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Business process Management MPM701

Chip Optisync Pty Ltd. Preliminary business report: The current Business Process Management and necessary changesZEIN NOOR MOHAMMED KHAN. Student ID: 214305612

Table of ContentsBPM AND STRATEGY............................................................................................3Problem Analysis............................................................................................5

PROPOSED SOLUTIONS:........................................................................................13Solution Considerations....................................................................................16

Recommendations............................................................................................17References.................................................................................................18

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BPM and STRATEGYLee and Dale (1989) define BPM as systematic management where the needs of the customer are focused upon, alongside using cross-functional teamwork and employee empowerment to measure and improve the processes of the company. The processes are broken down into operational, management and enabling processes (Zairi, 1997; DeToro and McCabe, 1997). Furthermore,BPM includes a set of procedures used by a business to effectively manage time and productivity at each stage of the business model, to then help the business gain a stronger competitive advantage than its competitors (Silva et al., 2012).

Chip’s Optisync Pty Ltd is currently using paper based manual methods in processing, which includes purchasing material from the suppliers to controlling production, satisfying customer orders and managing accounts.This is one of the reasons of their downfall, in spite of having the competitive advantage of being the leaders in innovation. Chip’s business is being affected as sales were strongly relied on word of mouth and did not concentrate on marketing strategies. Also, there has been a substantial delay in customers receiving the orders in time. Chip has to change the current working structure of the business as it is slow and outdated and thus, needs to concentrate more on theBPM approach.

BPM allows a number of objectives to be achieved through extensive adaption in processes, which can help firms to survive.

Firstly, cost can be reduced. This is important as costs can be effectively managedthroughout all functional areas. But, great attention to cost reduction can lead to tradeoffs which will be least appreciated by stakeholders. However, cost reduction is inadequate by itself and therefore, requires optimization with all other objectives, to be successful (Davenport and Short, 1990).

Secondly, BPM allows effective time management. The most common method used to conduct this within the product development process, is by carrying out tasks simultaneously to one another with use of IT to effectively coordinate commands across several departments (Lehmann, 2012). For example, this method has beenadopted by Ford for automobiles design and Xerox for their design of copiers.

Thirdis improvement in Quality of Work Life/Learning/Empowerment. With use of IT, empowerment of individuals can be attained or individuals produce a better control of output (Brocke and Rosenmann, 2010). Zuboff 3 | P a g e

(1988)mentions that processes can be simply automated with intensive use of IT however, the learning essential of IT within the process is usually ignored. Also, Schein (1988)identifies that frequently, individuals are not given the opportunity to be introduced or provide innovation to the IT within the organization. However, it is difficult to achieve all objectives with the simultaneous processes and more difficult to obtain tangible benefits. Lehmann (2012) highlights that implementation of business processes alongside business strategy is necessary. Therefore, within BPM, it is important for managers to be aware of these substantial risks of failure and respectively develop redesigned processes for organization and motivation.

Using a business process oriented approach, has helped several companies likeHewlett-Packard (HP) who have developed a BPM approach by outlining metrics in contrast to their processes, keeping a track of those metrics and reporting on the business fundamentals to take the required actions with the use of the Plan, Do,Check and Act Cycle when necessary (Brocke and Rosenmann, 2010).

The Optisync is clearly positioned in the high end as the product provides a great deal of innovation in the market.To further adopt BPM in the company, the business process should be flexible to support the volatile demand for the Optisync. Furthermore, BPM will have an effect on the organizational structure, making it flatter or hierarchal.

With relevance to the value chain, the inclusion and absence of participants in the supply chain will determine the value of the chain (Barber, 2008). The changes in human assets and processes, financial, structural and technological procedures will form the framework for measuring the performance of the total chain (Barber, 2008). Therefore, with sufficient implementation of BPM in the processes, can lead to the desired value in the value chain. Overall, BPM can help Chip’s Optisync Pty Ltd identify areas that require improvement by communicating and setting suited objectives and strategies necessary (Lee and Dale, 1998).

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Problem Analysis

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Optysync’s business processes are time consuming as it is using paper based methods instead of using

streamline or computer based processes which leads to decrease in consumer satisfaction and affect

the sales and profit of the business. If the customers are not happy with the services the firm

offer than the product will not be successful. The rising amount of consumer complaints about delays

in receiving the product has a made a huge impact on profit and sales.

Figure 1

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Causes

The ‘As Is’ diagram (Fig. 2) illustrates all activities that are involved in the delivering finalproduct to the customer. This can help spot activities that are redundant and create more lean valuestream, that will be presented in the solution section as ‘to be’ diagram. Current day to daymanagement problems are as following:

Major delays occurring in the Sales and purchasing department. The Sales department takes a week towrite the sales order and the purchasing department receives a notification of the invoices in 3weeks. Thus, leading to a delay in processing an order.

Manual Checking of stock, sales orders and shipping orders in various departments.

Out dated methods of documentation, by using post it’s, file cabinets and whiteboards etc. leadingto information redundancy and unnecessary usage of physical space and wastage of paper.

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Figure 2

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The Gap model

The following diagram illustrates clearly what are the performance and capabilities gaps, and theways in which business process optimization could enhance the company’s’ performance and customersatisfaction (Fig. 3).

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Figure 3

Scoping diagram for Optisync

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INPUT

OUTPUT

CONTROLS

ENABLERS

No marketingstrategy

Placing anorder to thesupplier bysurface mailscauses delay inreceiving the

order

The pc wherethis data iscollected is

outdated

This data ismanaged in aspreadsheetby usingsoftware

Customercomplaints isincreasing for

Decrease insales and

profit margins.

No Intranetfacilities

Lack ofbusiness rules

Lack ofcommunicationbetween interdepartments

No IT training

Using outdatedsoftwares and broken

scanner causes

NO ERP systems forgetting the workdone rather usingPaper based manual

Slow customerresponsiveness

Figure 4

The process scoping diagram (Fig.4.) illustrates the scope of problemsthat need to be considered in this case. The most important controlproblem is lack of accountability. Managers do not consider themselvesresponsible for the overall company performance. Day to day activitiesis chaotic and misaligned with the strategy. Company is not working oncreating a comprehensive database that would improve knowledgemanagement.From the enabling perspective the most important is lack ofautomated processes where, operations are run less effectively thanthey would with ERP systems.

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Proposed solutions: Business Process Architecture:

The architecture of the Business Process (BP)is defined as the type ofprocesses it contains and the relationships among them.

In the case of Optisync Pty Ltd, (wrist accessory) it would be a valuechain. As previously defined, the business process has a precise chainname ‘level 1 process’ and is followed by core business processes likemanufacturing and selling. Each process level (operational and supportprocesses) is followed by many sub processes called the ‘taskactivities’.

Although, chip did not provide an outline of the organization as awhole, it is vital to see what kind of information a traditionalorganizational structure ignores. Business process architecture mightbe advised to take a snapshot of how the key elements of theorganization work together to achieve the goals effectively andalliance of managers, measures and resources together, providing avisible system view of an organization. In addition, theresponsibility of each department would be well supervised tocontribute efficiently if business process management would apply.

The value chain in this case, can be broken into three core processesand then divided into sub process and then into low level process.

Adopting an technology (enterprise system)

It is a process where firms convert their operational and managementprocesses from paper based methods to an enterprise system automatedprocesses which increases the efficiency and overall services providedby the firm Previously, Amazon successfully applied the enterprisesystem which resulted in higher profits.

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We have to institute various management and control systems like DMS,SCS, OMS and PRS in order to automate internal communication andfacilitate organizational processes.

Data Management System (DMS) has been chosen. This is a softwaresystem which helps a business in maintaining analysis and communicatesdata electronically. It is accessible to all users from alldepartments leading to effective and fast communication amongdepartments and with the supplier.

It consists of the following:

1. Order Management System (OMS): Reduces all kinds of manual operations and ships items faster.

2. Stock Control System (SCS): Gives total stock information and allows detailed stock management.

3. Payment Record System (PRS): Records all payments received andcommunicates with the accounts and Logistics department.

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Below is a proposed (to be) architecture of Chip's Optisync Ltd

Figure 5

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When the customer places an order, the Sales department updates the"Order Management System" and the Production department is updatedsimultaneously which starts the production process. The Productiondepartment checks the "Stock Control System" and if the required stockis available. If it’s available, the production starts immediately.

The stock control system is updated every day and the procurementdepartment is informed automatically about the stock required

On completing the production process, the Accounts departmentinformsof the products to be shipped and they send the receipt to thecustomer. Logistics department is also updated by the OMS.

Payment Record System(PRS) is updated on receiving the payment fromthe customerand logistics is informed that products are ready to beshipped.

The disagreement, which occurs concerning the delays in time will bedone through automated e-mails to the suppliers by the Procurementdepartment. From the supplier, purchases will be considered in anorderly manner. Supplier will order the stock, when needed to meetthe delivery dates.

The procurement department will give this responsibility to a specificemployee as this will benefit the firm in delivering the product intime.

A specific employee will be chosen from the sales department to marketthe products with a new marketing strategy targeting the youth. A newpositioning strategy will be made with a fresh approach on marketing.

This approach will solve most of the problems of the firm and improveefficiency, communication and coordination.

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Solution Considerations Large BPM driven organizational changes can be extremely valuable.But, they are complex undertakings impacting the organization, itspeople and its use of modern technologies.

It is frequently said that ERP is complex to execute and needs highfront costsand could result in redesigning of business structure.However, it compels for a good incorporation of the department acrossthe company. Moreover, it would be rewarded by an increase of overallcustomer satisfaction level, increasing level of productivity andefficient internal and external communication.

In the case of chips business, it was found that it has superiorfinancial position and its revenue can afford ERP system.By assumingthe current statistics, the cost of producing one unit is 420$ andretail price in the market is 1500$; this evidently shows an enormousprofit margin. Moreover, the company has been sustained from 2011 to2014. They also have $1.2 million cash from where ERP software can bepurchased easily.

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Recommendations Chip will have to make these changes in order to survive in this market:

Update the computer hardware and establish an intranet. The current method of manual system should be changed by

purchasing an enterprise system software such as SAP and trainingthe employees to use these in practise.

After implementing the system, monitoring the process performanceto see how well the procurement process is being executed by calculating the lead time.

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ReferencesBarber, E. (2008).How to Measure the “Value” in Value Chains.InternationalJournal of Physical Distribution and Logistics Management, 38(9), 685-698.

Barrors O. (2007). Industrial Engineering Department Facultad deCienciasFisicas y Matematicas University of Chilehttp://w.bptrends.com/publicationfiles/05-07-ART-Business%20Processes%20and%20Design-Barros.pdf

Brocke, J., &Rosenmann, M. (2010). Handbook on Business Process Management:Introduction, Methods and Information Systems. New York: Springer.

Davenport, T., & Short, J. (1990). The New Industrial Engineering:Information Technology and Business Process Redesignhttp://sloanreview.mit.edu/article/the-new-industrial-engineering-information-technology-and-business-process-redesign/

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DeToro, I., & McCabe, T. (1997). How to Stay Flexible and EludeFads.Quality Progress, 30(3), 55-60.

Lee, R., & Dale, B. (1989). Business Process Management: A Review andEvaluation. Business Process Management Journal, 4(3), 214-225.

Lehmann, C. (2012). Strategy and Business Process Management: Techniques forImproving Execution, Adaptability and Consistency. Florida: CRC Press.

Silva, L., Damian, I., & Padua, S. (2012). Process Management Tasks and Barriers: Functional to Processes Approach. Business Process ManagementJournal, 18(5), 762-776.

Schein, E. (1988). Innovative Cultures and Organizations. Management in the 1990s Working Paper.

Zairi, M. (1997). Business Process Management: A Boundary lessApproach to Modern Competitiveness. Business Process Management, 3(1), 64-80.

Zuboff, S. (1988).In the Age of the Smart Machine.New York: Basic Books.

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