because like-activities are grouped into
    functional departments
  • And processes go through various departments.

Typical business process types
  • Manufacturing
  • From procurement to shipment
  • Product development
  • From concept to prototype
  • Concept formulation
  • From need to concept design
  • Order fulfillment
  • From order to payment
  • Service
  • From inquiry to resolution

Business process re-engineering cycle
  1. Identify processes
  2. Review, update, and analyze as-is.
  3. Design to-be
  4. Test and implement to-be

An Re-engineering example - Ford Motors (1)
  • Background
  • Accounts payable department of 500 workers in
  • Set a goal to reduce 20 head counts
  • It acquired 25 interest in Mazda at the time and
    found out it had only five workers.

An Re-engineering example - Ford Motors (2)
  • Effort
  • Re-engineer the process (not an org. unit) of
    procurement (including the accounts payable)
  • Eliminate invoice via an on-line database,
  • so that payment authorization is shifted to the
    receiving dock
  • from the account payable, who had to match PO
    with invoice and receiving documents.

An Re-engineering example - Ford Motors (3)
  • Result
  • The new process
  • A buyer in the purchase department issues a PO to
    a vendor and enters it to an online database.
  • Vendors send goods to the receiving dock
  • At the dock, a receiving clerk checks at the
    computer terminal if the received shipment
    correspond to an outstanding in the database.
  • If so, the goods are recorded and the computer
    will automatically issue and send a check to the
    vendor at the appropriate time.
  • It ended up with 125 workers in vendor payment at
    the end.
  • Handling only exceptions (Pareto 80-20 rules)

An Re-engineering example - Ford Motors (4)
  • Lessons learned
  • Reverse the industrial revolution (division of
  • Flatten the organization to eliminate
    fragmentation and bureaucracy
  • Process orientation
  • Ambition
  • Rule-breaking
  • Creative use of information technology

Information Technology BPR enabler
  • Shared database
  • Expert systems
  • Telecommunication networks
  • Decision support tools
  •  Portable wireless data communication
  •   Interactive videodisk
  •   Automatic ID and tracking systems
  •   High performance computing

Common themes in re-engineered processes
  • Several jobs are combined into one
  • Workers make decisions
  • Processes have multiple versions
  • Work is performed where it makes the most sense.
  • Checks and controls are reduced
  • Reconciliation (consolidating redundant papers)
    is minimized.
  • Hybrid centralized/decentralized operations are

Changes in re-engineered business processes
  • Work units changes from functional departments
    to process teams
  • Jobs change from simple to multi-dimensional
  • Peoples role change from controlled to
  • Job preparation changes from training to
  • Focus of performance measures and compensation
    shifts from activity to results
  • Advancement criteria change from performance to
  • Values change from protective to productive
  • Managers change from supervisors to coaches
  • organizational structures change from
    hierarchical to flat
  • Executives change from score keepers to leaders

What re-engineering is NOT
  • Automation
  • More efficient way of doing wrong things
  • Software re-engineering
  • Use more sophisticated computer system)
  • Downsizing
  • Reduce capacity to meet lower demand
  • Other re-s
  • Restructuring
  • re-organizing
  • Flattening
  • De-layering
  • Quality improvement (TQM)
  • Kaizen continuous incremental improvement

Who re-engineer
  • leader
  • steering committee
  • reengineering czar
  • reengineering team
  • process owner

Three criteria to identify re-engineering
  • Dysfunction
  • the processes that are in deepest trouble
  • Importance
  • the processes with the greatest impact on the
    companys customers
  • Feasibility
  • the processes most susceptible to successful

Broken processes (1)
  • Observation
  • extensive information exchange, data redundancy,
    and re-keying
  • Problem
  • arbitrary fragmentation of a natural process
  • Solution
  • consolidate fragmented tasks, when feasible

Broken processes (2)
  • Observation
  • inventory, buffers, and other assets
  • Problem
  • system slack to cope with uncertainty
  • Solution
  • structure processes such that suppliers and
    customers plan and schedule their respective work

Broken processes (3)
  • Observation
  • High ratio of checking and control to value
  • Problem
  • Fragmentation
  • Solution
  • Eliminate managers mistrust and incompetence
    that come from fragmentation

Broken processes (4)
  • Observation
  • rework and iteration
  • Problem
  • inadequate feedback along chains
  • Solution
  • eliminate mistakes

Broken processes (5)
  • Observation
  • complexity, exceptions, and special cases
  • Problem
  • growth onto a simple base (simple process grows
  • Solution
  • develop simple processes with decision points

Important business processes
  • From customers point of view
  • product quality and features
  • product cost
  • on-time delivery
  • Customer service
  • Product life cycle

Factors for choosing feasible processes for
  • Likelihood of success
  • Commitment of the process owner
  • Strength of the re-engineering team
  • Cost
  • Lead time

The re-engineering process
  • identify a process to reengineer
  • understand the current process
  • what and why including input output, but not
  • understand how the customer uses the output of
    the process
  • by watching how it does
  • Redesign
  • try to avoid benchmarking, as it may limit the
    teams innovation

BPR Principles
  • Work is best organized around outcomes, not tasks
  • As few people as possible should be involved in
    the performance of a process
  • Identify and destroy assumptions
  • Look for opportunities for creative application
    of information technology

Additional BPR principles as role players
  • You dont need to be an expert to redesign a
  • Being an outsider helps
  • Your have to discard preconceived notions
  • Its important to see things through the
    customers eyes.
  • Redesign is best done in teams.
  • Your dont need to know much about the current
  • Its not hard to have great ideas
  • Redesign can be fun.

Avoidance in BPR (1)
  • Try to fix a process instead of changing it
  • Dont focus on business processes
  • Ignore everything except process redesign (as it
    affects others).
  • Neglect peoples values and beliefs
  • Be willing to settle for minor results
  • Quit too early
  • Place prior constraints on the definition of the
    problem and the scope of the reengineering effort
  • Allow existing corporate cultures and management
    attitudes to prevent reengineering from getting
  • Try to make reengineering happen from the bottom

Avoidance in BPR (2)
  • Assign someone who doesnt understand
    reengineering to lead the effort
  • Skimp on the resources devoted to reengineering
  • Bury reengineering in the middle of the corporate
  • Dissipate energy across a great many
    reengineering projects
  • Attempt to reengineer when the CEO is 2 years
    from retirement
  • Fail to distinguish reengineering from other
    business improvement programs
  • Concentrate exclusively on design
  • Try to make reengineering happen without making
    anybody unhappy
  • Pull back when people resist making
    re-engineerings changes
  • Drag the effort out (should not longer than 12

Nature of the business environment
  • Knowledge intensive product/service
  • Innovation
  • Consumers market
  • Individuality
  • Mass customization
  • Very dynamic and short product lifecycle
  • Concurrent engineering/operations
  • Highly mobile labor market
  • Agile manufacturing
  • Free product or service

Enterprise characteristics
  • Innovation
  • First in the market (market pre-emption)
  • Mass customization
  • Quick response
  • No inventory
  • Virtual resources (collaborative via SCM)
  • Scalability
  • Agility
  • Process knowledge management

Business process intelligence
  • Business knowledge
  • Product mfg. process
  • Production
  • Business process
  • Business process knowledge mgt.
  • Knowledge warehouse ( ISO) vs.
  • Process embedded with knowledge
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