Managing Business Processes:
Design and Improvement
Cheng Li, Ph.D.
California State University, Los Angeles
January 2001
The Process Focus
• The changing emphasis of management
practices: from individual activities to
process
• Background:
– Local optimization is inadequate.
– Activities are increasingly integrated.
What is the business process
approach?
• A work process: a set of related activities
that adds value and provides a service to a
customer.
• The process focus:
– integrative
– cross-functional
– customer orientation
What is covered?
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•
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Business Process Improvement
Business Process Modeling
Process Structure
Total Quality Management
Business Process Reengineering
Business Process
Improvement
What is business process
improvement?
• Process Improvement: how to do our work
better in terms of customer satisfaction, cost
reduction, and self-fulfillment, etc.
• Related Process Management Theories:
– Reengineering (Michael Hammer)
– Continuous improvement or TQM
– BPI: Business Process Improvement (James
Harrington)
The Four Phases of Process
Improvement
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Description
Analysis
Design
Implementation
Process Description
• Customers
• Activities
– Primary (value-adding) activities
– Supporting (non-value-adding) activities
• Work flow
• Policies and constraints
• Output: process flowcharts & description
Process Analysis
• Identify potential improvement areas
– sources of information: internal and external
– problems and causes
• Identify related work processes and
prioritize improvement projects
• Output: major problems, causes of the
problems, targeted work processes
Process Design
• Customer requirements
– e.g. telephone repair: short down time, when it can
be repaired, convenient hours, short waiting time
• Design parameters
– e.g. telephone repair: training of the operators,
computer systems, # technicians
• Relationships between requirements and
parameters
QFD: Quality Function
Deployment
• Example: a relationship matrix
D o w n T im e
W hen
C o n v e n ie n ce
T rain in g
C o m p u te r
S y ste m
W EAK
W EAK
STRONG
# T e ch n ician s
STRONG
STRONG
Process Design (cont.)
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Generating ideas
Evaluating alternatives
Designing the new process
Setting policies and controls
Other issues: feedback mechanism,
justification of the new process
Implementation
•
•
•
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Planning
Work process changes
Policy changes
Organizational changes
Training
Promotion and education
Business Process Modeling
Business Process Modeling
• Description of the Process
– Flowchart: procedures, policies and constraints
– Data on process flow
• Queuing Theory
• Simulation
Basic Techniques: Process
Flowchart
• e.g. student registration process
–
–
–
–
get a copy of class schedule
select classes, consult advisor if necessary
make payment
wait for authorization: pin number, time
window
– call the system
– register, etc.
Process Flowchart: symbols
• Examples:
Action/Operation
Decision (If …)
Delay
Transportation
Process Modeling Languages
• Process Modeling Languages
• QPL: Quality Process Language by Gary
Born
Process Modeling Languages
• Process, input, output, the process owner, and
authorities
list of bids
Evaluate Bids
----------------
list of bids
Purchasing Officer Selected supplier
Quality Process Language
• Unchanged and Changed Output:
– list of bids: unchanged
– selected supplier: changed
list of bids
Evaluate Bids
----------------
list of bids
Purchasing Officer
Selected supplier
Quality Process Language
• Process Owner: a person or a machine
responsible for execution of processes
list of bids
Evaluate Bids
----------------
list of bids
Purchasing Officer
Selected supplier
Quality Process Language
• Process Owner: variable
list of bids
Evaluate Bids
----------------
list of bids
Purchasing Officer
Choice of purchasing officer
Selected supplier
Quality Process Language
• Authorities: provide rules and guidance on
how to process information
Purchasing procedures
list of bids
Evaluate Bids
----------------
list of bids
Purchasing Officer
Selected supplier
Modeling Information
• Information is the link between processes.
• Classifying information based on versions
to keep.
• Channel: temporary
• Information Store: only the current version
• Archive: current and previous versions
Modeling Information
• Symbols:
I
channel
Information Store
Archive
Queuing Theory
• System Characteristics
– Population source: finite, infinite
– No. of servers
– Arrival and service patterns: e.g. exponential
distribution for inter-arrival time
– Queue discipline: e.g. first-come-first-serve
Queuing Theory
• Performance Measurement: e.g. infinite
source, single server, exponential interarrival and service times, first-come-firstserve:
– System utilization
– Average no. of customers: in line and in system
– Average waiting time: in line and in system
Queuing Theory
• Procedure:
– describe the process
– collect data on incoming and service patterns
– find formulas and/or tables, software to
calculate performance measures
Process Structure
Strategic Positioning through
Process Structure
• Complexity:
– e.g. preparation process:
fast food vs. gourmet food
• Divergence: degree of customization, the
amount of discretion or freedom allowed
– e.g. H&R Block vs. CPA firms
– e.g. Options for Mercedes vs. for Camry
Competitive Advantages through
Process Structure
• Competitive Advantages
• Competitive Strategies
• e.g. Sam’s Club vs. Nordstrom
– layout, selection, service process, personnel
• Competitive Strategy and Structural
Positioning
Example: Structural Alternatives
for a Family Restaurant
Lower
• no reservations
• self-seating,
menu on board
• customer fills out
form
• pre-prepared, no
substitute, limited
to 4 choices
Current
take reservation
seat guests, give
menus
Serve water and
bread
Take orders
Prepare orders:
salad (4),
entrée (15)
Higher
specific table
selection
recite menu,
describe entrees and
specials
assortment of hot
breads
at table, taken
personally
individually
prepared
Generic Approaches to Service
System Design
• Production Line Approach
–
–
–
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limited Discretionary Action of Personnel
division of labor
substitution of technology for people
service standardization
Generic Approaches to Service
System Design
• Customer as Coproducer
– substitution of customer labor for provider
labor
– smoothing service demand
Generic Approaches to Service
System Design
• Customer Contact Approach
– Degree of customer contact
– Separation of high- and low-contact operations
Total Quality Management
TQM/Continuous Improvement
• The Concept of Total Quality
• The Dynamics of Quality Improvement:
continuous improvement vs. tradeoff
balancing
• Employee Involvement
• Emphasis on Customer Satisfaction
Statistical Process Control
• Emphasis on the process instead of the
product/material
• Focus on “prevention”
Statistical Process Control
• Control Charts:
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Mean Chart
Range Chart
p-Chart
c-Chart
• Process Capability
• Process Capability Index
Other TQM Tools
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Check sheet
Scatter diagram
Histogram (frequency)
Pareto chart
Control chart
Cause-and-effect diagram
Business Process
Reengineering
Business Process Reengineering
• Evolution vs. Revolution
• Bottom-up vs. Top-down
• Break the routine:
– habits
– assumptions
– values
Reengineering: Assumption
Busting
• Problem: a specific performance
shortcoming of the process
• Rule: A specific aspect of the process
design that causes the problem
• Assumption: a belief about the environment
that gives rise to the rule
Reengineering: Assumption
Busting
Example:
• Problem: Customers don’t know when the
repair can be done.
• Rule: The operator does not have the
authority to schedule technicians.
• Assumption: The operator does not know
where the problem is and does not have
information about technicians’ schedules.
Overcoming Resistance to
Change
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Resistance is natural and inevitable: expect it
Resistance doesn’t always show its face: find it
Resistance has many motivations: understand it
Deal with people’s concerns rather than their
arguments: confront it
• There’s no one way to deal with resistance:
manage it
The Key Mechanisms for
Overcoming Resistance
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Incentives: positive and negative
Information: dispel uncertainty and fear
Intervention: one-on-one connections
Indoctrination: make change seem
inevitable
• Involvement: make people part of the effort
The Ten Principles of
Communications
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Segment the audience
Use multiple channels
Use multiple voices
Be clear
Communicate, communicate, communicate
The Ten Principles of
Communications (cont.)
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Honesty is the only policy
Use emotions, not just logic
Heal, console, encourage
Make the message tangible
Listen, listen, listen
The People Side of Processes
• People are the most important asset
• Empowerment
– a sense of achievement in what is accomplished
– a sense of control over the means of production
– a pace of work which is appropriate for both the worker
and what is produced
The People Side of Processes
• Csikeszentmihalyi (1990): elements of enjoyable
work:
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capable of completing the task and allowed full control
able to concentrate entirely on the work in hand
clear goals
immediate feedback
deep involvement: free from everyday worries, unaware of
time
– “Our sense of self disappears, only to return with added
strength when the task is finished.”
The People Side of Processes
• Consultation: part of empowerment
• Teamwork:
– size: small enough so that individual effort can make a
difference
– organization
– conflict resolution
– responsibility and authority
– team dynamics
– cultural background
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Work Process Design and Improvement