How well does the process utilize resources

What is a business Metlen

Metlen What is a business

What is a business:
• A business is a group of people working together with a set of processes to accomplish a specific goal in a specific and, often, dynamic market. These groups and processes are constrained and/or guided by dynamic organizational and governmental structures then who we are as human beings.
• The end goal in business is to produce the correct product such that value as seen by the customer is greater than competitions priced such that other stakeholders can be satisfied, including a profit sufficiently large to satisfy owners in the short and long term.
• Profit is obtained by producing and selling the correct product ethically and legally.
• Process: a structured, measured set of activities designed to produce a specific output.
• Product: good and/or service (tangible and intangible characteristics)
• Correct Product: Provides more value to your targeted customer than your competition at a price that provides enough revenue to satisfy the wants and needs of the other five stakeholders. Have to be stakeholder centric to achieve this balance.
• Value: what a person gives up for what they receive. Time, money, effort…
• Six Stakeholders: Owners/stockholders, employees, suppliers, customers, community, environment.
• Having the correct adaptable Mission, Vision, and Strategy. (high level goals)
• Being able to operationalize MVS (process mgt, everything we do in the preceding slide)
• Operationalization occurs through goal congruency (lower level goals aligned with high level goals)
Purpose of a Process:
What is a process:
“A network of activities performed by resources that transform inputs into outputs.” Anupindi et. Al. 1999
“A set of logically related tasks or activities performed to achieve a defined business outcome.” APICS Dictionary 1995
“The collection of activities and operations involved in transforming inputs, which are the physical facilities, materials, capital, equipment, people, and energy, into outputs, or the products and services.” Evans & Lindsay 2002
“A collection of activities and decisions that produce and output for an internal or external customer.” Devane, T. 2004
Purpose of processes ? create the correct product (greater value than competitors at a profit that provides enough to meet needs of stakeholders in a perceived equable manner) in a given context
Context: market demand, market share, technology (machines, computers, software) and resources (knowledge, materials, people, infrastructure, power) available to execute process
How to judge a process:
How well does it meet demand (step one queue if tied to arrival of orders, capacity, Takt time, cycle time, business rules)
How well does the process utilize resources (utilization (people and machine, rate of consumption of power), WIP (holding/queue or process, or total), power, pollution, safety, material)
How well does it produce the customer described/demanded product
Cost relative to achievable price
Why & how to simulate
i) Existing: To learn about the process and to do what if analysis
(a) conceptual model,
(b) data flow,
(c) resources (costs),
(d) demand,
(e) interfaces,
(f) business rules,
(g) collect data from observation
1. arrival rate, demand, step cycle times, TPT (use for verification), capacity (use for verification), batch size, set up costs, resource costs, mean time to break down/chance of breakdown, time down, scrap, rework, items produced per step,
(h) Enter into simulator
(i) Verify data and model (does the model produce the same results every time as expected (costs and output))
(j) Validate the model (does the model mimic the real outputs of the actual process)
(k) Do what if analysis, including statistics
ii) Green Field: To learn about the process and do what if analysis
(a) conceptual model,
(b) data flow,
(c) resources (costs),
(d) demand,
(e) interfaces,
(f) business rules,
(g) collect data from projections
(h) arrival rate, demand, step cycle times, TPT (use for verification), capacity (use for verification), batch size, set up costs, resource costs, mean time to break down/chance of breakdown, time down, scrap, rework, items produced per step
(i) Enter into simulator
(j) Verify data and model (does the model produce the same results with simple data as mathematically solving the model)
(k) Do what if analysis, including statistics
Process Management
Process Management (process owner activities: advocacy/influence, boundary management, collaboration, improvement, metrics, know relationship of process to stakeholder satisfaction)
Design/re-design (concepts to keep in mind are TQM, Six Sigma and lean, tools used in this class simulation and workflow)
Needs analysis & definition (simulation and history): goals, scope/boundaries, participants, constraints, schedule so design, implement and management follow nicely (Cost, time, quality, scope?project management) Goals should be SMART (specific, measurable, attainable, realistic, tangible) Three C’s of leadership (clarity, consistency, and commitment)
Tech
Knowledge of Process logic (steps) schematic needed, Data flow logic, Resource consumption per step, business rules, interaction with other processes (often overlooked) and firm’s stakeholder satisfaction goals
How going to measure (quality control policy)
Implementation (workflow and simulation): probably not the big bang, will not come to a better mouse trap
Buy-in through communication in design and implementation
Rests on design
Take care of silent dissent as well as voiced dissent
7 c’s of implementation: common goal and measures, cross-functional commitment, continuity, clear communication, competent project management, credible coaching, celebration
Management/control (workflow and simulation)
Who is the owner, cannot be at too low of level or will keep silos and lose cross-functional involvement
Quality control statement (measures should link customer satisfaction drivers to financial outcomes, metrics should be visible (communication))
Training of resources
Evaluation/assessment
Accountability
Cross-functional involvement communication
Continuous training for executive and management on enterprise process management (so old do not forget and new learn so there is process management continuity)
Continuous Improvement (simulation and workflow)
Needs to be culture: obtain culture through metrics, rewards, and training
Take action on what find in mgt/control steps
Where are, where want to go, how going to get there, is it worth it
Important considerations when managing processes
Purpose of process relative to bottom line of company (how does the output and variation of output impact the bottom line?what processes does the output inform, path from output to $ in)
Interfaces with other processes smoothly
Interfaces across functions within process go smoothly
Design human interaction portion of processes relative to human physiology and psychology
Process control policy
Effectiveness of process (correct output done correctly?form/function, time, cost, quality
Processes we need to manage
Processes we need to manage & how to tell if a company is good at process management
Process mgt steps of:
management and control throughout.
Support Processes
Corporate planning SWOT
Develop Mission, Vision, Goals, Strategy
R&D
Design Products
Manage/develop technology
Knowledge mgt
Accounting
Information Tech
Improvement and change
Assessment (internal, self, external supplier/customer/environment/owner, up, down)
Goal congruency
Finance
Capital Structure
Capital and operations budgets
Resource, real property and others mgt
HR
Develop (train educate) and Manage (hire, fire, control, desk audits TDRs) Human Capital
Procurement
Manage supply side relationships
Process Mgt steps of: design, implementation, redesign, implementation
Primary Processes
Logistics
Manage supply and customer side relationships
Operations
Make products
Marketing & Sales
Manage customer side relationships
Service
Manage customer side relationships
Bridging Processes
Product Development Process
Internal processes
Internal services
Internal goods
External products
Knowledge Management
Process Management
Why categorize:
The same reason we make a high level logic flow diagram for a process before we start breaking down the sub-processes, categorization gives a birds eye view of the process flow in a company.
Reminder that we need to look at more than just production processes.
It is the ground work to help guide the interacting links between process output and the end goal (the spaghetti diagram). Shows the enterprise wide view of PM.
Given the above, there is a guide work to find the problem behind the symptom.
Helps to define structure within a company, what needs to be done.
Helps with data flow and business rule formation; prioritization of what should be done when.
Helps with, if I change X process, how will that affect the enterprise.
Helps with understanding the people, processes, control mechanism, and organizational structure and interactions of a firm, or six major dimensions of an organization: knowledge communities/functions, processes, content, marketplaces, culture, and organizational structure.
Process Management Framework
High level: What is the organization (relationship between people, processes, control mechanisms, and org structure), can it support a process management perspective

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