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TRANSCRIPT
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Business Process Management for Enterprises
Ing. Antonio Caforio
Centro Cultura Innovativa d’Impresa
Università del Salento
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Business Motivation
Ends
What an enterprise wants to be
End Vision
Goal
“Be the premier software services
provider for SMEs”
“20% increase in market share in the
next 3 years”
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Business Motivation
Means
What an enterprise has decided to do in order to achieve an End
Mean Mission
Strategy
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What is Mission
A Mission should consist of
An action (i.e “provide”, “make”, “deliver”, …)
A product or service (i.e. “aircraft engine components”, “pizza”, …)
A market or customer segment (i.e. “airlines”, “city-wide customers”, …)
Mission Vision makes operative
A Mission or a Value Proposition
“Provide pizza of good quality quickly at home to all customers
in the neighbourhood”
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What is Strategy
A Strategy is
an approach accepted and pursued by an enterprise to achieve its goals, given the environmental constraints and risks
Strategy Goal directs efforts
towards
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What is Strategy
“The essence of strategy is choosing to perform the activities differently than rivals do” M. Porter
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What is Strategy
“The essence of strategy is choosing to perform the activities differently than rivals do” M. Porter
Southwest Airlines
Activity Map
Taken from : M. E. Porter; “What is Strategy?”; Harvard Business Review, Nov-Dec 1996
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Strategy Types
• Ryanair
• Eurospin
Cost Leadership
• Apple
• 3M
Differentiation
Niche Specialization
Porter’s Competitive Strategies
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What is Goal
A Goal is
a statement about a future state or condition of the enterprise that is desirable to be achieved through appropriate Means
Strategy Goal directs efforts
towards
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How to define Goals
The Balanced Scorecard (BSC) Approach
Ritaglia e disponi
Financial Perspective
Customer Perspective
Internal Perspective
Learning & Growth
Perspective
“If we succeed, how will we look to our shareholders?”
“To achieve our vision, how must we
look to our customers?”
“To satisfy our customers, which processes must we excel at?”
“To achieve our vision, how must our
organization learn and improve?”
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How to define Goals
BSC Dimensions
Ritaglia e disponi
Financial Perspective
Customer Perspective
Internal Perspective
Learning & Growth
Perspective
• Productivity Strategy
• Revenue Growth Strategy
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How to define Goals
BSC Dimensions
Ritaglia e disponi
Financial Perspective
Customer Perspective
Internal Perspective
Learning & Growth
Perspective
• Productivity Strategy
• Revenue Growth Strategy
• Customer satisfaction
• Customer retention
• Customer acquisition
• Customer profitability
• Market share
• Account share
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How to define Goals
BSC Dimensions
Ritaglia e disponi
Financial Perspective
Customer Perspective
Internal Perspective
Learning & Growth
Perspective
• Productivity Strategy
• Revenue Growth Strategy
• Customer satisfaction
• Customer retention
• Customer acquisition
• Customer profitability
• Market share
• Account share
• Operations management processes
• Customer management processes
• Innovation processes
• Regulatory and social processes
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How to define Goals
BSC Dimensions
Ritaglia e disponi
Financial Perspective
Customer Perspective
Internal Perspective
Learning & Growth
Perspective
• Productivity Strategy
• Revenue Growth Strategy
• Customer satisfaction
• Customer retention
• Customer acquisition
• Customer profitability
• Market share
• Account share
• Operations management processes
• Customer management processes
• Innovation processes
• Regulatory and social processes
• Human Capital
• Information Capital
• Organizational Capital
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Value Proposition and Goals
Strategy Types and the BSC Customer Perspective
Source: R. S. Kaplan, D. P. Norton; “Strategy Maps: Converting Intangible Assets into Tangible Outcomes”; Harvard Business Press, 2004
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Strategy Maps
Source: R. S. Kaplan, D. P. Norton; “Strategy Maps: Converting Intangible Assets into Tangible
Outcomes”; Harvard Business Press, 2004
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Strategy Maps
Low Cost Airline Example
Source:
R. S. Kaplan, D. P. Norton;
“Strategy Maps:
Converting Intangible
Assets into Tangible
Outcomes”; Harvard
Business Press, 2004
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The path from Vision and Mission
Vision
Mission Strategy
Strategy Map
Balanced Scorecard
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…
Means towards Ends
MeanMission
Strategy
EndVision
Goal
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…
Means towards Ends
MeanMission
Strategy
EndVision
Goal
Business Processes
realized by
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What is a Process
“a sequence of steps performed for a given purpose”
(IEEE)
“the logical organization of people, materials, energy, equipment, and procedures into work
activities designed to produce a specified end result”
(Pall, Quality Process Management, 1987)
“a structured, measured set of activities designed to produce a specific output for a
particular customer or market. It implies a strong emphasis on how work is done within an
organization, in contrast to a product focus’s emphasis on what. A process is thus a
specific ordering of work activities across time and space, with a beginning and an end,
and clearly defined inputs and outputs: a structure for action. ... Taking a process approach
implies adopting the customer’s point of view. Processes are the structure by which an
organization does what is necessary to produce value for its customers”
(Davenport ,1993)
“a collection of activities that takes one or more kinds of input and creates an output that is
of value to the customer”
(Hammer & Champy’s ,1993)
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Types of Processes
Deliver Products
Manufacture Products
Manage Orders
Develop New
Products
Core
Processes
Develop Strategy
Evaluate Enterprise
Performance
Maintain Policies
Management
Processes
Develop HR
Develop IT Systems
Maintain Facilities
Support
Processes
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The Value Chain Concept
A Value Chain is
a comprehensive collection of all of the activities that are performed to design, produce, market, deliver, and support a product line.
Va
lue
Ch
ain
Management Processes
Core Processes
Support Processes
Administer Contracts
Create New Products
Manage Programs
Ensure
Customer
Satisfaction
Produce Products Deliver Products
Provide HR
Provide Information
Systems & Services Manage Facilities
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Process Architecture
Level 3
Level 2
Level 1
VC Value Chain
Business Process 1
Business Process 2
Business Process 3
Process 3.1
Process 3.2
Sub-Process
3.2.1
Sub-Process
3.2.2
Sub-Process
3.2.3
Business Process 4
Process 4.1
Process 4.2
A Process Architecture is
a hierarchical decomposition of the processes that are contained in a value chain.
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Level 3
Level 2
Level 1
VC ValueChain
Business Process 1
Business Process 2
Business Process 3
Process3.1
Process3.2
Sub-Process
3.2.1
Sub-Process
3.2.2
Sub-Process
3.2.3
Business Process 4
Process4.1
Process4.2
How to create a Process Architecture
Reference Frameworks
KPIs
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Reference Process Architecture
An Example
from Standards:
APQC
(www.apqc.org)
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Building Process Architectures
x.0 Category
x.x Process Group
•x.x.x Process
•x.x.x.x Activity
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Building Process Architectures
2.0 Develop and Manage Products
and Services
• 2.2 Develop products and services
• 2.2.1 Design, build, and evaluate products and services
• 2.2.1.1 Assign resources to product/service project
• …
• 2.2.1.3 Develop product/service design specifications
• …
• 2.2.1.6 Build prototypes
• …
• 2.2.2 Test market for new or revised products and services
• 2.2.3 Prepare for production
3.0 Market and Sell Products and Services
• 3.1 Understand markets, customers, and capabilities
• 3.1.1 Perform customer and market intelligence analysis
• 3.1.1.1 Conduct customer and market research
• …
• 3.1.2 Evaluate and prioritize market opportunities
• 3.2 Develop marketing strategy
• 3.3 Develop sales strategy
• 3.4 Develop and manage marketing plans
• 3.5 Develop and manage sales plans
4.0 Deliver Products and Services
• 4.1 Plan for and acquire necessary resources (SCP)
• 4.2 Procure materials and services
• 4.3 Produce / Manufacture / Deliver product
• 4.3.1 Schedule production
• 4.3.2 Produce product
• …
10.0 Manage Environmental Health
and Safety (EHS)
• 10.1 Determine environmental health and safety impacts
• 10.2 Develop and execute EHS program
• 10.3 Train and educate employees
• 10.4 Monitor and manage EHS management program
• 10.5 Ensure compliance with regulations
• …
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Building Process Architectures
2.0 Develop and Manage Products and Services
2.2 Develop products and services
• 2.2.1 Design, build, and evaluate products and services
• 2.2.1.1 Assign resources to product/service project
• …
• 2.2.1.3 Develop product/service design specifications
• …
• 2.2.1.6 Build prototypes
• …
• 2.2.2 Test market for new or revised products and services
• 2.2.3 Prepare for production
3.0 Market and Sell Products and Services
• 3.1 Understand markets, customers, and capabilities
• 3.1.1 Perform customer and market intelligence analysis
• 3.1.1.1 Conduct customer and market research
• …
• 3.1.2 Evaluate and prioritize market opportunities
• 3.2 Develop marketing strategy
• 3.3 Develop sales strategy
• 3.4 Develop and manage marketing plans
• 3.5 Develop and manage sales plans
4.0 Deliver Products and Services
• 4.1 Plan for and acquire necessary resources (SCP)
• 4.2 Procure materials and services
• 4.3 Produce / Manufacture / Deliver product
• 4.3.1 Schedule production
• 4.3.1.1 Generate line level plan
• 4.3.1.2 Generate detailed schedule
• 4.3.1.3 Schedule production orders and create lots
• 4.3.1.4 Release production orders and create lots
• 4.3.2 Produce product
• …
10.0 Manage Environmental Health
and Safety (EHS)
• 10.1 Determine environmental health and safety impacts
• 10.2 Develop and execute EHS program
• 10.3 Train and educate employees
• 10.4 Monitor and manage EHS management program
• 10.5 Ensure compliance with regulations (11184)
• …
Operations Management
Processes
Customer Management
Processes
Innovation Processes
Regulatory and Social Processes
Internal Perspective
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Learning and Growth Perspective
Building Process Architectures
Information Capital
Organization Capital
Human Capital
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Process Performance Measures
Process performance are measured through
Key Performance Indicators (KPI)
Process perfomance are measured against a Service Level
Service Level Agreement (SLA)
Efficiency
Quality Service
Percentage of Rejects Delivery on-time
Productivity
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Process Performance Measures
Key Performance Indicators (KPI)
External KPI
– Throughput time, waiting time, service level
Poor performances cause loss of money!!!
Internal KPI
– Rate of resource utilization, number of cases, cost of resources
Good performances can be expensive!!!
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PPM from frameworks
Performance Attribute Level 1 Metric
Supply Chain Delivery Reliability Delivery Performance
Perfect Order Fulfillment
Supply Chain Responsiveness Order Fulfilllment Lead Times
Supply Chain Costs Cost of Goods Sold
Total SC Management Costs
SCOR Framework
Process Name Metric
2.1 Manage product and service portfolio Total cost to generate new product/service ideas per
$1,000 revenue
Total R&D cost per business entity employee for the
current reporting period
2.2 Develop products and services Average time-to-market in days for new
product/service development projects
Number of FTEs who develop and manage products
and services per $1 billion revenue
APQC Framework
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Key Performance Indicators
Auto Transportation example
Type KPI Metric
Efficiency
Trucks Utilization Hours Utilized /
Hours Available
Routing Efficiency KMs with load /
KMs travelled
…
Quality
Wrong Delivery Wrong Deliveries /
Total Deliveries
Damages Total number of
damages
…
Service Delivery Time Average DT
Delivery on time Pct Dot
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Process Management
Plan
Work
Execute
Work
Monitor & Control
Work
Set Goals
Establish Process
Define Plans, Resources
Determine Budget
Gather Information
Monitor Processes
Develop Forecasts
Take Preventive/Corrective Actions
Use
Inputs
to
Produce
Outputs
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Processes and the Organizational Chart
Management
Engineering Production Marketing Sales
Value Chain
Develop New Product
Build Product
Sell Product
Source: P. Harmon; “Business Process Change: A Guide for Business Managers and BPM and
Six Sigma Professionals”; MK Press, 2007
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Quality Standards
UNI EN ISO 9001:2008
Principles of Quality Management
Customer orientation
Leadership
Personnel Involvement
Process Orientation
Systemic approach to management
Continuous improvement
Facts-based Decisions
Beneficial interrelationships with suppliers
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UNI EN ISO 9001:2008
Product Realization
Management
Responsibility
Measures,
Analysis and
Improvement
Resource
Management
Cu
sto
mer
Req
uir
em
en
ts
Process
Classification
Primary Processes
Secondary Processes
Cu
sto
mer
Sati
sfa
cti
on
Continuous improvement of the QMS
input
output
Information
Flow
Quality Standards
Product
Information Flow
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References
APQC.org; “APQC Process Classification Framework 6”, http://www.apqc.org/process-classification-framework - last accessed on October 2013
G. Bracchi, C. Francalanci, G. Motta; “Sistemi informativi e aziende in rete”; McGraw Hill Italia, 2001
M. E. Porter; “Competitive Advantage: Creating and Sustaining Superior Performances”; The Free Press,1985
M. E. Porter; “What is Strategy?”; Harvard Business Review, Nov-Dec 1996
R. S. Kaplan, D. P. Norton; “Strategy Maps: Converting Intangible Assets into Tangible Outcomes”; Harvard Business Press, 2004
P. Harmon; “Business Process Change: A Guide for Business Managers and BPM and Six Sigma Professionals”; MK Press, 2007
Supply Chain Council; “SCOR Reference Framework”, http://supply-chain.org/scor - last accessed on October 2013
OMG Specification; “Business Motivation Model”; 2010
UNI EN ISO 9011:2008, International Standards Organization