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Business process management

- a management approach that seeks to coordinate the functions of an organization to customer satisfaction.
- process management seeks effectiveness and efficiency via promotion of innovation, flexibility and integration with technology.


Business process management activities

1. Design
2. Modeling
3. Execution
4. Monitoring
5. Optimization


Business process management techniques

1. Define - the original process is defined as a baseline for current process functioning or process improvement.
2. Measure - the indicators that will show a change to the process
3. Analyze - various simulations or models are used to determine the targeted or optimal improvement
4. Improve
5. Control - dashboards and other measurement reports are used to monitor the improvement in real time and apply the data to the model for improvement.


Process management

1. Plan
2. Do
3. Check
4. Act


Process measures

financial or non financial and should correlate directly to the managed process
1. Gross revenue
2. Customer contracts
3. Customer satisfaction
4. Operational statistics


Process Management Benefits

1. Efficiency
2. Effectiveness
3. Agility - fast response


Implications for business risks and controls

Consolidation of redundant services creates efficiency, but may also
1. Service flow disruption
2. Faulure demand



contracting of services to an external provider.


Implications for business risks and controls

1. Quality risk
2. Quality of service
3. Productivity
4. Staff turnover
5. Language skills
6. Security
7. Qualifications of outsourcers
8. Labor insecurity


Offshore operations

Outsourcing of services or business functions to an external party in a different country
1. Information technology outsourcing
2. Business process outsourcing
3. Software research and development
4. Knowledge process outsourcing


Improvement Initiatives

1. Irrational - intuitive and emotional
2. Rational - Structured and systematic a. Strategic gap analysis
b. Review competitive priorities
c. Review production objectives
d. Choose improvement program


Implementing improvement initiatives

1. Internal leadership
2, Inspections
3. Executive support
4. Internal process ownership


Business process reengineering

- techniques to help organizations rethink how work is done to dramatically improve customer satisfaction and service
- business process management seeks incremental change
- business process reengineering seeks radical changes - fresh start


Just in time

anticipates achievement of efficiency by scheduling the deployment of resources just in time to meet customer or production requirements
1. Inventory does not add value
2. Benefits
- synchronization of production scheduling with demand
- supplies arrive at regular intervals
- improved coordinations
- reduced set up time
- efficient use of skilled employees



product’s ability to meet or exceed customer expectations


Quality control principles “Cost of “Quality"

costs associated with activities related to conformance with quality standards and opportunity costs or activities associated with correcting nonconformance with quality standards


Conformance costs

1. Prevention costs - prevent the production of defective units - training, inspection, maintenance, redesign etc
2. Appraisal costs - discover and remove defective parts before they are shipped to the customer or the next department- testing, inspection, statistical quality checks, maintenance of the laboratory


Nonconformance costs

difficult to compute because most of these costs are in the form of opportunity costs

1. Internal failure - costs to cure a defect discovered before the product is sent to the customer - rework costs, scrap, tooling changes, costs to dispose etc
2. External failure - costs to cure a defeat discovered after the product is sent to the customer - warranty costs, cost of returning the good, liability claims, lost customers


Quality reporting

- inverse relationship between conformance and nonconformance costs.
- Increased investment in conformance costs should result in decrease in nonconformance costs,
- reduced investment in conformance costs may result in increased nonconformance costs


Total quality management

represents an organizational commitment to customer focused performance that emphasizes both quality and continuous improvement


Quality management factors

1. Customer focus
- external customers
- internal customers
2. Continuous improvement
3. Workforce involvement - quality circles
4. Top management support - delegation and empowerment
5. Objective measures
6. Timely recognition
7. Ongoing training


Quality audits and gap analysis

1. Quality audits - technique used as part of the strategic positioning function in which management assesses the quality practices of the organization
2. Gap analysis - determines gap or difference between industry best practices and current practices of the organization


Lean manufacturing

use of only those resources required to meet the requirements of customers
1. Waste reduction
2. Continuous improvement Kaizen
3. Process improvements/Activity based management


Demand flow

manages resources using customer demand as the basis for resource allocation


Theory of constraints

organizations are impeded from achieving objectives by the existence of one or more constraints.
1. Constraints - impedes the accomplishment of an objectives.
- internal constraints - market demands more than the system can produce
- external constrains - system produces more than the market requires


Theory of constrains steps

1. Identification of the constraint
2. Exploitation of the constraint
3. Subordinate everything else to the above decision
4. Elevate the constraint
5. Return to the first step



mangers add buffers before and after the constraints to ensure that there are enough resources to accommodate the constraint either before or after the constraint is encountered


Six sigma

use of rigorous metrics in the evaluation of goal achievement.


Existing product and business process improvements

1. Define the problem
2. Measure key aspects of current process
3. Analyze data
4. Improve or optimize current processes
5. Control


New product or business process development

1. Define design goals
2. Measure critical to quality issues
3. Analyze design alternatives
4. Design optimization
5. Verify the design