Session 1 Introduction to Business Process

Session 1
Important Perspectives of Business Business Functions and its links What is a business process? Business Process features Three basic logics of a business process Business Process Supply Chain Case Some examples of Core Business Processes Dominos example

Perspectives of a Business
The Enterprise
Process Perspective

Function Perspective

Data Perspective
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Business Functions & its links

Sales and Distribution
Sales planning Profit planning Forecasts

Production Planning
Demand management Master planning Capacity planning MRP

Materials Management
Direct requisition Purchasing Inventory management Goods receipt Material valuation Invoice verification Warehouse management

Customer order processing Shipping, billing, transport

Order - Creation - Release - Confirmation Shop floor control Capacity leveling Process planning

Quality Management
Lot inspection Process charting

Preventive Maintenance Project system

Planned repair Emergency
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What is a BUSINESS PROCESS?

A business process is a collection of related structural activities that produce a specific outcome for a particular customer.

It is a recipe for achieving a commercial result. Each business process has inputs, method and outputs. The inputs are a pre-requisite that must be in place before the method can be put into practice. When the method is applied to the inputs, then certain outputs will be created.
A business process can be part of a larger, encompassing process and can include other business processes that have to be included in its method. A business process can be thought of as a cookbook for running a business; "Answer the phone", "place an order", "produce an invoice" might all be examples of a Business Process.
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A Business Process Features

A business process:

Driven by an event Has a goal Has specific inputs Has specific outputs Uses resources Has a number of activities that are performed in some order May affect more than one organizational unit. Horizontal organizational impact Creates value of some kind for the customer. The customer may be internal or external.
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A Business Process Model

Information Resource Goal

Event

Process Business process

Output

Logics of a Business Process A business process is an aggregation of operations performed bydetermines input & output people and software systems information requirements for containing the information used in the process, each along with the applicable activity rules. business Business process has to deal with information flow logic, control flow logic and transaction logic.

determines the sequence of activities

determines values of output.
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Example : Paragon Leather Products Pvt. Ltd.

Paragon Leather Products P Ltd., receives a sales order for supply of 1,000 pairs of shoes (in different sizes) from a customer. This sales order process may involve execution of transactions such as Generation of Order document, Generation of Shipping document and Generation Billing document in an ERP system. In practice, three different performers from Sales Office, Warehouse and Accounts department may perform three transactions respectively, which comprises of - Generation of Order document by sales office executive - Generation of Shipping document by warehouse executive - Generation of Billing document by accounts executive This process requires enforcement of credit control by sales executive i.e., if the sales order exceeds the credit limit, a special approval is required from the sales manager before warehouse executive can generate shipping document.
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Example : Paragon Leather Products Pvt. Ltd.

The sales manager in order to take the decision needs the information on order details, credit limit and credit history before he or she could take the decision. The sales office executive has to compute order value based on products ordered, no. of units ordered, sales price, discounts, duties & taxes applicable. The sales office executive also has to provide the delivery date based on the availability of stock, production schedule and dispatch schedule. In the above activities, control flow logic determines the activity after Generation of Order document, which could be either Generation of Dispatch document or Approval from Sales Manager depending upon credit control. Information logic determines what information is to be provided (input) to and obtained (output) from the sales manager. Transaction logic determines the value of sales order and delivery date or the decision by the sales manager.
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Business Process A Supply Chain Case Conventional Supply Chain Suppliers

Material Information

Intra-company Fabrication Assembly

Distributors

Features: Independent systems to manage the interaction between players in the supply chain Great operational flexibility Problems in forecasting, transparency, accuracy, 11 speed

Retailers
Consumers Commercial Buyers

Business Process A Supply Chain Case

IT Enabled Supply Chain

Suppliers

ERP System

Intra-company Fabrication
Web-order Processor Assembly

Consumers
Retailers

Features: Integrated information System optimization possible

Distributors
Material

Commercial Buyers
Information

Problems inflexible much more formal infrastructure needed to support the systems 12

Sales Order Process (Order-to-Cash)

Sales Order Entry
Check Availability

Pick Materials

Receipt of Customer Payment Invoice Customer

Pack Materials

Post Goods Issue

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Procurement Process (Procure-to-Pay)

Purchase Requisition Purchase Order Notify Vendor

Payment to Vendor

Vendor Shipment Invoice Receipt

Goods Receipt
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Purchase, Sales & Cash Process

Sales Inquiries
Finished Goods Manufacturing Resources Planning

Raw Materials

Labour

Sales Accounts Payable

Customer

Vendor

Accounts Receivable Profit Center Cash

Cash

Information

Materials

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Pizza Development Process at Dominos

DOUGH MAKING (1 MINUTE) TOPPING & BAKING IN OVEN (6 MINUTES)

PIZZA PACKING ( 1.5 MINUTES)

PIZZA CUTTING (15 SECONDS)

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Flow Logics in Dominos Example

Control flow logic: 1. Customer calls outlet 2. Customer details fed in system 3. Order is taken over the phone 4. The delivery process of 30 minutes starts here. 5. Bill is printed a copy of which is sent to the kitchen. 6. Pizza is made and delivered to the customer Information flow logic: 1. Customer details customer name, ph no. address is input to customer master file 2. Copy of bill generated acts as input to the cook for processing order 3. Order for raw material procurement is sent every alternate day. 17 4. Payment details acts as input to the outlet

Flow Logics in Dominos Example

Transaction flow logic: 1. Decisions about special offers and discounts. 2. For area greater than 5 Kms customer is redirected to the nearest outlet or a timeline is given. 3. Sales reports sent on monthly basis to the headquarters at Mumbai 4. Depending upon number of orders decisions are taken to either increase decrease or promote the available SDBs. 5. Performance of SDBs is evaluated and incentives are provided

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