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Flashcards in Operations Management: Process Management Deck (42):

Business Process Management

management approach that seeks to coordinate the function of an organization to customer satisfaction
The process seeks effectiveness and efficiency through promotion of innovation flexibility and integration with technology


BPM can be categorized in 5 categories

-Modeling-what-if analysis
-Execution-changes are implemented. key indicators of success are developed


Techniques for BPM

-Define- WHere are we now?
-Measure-Objectively are we getting better?
-Analyze-Best options available?
-Improve-is selected and implemented
-Control-Does it work?


Measures for BPM

1) Gross Revenue-Financial
2) Customer Contracts-Leads
3) Customer Satisfaction-Complaints
4) Operational Statistics-Time


Benefits of BPM

-Agility- Responses to change are faster and more reliable


Process management (PDCA)

Plan-Design the planned process environment
Do-Implement the process improvement
Check -Monitor the process improvement
Act-Continuously commit to the process and reassess the degree of improvement



1) Efficiency- Fewer resources are used to accomplish organizational objectives
2) Effectiveness-Obj. are accomplished with greater predictability
3) Agility- Responses to change are faster and more reliable


Shared Services

Seeking out redundant services, combining them and then sharing those services within a group or organization.
Ex. HR, payroll, and legal dept. services will be consolidated into one centralized functions.


Shared Services Implications for Business Risks and Controls -gaining efficiency

a) Service flow disruptions
b) Failure demand



Contracting services to an external provider.


Outsourcing: Implications for Business Risks and Controls -gaining efficiency

a) Quality Risk -Product or service may be defective
b) Quality of Service-Poorly designed service agreements may impede the quality of service.


Outsourcing Issues Continued

a) Quality Risk -Product or service may be defective
b) Quality of Service-Poorly designed service agreements may impede the quality of service.
c) Productivity
d) Staff turnover
e) Language Skills
f) Security
g) Qualifications of Outsourcers
h) Labor Insecurity


Offshore Operations

relate to an outsourcing of services or business functions to an external party in a different country.


Common types of Offshore Outsourcing

a) IT
b) Business Process( Call centers)
c) Software research and development
d) Knowledge Process


Selecting Improving Initiatives

A) Irrational- Intuitive & Emotional
B) Rational- Structured & Systematic


Implementing Improvement Initiatives

1) Internal Leadership
2) Inspections
3) Executive Support
4) Internal Process Ownership-Accountability


Business Process Engineering

Refers to techniques to help organizations rethink how work is done to dramatically improve customer satisfaction and service, cut costs of operations and enhance competitiveness.


Performance Improvement

Provide the highest quality goods and services in the most efficient and effective manner possible.


Just in Time (JIT)

JIT mgmnt aticipates achievement of efficiency by scheduling the deployment of resources of JIT to meet customer or production requirements


JIT & Inventory

The underlying concept is that inventory does not add value. The maintenance of inventory on hand produces wasteful costs.


Benefits of JIT

1) Synch of production scheduling with dept.
2) Arrival of supplies at regular intervals throughout the production day.
3) Improved coordination and team approach with suppliers
4) More efficient flow of goods between warehouses and production
5) Reduces set-up time
6) Greater efficiency in the use of employees with multiple skills


Costs of Quality

Conformance with quality standards & correcting nonconformance with quality standards.
Prevention + Cure


Conformance Costs

Prevention and appraisal costs


Prevention costs - Prevent the production of defective units

1) Employee Training
2) Inspection expenses
3) Preventive maintenance
4) Redesign of product
5) Redesign of processes
6) Search for higher quality suppliers


Appraisal Costs- Discover and remove defective parts before they are shipped to the customer or the next department

1) Statistical Quality Checks
2) Testing
3) Inspection
4) Maintenance of the laboratory


Nonconformance Costs

Often difficult to compute because most of these costs are in the form of opportunity costs. Basically the customer telling us to fix it.


Internal Failure-Cure a defect discovered before the product is sent to the customer

1) Rework Costs
2) Scrap
3) Tooling Changes
4) Costs to discpose
5) Cost of the lost unit
6) Downtime


External Failure-Cure a defect discovered after the product is sent to the customer

1) Warranty Costs
2) Cost of returning the good
3) Liability Claims
4) Lost Customers
5) Reengineering an external failure


Total Quality Management

Organizational Commitment to customer focused performance that emphasizes both quality and continuous improvement


Quality circles

Gather people together that can best solve the problem


Objectives of TQM- Total Quality Management

a) Customer Focus
b) Continuous Improvement
c) Workforce Involvement-Quality Circles
d) Top Management Support
e) Objective Measures
f) Timely Recognition
g) Ongoing Training


Lean Manufacturing

requires the use of only those resources required to meet the requirements of customers


Focus of lean -Waste Reduction

Not quality focus


Continuous Improvement

Kaizen refers to continuous improvement efforts that improve the efficiency and effectiveness or organizations through greater operational control



Activity Based Management


ABC- Cost Identification

Highlight the costs of activities, Makes the id of costs of quality and value added activities more obvious


Theory of Constraints

States that org. are impeded from achieving objectives by the existence of one or more constraints.



a) Internal Constraints =When the market demands more than we can produce.


Internal Constraints

1) Equipment may be inefficient or used inefficiently
2) People may lack the necessary skills or mind set necessary to produce required efficiencies.
3) Policies may prevent the efficient use of resources.


External Constraints

Exist when our system produces more than the market requires.


Six Sigma

Anticipates the use of rigorous metrics in the evaluation of goal achievement.


Just In Time Characteristics

Insignificant setup times and costs.

Lot sizes equal to one.
Balanced and level workloads.