Process management (2)

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1 Process management (2) International Business Program prof. UW dr hab. Krzysztof Klincewicz TiMO (Department of Organization Theory and Methods)

Krzysztof Klincewicz kklincewicz@wz.uw.edu.

2 The Fifth Discipline (Peter Senge) Management bestseller from the 1990s Fifth discipline = building learning organizations The art of seeing the forest AND the trees modelling interdependencies in organizations and their environments learning from successes and mistakes boiling a frog and automobile industry delayed consequences of own s experiences butterly effect (Edward Lorenz) delayed consequences of cost-cutting

organizations and their environments learning from successes and mistakes boiling a frog and automobile

3 Systems dynamics Analytical approach, popularized by Senge developed by Jay W. Forrester, MIT, 1960s used to model business, social and ecological systems uncovering counter-intuitive relations Senge did not use equations (quantitative modelling) but original systems dynamics is quantitative

Forrester, MIT, 1960s used to model business, social and ecological

4 Software for systems dynamics modelling Vensim PLE, free edition for non-commercial purposes helps: graphically describe interdependencies identify feedback loops quantitatively describe relations (build equations) simulate

com free edition for non-commercial purposes helps:

5 Positive feedback loop (reinforcing cycle) The rich are getting richer More X leads to more X! Senge (1990)

6 Negative feedback loop (balancing/stabilizing system) Homeostatic mechanism Senge (1990) Senge (1990)

7 Feedback loop with a delay Delays cause stability/adjustment problems Senge (1990) Senge (1990)

8 Archetype Limits to growth Combination of positive and negative feedbacks Senge (1990)

9 Archetype Limits to growth Combination of positive and negative feedbacks Senge (1990)

10 Archetype Shifting the burden Instead of fixing the problem, solutions induce additional negative side effects Senge (1990)

11 More complex models Senge (1990)

12 More complex models Senge (1990)

13 More complex models Senge (1990)

14 More complex models Senge (1990)

15 Modelling production systems Kirkwood (1998)

16 Two types of variables in systems dynamics - stocks and flows Stock (level) is accumulated, marked as rectangle Flow (rate) is changing over time, marked as two triangles stock flow stock Kirkwood (1998)

17 Complex model: market growth and capacity expansion Kirkwood (1998)

18 Assignment Use Vensim PLE to analyze challenges, described in the case study Bonnie Blaine The systems dynamics model should include: stocks and flows (no equations, but + / - symbols for each arrow) at least 20 variables and at least one system archetype interpretation (explain how can systems dynamics model help solve the problems in question) Essay accompanying the model, answering all 7 questions from the case study based on the insights from the Vensim model Formal requirements PDF file send by by Vensim model should be copied and integrated into the PDF file original work (plagiarism = failing the course) prepared individually (every person needs to prepare an own model)

question) Essay accompanying the model, answering all 7 questions from the case study based on the insights from the Vensim model Formal requirements PDF file send by

19 Business Process Reengineering Management bestseller by Michael Hammer and James Champy: "Reengineering the Corporation. A Manifesto for Business Revolution revolution not evolution - radical redesign not incremental improvements traditional approaches to process management: how is the process performed? how to shorten the process? how to improve the performance? how to reduce costs? BPR: why is the process performed? can it be done differently?

A Manifesto for Business Revolution revolution not evolution - radical redesign not incremental improvements

20 BPR s example Ford (before) Hammer, Champy 400 employees at accounts payable compared with 5 employed by Mazda

21 BPR s example Ford (after) Hammer, Champy invoiceless processing 75% reduction in headcount

22 BPR fundamentals (1) rethinking business processes - radical redesign promises dramatic improvements organization-wide processes - going beyond single departments, everybody has access to process data analysing relations between different processes

23 BPR fundamentals (2) processes run regardless of hierarchies and departmental divisions flattening of organizational structures cross-functional teams resources in disparate location should be treated as if they were in the same place capturing information at source

24 BPR fundamentals (3) importance of communication and teamwork - as opposed to traditional division of work and specialization joint responsibility for the outcomes of the process everyday work becoming more ambitious (work enrichment)

25 BPR fundamentals (4) less control of the everyday work, more autonomy but verification of results focus on results not tasks process roles not organizational positions performance-based pay internal customers (users of the process results) involved in process performance

26 BPR fundamentals (5) the same results could be achieved in different ways (e.g. automation, elimination, outsourcing) creative redesign revolution

27 BPR fundamentals (6) importance of Information Technology use of central database and transaction system access to data and information by all people involved in the process workflow - coordination of work, distribution of tasks, process control automation of basic tasks

28 BPR projects Identify process customers Define process goals Map the current process Redesign the process Implement

29 Problems with BPR Lack of precise recommendations Implementation mistakes: downsizing instead of process redesign Potential loss of knowledge Demotivation and layoff survivor syndrom Risks related to radical changes

30 Different change scenarios revolution evolution top-down bottom-up with consultants selfsufficient

31 Business Process Improvement (BPI) Continuous, evolutionary improvements instead of revolutionary redesign Use of process benchmarking ESIA framework Eliminate - e.g. waiting time, paperwork, inventory, movement, over-production, duplication of tasks, reformatting data, transferring data, control Simplify - procedures, forms, communication methods Integrate - jobs, people, suppliers Automate - tedious, dirty and difficult tasks, data capture, transfer and analysis

32 Process modelling Graphical representation of a process Helps analyze and modify Usually supported by computer software ARIS the most popular commercial application for process modelling ARIS Express free version of ARIS, limited in functionality but with similar user interface, can be used as entry-level solution

33 Business Process Modelling Notation (BPMN) Standard notation for graphical representation of processes (one of many competing standards) Supported by ARIS Express

34 Simple BPMN process model Credit approval process White 2006

35 Simple BPMN process model On-line auction process Owen, Raj 2003

36 BPMN elements White 2006 Owen, Raj 2003

37 BPMN process with pools/lanes Owen, Raj 2003

38 BPMN process with pools/lanes White 2006

39 Gateways OR / AND Owen, Raj 2003 Owen, Raj 2003 Owen, Raj 2003 Owen, Raj 2003

40 Event-based actions Event triggering subsequent actions White 2006 Wait for 3 days

41 Data objects Owen, Raj 2003 Owen, Raj 2003

42 Video tutorial for ARIS Express Tutorials explaining how to use the software Tutorial explaining how to model BPMN in ARIS Express /BPMN_modeling_support_en.htm

43 BPMN manuals Introduction to BPMN whitepaper (S. White, IBM) Introduction to BPMN slides (S. White, IBM) BPMN and BPM (M. Owen, S. Raj, Popkin Software)

44 Assignment Use ARIS Express prepare a BPMN model of an optimized business process, based on the case study Janson Medical Clinic The model should: use BPMN notation, include pools/lanes, use gateways, event-based actions and data objects, re-engineer the activities incorporated in the past processes related to answering phone calls and registering patients Formal requirements ARIS file send by by original work (plagiarism = failing the course) prepared individually (every person needs to prepare own assignment)

Business Process Reengineering (BPR) for Engineering Management (EM) Majors: Industry Perspective and Students Feedback

Business Process Reengineering (BPR) for Engineering Management (EM) Majors: Industry Perspective and Students Feedback Rashmi Jain, PhD Associate Professor Stevens Institute of Technology Rashmi.Jain@stevens.edu