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objectives present the process view of
organization describe business processes discuss business process reengineering
definition of business process
a specific ordering of work activities across time and place, with a beginning, an end, and clearly identified inputs and outputs
Davenport, 1993
focus on “what” focus on “how”
vertical; chain of command horizontal; workflow
static; slice-in-time dynamic
task-centered customer-oriented
individual; specialist team; generalist
parochial holistic
So, what’s the difference?
Function Process
typical business processes product development customer acquisition manufacturing order management human resource management planning & resource allocation
cross-functional processes: product development
MARKETING PRODUCTIONR & D
product developmentproduct development
com
petit
or a
nalys
ism
arke
t res
earc
h
new
prod
uct
prot
otyp
e
needs analysisresearchmarket test
component designproduct testproduct release
process designequipment designproduction start
cross-functional processes: order management
SALES FINANCELOGISTICS
order managementorder management
sale
s or
der
paym
ent
proposalcommitment
configurationdelivery
credit checkingbillingcollection
SAP event process model:sales logistics
xor
V
V
Arrival of orderw/o reference to
quotation
Arrival of orderw/o reference to
quotation
Quotation is valid
Quotation is valid
Arrival of orderwith reference
to quotation
Arrival of orderwith reference
to quotation
Standard orderprocessing
Standard orderprocessing
processing
xor
Orderconfirmation
is sent
Orderconfirmation
is sent
Material requirements
planning
Rejection issent to
customer
Rejection issent to
customer
Deliveryprocessing
Deliveryprocessing
Material isissued
Material isissued
Billing documentproceessing
Order is released
Order is released
Sales requirements are
determined
Sales requirements are
determined
Createbilling document
Createbilling document
value chain
stream of activities part of larger “value system” applies to both products and services
pro
fit
mar
ginsupport:
primary:
infrastructure, hr, r&d, procurement
inboundlogistics
operationsoutboundlogistics
marketing& sales
service
inter-organizational processes
The 2000’s will be about breaking down external walls: integrating and redesigning inter-enterprise processes using the Internet
-Michael Hammer
Michael Hammer“Father of Reengineering”
“Don’t automate…
business process reengineering
......OBLITERATEOBLITERATE!”!” fundamental redesign of processes
“clean sheet of paper”
leveraging technology upgrading skill levels (aka fewer jobs)
Hammer’s principles
outcomes over tasks users of output: do it yourself! process information at the source geography doesn’t matter coordinate activities empower workers
servicing of loan
follow-up processing
origination of loanpre-
qualificationdocumentgeneration
applicationprocessing
credit analysis& underwriting
approval& closing
paymentprocessing
escrowmanagement
customerservice
collections& foreclosures
valuation &risk analysis
transfer tosecondary mkt
loan processingdesk-to-desk approach
creditreporting
loan processingteam approach
field replaptop
regionalproduction
center
loanorigination
team
loanservicing
team
BPR success stories Ford A/P
eliminated invoices reduced headcount: from 500 to 125
Mutual Benefit Life revised application processing (from 30
steps, five departments, 19 people, 5 to 25 days to one person + expert system, 4 hours)
eliminated 100 positions