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Chapter 1
Introduction
Definition, Business Process, Business Process Improvement, Business Process Reengineering-The
Need Of BPR
# Definition
Business process reengineering (BPR) is the analysis and redesign of workflow within and between
enterprises.
BPR is the fundamental rethinking and redesign of business processes to achieve dramatic improvements
in critical, contemporary measures of performance, such as cost, quality, service and speed.
BPR is not:

Automation

Downsizing

Outsourcing
# 7 principles of BPR:
Organize around outcomes, not tasks.
Identify all the processes in an organization and prioritize them in order of redesign urgency.
Integrate information processing work into the real work that produces the information.
Treat geographically dispersed resources as though they were centralized.
Link parallel activities in the workflow instead of just integrating their results.
Put the decision point where the work is performed, and build control into the process.
Capture information once and at the source.
# Steps to execute BPR:
Develop business vision and objectives of processes:

Objectives can be (i) Cost reduction (ii) Faster cycle time (iii) High quality output
Select the processes to be redesigned:

For this there are two approaches (i) The priority approach [i.e. it involves identification of all the
processes within an organization and then assignment of priority for redesign] and (ii) The critical
success approach [i.e. it involves redesign of processes which are critical to the success of the
organization].
Understand and measure the existing processes:

Use of Data Flow Diagrams [DFDs] and Entity Relationship [E-R] Diagram.
Redesign the processes and build a prototype of new processes:

Various tools can be used in redesigning the processes like Flow chart, Fishbone diagram, Control
charts, etc.
Continuous improvement KAIZEN:

It is not a one time affair we must focus on continuous improvement to cope with dynamic nature of
the globalization.
# Goals of BPR:
Customer friendliness:

Meeting customer requirement

Providing convenience
Effectiveness:

Output based approach

Gaining loyalty of customers

Image and branding

Efficiency:

Time

Cost

Effort
# Challenges of BPR:
Identifying customer needs and performance problems in current process.
Reassessing the strategic goals of the organization.
Controlling risks.
Maximizing benefits.
Managing organizational changes.
Defining the opportunities for reengineering.
# Critical successful factors in BPR:
Cleat vision for transformation.
Top management commitment.
Ambitious BPR team.
Engaging external consultant.
Tolerance of genuine failures.
Change management.

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# Critical failure factors in BPR:
Trying to fix a process instead of changing.
Lack of focus on business critical processes.
Quitting too early.
Dominance of existing corporate culture.
Adopting bottom-up approach.
Poor leadership.
# Business Process
A business process can be defined as a set of logically related tasks performed to achieve a defined
business outcome.
# Types of business process:
Inter organizational processes:

Takes place between two or more business organization.

Inter functional processes:

Takes place within the organization but across several functions or divisions in the organization.
Inter personal processes:

Are those which involve tasks within and across the small work groups within the organization.
# Types of business process: (also)
Management process:

These are process that governs the operation. Typically management process includes Corporate
Governance and Strategic Management.
Operational process:

These processes create the primary value streams that are part of the core business.

Typically operational processes are purchasing, manufacturing, marketing and sales.

Supporting process:

These supports the core processes. Examples include accounting, recruitment, IT support, etc.
# Business Process Improvement (BPI)
BPI is a process of developing and implementing incremental improvements for a process. It is a systematic
approach to help any organization make significant changes in the way it does business. The goal of BPI is a radical
change in the performance of an organization rather than a series of incremental changes.
Vision of Business Process Improvement:
Increase efficiency
Improve customer service
Reduce costs
Share data and information
Use of IT at right place at right time
Reduce duplicates, stove pipe systems
# Process of BPI or Continuous Process Improvement:
Documentin
g process

Establish
measures

Follow
process

Measure
performanc
e

Identify &
implement
improveme
nt

# Business Process Reengineering-The Need Of BPR

Preventing errors from occurring instead of rectifying them at a later stage i.e. less rework.
Enabling the organization to focus on the customers.
Enhancing the organizations ability to compete by reducing costs i.e. optimal utilization of available
resources.
Higher productivity through reduced cycle time of the processes.
Chapter 2
Business Process Reengineering
Winning Order Criteria, Qualifier, Principles In Applying BPR, Methodology, Some Success Factors Of
Re-engineering
# Winning Order Criteria
Order winners are the criteria that differentiate the products and services of one firm from another. Repair
services can be order winners for examples: Warranty, Roadside Assistance, Leases, etc.
A firms ability to win orders on the market depends on its competitiveness. A competitive firm wins orders
on the market, which has a positive impact on its sales performance. Order winning criteria are those criteria that
make a difference to the customer when s/he decides between qualified offered products. The selling and the

Page 3 of 20
buying actors may have the same or different ideas about what constitute these order winners, and they may also
differ in their evaluation of the competitive strengths of a firm. Analyses the selling and buying actors perceptions
of order winners and competitive strengths as the degree of fit between these perceptions. A good fit means that
the two actors agree on order winning criteria and the firms competitive strength on these criteria. It is expected
that a good fit relates to a positive sales growth of the selling firms product.
The criteria can be:

Cheapest price than the competitors.

Better quality than the competitors.

# Qualifier
Order qualifiers are the basic criteria that permit the firms products to be considered as candidates for
purchase by customers. For example: A brand name for a car can be an order qualifier.
The criteria can be:

Registered company.

Legally exist.

Quality declaration.

Meeting specified quality and price.

# Principles In Applying BPR
Refer to 7 principles of BPR Page no. 1
# Methodology
BPI employs a structured methodology that reduces work processes to their essential composite activities,
and provides cost performance metrics to facilitate a business case for dramatic improvements. Both functional
and cross-functional processes are evaluated through workflow analysis and activity based costing. In many cases,
the application of new technology and industry best practices will enable quantum improvements in an
organization's cost and performance.
# Some Success Factors Of Re-engineering
Strategic focus
Resources
Change management
Top-Down commitment
Bottom-Top support
Empowering people and getting them to take initiative
Precise vision
A key to success in any BPI effort is strategic focus and top-down leadership. Additionally, there must be
some sense of urgency due to drastic resource constraints, competition for resources or customers, downsizing
and consolidation, or a need for reductions in cycle time, or increases in volume of input or output.
# Making BPR a success:
Start BPR by setting up one task force to select and structure all processes, to conduct the first high level
process review and to eliminate structural inefficiencies.
Each process has to cover the entire sequence of activities from source to customer and produce
measurable results which are relevant to the customer.
Set the objectives from the customers viewpoints and measure results as relevant to them; always
measure costs, response time, quality and variance.
Measure the result of existing processes first before setting targets and compare them with competition
and customers feedback. Set the baseline for improvement.
Appoint one person to be responsible for the re-engineering process, implementation management and
success tracking of one complete process.
Develop the should be process from the customer backwards and never forwards from resource level.
Engineer from scratch rather than re-engineer.
Choose a top down approach to process mapping and avoid overly detailing... but take great care in
measuring and defining the output. Use maps of existing processes primarily for as is vs. should be
comparison and implementation action planning. Do not use detailed process mapping for upwards
elimination of steps.
Involve every function which takes part in the whole process. Train, motivate and support the teams in
every possible way. Recognize and reward teams for success. Cascade experience down the organization.
Set performance measures for each participating function. This enables tracing performance deviations
back to the originator and prevents failures being blamed on other links in the process chain. Avoid double
counting of successes.
Set up one decision making team for each whole process and another for the whole program. Manage
conflicts though teams.
# Generic steps to BPI project:
Develop strategic vision and design new process(es)
Identify and select process(es)
Reengineering opportunities
Identify IT levers and cost performance metrics

Page 4 of 20

Design new process(es)

Develop a business case for selection and implementation of change alternatives
Formulate implementation plan and/or pilot program
Review, approval, and execution
Training and change management for the new environment

# Re-engineering model:
Strategic business planning
Concepts of operations
Scoping and redesign effort
Assessment of the AS-IS process
Gathering data from customers and
stakeholders
Benchmarking best practices in related
processes
Reengineering and design of the TO-BE
process
Develop business case
Develop implementation plan
Prototyping and system development
Implementations integration and system
migration
Education and communication
Evaluation and reassessment
BPI cycle

Develop expectation and organizational vision, mission, objectives

and actions plans
Principles, desired characteristics, roles and responsibilities, high
level products, service and line of business
High level activity modes, select candidates processes
Activity and data modeling, activity based costing
Requirements
Performance measures
Generate redesign alternative, evaluate and tests, simulation
modeling
Select best alternatives, functional economic analysis
Metrics
Data management planning
Awareness training

Chapter 3
Change Management
Change Management From Different Perspective, Critical Elements Of Change Management
# Change Management From Different Perspective
Change management is a process of planning, coordinating, and implementing changes to the information
processing, production, distribution, and system facilities.

Business
Context

Current
State

Organizati
on And
People

Processes
Change
Management

Desired
State

Technology
# Top 10 mistakes made by top managers while implementing change:
Failed to provide visible support and reinforce the change with other managers.
Did not take the time to understand how current business processes would be affected by change.
Delayed decision making, which leads to low morale and slow project progress.
Were not directly or actively involved with change project.
Failed to anticipate the impact on employees.
Underestimate the time and resources needed.
Abdicated ownership of the project to another manager.
Failed to communicate both the business reasons for the change and the expected outcome to employees
and other managers.
Changed the project direction mid-stream.
Did not set clear directions and objectives for the project.

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Adoption
Installation
+ve Perception
Understanding
the Change
Awareness of
Change
Contact

Tim
e
# Critical Elements Of Change Management
Change plan

What and why you want to change?

Deployment plan

How you will get the unit to change?

Implementation plan

How the unit will execute?

What the unit will do?

# Critical Elements Of Change Management (also)
Awareness
Design
Knowledge
Ability
Reinforcement

Why the change is needed?

To support and participate in the
change.
How to change?
To implement new skills and
behavior.
To sustain the change (long term
durable).

# Key principles driving the elements of change management:

Targeted commitment levels
Executive ownership
Visible, sustained sponsorship
Deployment/Implementation support and monitor
Employee support

Commitment

Commitment

Institutionalizati
on

Acceptance
Preparation

Degree of support for change

Internalization
Sustainable Levels

Strong Commitment

Commitment
Model

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Chapter 4
Quality Management
Defining Quality, TQM, TQM Tools, Process Capability, Statistical Process Control
# Defining Quality
Quality is the degree, to which the design specifications for a product or service are appropriate to its
function and use, and the degree to which a product or service conforms to its design specification.
# Dimension of quality:
Performance
Durability
Features
Aesthetics
Serviceability
Perceived quality
Reliability
Conformance
# Total Quality Management (TQM)
T Made up of the whole
Q Degree of excellence a product or service provides
M Act, art or manner of planning, controlling, and directing
Therefore, TQM is the art of managing the whole to achieve excellence.
In other words, Total Quality Management means that the organization's culture is defined by and supports
the constant attainment of customer satisfaction through an integrated system of tools, techniques, and training.
This involves the continuous improvement of organizational processes, resulting in high quality products and
services.
# Dimension of TQM:
Dimension of TQM
Quality culture
Quality strategy
Quality improvement
Quality tools

# TQM

Supporting resources
Business excellence model, team building, etc
ISO 9000
Continuous improvement
Cause & effect analysis, brainstorming, process mapping, quality function
deployment, etc

components:
Planning
Implementation
Monitor and control

# Basic tenets of TQM:

The customer makes the ultimate determination of quality.
Top management must provide leadership and support for all quality initiatives.
Preventing variability is the key to producing high quality.
Quality goals are a moving target, thereby requiring a commitment toward continuous improvement.
Improving quality requires the establishment of effective metrics. We must speak with data and facts not
just opinions.
# TQM Tools
Check sheets
Pareto analysis
Control chart
Cause and effect diagram
Run chart
Flow chart
# Process Capability
To know about the process capability first of all we must know what process control is Process Control
refers only to the voice of the process i.e. looking at the process using an agreed performance measure to see
whether the process forms a stable distribution over time. Now we can say that Process Capability measures the
goodness of a process i.e. comparing the voice of the process with the voice of the customers; where, voice of
the customers is the specification range (tolerance) or the nearest customer specification limit.
Here, the objective is to get as close to the theoretical best that your process can achieve by eliminating
special causes of variation, so that only common (natural) causes are acting on the process, and then to reduce
these to a minimum, whenever possible.
Process capability-:

Is a statistical indicator that measures how close a process is running to its specifications limit.

Page 7 of 20
Measures of how well a given process is functioning.
Is dependent on a calculation of the total probability of defects reflected through sort-term variation
generally expressed.

Is a comparison of the actual variability of a process to the process specification.

# Types of processes:
Conversion (ex. Iron to steel)
Fabrication (ex. Cloth to clothes)
Assembly (ex. Parts to components)
Testing (ex. For quality of products)

# Process flow structures:

Job shop (ex. Copy center making a single copy of a student term paper)
Batch shop (ex. Copy center making 10,000 copies of an ad piece for a business)
Assembly Line (ex. Automobile manufacturer)
Continuous Flow (ex. Petroleum manufacturer)
# Statistical Process Control
It is a method designed to ensure that a process attains and remains in a state of statistical control. In
other words, it is a methodology for monitoring a process to identify special causes of variation and signal the need
to take corrective action when appropriate. SPC relies on control charts.
# Commonly used control charts:
Control chart for variables:

Control chart for mean (X-chart)

Control chart for range (R-chart)

Control chart for attributes:

Control chart for fraction defectives (P-chart)

Control chart for number of defectives (NP-chart)

# SPC

implementation requirements:
Top management commitment
Project champion
Initial workable project
Employee education and training
Accurate measurement system

Chapter 5
Product Design And Development
Product Life Cycle, Product Design Process, Concurrent Engineering, Quality Function Deployment,
Value Analysis, Product Design In Service Sectors
# Product Life Cycle
Product life cycle is an attempt to recognize distinct stages in the sales history of a product.
Product life cycle shows the stages that products go through from development to withdrawal from the
market.
# Product Design Process
Step 1 Idea Development

Someone thinks of a need and a product/service design to satisfy it

Step 2 Product Screening

Every business needs a formal/structured evaluation process

Step 3 Preliminary Design and Testing

Technical specifications are developed, prototypes are built, testing starts

Step 4 Final Design

Final design based on test results, facility, equipment, material, & labour skills defined, suppliers
identified
# Concurrent Engineering (CE)
CE is a systematic approach to creating a product design that considers all elements of the product life
cycle from conception through disposal. CE defines simultaneously the product, its manufacturing processes, and
all other required life-cycle processes, such as logistic support. CE is not the arbitrary elimination of a phase of the
existing, sequential, feed-forward engineering process, but rather the co-design of all desired downstream
characteristics during upstream phases to produce a more robust design that is tolerant of manufacturing and use
variation, at less cost than sequential design.
# Quality Function Deployment (QFD)
QFD is a planning tool which:
Translates customer needs into appropriate product development requirements.
Identifies the significant items on which to focus time, product improvement efforts, and other resources.
QFD is not:

Page 8 of 20

A quality control strategy.

VOICE OF CUSTOMER

QFD

CUSTOMER
SATISFACTION

Page 9 of 20
# Value Analysis
Value analysis is:
An organized effort directed at analyzing the functions of systems, products, specification standards,
practices, and procedures for the purpose of satisfying the required function at the lowest total cost of
effective ownership consistent with the requirements for performance, reliability, quality, and
maintainability.
The organized use of methodologies that focus on the functions of materials, processes, or services in
providing value to the customers.
# Product Design In Service Sectors
Product design in service sectors means designing service which is different from designing product since
services are intangible and they cannot be stored for future use.
According to James Heskett, designing service involves following four steps:
Identification of target markets:

Who are customers?

Where is the market?

Service concepts:

What are the service types?

How is it different from others?

Service strategy:

What is service policy?

What are the priorities?

What are the service packages and focus of service?

Service delivery system:

What are the actual processes?

What are the systems and facilities?

Who are the employees and what should be their skills and ability?
# New service development process:
The new service development process can be viewed as a cycle of activities as depicted below. The
development and analysis stages represent the planning phase where the strategic fit and market viability are
determined. The design and full launch stages represent the implementation phase.

Full launch

Full scale launch

Post launch review

Developme
nt
Formulation of strategies
Idea generation & screening
Concept development

People
Servic
Technolog

Design

Service design & testing

Personal training
Service testing & pilot run
Test marketing

Syste

Analysis

Business analysis
Project authorization

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Chapter 6
Process Analysis & Design And Capacity Planning
Classification Of Process, Process Analysis, Process Selection, Selection Of Equipment And
Technology, Strategy Capacity Management, Some Quantitative Tools For Capacity Planning Process
Analysis In Service Sectors, JIT, Lean Production
# Classification Of Process
A process is a particular course of action intended to achieve a result.
Project

Batch

Mass

Continuous

Type of product

Unique

Made to order

Made to stock

Commodity

Type of customer

One at a time

Few individuals

Mass market

Mass market

Product demand

Infrequent

Fluctuate

Stable

Very stable

Demand volume

Very low

Low to medium

High

Very high

No. of different
products

Infinite variety

Many, Varied

Few

Very few

Production system

Long term projects

Discrete, Job shops

Repetitive, Assembly
lines

Continuous, Process
industries

Equipment

Varied

General purpose

Special purpose

Highly automated

Primary type of
work

Specialized contracts

Fabrication

Assembling

Mixing, Treating,
Refining

Worker skills

Experts craft person

Wide range of skills

Limited range of
skills

Equipment monitors

Advantage

Custom work latest

technology

Flexibility,
Quality

Efficiency, Speed,
Low cost

Highly efficient,
Large capacity,
Ease of control

Disadvantages

Non-repetitive,
Small customer
base,
Expensive

Costly, Slow, Difficult

to manage

Capital investment,
Lack of
responsiveness

Difficult to change,
Far reaching errors,
Limited variety

Examples

Construction, Ship
building, Space craft

Machine shops, Print

shops,
Bakeries, Education

Automobiles,
Television,
Computers, Fast food

Paint, chemicals,
Food stuffs

# Process Analysis
Process analysis is the systematic examination of a process to understand the process in order to develop
ideas for improvement of the process.
Process flow charts

Symbolic representation of processes

Incorporates
Non productive activities (inspection, transportation, delay, storage)
Productive activities (operations)
Inspecti
on

Delay

Operation
s

Transportati
on

Storag
e

Page 11 of 20
Fig: Process flowchart symbols
# Principles of redesigning process:
Remove waste, simplify, and consolidate similar activities
Link processes to create value
Let the swiftest and most capable enterprise execute the process
Flex process for any time, any place, any way
Capture information digitally at the source and propagate it through process
Provide visibility through fresher and richer information about process status
Fit process with sensors and feedback loops that can prompt action
Add analytic capabilities to process
Connect, collect, and create knowledge around process through all who touch it
Personalize process with preferences and habits of participants
# Process strategy:
Capital intensity

Mix of capital and labor resources used in production process

Process flexibility

Ease with which resources can be adjusted in response to changes in demand, technology, products or
services, and resource availability
Vertical integration

Extent to which firm will produce inputs and control outputs of each stage of production process
Customer involvement

Role of customer in production process

# Factors determining make or buy decision:
Cost
Capacity
Quality
Speed
Reliability
Expertise
# Process Selection
Process selection is considered into three categories:
Methodologies:

Methodologies are general approaches to taking a large variety of problems. They are not aimed at
ways of selecting a particular process but at creating frameworks within which certain classes of
problems can be addressed. The intention is to guide the creation of procedures ensuring that all the
relevant aspects of selection are addressed.
Procedures:

Procedures can be considered as algorithms for tackling a set of related process selection problems.
They will content all the necessary steps and the appropriate tools for selecting a process in a given
situation. The way in which the procedure is actually used to carry out a selection will depend upon its
implementation. Implementations are usually software based, although they can be as simple as a
series of instructions and chart.
Tools:

It refers to the tools used in selection procedures. Examples include charts of properties, linear
regression analysis, etc. At the implementation stage it becomes to utilize more generic tools such as
expert systems.
# Selection Of Equipment And Technology
A technology decision is closely linked with the capacity and system maintenance areas. The technology
selection process will depend on the basis of strategy adopted by planners and on general trend in the
organization.
Factors that affects the selection of technology:
Technological factor:

Demand (Present and future)

Capital

Extension capacity

Competitive advantage
Environmental factor:

Seasonal variations

Production quality and improvement

Resource protection

Availability, accessibility and reliability

Institutional factor:

Legal framework

National strategy

Institutional setup

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Support from government, NGO and external support

Community and managerial factor:

Local economy

Living patterns and population growth

Living standards and general balance

Users preference
Financial factor:

Capital/cost

Budget allocations

Financial participation of users

Local economy

# Strategy Capacity Management

Capacity is the maximum output of a system in a given period. It is the amount of output that a system is
capable of achieving over a period of time. Thus, strategy capacity management means the ideas developed to
ensure that the maximum output is achieved in a given period. Capacity Management is divided into three subprocesses, of which the capacity planner typically manages the first two:
Business Capacity Management obtaining business projections and forecasting the impact of the new
demand on the existing resources.
Resource Capacity Management monitoring and analyzing the current resource demands.
Service Capacity Management managing the systems to the service level agreements established.
Performance management (the day-to-day managing and monitoring of the system) is a subset of this
process.
# Types of strategy:
Lead strategy is adding capacity in anticipation of an increase in demand. Lead strategy is an aggressive
strategy with the goal of luring customers away from the companys competitors. The possible
disadvantage to this strategy is that it often results in excess inventory, which is costly and often wasteful.
Lag strategy refers to adding capacity only after the organization is running at full capacity or beyond due
to increase in demand (North Carolina State University, 2006). This is a more conservative strategy. It
decreases the risk of waste, but it may result in the loss of possible customers.
Match strategy is adding capacity in small amounts in response to changing demand in the market. This is
a more moderate strategy.
# Some Quantitative Tools For Capacity Planning Process Analysis In Service Sectors
Capacity planning is the process of determining the production capacity needed by an organization to meet
changing demands for its products. In the context of capacity planning, "capacity" is the maximum amount of work
that an organization is capable of completing in a given period of time.
Quantitative tools for capacity planning process:
Modeling

A methodology for predicting the future impact of change. In IT, this usually means a tool that can map
the existing environment and demands, and then add to this the projected demand, resulting in a
picture of the resource demands expected.
Trending

A simpler way of looking at future growth, it assumes that growth rates in the past reflect growth rates
in the future. It generates a straight line into the future to determine growth. This technique is
generally used only when actual projections are not known.
Linear regression

A method for determining the relation between two (or more) metrics. Assuming that they are related,
an equation can be developed which explains this relationship, so you can figure out what the value of
one would be from the value of the other. Most methods for calculating linear regression will develop
an equation and a line, even if there is no relationship between the variables, so it is important to test
the relationship (correlation) before putting too much weight on the result.
Forecast

The process of estimating the unknown. Take all the data you can find about the subject, hopefully
leaving only one variable to estimate.
Workload characterization

This is the process of mapping IT processes and transactions to a business unit of work. In the past, a
CICS transaction often was the same thing as a business transaction, but now, as many business
applications span multiple platforms and IT applications, this exercise is necessary. The end user view
is critical in performance reporting, availability management and even chargeback.
# Steps in capacity planning:
Determine service level requirements:

Define workloads

Determine the unit of work

Identify service levels for each workload

Analyze current system capacity:

Measure service levels and compare to objectives

Page 13 of 20

Measure overall resource usage

Measure resource usage by workload

Identify components of response time

Plan for the future:

Determine future processing requirements

Plan future system configuration

# Considerations in adding capacity:
Maintaining system balance
Frequency of capacity additions
External sources of capacity
# JIT (Just In Time)
JIT is a pull system driven by actual demand. The goal is to produce or provide one part Just In Time for
next operation. JIT is a management philosophy that strives to eliminate sources of manufacturing waste and cost
by producing right part in the right place at the right time.

Ultimate
goal

Supporting
goal

A balanced
rapid flow

Eliminate
disruptions &
Make system
flexible
Product
design

Process
design

Eliminate waste

Personal
elements

Manfing
planning

Building
blocks

Fig: JIT goals and building blocks

# Benefits of JIT:
Low inventory carrying cost
Fast detection of defects in production
Reduce inspection and networks of parts
High quality parts at low cost
# Lean Production
Lean production or lean thinking (Womack et al., 1990; Womack and Jones, 1996) has its origin in the
philosophy of achieving improvements in most economical ways with special focus on reducing muda (waste). The
concept of muda became one of the most important concepts in quality improvement activities primarily originated
by Taiichi Ohno's famous production philosophy from Toyota in the early 1950s (Dahlgaard-Park, 2000, p. 128). This
philosophy was widely called as Toyota production system in Japan (Udagawa et al., 1995; Womack et al., 1990),
and it became later on (1986) labelled as lean production and lean thinking by Womack et al. (1990).
Lean production is a strategy that aims at high levels of production using lesser effort, time, and materials.
It is an integrated business approach to eliminate non value added activities from the customer delivery cycle in
the operations. This approach enables companies to respond quickly and profitably to changes in customer
demands. The technique of lean manufacturing can be applied to every situation in a company by finding out what
the customer wants, eliminating waste from processes and making flow continuously according to customer pull.
The idea is to create a culture in which people at various levels of an organization are continuously improving their
productivity every day in every way.
Lean Production V/S Traditional Production
Systematic efforts are made to reduce supply chain lead
times
Learning is incorporated into project, firm, and supply
chain management

Separate organizations link together through the

market, and take what the market offers

Stakeholder interests are aligned

Stakeholder interests are not aligned

Buffers are sized and located to perform their function

of absorbing system variability

Participants build up large inventories to protect their

own interests

# 10 steps to lean production:

Re-engineer the manufacturing system
Setup reduction or elimination
Integrate quality control into the system
Integrate preventative maintenance into the system

Learning occurs sporadically

Page 14 of 20

JL
a
P
d

eT

Level, balance, sequence and synchronize

Production Control
Reduce work-in-process
Integrate suppliers
Automation
Computer-Integrated Manufacturing
4 Pillars of Lean production

n
r

Chapter 7
Operation Technology
The Internet, Design Technology, Production Technology, Technology In Service Sector, Benefits &
Shortcoming Of Investing New Technology, Enterprise Resource Planning, Management Information
System
# The Internet
An internet is a group of networks connected together. The internet refers to the global connection of
networks around the world. The internet is a world wide, publicly accessible network of interconnected computer
networks that transmits data by packet switching using the standard internet protocol (IP). It is a network of
networks that consists of millions of smaller domestic, academic, business, and government networks which
together carry information and services such as electronic mails, online chats, file transfer, and the interlinked
webpage and other documents of the World Wide Web.
The size, scope, and design of the internet allows user to:
Connect easily through ordinary personal computers and local phone numbers.
Exchange information using e-mails.
Access multimedia information that include sound, photographic images, and even videos.
Download information.
# Design Technology
Design technology will help:
Evaluate the viability of a design
Recommend appropriate development techniques
Propose appropriate manufacturing processes and systems
Propose appropriate quality assurance procedures in design and manufacture
Implement and evaluate technology in a business environment
Manage technology systems
Manage information systems
Specify and manage computer based resources
# Production Technology
Production technology includes:
Types of Automation
Automated Production Systems
Factories of the Future
Automation in Services
Automation Issues

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Decision Approaches
# Types of automation:
Machine Attachments one operation
Numerically Controlled (N/C) reads computer or tape inputs
Robots - simulates human movements
Automated Quality Control verifies conformance to specifications
Auto ID Systems - automatic acquisition of data
Automated Process Control adjusts processes per set parameters
Automated Flow Lines (Fixed Automation)

Automated processes linked by automated material transfer

Automated Assembly Systems

Automated assembly processes linked by automated material transfer

Flexible Manufacturing Systems (FMS)

Groups of processes, arranged in sequence, connected by automated material transfer, and integrated
by a computer system
# Technology In Service Sectors
It is technology which establishes corporate direction and provides the framework for the identification,
implementation, operation, and maintenance of technologies used in the operation of the corporation facilities.
These technologies would include process control, electro-mechanical and electronics, telecommunications, etc.
Technology facilitates all service sectors like accounting, travel and tourism, engineering, photographic,
etc.
# Benefits & Shortcoming Of Investing New Technology
Benefits:
Easy diversification in business with established reputation and recognition of chaebols brand name.
Scope economies by synergy effects.
Scope economies by large size improvements in decision making by having cumulated knowledge and
experiences of many companies in a chaebol improvement in capturing new business opportunities with
vast knowledge in many fields of business.
Shortcoming:
Lack of business transparency.
High risks of business due to CEOs autocratic decision-making.
Increase in management cost due to the bureaucratic organization.
Inefficient resource allocation.
Delay of development in core capabilities.
# Enterprise Resource Planning (ERP)
ERP appeared in the 1970s as software modules that aimed to support business processes such as
production, inventory control, purchasing, enterprise data management, finances and other internal processes.
Several international Information Technology (IT) companies developed ERP software packages which shared
common databases and included several modules of ERP tasks. Over the last 20 years, a significant number of
companies all over the world started to apply ERP either in the form of simple small PC applications or in the form
of integrated ERP software packages with several modules.
ERP system integrates all activities and process of an organization into a unified system. The term ERP
originally implies system design to plan the use of enterprise wide resources. The ERP delivers the following
activities:
Production:
ERP applications for production were among the first that appeared and are based mainly on MRPII
(Manufacturing Resource Planning) methodology. MRPII is a descendant of MRP (Material Requirements
Planning) and was implemented through several modules concerning Master Production Scheduling (MPS),
Capacity Requirements Planning (CRP), Production Order Release, Operations Scheduling, Shop Floor
Control (SFC), Inventory Control, Purchasing, Production Data Management, etc.
Also in this category of ERP software, Computer Aided Design (CAD), Computer Aided Manufacturing (CAM)
and Computer Integrated Manufacturing (CIM) applications are included.
Sales & Marketing:
Sales ERP applications had software modules that aimed to support selling processes and transactions with
customers usually through Local Area Networks (LANs) and for large enterprises through Wide Area
Networks (WANs). The purpose of such applications was not only the invoice and receipt preparation but
also the entire processing of the customer order, from the time that the order was placed by the customer
until the shipment of the product and the invoice release.
On the other hand marketing applications were trying to utilize and process customer data and other
relevant information in an effort to support marketers at their work. Such applications can be compared
with todays CRM (Customer Relationship Management) and Data Mining e-marketing applications, but
they were less powerful, since less customer data was available particularly compared with the wealth of
customer data gathered today through Internet transactions.
Finance:
Financial ERP applications were one of the most important categories of ERP. Accounting and other financial
applications (like payrolls and costing) were the first ERP applications that appeared when computers were
first introduced in business. They support people in their calculations, work automation and provide

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storage for huge amounts of data. Today, financial applications are still among the most important ERP
applications and an effort is made to ensure good cooperation and integration with the other ERP functions.
Logistics:
Logistics ERP applications appeared more recently as separate applications, since initially the management
of the inventories and the purchasing were considered part of the production ERP modules. But after the
mid 1980s when the Japanese industries significantly reduced the cost of material handling by applying
new methods like Just-In-Time (JIT) and increased their competitiveness, American and European industries
started to concentrate more on the management and control of their logistics.
Human resources:
Initially human resources ERP applications were considered as part of production planning and financial
modules, where humans were considered as part of the processes, and their data, part of the enterprise
database. Today, since the human factor in the companies is thought one of the most important factors of
success in the business world, ERP software providers included modules for human resources
management. These modules extended applications for human resources focusing on human
improvement, satisfaction and cooperation. Principles of Total Quality are embodied in such applications
helping both humans and enterprises to become more efficient, to be satisfied and to achieve goals.
# Advantages of ERP:
Highly Graphics based User Interface.
Zero down time/planned down time.
Ready made solutions for most of the problems.
Integration of all functions ensured.
Easy enterprise wide information sharing.
Suppliers and Customers can have on-line communication.
Knowledge transfer between industries guarantees innovation.
Automatic adaptation to new technology.
# Management Information System (MIS)
In general term MIS is a computer system in an organization that provide information about its business
operations. Typically, it is also referred to as a central or centrally coordinated system of computer expertise and
management after including by extension the corporations entire network of computer resources. Thus, it is a
system that provides management with needed information on regular basis.
# Advantages of MIS:
Core competency support.
Enhanced distribution channel management.
Increased brand equity.
Boost production process.
Expand e-commerce.
Leverage stability.
Chapter 8
E-Commerce
Definition, Benefits And Limitations Of E-Commerce, E-Procurement
# Definition
E-Commerce, abbreviation for electronic commerce, usually defined as the conduct of business online, via
the Internet. Until recently, e-commerce was limited mainly to large companies and their suppliers, who connected
their computers together to speed up ordering and payment systems. Today, millions of people are involved in ecommerce on the Internet when, for example, they visit World Wide Web sites to buy books or CDs, order flowers
or pizzas, or check their bank accounts, etc. Thus, in short, e-commerce is the buying and selling of goods and
services on the internet, especially the World Wide Web.
# Benefits And Limitations Of E-Commerce
Benefits:
Increase sales
Decrease costs
Greater market coverage
24/7 transaction facility
Better inventory management
Effective customer relation management
Fast feedback from customers
Limitations:
Technical limitations:

High cost of technological solution

Some protocols are not standardized around the world

Reliability for certain purpose

Insufficient telecommunication bandwidth

Access limitations of dialup, cables, and wireless

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Some vendors require certain software to show features on their pages, which is not common in the
standard browser used by the majority.
Non-technical limitations:

Customer fear of personal information being used wrongly

Privacy issues

Customer expectations unmet

Vulnerability to fraud and other crimes

Lack of trust and user resistance

Fear of payment information being unsecure

# E-Procurement
E-procurement (electronic procurement, sometimes also known as supplier exchange) is the B2B or B2C or
B2G purchase or sale of supplies. Typically, e- procurement websites allow qualified and registered users to look for
buyers or sellers of goods and services. Depending on the approach buyers or sellers may specify costs or invite
bids.
E-procurement is expected to be integrated with the trend toward computerized supply chain
management.
E-procurement is done with a software application that includes features for supplier management and
complex auctions. The new generation e-procurement is now on-demand or software-as-a-service.
# Types of E-procurement:
Web based ERP (Electronic Resource Planning):

Creating and approving purchase requisition, placing purchase orders, receiving goods and services etc
by using a software system based on the internet technology.
E-MRO (Maintenance, Repair and Operating supplies):

Same as web based ERP except that the goods and services ordered are non product related i.e. MRO
supplies.
E-Sourcing:

Identifying new suppliers for a specific category of purchasing requirement using internet technology.
E-Tendering:

Sending requests for information and prices to suppliers and receiving the responses of suppliers using
internet technology.
E-Reverse Auctioning:

Using internet technology to buy goods and services from a number of known and unknown suppliers.
E-Informing:

Gathering and distributing purchasing information both from and to internal and external parties using
internet technology.
E-Market sites:

Expands on web based ERP to open up value chains. Buying communities can access preferred
suppliers products and services, add to shopping carts, create requisition, seek approval, receipt
purchase orders, and process electronic invoices with integration to suppliers supply chains and buyers
financial systems.
Chapter 9
Reengineering And Humane Resources
Labor Planning, Job Design, Visual Workplace, Work Measurement
# Labor Planning
Labor planning or HR planning means forecasting the number and types of personnel whom the
organization will have to hire, train, and promote in a particular period in order to achieve its objectives, policies,
programs, and procedures.
What is workforce planning then?
At its simplest form it is ensuring that there would be: The right person
The right place
The right time
Accomplish aims of the organisation
No ONE workforce planning model
# Objectives/Benefits of labor planning:
Making optimum use of available talent.
At national level, it is needed for economic development.
It reduces labor cost.
Delays due to non availability of a particular type of labor can be avoided by planning for manpower in
advance.
Labor planning identifies gaps in existing labor so that suitable training programs may be arranged to
develop the skills required.
# Steps in labor planning:

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Forecasting labor requirements

Preparing labor inventory
Identifying manpower gaps
Formulating manpower plans

# Job Design
Job design is the process of linking specific tasks to specific jobs and deciding what techniques, equipment,
and procedures should be used to perform those tasks. It is also defined as the function of specifying the work
activities of an individual of group in an organizational setting. Job design helps to determine:

What tasks are done?

How many tasks are done?

In what order the tasks are done?

It takes into account all factors which affect the work and organizes the content and tasks so that the
whole job is less likely to be a risk of the employee.
Early approaches:

Scientific Management

Job Enlargement

Job Enrichment
More recent approaches:

Job Characteristics Model

Social Information Processing Theory

Job design involves administrative areas such as:
Job rotation
Job enlargement
Job enrichment
Work breaks
Working hours
Job design is an ongoing process. The goal is to make adjustments as conditions for task changes within
the workplace.
# Approaches to job design:
Job enlargement:

Increasing the number of tasks a worker performs but keeping all of the tasks at the same level of
difficulty and responsibility; also called horizontal job loading.
Job rotation:

It moves employees from one place to another i.e. from one task to another.

It distributes the group of tasks among the member of the employees.

Job enrichment:

Increasing a workers responsibility and control over his or her work; also called vertical job loading.

Ways of enriching jobs:

Allow workers to plan their own work schedules.
Allow workers to decide how the work should be performed.
Allow workers to check their own work.
Allow workers to learn new skills.
Work design (Job engineering):

It allows employees to see how the work methods, layout, and handling procedure link together as well
as the interaction between people and machine.
# Goals of job design:
Task variety
Work breaks
Allowances for an adjustment period
Provide training
Vary mental activities
# Visual Workplace
Visual workplace means showing labor work, teaching a line or providing a place to post their workshops on
answer questions. A visual work place means showing the all operational activities in one place in increasing
efficiency to the labor.
# 5 pillars of visual workplace:
Sort means that you remove all items from the workplace that are not needed for current
Sort
production operations and add anything that is needed but is not there.
Set
In Set In Order means that you arrange needed items so that they are easy to use and label them so
Order
that anyone can find them and put them away.
Shine

Shine means we keep everything swept and clean.

Standardiz

Standardize is the result that exists when the first three pillars Sort, Set In Order, and Shine

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e

are properly maintained.

Sustain
Safety

&

Sustain is having the discipline to maintain a higher standard.

# Benefits of visual workplace:

Employee engagement (Everyone can participate)
Mutual trust and respect (Solve lingering problems)
Customer satisfaction (New business)
# Work Measurement
Work measurement is the application of techniques designed to establish time for a qualified worker to
carry out a specific job at a defined level of performance. It helps to:
Prepare realistic work schedule.
Compare the efficiency of alternative methods.
Balance the work of team members.
Determine the number of machine one can operate or monitor.
Set standards for machine use and labor performance.
# Steps in work measurement:
Select the work to be studied.
Record the relevant data.
Examine the recorded data.
Measure the quantity of work involved in each element in terms of time.
Compile or compute the standard time for the operation.
Define precisely the series of activities and methods of operation for which the time has been compiled
and derive the standard time for the activities and methods specified.
# Techniques of work measurement:
Direct observation:

Time study
It is a work measurement technique for recording the times and rates of working for the elements
of a specified job carried out under specified conditions in order to determine the time necessary to
carry out the job at a defined level of performance.

Activity sampling
It measures the percentage of the time and activity or delay occurs when a large no. of
observations are made at random intervals over a period of time for one group of machines,
processes, or workers. Each observations record what is happening at the particular instant and the
percentage for a particular activity or delay.
Pre-determination:

Analytical estimating
Here, the time of elements of a job at defined level of performance is estimated partly from
synthetic data and partly from knowledge and experience.

Comparative estimating
Here, the time for job is estimated by comparing the work in it with the work in a series of similar
jobs benchmarks the work contains of which has been measured.

Pre-determined Time System (PTS)

PTS is a work measurement technique where times estimated for basic human motions (classified
according to their nature and conditions in which made) are used to build the time for a job at a
defined level of performance.

Synthesis
It is a work measurement technique for building of the time for a job or parts of the jobs at defined
level of performance by summing up the elements times obtained previously from time studies on
other jobs containing the demand concerned or synthetic data.

THE END

PREPARED & DISTRIBUTED BY

RITESH SHAKYA

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