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Management
MD
What is a (Business) Process?
Examples:
• Order-to-Cash
• Procure-to-Pay
• Application-to-Approval
• Claim-to-Settlement
• Fault-to-Resolution (Issue-to-Resolution)
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“My washing machine won’t work!”
Warranty?
Call Center
Technician
Customer Customer
Parts
Service Store
Dispatch
VALUE
fault-report-to-resolution process
© Michael Rosemann 3
Processes and Outcomes
• Every process leads to one or several outcomes,
positive or negative
– Positive outcomes deliver value
– Negative outcomes reduce value
• Fault-to-resolution process
– Fault repaired without technician intervention
– Fault repaired with minor technician intervention
– Fault repaired and fully covered by warranty
– Fault repaired and partly covered by warranty
– Fault repaired but not covered by warranty
– Fault not repaired (customer withdrew request)
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What is a Business Process: Recap
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BPM: What is it?
Body of principles, methods and tools to design,
analyze, execute and monitor business processes
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Why BPM?
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Why BPM?
Information Yields
Technology Business
Value
Enables
Yields
Process
Change
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How to engage in BPM?
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The Ford Case Study (Hammer 1990)
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The Ford Case Study
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The correct answer is …
Mazda’s Accounts Payable Department
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How the process worked? (“as is”)
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How the process worked? (“as is”)
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How the process worked? (“as is”)
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How the process worked? (“as is”)
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How the process worked? (“as is”)
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How the process worked? (“as is”)
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How the process worked? (“as is”)
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Reengineering Process (“to be”)
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Reengineering Process (“to be”)
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Reengineering Process (“to be”)
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Reengineering Process (“to be”)
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Reengineering Process (“to be”)
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Reengineering Process (“to be”)
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The result…
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How to engage in BPM?
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Process Identification
Core processes
Support processes
Management processes
Quote handling
Product delivery
Invoice handling
Detailed quote
handling process
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Phase 1: Performance Measure
Identification and Selection
Non-value-
Customer
Waste adding
feedback
time
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Por ejemplo para el Proceso de admisión
• Tiempo promedio entre el momento de que una aplicación –
solicitud es recibida y el momento en que esta es aceptada o
rechazada. (Cycle time)
• Porcentaje de solicitudes rechazadas debido a documentos
incompletos. (# solicitudes rechazadas por no estar
completas y # solicitudes rechazadas por imcompletas y
además no se reenvió para completer la aplicación).
• Porcentaje de solicitudes rechazadas debido a la prueba de
idioma.
• Porcentaje de solicitudes rechazadas debido al nivel
académico.
• Porcentaje de aplicaciones aceptadas.
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Procure-to-pay process at BuildIT
• BuildIT is a construction company specialized in public works (roads,
bridges, pipelines, tunnels, railroads, etc.). Within BuildIT, it often
happens that engineers working at a construction site (called site
engineers) need a piece of equipment, such as a truck, an excavator, a
bulldozer, a water pump, etc. BuildIT owns very little equipment and
instead it rents most of its equipment from specialized suppliers.
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• Sometimes the selected option is not available and the clerk has to select an
alternative piece of equipment and check its availability with the corresponding
supplier.
• Once the clerk has found a suitable piece of equipment available for rental, the
clerk adds the details of the selected equipment to the rental request. Every rental
request has to be approved by a works engineer, who also works at the depot. In
some cases, the works engineer rejects the equipment rental request. Some
rejections lead to the cancellation of the request (no equipment is rented at all).
Other rejections are resolved by replacing the selected equipment with another
equipment—such as a cheaper piece of equipment or a more appropriate piece of
equipment for the job. In the latter case, the clerk needs to perform another
availability enquiry.
• When a works engineer approves a rental request, the clerk sends a confirmation
to the supplier. This confirmation includes a Purchase Order (PO) for renting the
equipment. The PO is produced by BuildIT’s financial information system using
information entered by the clerk. The clerk also records the engagement of the
equipment in a spreadsheet that is maintained for the purpose of tracking all
equipment rentals.
• In the meantime, the site engineer may decide that the equipment is no longer
needed. In this case, the engineer asks the clerk to cancel the request for renting
the equipment.
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• In due time, the supplier delivers the rented equipment to the
construction site. The site engineer then inspects the equipment. If
everything is in order, the engineer accepts the engagement and the
equipment is put into use. In some cases, the equipment is sent
back because it does not comply with the requirements of the site
engineer. In this case, the site engineer has to start the rental
process all over again.
• When the rental period expires, the supplier comes to pick up the
equipment. Sometimes, the site engineer asks for an extension of
the rental period by contacting the supplier via e-mail or phone 1–2
days before pick-up. The supplier may accept or reject this request.
• A few days after the equipment is picked up, the equipment’s
supplier sends an invoice to the clerk by e-mail. At this point, the
clerk asks the site engineer to confirm that the equipment was
indeed rented for the period indicated in the invoice. The clerk also
checks if the rental prices indicated in the invoice are in accordance
with those in the PO. After these checks, the clerk forwards the
invoice to the financial department and the finance department
eventually pays the invoice.
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Phase 2: Process Discovery
Durante esta fase, identificamos a
los interesados, observamos,
entrevistamos, desarrollamos una
visión, mapeamos el proceso y sus
problemas
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Phase 3: Analysis
Qualitative analysis
• Root-cause analysis
• PICK charts
• Issue register
Quantitative Analysis
• Flow analysis
• Queuing analysis
• Process simulation
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Issue Register
Issue Short Issue Explanation Broad Consequence Assumptions Impact
No. Description
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© Michael Rosemann
Simulation / What-If Analysis
10 applications per hour
Poisson arrival process (negative exponential)
0.3
Receive info Request info
No
0.5
accept Deliver card
Notify acceptance
Check for Yes Perform checks Make decision
completeness
Start 0.7
complete? Decide
0.8 End
reject
0.5 Notify rejection Time out
review request
Receive review
reviiew
0.2
request
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Simulation output: KPIs
Resource Utilization
Resource Cost
100.00%
4,500.00 $ 4,260.95
90.00%
4,000.00
80.00%
3,500.00
70.00%
3,000.00
60.00% Cycle Time - Histogram
2,500.00 50.34%
50.00%
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2,000.00
40.00%
10
1,500.00
30.00%
$ 898.458
18.82%
1,000.00
20.00%
# PI's
500.00
10.00%
6 $5.04%
285.00
0.00
0.00% 4
Clerk
Clerk Manager
Manager System
System
2
0
0 10 20 30 40 50 60
Days
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Phase 4: Process Re-Design
Costs
Time
Flexibility
Quality
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Phases 5-6. When technology Kicks in..
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Process Execution Engines
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The end
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