BPM and Strategy
Business Process Management is a methodical platform that allows businesses to improve the efficiency and effectiveness of their workflows by increasing the sharing of information, transparency of transactions and communication channels all through a data management system. It is a continuous management process that provides structure within an organization and ensures that all processes are integrated and working to achieve the same goal. An important objective for any business should be optimal customer satisfaction and by implementing such a system customer value will be created through improved efficiency and effectiveness. The impact of all this on Technobuild could be an upturn in the current downward sales trend.
The potential benefits of using business process management are extensive, provided it is implemented correctly and monitored accordingly. It ensures that all important information is correctly translated to all employees. The business functions and the role that each employee must play are clearly defined and as a result relations and communication channels internally and externally will be enhanced. BPM is technology enabled and will assist Technobuild in becoming more technologically savvy. By digitizing most of their processes and ensuring that all changes regarding design and implementation are carried out quickly the business can eliminate all outdated systems and possibly gain a competitive advantage in the market. Change is an aspect that Technobuild must constantly be aware of and be ready to implement. Customer preferences many change or new opportunities may arise and BPM allows for those changes faster than any other options.
Strategy is a plan of action used to guide and assist a business to achieve its long term goals. It is shaped by both internal and external factors which help identify an organization’s strengths and weaknesses. BPM will ensure that Technobuild’s capabilities and resources are used in the most effective way when it comes to strategic decision making in order to create value for its customers. Value chains are a group of activities focused on developing and putting out the best possible product. They play an important role in strategy in that they ensure that the product is of optimal quality and is of the standard expected by customers. Each process a product goes through must create value and improve the product as a whole. If a process is identified as not adding any value it should be redesigned or completely eliminated if necessary to ensure that no extra costs being incurred. Technobuild may have stages within their processes that are only contributing to delays rather than adding value.
The company has been faced with so many problems that result in dealing with broken business processes. Some of these problems are poor departmental coordination, bad work flows, delays in both selling and producing processes which are mostly caused by paper base system or lack of streamlined computer base process, no centralised store of data because of poor IT, inadequate office equipment, inaccurate and out of date information especially in accounting statements and customers’ addresses, and also using mail to order supplies. The consequences of these problems are client dissatisfaction, loss of sales followed by a reduction of profit and slow response. (Figure1)
The problem, considered the most urgent one, happens in the production department where delays in both the selling goods and producing processes are occurred. Some factors such as the absence of inventory of finished goods which causes physical stock check and old clients’ addresses data, lead delivery to postpone which is caused by the most urgent problem “delay in producing process”. This problem is mostly affected by absence of a warehouse department and also inventory control. (Figure 2)
Technobuild is experiencing great delays in their ordering and selling processes due to the fact that they do not have a re-order point and purchase orders are mailed to suppliers with responses only being received approximately after six week. Efforts need to be made to reduce the delays seeing as the manufacturing products already take too much time due to limited production lines and time taken to produce each one.
Manufactured goods are created by using a series of tasks that take a group of inputs and alter them into the desired outcomes which is referred to business process. According to the chart of organisation, the production department has 14 employees per se, where it seems that no tasks are defined and nobody is responsible for a particular duty.
All the work engaged in manufacturing the products and the processes used to produce them called scope. In being ensured that we maintain scope, a methodology has been offered. At first, a simple flow diagram describing a set of activities linked to structure a process (Figure3), and then extends to a 'process scoping diagram'. It is included all input, output, process flow and day to day management problems plus problems with control and enablers. This diagram (figure4) helps with the estimation and scope of a To-Be process.
There are numerous solutions that the company could use such as introducing ERP system to replace the manual system and automate functions. The company needs to update equipment and information frequently. The company has to focus on production such as establishing a Warehouse department and introducing double shifts and adjusting production time. Identifying alternative closer suppliers to reduce total cost is also a wise choice.
As is shown in the “To Be” process flow diagram, when a customer places an order, Sales will receive it and pass it to order entry. If the order is complete and not rejected, it will be sent to the Warehouse. Unlike the “As Is” process, the Warehouse will be a department in the “To Be” process, which is in charge of checking inventory. The company needs to introduce a re-order point system to identify low level of stock. Once the Warehouse receives the order, they will send a packing list to Accounting and hold products until the customer has made payment. After receiving payment confirmation from Accounting, the Warehouse will let Logistic ship the order to the customer. Order entry will close the order under this circumstance.
According to re-order point system the availability of products will be checked. If products are insufficient, the Warehouse will check raw materials. If they are available, they will be sent to Production where schedule production begins and finished goods will be sent to the Warehouse. Meanwhile, raw materials will be checked and if they are not available, the Warehouse will contact Purchasing to place an order to the suppliers. The suppliers will ship parts to the Warehouse and send an invoice to Accounting. When Accounting makes payment, the transaction will be completed. Furthermore, the IT department will have an ERP system throughout the whole “To Be” process to support every department and every process.
By using these proposed solutions and implementing this “To Be” process above, the company could replace the manual system to save cost and improve efficiency. By updating equipment and information, all the process flows will be running more effectively. Besides, by adjusting organizational structure and changing production pattern, the delays in the production processes could be reduced. Ultimately, client dissatisfaction will be decreased and sales will be increased.
In order to use ERP and other systems, the company needs to establish an architecture which is valuable for it. By developing a “business process architecture”, from the internal perspective, both CEO and employees will get a clearer vision of what kind of business their company is really in, how a value chain works and what responsibilities they take. Instead of only focusing on their own parts, different departments will begin to concentrate more on the process as a whole. Therefore, a better communication system will be developed and tensions between members of each group will be alleviated. From the external perspective, this architecture could make some adjustments to current organizational structure which leads to improvement of efficiency and stimulation of revenue growth. In the case of this company’s architecture, sales and order entry will be responsible for customers’ order. While the Warehouse, Purchasing and Production will deliver resources and send messages to each other via ERP system to complete the production cycle and contact suppliers at the same time. Logistics will only interact with the Warehouse inside of the organization. Accounting deals with both internal and external entities. In order to alleviate tensions within this architecture, the company could develop a more harmonious working environment.
Enterprise Resource Planning (ERP) system is used to fully integrate all the key intracompany processes to make sure that departments are communicating with each other and working together. There are three types of data in the enterprise system. Organizational data are used to define the company’s structure. Master data are used to define entities’ information. While transaction data are used to reflect daily processes.
SOLUTIONS AND CONSIDERATIONS
There are some internal and external factors that could hugely impact not only the implementation of BPM but also the future success of the company. The biggest challenge will most likely to be financing.
Technobuild needs to be financially stable enough, to replace all out dated machines and to purchase new and more advanced equipment to suit the needs of the new processes. Training costs to ensure that all employees are comfortable and understand how their jobs will change will be significant.
Technobuild may even consider hiring experts to assist with the transition. The likelihood of there being workforce resistance is extremely high seeing as they all appear to be very contented and happy with the systems they already have in place. The time to train all the employees and go through the entire development and implementation stages must be carefully considered.
Applying these changes will also come with numerous risks. One of Technobuild’s main suppliers is based in Singapore. If the new processes bring about some sort of disorder leaving the supplier confused and unhappy their business relationship will be compromised. Seeing as this is the only supplier who can manufacture the components that they need, they cannot afford to do anything that will negatively impact that particular supplier or else their production will be brought to an absolute halt.
If the company finds a new way to make its products that may reduce production time or perhaps introduce a new feature to help boost sales BPM will make the adaptation stage much easier.
The new processes are likely to result in some changes to the actual finished good. These changes whether minor or drastic, need to be considered so that they do not negatively impact the customers. Producing a good that will still look and function the way customers like will be important or else sales will be lost. The economy and other external factors such as increased competition, trade restrictions or political instability will all have an impact on the success of this project and therefore careful research and development must be carried out.
Harmon, P 2014, Business Process Change - A Business Process Management Guide for Managers and Process Professionals, Third Edition, Morgan Kaufmann, Massachusetts, USA.
Magal, S and Word, J 2009, Essentials of Business Processes and Information Systems, John Wiley & Sons, Hoboken, NJ, USA.
Schwalbe, K 2007, Information Technology Project Management, Fifth Edition, Course Technology, Cengage Learning, Massachusetts, USA.
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