Talstra Analysis

Talstra Analysis

Section 1 (50 marks | word limit: 1000–1250 words)
Complete the assigned readings and conduct your own research (using the internet or the
Kaplan Library) to identify an organisation for analysis for your business process change
document.

1. A contents page for your report.
2. A brief introduction that outlines the purpose of the report.
3. Provide the name of the organisation you have selected, describe the organisation’s size and
summarise the primary mission of the organisation. Don’t simply copy from the
organisation’s mission statement.
4. From your research of the organisation, identify a single business process change that the
organisation will need to contemplate and undertake in the coming year. This change can
result from new technologies, economic issues or changes in the marketplace/industry.
5. Using the Capability Maturing Model (CMM) briefly outline what changes will need to be
undertaken at each of the five stages.
6. Evaluate Porter’s three-phase process (page 32, Figure 2.1) for defining a company
strategy. Create a simple chart of the recommended change and address the issues in
each phase for your organisation.

Note: on part 5. Because the prosses identified is about service you can use the CMMI instead since the CMM IS MORE RELATED TO SOFTWARE.

Section 2 (50 marks | word limit: 1000–1250 words)

In this section you will create two process diagrams. The website below provides general
instructions and visuals on how to use MS Word to create your process change diagram. Their
use is not mandatory and they are only suggestions. You may wish to research other ways
to prepare process diagrams.

TechRepublic: Create process diagrams in less time with Word 2007’s SmartArt
1. Prepare two (2) general process diagrams (see Figure 9.2) for the business process
change you identified for Question 2 in Section 1. Create a diagram of the steps currently
taken by the organisation for the process. Create a diagram of any adaptations to the
process steps after the change process is approved.
2. Evaluate the importance of the existing and future diagrams, and explain how they assist the
organisation to determine the validity of the suggested change.

Note. You are not required to provide a conclusion or recommendations since the second
report will be a continuation of this one. If this assignment is done nicely I will ask you to do for me the continuation of this to which is due later. For now just do pls what is required.
Please don’t put page numbers for in text referencing its my style and will understand someone alse did it so just e.g (Bryan, 2014) is fine
This is the report I need to be done if a good job is done the second part will be handed to you as well which is due next week.
So like I explained I choose Telstra and talking about the process of call centres and how Australians call and get connected to a non-native speaker, and they can’t deal with the problem. So expanding offshore will require better

centres to these countries. With people that can talk native ( e.g Malaysia has 3 languages) I will copy and paste a few of my findings with website references. I will also upload articles that some of them have to be used and the

textbook we are using, all in pdf. Below I send u some figures

http://www.adnews.com.au/adnews/vodafone-still-beset-by-poor-customer-satisfaction

http://whatphone.com.au/guides/mobile-phone-coverage

Managing outsourcing process:
applying six sigma
Rakesh Agarwal and Nonika Bajaj
Accenture Services Private Ltd, Bangalore, India
Abstract
Purpose – The decision to manage an outsourced project is easy but to provide client satisfaction is a
difficult process. Outsourcing has been broadly accepted due to the extensive and useful business need
they provide, even in those situations where the planning/decision support paradigm provided by the
system poorly fits the business. The purpose of this paper is to propose an effective modeling
methodology for managing the process of outsourced projects for the clients.
Design/methodology/approach– The paper proposes a cimosa, O3ML and business outsourcing
process using DMADV methodology – an effective modeling methodology for managing the process
of outsourced projects for clients.
Findings– The hybrid governance structure consists of inter-organizational coordination
mechanisms, inter-organizational systems and social control. Companies that wish to offshore their
business process should select the service providers that can facilitate setting up such hybrid
governance structure.
Research limitations/implications – The limitations of managing the outsourced paradigm (IT or
business process), i.e. redesigning work and assigning responsibilities, need to be clearly recognized if
they are to be dealt and delivered with in an effective manner.
Practical implications– Six sigma is a business process improvement strategy, which essentially
checks that the performance of the business is according to the needs of the client. The end-user of a
product or service is a client and thus the deliverable of a project should be according to the needs of
the client.
Originality/value – The paper is of value in proposing an effective modeling methodology for
managing the process of outsourced projects for clients.
Keywords Outsourcing, Six sigma, Process management
Paper typeCase study
1. Int roductio n
Management of outsourced projects of information systems has become more complex
(Chris, Outsourcing). Vendors are signing more outsourcing deals, and increasingly
relying on more than one supplier for their survival/profit. This means that the
management of the outsourcing relationship is becoming more complex. Current
trends suggest that the outsourcing market will continue to grow.
Conventional outsourcing has missed the most vital element that is the substance of
effective change:, i.e. business process. Business processes can be re-defined as
interaction of people (Benoit, 2003). This interaction can be made effective by using
proper diverse level of process models.
Growth in offshoring has been in the order of 30 percent per annum in monetary terms
and has focus on cost savings (Dawne, 2001, p. 38). However, the growth in the use of
offshored services has illustrated that its benefits are no longer just about price – they
can include service quality improvements, scalability, better risk management and the
freeing up of internal resources to focus on core value-adding activities (Deo and
Agarwal, 2001, pp. 65-8).
The current issue and full text archive of this journal is available at
www.em eraldinsight.com/146 3-7154.htm
Managing
outsourcing
process
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Business Process Management
Journal
Vol. 14 No. 6, 2008
pp. 829-837
q Emerald Group Publishing Limited
1463-7154
DOI 10.1108/14637150810916008
Some of the leading offshore service providers have uplifted their approach to
customer relationship management and service delivery. Service delivery comprises of:
consulting services, IT infrastructure management, software applications development
and management, help desks and business process outsourcing. IT outsourcing
(maintenance and new development of IT applications) and business process
outsourcing (call center, clerical, professional – much less mature model) are the two
broad areas where the software houses are focusing.
Computer Integrated Manufacturing-Open System Architecture (cimosa) is an Open
System Architecture for supporting the development of systems throughout the whole
systems life cycle and is synthesized from the experience of a wide range of
manufacturing companies, manufacturing and information technology vendors and
research institutions. The total cimosa architecture identifies a possible future
manufacturing system towards which the current systems can evolve.
In this paper, we will discuss how cimosa can be configured with O
3
ML (Operational
Object-Oriented Modeling Language) (Currie and Willcocks, 1998, p. 89) to provide for a
suitable management of outsourcing both for IT and business processes. The
implementation methodology for business process activities can be accomplished in a
sequential manner and applying six sigma to improve the process and to achieve more
client satisfaction.
2. Step s in ma naging outso urcing
Outsourcing implementation methodology may have different number of steps
(Agarwal, 2006, p. 662). We may not follow all the steps in the process but it is highly
essential to have a structured approach. Project leaders must set out clear measurable
objectives at the beginning of each process and review the process at intervals.
The steps that are essentially required for outsourcing implementation are as
follows:
(1) Business strategy.
(2) Business process re-design.
(3) Project initialization and documentation.
(4) Initial training.
(5) Identification of functionality.
(6) Prototype configuration and business model.
(7) Configuration and development.
(8) Integration and testing.
(9) End-user training.
Based on the different steps in outsourcing implementation, Figure 1 shows how they
interact with different conceptual and operational tools.
3. Si x sigma
The quality movement in the traditional sense referred only to the manufacturing
industries. Six sigma – the latest incarnation of the quality movement – today has
swept across all the layers of the organization and all the industries alike. Sigma is
basically a Greek term for variation (Agarwal, 2006, p. 662). Six sigma is an extremely
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well structured program whose prime objective to improve the business processes
by minimizing the variations or defects during the production process. It is defined as
3.4 defects per million products (Deo and Agarwal, 2001, p. 65).
What does the customer need from the process? How does the customer view or
measure the performance of the process? How can the process improve further? The
answers to these questions would help to improve the processes and thereby manage the
project better. The methodologies provided by six sigma viz., define, measure, analyze,
improve, control (DMAIC) and define, measure, analyze, design, verify (DMADV) helps
to manage the projects effectively so that variation is minimized as much as possible
from the processes in order to provide consistency, efficiency and profits in the long run.
The prime objective of six sigma is the implementation of a strategy that focuses on
improving the process and reducing the variation during the manufacturing process of
a product. This can be achieved by using either of the two, six sigma
sub-methodologies – DMAIC and DMADV (Cosgrove Ware, 2001).
The DMAIC process is an system for improving existing processes which are below
specification and looking for continuous improvement (Dawne, 2001, p. 38) whereas the
DMADV process is an system for improvement used to develop new processes or
products at six sigma quality levels DMADV (Cosgrove Ware, 2001). Hence, we have
the “improve” stage in DMAIC (improve the existing process) and the “design” stage in
DMADV (design the new process).
Figure 2 shows the organizational structure of six sigma. The main activity
associated (Deo and Agarwal, 2001, p. 65). with each of the roles is explained below:
.
Quality lead er(QL)/q uality manag er – The QL will represent the needs of the
customer and help to improve the overall quality of the organization.
.
Master black be lt – are in-charge of a specific function in an organization. They
work along with the owners of the process to set quality objectives and targets
and to track progress of these targets.
Figure 1.
Integration between
cimosa, O
3
ML and
outsourcing
Organizational View
Resource View
Informational View
Functional View
Step in managing outsourcing
1. Business strategy
2. Business Process Re-design
3. Project Initialization and
Documentation
4. Initial training
5. Identification of Functionality
6. Prototype Configuration and
Business Model
7. Configuration and Development
8. Integration and Testing
9. End-user Training
Support Cooperative
work among individuals
and teams by automating
the process
Request and Design
Request, Design
& Implement
Coordination between
team members for
cooperative work
Modeled by
Implementation
O
3
ML operational
Model
Managing
outsourcing
process
831
.
Process owner – are the persons who are responsible for a specific process. They
may belong to any level of an organization.
.
Black belt – are those persons who lead the quality projects & are completely
dedicated to these projects till they are complete.
.
Green be lt – are those employees who spend 10-50 percent of their time in
completing the six sigma projects.
4. Imp lementa tion of six sigma to evolve a new process fo r ma naging
outso urcing
The prime objective of six sigma is the implementation of a strategy that focuses on
improving the process and reducing the variation during the manufacturing process of
a product. This can be achieved by using either of the two, six sigma
sub-methodologies – DMAIC and DMADV (Cosgrove Ware, 2001).
The DMAIC process is an system for improving existing processes which are below
specification and looking for continuous improvement (Dawne, 2001, p. 38) whereas the
DMADV process is an system for improvement used to develop new processes or products
at six sigma quality levels. Hence, we have the “improve” stage in DMAIC (improve the
existing process) and the “design” stage in DMADV (design the new process).
Figure 2.
Six sigma organizational
structure
CEO of the
Company
Reports to
Responsible for
specific function
MBB
MBB
Responsible for
specific process
PO
Master Black Belt
(MBB)
Group Manager Quality
Responsible for leading
quality projects and
are full time workers
BB
Process Owner
(PO)
Black Belt
(BB)
Responsible for leading
quality projects and
are part time workers
GB
Green Belt
(GB)
Process Owner
(PO)
Group Manager
Systems
Reports to
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The DMADV stage can also be employed if a current process requires more than just
incremental improvement (Agarwal, 2006, p. 662).
The DMADV methodology of six sigma is applied to each organizational pyramid
and is described in detail in the following section (Figure 3).
4.1 Orga nization al view
At this level, the business strategy, selling shaping and contracting by the highest level
of management is done. The need of the service outsourced should be aligned with the
need of the client. The different stages of the DMADV methodology applied to the
organizational view and are described in Table I.
4.2 R esource view
Decisions related to the resources, solution planning and service transformation are
taken at this level. The resource and the solution planning for the client’s requirement
happen at this view. Let us assume that the client has an application service
management outsourced to us. Then the planning of the solution of which technology
service can be supported from business end needs to be provided at this level. The
process of service transformation also needs to be taken care. The integrated approach
applied will support in effective management of resources. The stages of the DMADV
methodology applied to the resource view are described in Table II.
Figure 3.
Different organizational
views
Organization
View
Resource View
Information View
Functional View
Selling and Shaping
Contracting
Solution
Planning
Transformation
of Service
Transition
Planning
Transition
Termination
Service Operations
DMADV methodology Cimosa, OM
3
L and outsourcing integrated process
Define Determine the business strategy
Measure Map business performance with the business strategy
Determine the differences between the business and the desired state
Quantify the difference
Analyze Determine the sources of variation in business performance
Determine the leverage in the system that affects the performance
Design Design new process that bridges the gap between current state and
desired state
Verify Evaluate the process strategy with the results and quantify that the gap is
minimizing with new process
Table I.
DMADV stages for
organizational view
Managing
outsourcing
process
833
4.3 Infor mation view
Decisions at this level are related to transition planning, service transition and for
service termination. It manages communication between the onshore and offshore
team. The implementation of services, financial and contract management are done at
information view. The knowledge transfer also happens at this view. The integrated
approach applied will support in effective management of resources. The stages of the
DMADV methodology applied to the information view are described in Table III.
The implementation and feasibility of service transitioned is managed at this view.
4.4 Funct ional view
Functional view handles service operations. Implementation of technology, work
environment, unit operations, enabling people and transfer of knowledge is managed at
this view. The real implementation of the service off shored happens at this level. The
cimosa, OM
3
L and outsourced integrated process is a new process. The stages of the
DMADV methodology applied to the information view are described in Table IV.
The software houses need to evaluate the maturity of the processes:
.
When to adopt and when to synch up.
.
Partners are excellent at embracing existing procedures (seek advice & guidance
on best practices from partner).
.
Proper and adequate resources.
The existing problems won’t go away; a development strategy needs to be modeled for:
.
Defining scope.
.
Generating better understanding of problem.
DMADV methodology Cimosa, OM
3
L and outsourcing integrated process
Define Determine the solution planning and service transformation
Measure Identify the service transformation
Evaluate service transition
Analyze Determine the sources of variation in service transformation
Determine the leverage in the system that affects the performance
Design Design new process that bridges the gap between current state and
desired state
Verify Evaluate the process strategy with the results and quantify that the gap is
minimizing with new process
Table III.
DMADV stages for
information view
DMADV methodology Cimosa, OM
3
L and outsourcing integrated process
Define Determine the resource and solution to clients’ requirement
Measure Identify the key resource and solution variables
Evaluate the variables
Analyze Identify the cause for variables
Identify the leverage in performance due to these variables
Design Outlined a new process that bridges the gap between current state and
desired state, minimizing the leverages
Verify Evaluate the process strategy with the results
Table II.
DMADV stages for
resource view
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.
Setting meaningful SLA’s & metrics.
.
Gaining client involvement.
5. C ase stu dy
The near shore team works in the time zone where maximum user base is, their role is
more client facing. They collect all the required information to work on a case and pass
it to offshore team. Based on these inputs, offshore team works on cases in their day
time. The Life cycle of the outsourcing typically is depicted in the Figure 4.
On site team only solve high priority issue which is opened in their business hour.
They hand over all other cases to offshore team.
Our service level agreement is:
.
Pr1 Issue – 2 h.
.
Pr2 Issue – 5 h.
.
Pr3 Issue – 20 h.
.
Pr4 Issue – 7 days.
There is a clear mandate from management to push more and more work to offshore.
Guideline is set to ensure all Pr3, Pr4 and Pr5 tickets are sent to offshore without
any exception. Even for Pr2 issue opening during last two business hours of on shore
team, on site team does the ground work and sends it across to offshore team. The
service methodology is shown in Figure 5.
DMADV methodology Cimosa, OM
3
L and outsourcing integrated process
Define Determine the service operation
Measure Identify and evaluate the service operations
Analyze Determine the sources of variation in service transformation
Determine the leverage in the system that affects the performance
Design Design new process that bridges the gap between current state and
desired state
Verify Evaluate the process strategy with the results and quantify that the gap is
minimizing with new process
Table IV.
DMADV stages for
functional view
Figure 4.
Outsourcing lifecycle
Selling
Contracting
Solution
Planning
Due
Diligence
Transition
Planning
Service
Transition
Service
Transformation
Renewal
Shaping
Contract
Shaping
Service
Termination
Service Operations
Time
Managing
outsourcing
process
835
Near shore team is primarily focused to work as eyes and ears of off shore team.
They collect all the required information to work on a case and pass it to offshore
team.
Management monitor and report very closes for every cases resolved by offshore
team or cases where all required information is not collected by onshore team.
Engagement has developed daily hands off process. At the end of Business hour,
hands off set is sent. Every day leads from both location gets involved in daily call to it.
Every ticket with is open in the queue is classified in one the following category:
.
Scheduled.
.
Dependency.
.
Waiting for customers’ signoff.
.
Waiting for more information from customer.
.
Work in progress.
This process has helped immensely to both location in getting all the required
information to work on cases and closing ticket quickly.
Owing to all these efforts, ticket resolution from offshore team increased from 26 to
65 percent while ticket volume has increased by 46 percent Back-log went up from
33 to 80 in offshore ticket resolution went up from 46 to 75 percent. The case study
clearly depicts that the implementation of six sigma has increased the tickets volume
and within short period of time we were able to achieve high targets by implementing
six sigma.
Figure 5.
Services methodology
flow
Incident
Identified
Help Desk Logs and
Prioritize issues
Incident Management
Protocol Initiated
Workaround
Required ?
No
Yes
Critical ser
1,2
Predictive
Monitoring
incident
identified
Action plan and
communication
approach reviewed
Escalation (as needed)
Access
Incident
No
Identify workaround
option, if any
Implement/Verify
workaround option
Problem mgt.
required?
Log Problem
Resolve and
close incident
No
Incident Management – Process Flow
User
Help
Desk
Service
Desk
TFS
Incident reviewed and
assigned
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6. C onclus ions
As outsourcing is becoming more as a requirement for business service, savvy
outsourcers are realizing that by understanding their clients’ businesses they can bring
much more value to the business.
This paper has highlighted the modeling process for delivering complex
outsourcing projects (IT or business processes) and also applied six sigma to
integrated process. Further work is focused on implementing a real life case study.
7. Dis claimer
The author(s) of this report gratefully acknowledge Accenture for their encouragement
in the development of this research. The information contained in this document
represents the views of the author(s) and the company is not liable to any party for any
direct/indirect consequential damages.
References
Agarwal, R. (2006), “Managing outsourcing: IT or business”, paper presented at International
Conference on Recent Trends in Information Systems, Kavilpatti, pp. 662-6.
Benoit, A. (2003), “Trends in outsourcing of information systems minitrack”, Proceedings of the
36th Hawaii International Conference on System Sciences.
Chris, T. “Outsourcing: managing relationships not contracts”, available at: www.itnetplc.com
Cosgrove Ware, L. (2001), “Upward and onward with outsourcing”, CIO Magazine , August 1.
Currie, W. and Willcocks, L. (1998),New Strategies in IT Outsourcing, Major Trends and Global
Best Practises, Business Intelligence, London.
Dawne, S. (2001), “Six sigma in the computer world”, p. 38.
Deo, A. and Agarwal, R. (2001), “Six sigma – a tool for improving quality in organizations”,
paper presented at International Conference Information Technology in Management,
Cuttack, pp. 63-5, 21.
Further reading
Agarwal, R. (1996), “Operation object-oriented modeling”, PhD thesis, Politecnico di Torino,
Dipartimento di Automatica e Informatica, Torino.
Agarwal, R., Bruno, G. and Torchiano, M. (2000), “An operational approach to the design of
workflow systems”,Information and Software Technology , Vol. 42 No. 8, pp. 547-55.
Corresponding author
Rakesh Agarwal can be contacted at: rakesh.agarwal@accenture.com
Managing
outsourcing
process
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Business process improvement:
empirical assessment
and extensions
Samia M. Siha
Kennesaw State University, Kennesaw, Georgia, USA, and
Germaine H. Saad
Widener University, Chester, Pennsylvania, USA
Abstract
Purpose – The purpose of this paper is to survey and analyze current process improvement (PI)
approaches, their empirical results reported in the literature, and develop accordingly a conceptual
framework and implementation guidelines.
Design/methodology/approach– A literature review of the popular business database to search
for case studies and empirical research on PI methods was conducted. The empirical evidence on
success and failure factors were inferred and tabulated. Based on synthesis of the lessons learned from
this empirical evidence along with concepts drawn from economics, and operations management, a
conceptual framework is developed.
Findings– It was found that the framework would serve as a diagnostic tool for identification of, and
recovering from root causes of problems and inefficiencies faced in business environments. The
framework proposed synthesizes and extends earlier PI tools and basic approaches used for mitigating
disruptions faced in operations practice. The framework design consists of three main phases: Specify;
Analyze; and Monitor closely. Accordingly, it is denoted by SAM.
Practical implications– Decision makers can be altered to both the success factors and causes of
failure of different PI approaches, and a framework is provided along with implementation guidelines
that help assure practical effectiveness of PI efforts. The guidelines provided for practicing managers
comprise two categories: specific; tool-based, and general; system-based.
Originality/value – The contribution of this paper is two fold: first, empirical evidence on the
drivers of success and failure of four main PI approaches, were synthesized . These include: six sigma,
benchmarking, reengineering and process mapping. Second, based on this empirical evidence, a
conceptual framework that guides both the choice and implementation of business process
improvement programs is developed. The proposed framework and its implementation guidelines help
assure actual effectiveness of PI practice.
Keywords Process management, Business process reengineering, Modelling
Paper typeLiterature review
1. Int roductio n
Companies are striving to gain market share in global economy, and the competition is
so fierce. Quality and customer satisfaction are major items on each company’s agenda,
but so is profitability. The effort has to start internally, by continuously improving
their business processes in every area, as well as from the “Outside-In” to reflect the
changes in market requirements, and in customers’ needs.
The current issue and full text archive of this journal is available at
www.em eraldinsight.com/146 3-7154.htm
The authors gratefully acknowledge the reviewers’ comments and remarks received on an earlier
version of this paper, which helped improve the paper readability, and content.
BPMJ
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Business Process Management
Journal
Vol. 14 No. 6, 2008
pp. 778-802
q Emerald Group Publishing Limited
1463-7154
DOI 10.1108/14637150810915973
It is noticed however that, not all process improvement (PI) efforts lead to profitability
increase. Many companies have experienced impressive improvement in an individual
process, where the bottom line improvement was next to none (Hallet al. , 1993).
So, what is PI? How to measure its success? What are the main drivers of its success
and the root causes of its failure in practice? How to avoid such failure, and help
practitioners insure their PI programs achieve their intended outcome? This paper
addresses these questions. The empirical lessons learned from actual PI programs are
synthesized and used to develop a Framework that helps practitioners achieve the
intended results from PI.
According to APICS, aprocess is “a planned series of actions or operations
(e.g. mechanical, electrical, chemical, inspection, tests) that advance a material or
procedure from one stage of completion to another.”
Oxford gives a more detailed definition. It defines aprocess as “a continuous and
regular action or succession of actions, taking place or carried out in a definite manner,
and leading to the accomplishment of some result; a continuous operation or series of
operations.” However, recognizing and understanding a process is not always easy
because it cuts through departments and hierarchical boundaries particularly in
service organizations. Some distinguish between three process types: strategic
processes, operational processes and enabling processes (e.g. management of human
resources and management of information systems). This categorization does not give
extra importance to one process over the other but “it provides a mechanism for
categorizing processes at the enterprise level” (Peppard, 1996).
Hammer (2002) defines PI as “A structured approach to performance improvement
that centers on the disciplined design and careful execution of a company’s end-to-end
business process.” However, not all PI efforts are successful. As reported in the
literature, 50-70 percent of the PI initiatives fail to achieve their objectives (Hammer
and Champy, 1993).
Reasons for failure of PI effort include a focus on the tactical issues not on the issues
that affect the entire business, and the lack of knowledge transferability of PI projects.
Lapre´ and Van Wassenhove (2002) performed an extensive study of an European
manufacturer and found that both the operational and conceptual learning are
important for knowledge transferability, and consequently, for both productivity and
“bottom line” improvement.
There are various methods of PI, some of them are statistically oriented (e.g. six
sigma), and others utilize creativity and innovation (e.g. business process
reengineering (BPR)). In this paper, we survey and analyze four PI methods; six
sigma, benchmarking, BPR and process mapping, as these are the most widely used
business process improvement (BPI) approaches in practice.
The paper is organized as follows: first, the main research issue, and methodology
used are presented, in Section 1. This is followed by a literature review of four BPI
methods. We discussed their pertinent empirical evidence; and articulated,
accordingly, the critical success and failure factors of each, in Section 2. The lessons
learned from this empirical evidence are then synthesized, and used to develop a new
framework for guiding management practice, in Section 3. Practical extensions and
implementation guidelines are then presented in Section 4. We then conclude, in
Section 5, by a summary of the study findings and suggested issues for future research.
Business process
improvement
779
1.1 Research methodology
Our research methodology consists of three stages:
(1) First, we conduct a literature review of actual implementations of PI projects that
used six sigma, benchmarking, reengineering, and process mapping. Our search
comprised the ABI Inform and EBSCO Host – Business Source Elite databases
and pertinent journals from Emerald database since they cover most of the
business periodicals. For each search attempt, the key words: PI, and, one name of
the PI methodologies, were used. We then reviewed the retrieved articles, and
excluded the rhetorical, opinion-based, and theoretical articles. We kept only the
case-based studies and the empirical research articles. This set of articles went
through another round of review to choose the articles with enough information
on BPI implementation and rigorous coverage. These articles were supplemented
by another set that were hand picked – based on title and suitability – from their
reference lists. The articles reviewed were categorized next by the four PI
methods: six sigma, benchmarking, BPR, and Process mapping.
(2) Second, from this review we provided a summary of empirical evidence on the
success factors and causes of failure of each approach.
(3) Third, the lessons learned from this empirical evidence were then synthesized
with concepts drawn from Economics, and Operations Management, and used
to develop a conceptual framework for advancing PI practice, and provided
action guidelines that help assure its implementation effectiveness.
2. Lite rature review and cla ssificat ion of BPI empirica l evidence
Reported evidence on actual implementations of four PI approaches are now discussed,
and categorized. These include: six sigma, benchmarking, reengineering, and process
mapping, respectively.
2.1 Six sigma
Motorola initiated six sigma concept which refers to reducing the failure rate to about
3.4/million. To understand the practical extent of six sigma, it is enough to know that
the average process defect rate at most companies is about four sigma or 6,200
defect/million, while six sigma defect rate is 3.4 defect/million (with the assumption of
process shift by 1.5 sigma). However, six sigma program is much more than that. It is
not just a collection of statistical tools and metrics; it is a program that implements
a wide range of tools in order to improve productivity and profitability. Six sigma is a
standardized approach to problem solving and PI. Six sigma PI consists of five phases:
(1) define and quantify the problem;
(2) measure performance and determine defect levels;
(3) analyze data and perform root cause analysis;
(4) improve the number of defects; and
(5) control the process to insure improvements are sustained.
The success of six sigma could be attributed to many factors including: management
involvement, adjustment of culture and employees’ attitude, organization
infrastructure, training on six sigma methodology and tools, project management
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skills, and linking six sigma to business strategy, human resources, customers and
suppliers (Antony and Banuelas, 2002). Moreover, it is important to use structured
methods, select the process for six sigma improvement strategically, employ full time
specialists and relate the financial and business results to the bottom-line (Schroeder,
2003). In a research which highlights six sigma as a goal setting and goal achievement,
Linderman et al. (2002) accentuate the importance of the explicit challenging goals, the
structured methods of six sigma, the employees’ rewards, incentives and training.
Although six sigma was first used to reduce the variations and the defects in
manufacturing processes, it has been extended and well received by many service
industries; particularly financial institutions and healthcare (see examples in Table I).
Despite of all the promises of six sigma programs and its great success reported by
several companies like GE, Motorola and Allied Signal; many other companies are
dissatisfied with the results from their six sigma projects. Velocci (2002) related this to
lack of direct impact on customer, failing to involve both suppliers and customers, need
of linkage to overall business objectives, in addition to viewing six sigma as just a tool
and not as a complete PI approach.
Another problem with six sigma PI projects is their concentration on functional
areas, which does not necessary lead to an improvement in the profit margin.
Furthermore, applying six sigma, on a process to improve it, implies that the process is
sound, while, sometimes, the process needs to be redesigned. Yet, six sigma with its
analytical instead of creative orientation is not equipped for this task (Hammer, 2002).
Table II provides a summary of the critical success factors, and causes of failure
induced from empirical literature on six sigma implementations.
2.2 Benchmarking
Benchmarking is the process of continuously measuring and comparing one’s business
processes against comparable processes in leading organizations to obtain information
that will help the organization identify and implement improvements (Watson, 1993).
The American Productivity & Quality Centre has defined benchmarking as:
A systematic and continuous measurement process; a process of continuously measuring and
comparing an organization’s business process against business process leaders anywhere in
the world to gain information which will help the organization take action to improve its
performance.
Benchmarking has been evolved from reverse engineering of competitive product, to
process benchmarking, to strategic benchmarking, and then to global benchmarking.
There are different types and scopes of benchmarking: internal benchmarking, external
benchmarking, competitive benchmarking, and generic benchmarking (Watson, 1993).
Xerox is credited for starting the use of benchmarking in late 1970s and early 1980s when
it benchmarked its partner in Japan. Although benchmarking was originated in the US
and American companies led the implementation, many European companies have caught
up. Many initiatives have been growing in the UK: UK benchmarking index, Inside UK
Enterprise and Cranfield Best Factory are just examples (Zairi and Ahmed, 1999). Same
position is taken by other European countries, as illustrated in Table III. At the core of
benchmarking is the comparison between the organization and the best practice. When an
organization benchmarks the best practice, it is actually performing a gap analysis to
access the difference between the two. This gap analysis is usually one-dimensional.
Although, it is easier to monitor one dimension, organizations may miss on the
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Company/unit Performance measures
Sources
of variations/errors Tools Results Citation
McMahon’s EZ – Acres
Dairy Farm/the feeding
system
Forage dry matter content
Dry matter intake by
lactating cow group
Feed cost/kg milk
produced
Purchased feed
Feed dry matter and
chemical composition
Control charts Decrease variation in the
diets offered to groups
Reduce feed costs
Improve safety factor
levels used in ration
formulation
Tylutki and Fox
(2002)
Memorial Hospital in
NJ/acute anticoagulation
with heparin
Time interval between the
collection of first and
second partial
thromboplastin time
(PTT)
Percentage of patients
developing anemia while
on heparin
Occasional episodes of
incorrect pump setting
Incorrect use of pumps
Delay in obtaining and
reacting to a PTTs
Mixing errors of heparin
infusions
Weighing patients only 48
percent of the time
Process map
Control charts
Run charts
Reduce errors
Reduce no. of steps in
medication administration
Improve staff productivity
Increase patient safety
Kooyet al. (2002)
Citibank/ Time to complete manual
funds transfers
Time to open an account
The number of handoffs
The internal call back
procedure
Pareto chart Reduce process timelines
Improve cash
management
Increase customer
satisfaction
Rucker (2000)
Human resource function Level of communication
feedback
Recruitment time
Rate of return of feedback
sheets
Personnel
Geographical proximity of
recruiters
Type and timing of
advertising
Position type
Quality function
deployment
Control charts
Run chart
Cause and effect
diagram
Pareto chart
Reduce the HR
cost/employee
Reduce overhead cost
Improve productivity
Reduce throughput time
Wyper and
Harrison (2000)
( continued )
Table I.
Six sigma
implementation
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Company/unit Performance measures
Sources
of variations/errors Tools Results Citation
Froedtert Memorial
Lutheran Hospital, WI
Frequency of error
occurrence in medication
delivered by continuous
I.V. infusion or in lab
analysis and reporting
Severity of the error on
medication delivered by
continuous I.V. infusion
I.V. rate calculation
I.V. pump set up
Order entry of lab work by
the unit clerical staff
Transportation of the
specimens
Analysis of specimen in
the lab
Failure mode
and effect
analysis
Risk priority
numbers
Cause and effect
analysis
Process map
Create a standard for the
ordering and processing of
I.V. drips
Reduce turnaround time
Improve patient safety
Buck (2001)
Motorola’s Austim
Assembly plant:
ultrasonic wire bond
operation
Power measured in
milliwatts
Time measured in
milliseconds
Force measured in grams
Problem with the wire
Lack of consistency
Pareto diagram
Cause and effect
analysis
Control charts
Design of
experiment
Improve overall yield of
the equipment
Kumar and Gupta
(1993)
Student Loan Marketing
Association
Ratio of loans falling out of
rehabilitation
Failure to acquire loans
that could be rehabilitated
and refinanced
High variability among
account representatives
Cause and effect
analysis
Process
capability index
Expected results are:
reduce cost
compete in the student
transition loan
Taghaboni-Dutta
and Moreland
(2004)
Table I.
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Method Critical success factors Failure factors
Six sigma Management involvement
Adjustment of culture and employees’ attitude
A supporting infrastructure
Training on six sigma methodology, tools and
project mgt. skills
Linking six sigma to the corp. strategy, human
resources, customers and suppliers
Strategic selection of six sigma projects &
participants
Set Challenging goals for six sigma
Use of appropriate incentive systems and training
Lack of direct impact on customer
Failure to involve both suppliers and customers
No linkage with to overall business goals and
objectives
Viewing it as a tool, not as a complete PI
methodology
Focus on improve. of functional area which does not
lead to profit increase
Use of 6sigma assumes the process is sound and just
needs improvement, yet the process may need
redesign, and creative orientation that six sigma is
not equipped to fulfil
Benchmarking Ease of monitoring one dimensional gap analysis
Sharing forums among comparative firms proves
very effective for improving practice
Linking best practice to the delivery of corporate
objectives
Emphasis of knowledge sharing and communication
A one dimensional gap analysis may overlook main
drivers and relationships that are key to the
underlying business success
Is limited in ambition by the best in practice which
may not be best in a changing world
Mgt. of proprietary info. And antitrust laws can pose
problems
Lack of top mgt. support
Lack of clear association between benchmarking and
profit increase
Its focus is on the tactical issues not on the issues
that affect the entire business
It requires the cooperation among varies companies
which brings issues concerning the management of
proprietary information and anti-trust laws
( continued )
Table II.
Success and failure
factors of empirical PI
implementations
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Method Critical success factors Failure factors
Business process reengineering Questioning the fundamental assumptions of a
process
Integration of BPR with the Corp. Strategy
Total commitment of the leadership
Strong communication among the participating team
The ambitious goals of the reengineering process
Deployment of the most talented, competent and
creative people in the project
The process chosen for reengineering should be in
the center of the organization for the improvement to
be felt
The effective use of information and communication
technology
Negligence of the work environment aspects of the
design process
The importance of BPR projects
The rigidity of the infrastructure system
Consideration of human factors as cost that needs to
be reduced, rather than a resource to be developed
Process mapping The focus on the customer and measures of process
success
Emphasis on achieving the company’s goals
Focus on both the process’s efficiency &
effectiveness
Accuracy in collecting the process data
Assuring full participation of every one in the
process
Creation of autonomous and cross-functional teams
accountable for the results
The inclusion of the decision points which are a key
to effective analysis
Failure to define a beginning and end to the process
Lack of identifying the purpose of the improvement
effort and consequently the required details of the
process’ depth and breadth. This may lead to
unneeded extra expense or poorly designed process
Failure to link the goal of PI to the organization
competitive priorities
Inability of defining the process boundaries; its
begging and end (Savory and Olson, 2001)
Table II.
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785
Country Industry/company
Type
of benchmark Areas to benchmark Method Citation
Italy Health business/ Internal Personal motivation and
satisfaction
The “plan-do-check-act” cycle Sargiacomo
(2002)
Scotland Tourism/hotel, tour operator and
visitor attraction
General Customer loyalty, innovation and
attracting new customers
SWOT, process maps, analysis,
implementation and evaluation
Canoet al. (2001)
USA Electronic manufacturing/AT&T
Oklahoma City Works
Internal and
competitive
Six key process from product
introduction to circuit card
assembly
The “plan-do-check-act” cycle Pulat (1994)
UK Retailing/Boots the Chemist Internal The promotion of new
merchandise line
Find best practice among all
stores
Set a target
Communicate to store managers
Simpson et al.
(1999)
Brazil Residential steel doors and
windows
Competitive Product and process development
production and delivery
Use five steps “product and
market analysis, critical
dimension; performance
assessment and improvement
priorities”
Carpinetti and
Mole (2002)
Table III.
Benchmarking
implementations
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complexity of the trade-off that exists within each company and among companies.
A more comprehensive multi-dimensional gap analysis is captured in spider-web
diagrams. The spider-web diagram can show at a glance multiple targets for various
stakeholders (Ahmed and Rafiq, 1998).
Regardless of the tools and scope used in benchmarking, it has been accused of its
limitation to ambition, since the aspiration is to be as good as the best in industry. Even
the definition of the best in industry is not clear since the best this year may not be the
best next year. Another issue is the management of proprietary information and
antitrust laws (Pulat, 1994). Nevertheless, many companies attributed a great deal of
improvement in their processes to benchmarking. Table III presents a summary of
empirical results of benchmarking implementations.
It is noticed that these companies along with many others (e.g. Chevron, HP and
Hughes Space & Communication) have attributed their success in benchmarking
implementation to the effective transfer of best practices. The critical success factors of
benchmarking are summarized in Table II.
2.3 Reengineering
Reengineering (or BPR) is a term that was coined by Hammer and Champy (1993) to
describe a mean of radical process redesign in order to achieve large-scale improvement
in business performance. They defined reengineering as: “The fundamental rethinking
and radical redesign of business processes to achieve dramatic improvements in critical,
contemporary measures such as cost, quality, service, and speed.”
Reengineering is different from most other PI approaches because it does not focus
on what is , but rather on what should be . It does not seek to alter or fix existing
processes; yet, it forces companies to ask, whether or not a process is necessary, and
then seeks to find a better way to do it. Peppard (1999) summarizes the key principles
of BPR as: ambition, process focus, questioning fundamental assumptions of the
process, and that information is used as an enabler and measurement of results, not as
activities. He also emphasized the importance of integrating the business process
redesign and the corporate strategy of the underlying business.
Many companies have implemented reengineering projects, and some achieved
great success, and others failed. BPR has been implemented by both service (Hall et al. ,
1993, Attaran and Wood, 1999, Shin and Jemella, 2002) and manufacturing companies
(Hall et al. , 1993, Zinser et al. , 1998, Tonnessen, 2000) in the USA and Europe. While
there are many published success stories, the failure can only be deducted or found in
published statistics and large studies (Hammer and Champy, 1993 and Hall et al. , 1993).
From the above reported reengineering implementations, one concludes that, the
improper choice of the reengineering process can lead to failure of recognizing its
global benefits. The process should have enough breadthand depth. A broadly defined
process should include more activities so the improvement is more likely to extend
throughout the entire business. The depthis measured by the change in six elements:
role and responsibilities, measurements and incentives, organizational structure,
information technology, shared values, and skills (Hall et al., 1993). Moreover, the
suitability of the reengineering method to the organizational context is of great
significance. While process reengineering could benefits manufacturing and service
firms, there should be distinction in its implementation to suit the unique situation of
the firm (Shin and Jemella, 2002). Table II illustrates the main causes of failure in
reengineering practice.
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As to reengineering success factors, it is noticed that reengineering efforts were behind
many positive outcomes such as: reduce cost; increase productivity; reduce time; improve
quality; reduce business cycle; increase profit; and decrease response time. Examples of
these efforts are shown in Table IV. The reader may notice that cross functional teams and
investment in information technology are among the most common tools utilized in BPR
implementation. In addition, time and cost reduction, were among the most reported
results.
While the practice of BPR was found to be successful in the US and Europe
(Table IV), it was not enthusiastically received by Scandinavian countries. The
Scandinavian culture which emphasizes work place democracy and strong employee
participation did not appreciate the top down approach used in BPR. However, the idea
of radical change was appealing. They have integrated BPR with total quality
management (TQM) elements that were already in place and they reported preliminary
success in pilot studies (Tonnessen, 2000).
Based on the above empirical evidences, it is clear that the key drivers for
reengineering success comprise: questioning the fundamental assumptions of a
process, drastic improvement of this process, alignment with corporate strategy, and
effective use of information and communication technologies.
2.4 Process mapping
The Russian writer Ivan Turgenev once said “A picture shows me at a glance what it takes
dozens of pages of a book to expound” (Paradiso, 2003). Process mapping offers a “visual
aid” to PI and provides a mean for analyzing the process. Process mapping is not data flow
diagrams or flowcharts. It is a framework that shows relationships between the activities,
people, data and objectives. There are two types of process mapping: value-added process
map, and Cross-functional map or process interaction map. The first one checks whether
the various activities add value to the process, or not. The second shows the activities done
by various functions and their interactions (Savory and Olson, 2001).
Process mapping is a powerful tool for improving efficiency; it could show control
breakdowns, bottlenecks, unproductive utilization of resources, redundant steps;
non-value added activities and root causes of problems (Keller and Jacka, 1999, Savory
and Olson, 2001, and Paradiso, 2003). However, it is noticed that process mapping may
not be adequate for addressing cultural and political issues when dealing with human
activity systems, as Biazzo (2002) indicated.
Like all other PI tools, process mapping has been used by both manufacturing and
service organizations and proves to be beneficial. The following list summarizes the
success of various organizations in implementing process mapping:
.
Simplify claim process or work done which helps improve productivity and
increase speed (Owens-Corning: Denton, 1995, Farmer insurance: Keller and
Jacka, 1999).
.
Help employees understand their role in the organization and how their work
affects everyone else (Farmer insurance: Keller and Jacka, 1999).
.
Increase the ratio of value added to non-value added time (Citibank: Rucker, 2000
and Goodwill: Mehta and Fargher, 2005).
.
Reduce the cycle time (Owens-Corning: Denton, 1995, ABB: Denton, 1995,
Goodwill: Mehta and Fargher, 2005).
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Company Process type Improvement result How Citation
AT&T Global business communications
system
Reduce time
Reduce handoffs
Increase profit
Assign team members from a wide
range of functions
Create training program of the new
skills
Hall et al. (1993)
Banca di America
e di Italia
The bank transaction process –
create paperless bank
Reduce cost
Improve customer
service
Increase front office
efficiency
Significant investment in
information technology and new
skills training
Placing the best people in the
redesign team
Hall et al. (1993)
Chase Manhattan
Bank
Name and address change, the
branch and ATMs cash, the service
charge and the retail funds transfer
Reduce cost
Increase revenue
Implementation of four segments
methodology: energize, focus,
invent and launch
Utilizing cross functional teams
Shin and Jemella (2002)
Ford Motor
Company
Account payable Reduce cost
Reduce time
Reduce staff
Incorporate a centrally maintained
database
Hammer and Champy (1993)
Halmark New product development process Reduce time
Increase
productivity
Utilizing cross-functional teams vs
the old sequential method
Wellins and Murphy (1995),
Attaran and Wood (1999)
IBM Checking the potential customer
credit
Decrease response
time
Reduce handling
Reduce the credit application
process from multifunction activity
to a single process format
Pegels (1995), Attaran and Wood
(1999)
( continued )
Table IV.
Business process
reengineering
implementations
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Company Process type Improvement result How Citation
Liberty Mutual Issuance of contract to customers Reduce cycle time
Reduce handling
Increase
productivity
Employ cross-functional teams of
sales, underwriters and loss
prevention experts
Hammer and Stanton (1995),
Attaran and Wood (1999)
Porsche New acquisition of prototype parts Reduce time
Improve
information quality
Systematic application of three
phase process reengineering:
initiation, definition and control
Zinser et al. (1998)
Simens Nixdorf
Service
Servicing process Increase
productivity
Total commitment of the
leadership
Keep strong lines of
communication
Build the moral of the workforce
Hall et al. (1993)
WalMart Procurement and distribution Reduce time
Reduce cost
Reduce error
Utilize sophisticated information
technology System
Furey and Diorio (1994), Attran
and Wood (1999)
Table IV.
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.
Increase accuracy of order taking (Owens-Corning: Denton, 1995).
.
Reduce the defect rates by solving the defect problems (ABB: Denton, 1995,
Goodwill: Mehta and Fargher, 2005).
.
Clarify the importance of, and the relationships among various functions, which
in turn reduce the interface problems (Healthcare: Snyder et al. , 2005).
Table II includes a summary of the critical factors in successful implementations of
process mapping, as well as factors that may diminish its value in practice.
Based on the empirical evidence discussed above, and the critical success and
failure factors summarized in Table II; one can deduce the following key determinants
of BPI outcome:
.
Top management: the real involvement of top management in the PI effort is a
must. It should be effective, real, active and clear to all involved employees.
.
Strategic alignment:PI project should be closely aligned with, and tied to, the
corporate strategy and core competency that are critical to the organization’s
success.
.
Process improvement project: should be carefully chosen and broadly defined
and include more activities so that the resulting improvement is more likely to
extend throughout the entire business.
.
Human resourcesthe effect of the new “improved” process on the employees
should not be neglected. They need to know how it is going to affect their future
jobs and “what is in it for them.” Moreover, assure the use of the right people in
the right project.
.
Business environment: the new process may require new training, new
technology, and new data availability. The change in the business and job
environments, and the availability of supportive infrastructure should be
considered.
.
Performance measures: are important to be established and used both before,
and, after the fact to evaluate the outcome. The choice of the metrics used to
measure performance is critical; they should be objective, comprehensive, and
reflecting important criteria in the process, which should be tied to the business
“bottom line.”
.
Sustainability: is important to ensure the “continuous improvement” of the
process and not be satisfied with just the initial result of improvement, the move
should be made from just “a process improvement project” to continuous
improvement of process management (Popoff and Brache, 1994). This can be
accomplished by having a structure in place to avoid backsliding, a system of
formal problem solving process in place, a consistent focus on improvement
activities and long-term measurable objectives which are linked to the
improvement efforts.
Now, the empirical lessons discussed above along with relevant Economics and
Operations Management theories are used to develop a conceptual framework that
guides practitioners’ BPI efforts.
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3. Pr oposed frame work
Several frameworks and models have been proposed in the literature for
undertaking business improvement programs. It is noticed that some of these have
very limited focus, while others were more generic, yet, mainly theoretical in nature.
Moreover, most of these frameworks did not address, nor made use of the lessons
learned from the critical success and failure factors of the business improvement
practice.
For instance, Motwani et al. (1998) provided a theoretical framework for
implementing BPR. This framework comprises six phases: understanding, initiating,
programming, transforming, implementing, and evaluating. Their approach was
restricted to only BPR, and little effort was done to develop a comprehensive integrated
model.
Carpinetti et al. (2000) presented a conceptual framework for deployment of
continuous improvement. They emphasized prioritizing the improvement efforts to
meet the strategic objectives, and to provide a systematic approach to achieve their
goal. The framework was not integrative, and did not consider the factors that can
contribute to the success or failure of the BPI method used, and was not clear on how to
choose the appropriate method.
Another framework was offered by Adesola and Baines (2005), which has a
structure of seven steps and named model-based and integrated PI. While this
framework is intended to be generic in nature, it has focused on marginal improvement
of current processes using only a bottom up approach. It neglected BPR concepts, that
aim at achieving drastic improvement, and lacked measures of sustainability.
Mansar and Reijers (2005) introduced a framework to help practitioners choose the
proper business process redesign. They identified six areas that the practitioner needs
to consider when redesigning the process: customers, products, operations,
organization, information, and technology. Their goal was to help practitioner to
identify the best practice in the above areas when implementing business process
redesign. While their framework was fairly comprehensive, it is primarily theoretical.
It did not account for the empirical lessons learned from actual BPI implementations,
nor the critical success and failure factors induced from practice, unlike our proposed
framework, which follows next.
Now, the main features and role of our framework are presented first, and then
followed by its design and contents.
3.1 The framework role and features
The framework proposed is a tool for triggering appropriate response to change in
markets requirements and/or customer needs. It also serves as a guiding reference for
recovering from, root causes of problems and inefficiencies faced in the underlying
business environment. More explicitly, it is intended to:
.
Make use and reinforce the core competencies of the underlying organization.
.
Help trigger or initiate appropriate proactive moves needed to advance the firm’s
competitive position (“from the Outside-In”).
.
Help generate feasible and effective solutions and results ( from the “Inside-Out” ).
.
Allow a direct mapping of thecritical success factors of the method used for PI
(outlined in Table II), and the metrics used for evaluating business performance
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and strategies, in the underlying business environment. These metrics should
include the value created for the different stakeholders, e.g. the consumer surplus
for customers; profit, market share, and learning and growth for producers , and
distributors, as well as for other supply chain partners.
Additionally, it is designed with practical features in mind, as being:economical, i.e.
its benefits must exceed its costs; easy to understand , and implement by all
relevant parties; evolutionary , i.e. adaptable to fit the current stage of the firm’s
business cycle, its external opportunities and threats, and its internal points of
strength and weakness, and robust , i.e. generates reliable results and stable
solutions that are appropriate for a wide range of changes in the underlying
business environment.
Guided by the above features, and the empirical results presented in section II, the
framework design is now discussed.
3.2 The framework design
The framework proposed consists of three main stages.
First: Specify; second: Analyze; and third: Monitor closely. Hence, is denoted by
SAM, as summarized in Figure 1. Each of the three stages of this framework is now
discussed in more detail.
3.2.1 The first stage: Specify. This stage provides the foundation on which the BPI
planning and execution efforts will be built. It involves scanning both the internal and
the external business environment of the firm:
(a) Starting from the “Inside-Out”: All inefficiencies and problems faced must be
identified. The focus here should be not on the symptoms of problems faced or
inefficiencies encountered internally, but more importantly, on identifying the
root cause of each problem faced, and the pathway to its solution.
(b) Starting from the “Outside-In” : Changes in market conditions, in customer needs
and requirements must be specified. The appropriate response to these changes
must be delineated accordingly.
(c) Based on (a) and (b) above, the desired goals and outcomes to be achieved should
be defined; and the scope of BPI delineated.
(d) Accordingly, the feasible BPI alternatives will be defined.
It should be noted that this stage includes all objective questions related to
What, e.g.:
.
What are the corporate strategies that the BPI approach used must be aligned
with?
.
What are the current core competencies and the potential ones?
.
What are the customer needs and values, the firm must meet, for each customer
segment?
.
What are the current inefficiencies faced, the most significant of these, and the
root cause for each?
.
What are the expected results to be achieved, and/or the standards to be met?
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.
What are the appropriate business performance metrics to use? These metrics
must benecessary and collectively sufficient to provide reliable and complete
measure of performance, and to trigger needed improvements, and pathways for
corrective actions.
It should be noted that each of the three stages of the framework proposed illustrated in
Figure 1, is both continuous and dynamic. Stage I above is no exception. It includes a
continuous review of the relevant questions to be raised, so that the ranking in the next
stage is updated accordingly.
Figure 1.
A conceptual framework
for guiding BPI practice
II. ANALYZE
a) The potential impact of each BPI alternative
b) Select those resulting in significant & widespread impact scope-wise, and time-wise.
c) Assure compliance with all success factors of pertinent BPI approaches used
(as defined in Figure 4).
d) Avoid Empirical Failure causes for each BPI tool used (those specified in Figure 4).
e) Assure that the selected BPI approach meets the goals and outcomes as specified in
stage I. c) above.
III.      MONITOR
Monitor implementation closely to assure effective performance by the right three R’s,
i.e., the Right:
a)
Readiness→
→
→
before the fact
b)
Response during execution
c)
Resilience after the fact
Feedback
I.  SPECIFY
a) From the ‘Inside-Out’:
Internal Inefficiencies
Problem(s) Faced
Root Cause of each Problem & Pertinent Pathways
b) From the ‘Outside-In’:
Changes in Market Conditions and/or Customer Requirements
Needed Response to those Changes
c) The Desired Goals and Outcomes: Based on a) & b) above
d) Feasible BPI Alternatives to be able to achieve c) above
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3.2.2 Second stage: Analyze. At this stage, data has to be collected and information
corroborated to answer each of the questions raised in Stage I above. Additionally,
analysis is to be conducted – at this stage – to:
(a) Evaluate the potential impact of each feasible BPI alternative.
(b) Select those resulting in significant and widespread impact throughout the
organization, scope-wise, and significant impact time-wise . This means making
sure that the selected BPI approach will result in positive results which impact
the whole organization, and extend not only for short period, but be sustained in
the long run, as well.
(c) Assure compliance with the empirical evidence on the Success Factors pertinent
to each BPI approach, as summarized in Table II.
(d) Avoid the empirical failure causes associated with each BPI tool used, as
illustrated earlier.
(e) Insure that the selected BPI approach fits the goals desired and outcomes
specified in Stage (I-c) above.
The analysis at this stage should result in, answering the “How” questions. It includes:
.
Identifying the priority of the appropriate activities to be improved, and scopeof
each BPI project to be carried out.
.
Identifying the appropriate tools and BPI approaches to use for achieving the
specified goals and desired outcomes, as delineated in Stage I, above.
It should be emphasized that, in selecting the most fitting BPI approach to use,
management should be guided by the success factors for each method, and avoid the
failure causes, i.e. adhere to the lessons learned from empirical practice as summarized
in Table II, in addition to making use of the appropriate quality and operations
management theories.
For instance, as noted by Lapre´ and Wassenhove (2002), PI projects should produce
knowledge that is transferable . This comprises both conceptual learning, defined as
“Know-Why”; and Operational learning, i.e. “Know-How.”
Based on the goal of improvement, two basic theories of PI can be characterized:
Gradual and continuous improvement on one hand vs Drastic and discrete
improvement on the other hand. The former one comprises all TQM approaches and
tools, including six sigma and benchmarking. The later one uses BPR as the main tool
for realizing drastic, i.e. revolutionary, improvements that are not just marginal or
gradual overtime. While these two theories for improvement have different goals and
use different tools; yet they both share a common focus, as noted by Tonnessen (2000).
It should be noted that, regardless of the primary goals intended and tools used, all
BPI approaches should focus on promoting: customer satisfaction, real PI, teamwork,
quality, effective change, and efficiency.
Additionally, it is important to select a set of improvement methods that complete
each other, such that, maximum synergy is realized by their simultaneous deployment.
As indicated earlier, each tool is most effective for specific results, and for specific set
of operating characteristics, needs, and contingencies. The selected improvement
approaches should allow for measuring the specific results desired (e.g. customer
satisfaction) and not the individual activities.
Business process
improvement
795
Other important consideration is the budget and/or resources needed, along with an
effective allocation of these. Such allocation must be both feasible, i.e. within the
company’s capabilities, on the one hand, and fulfill the needed improvements, on the
other hand.
3.2.3 Third stage: Monitor . The first two stages of the framework proposed above
focused on planning and setting the right conditions for execution to take place
effectively. This third stage focuses on monitoring closely the actual BPI execution to
assure effective implementation and actual achievement of the desired outcome
specified in Stages I and II.
What cannot be measured cannot be managed effectively. Hence, to monitor the
progress closely and effectively, objective and comprehensive performance metrics
must be used to guide this process.
It is noted however that because execution is subject to many uncontrollable
variables and contingencies, the necessary fine-tuning, and/or modifications of plans –
set at the prior two stages – is a core part of this stage. Here, is the real test of whether
or not, the desired goals and planned outcomes have been materialized.
It should be emphasized that monitoring is continuous. It requires close attention
before , during ,and after the fact. It includes detailed follow-up of all aspects required to
assure effective execution and control. It is affected by a wide range of factors in every
step of execution. These include work force related issues, financial aspects, and
intangible drivers of business performance, e.g. the organizational culture, behavioral
norms, and work climate.
Close monitoring that assures effective performance requires using the right
strategy that we label as the “Right 3 R s”; namely, the Right :
(1) Readiness , i.e. full preparedness, before the fact.
(2) Response , i.e. appropriate action, during execution; and the right.
(3) Resilience , i.e. assure sustainability of the positive BPI outcomes, after the fact.
Resilience requires accounting for the long range impact, and not seeking, nor adopting
only temporary solutions, or results that fade quickly as time goes by.
In general, effective monitoring at this stage involves three main tasks:
(1) Continuous alignment of the employed PI approaches with the corporate
strategic goals.
(2) Matching and continuous mapping of the PI tools, and their implementation
steps with the metrics used to measure business performance. This should
be realized within each firm, i.e. “intra-firm” wise, and mapped with the
stakeholders’ expectations and partners across the value chain, i.e. “inter-firm”
wise.
(3) Continuous assessment and evaluation of the actual results achieved vs those
desired, or, planned. This is attained by analyzing the root causes of variations
between the actual and planned, and taking corrective action, accordingly.
Key to this monitoring and evaluation phase, is to understand clearly the relationship
between the Process and the Outcome, and how such relationship differs at the
execution stage, from that at the planning stage. More on this point follows in the next
section.
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4. Imp lementa tion guidelin es
Guidelines aimed at facilitating the actual implementation of the Framework proposed
above, and on expanding its use for different types of operating environments, are now
discussed. These guidelines are classified in two main categories: specific, i.e. tool-based,
and general, i.e. system-based. Each of these is now discussed in more detail.
4.1 Specific: tool-based
.
As a general rule, the actual performance level achieved depends primarily on the
goals planned, and the pertinent level of performance sought. An ambitious plan
will result in higher actual achievement level, than those resulting from much less
ambitious goals and plans. In a nut shell, if one shoots high ends up high. Yet, if one
shoots for low level, will end up lower in actuality. Based on this fact, whenever
benchmarking is used as a tool for PI, we note that the effectiveness of this approach
is not determined only by the success factors reported earlier (Table II), but by a
more ambitious benchmarking goal. The goal should be, not onlyclosing the gap
between a firm and the current “Star,” or “Best-in-Class” performance, but to go
much beyond that to eventuallyreverse the gap between the current “Star” and the
underlying firm. Figure 2 provides a graphical illustration of this point.
.
As for business process reengineering implementation; to maximize its practical
success, we suggest to follow a “Backward Path,”, i.e. to start first with the ideal
outcome desired to be achieved at specific future time period, and then move
backward to the present , to specify the gap between the desired goal of this future
time period, and, the current state of affairs. This should be then followed by a
“Forward Path” afterwards, i.e. start from the actual present state, and then moving
forward to the desired future, to delineate the specific action needed, to close the gap
between the desired future and the actual status at the present time.
Figure 2.
Benchmarking: reversing
the gap
Time
$
Performance gap
Present Past Future
The Star
The XYZ
Company
Business process
improvement
797
To help assure maximum effectiveness of BPR practice both these “Forward” and
“Backward” paths should be followed, simultaneously, as they complete each other.
4.2 General: system-based
(1) Regardless of the specific approach or tool used for BPI, practitioners must
understand the relationship between the Process and the Outcome. This
relationship is reversed in the execution phase, as compared by the planning
phase. In the planning phase, the approach planned for PI is a function of the
outcome desired, i.e. The Process planned to be used depends on the goal
desired. Hence, at the planning stage the goal desired is the independent
variable, and the planned approach to achieve this outcome, is the dependent
variable. However, the opposite is true in theexecution phase. At execution, the
actual outcome realized, is a function of the actual process followed. Executed
processes may, and in most cases will, differ from what was planned. This is
due to the occurrence of many contingencies unaccounted for, and mostly
unexpected, during the planning phase (for more detailed discussion on this
relationship the reader is referred to Saad and Siha (2000)).Therefore, it is
imperative that alternative BPI approaches, and contingency plans be
considered in order to assure that the actual results achieved are in full
compliance with, the desired goals, or, close as possible to the planned goals,
and intended outcomes. This is a necessary condition for effective preparedness
at the planning stage, i.e. before the fact. In essence, this would assure being
prepared proactively for the future.
(2) An important guide to practitioners is to use Pareto’s “80/20” rule in
implementation of the Framework proposed. This rule assumes that most of the
result achieved, i.e. at least 80 percent of the outcome achieved is due to, less
than 20 percent of all affecting factors.
Accordingly, we recommend that the practicing managers focus their
attention and effort on the few most significant factors, and may neglect – or
give much less attention to – the many insignificant factors at each of the three
stages of the proposed framework.
Making use of this 80/20 rule by practitioners in their BPI implementation
would result in achieving the greatest PI outcome, with minimum cost and
effort. Hence, maximize the value-added from BPI practice.
(3) An important guideline for effective implementation of the framework proposed
is the alignment of, and coordinationamong all tools used for PI:
.
With each other, in an integrative way, i.e. the disadvantages or cones, in one
approach should be compensated by the advantages and pros of the
alternative approach used with it simultaneously.
.
Among all divisions in the firm, i.e. intra-firm wise; to assure both
consistency in implementation, and widespread impact as well.
.
Across all firms along the supply chain, i.e. inter-firm wise. As this will
assure a win-win outcome to all the supply chain partners, and would
smooth significantly the underlying supply chain operations, and
management.
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(4) Since:
.
PI projects should produce knowledge that is transferable , to assure both
conceptual learning, i.e. “Know-Why”; and operational learning, i.e.
“Know-How” as indicated earlier (Lapre´ and Wassenhove, 2002).
.
Any firm cannot operate in isolation of, and full independence from others
across its supply chain.
.
A firm’s performance is driven by the weakest link in its supply chain. For
example, disruptions in material supply as a result of a main supplier goes
abruptly out of business, will result in direct disruption in the producer/buyer’s
processes.
It is imperative to have information sharing, and supply chain visibility to assure such
learning transferability to take place; and to avoid operations disruption, and preempt
them, as possible.
Furthermore, establishing coordinated, cooperative, and collaborative relationships
among supply chain partners would help improve business processes for each partner
in the chain, and makes them more efficient and more robust than if each firm is acting
in isolation and independent from its suppliers. Thus, a “win-win” outcome would
result to all firms across the supply chain.
5. Summa ry and conclus ions
Business process management and improvement are among the hottest topics for both
practitioners and academicians, as a process constitutes the core of “How” to advance.
There are various methods of PI and many articles that have been published in a wide
range of journals and periodicals addressing these methods. We surveyed the Case-Based
BPI literature focusing on empirical evidence on the critical success and failure factors of
four PI methods; six sigma, benchmarking, BPR and process mapping. The empirical
evidence on both the success and failure factors for each method, have been discussed and
summarized. The involvement and total commitment of top management, the importance
of knowledge sharing and communication, the effective use of information technology, the
emphasis on knowledge transferability, and the smart choice of the process to be improved,
are among the critical success factors of PI methods.
Based on a synthesis of the empirical evidence, with appropriate management
theories, a general framework was developed to guide the choice and implementation
of BPI approaches in practice. This framework is denoted as SAM as it comprises three
main stages: Specify, Analyze, and Monitor. Each of these stages has been discussed in
detail. Guidelines that facilitate the actual implementation of the framework proposed,
and help expand its actual effectiveness have been discussed.
A logical next step for further research is to test this framework in several business
environments, and verify its actual outcomes for different operations characteristics,
and market dynamics. The effect of variables like: type of industry, the firm’s size,
culture, and operating strategy may be investigated, as well.
Moreover, further research is needed to examine BPI practice, not only at the firm
level, but perhaps more importantly, across the supply chain partners, since a supply
chain performance is determined by its weakest link. A relevant conjecture to explore
here, is how the different supply chain partners can reinforce each other through
appropriate BPI collaborations.
Business process
improvement
799
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Corresponding author
Samia M. Siha can be contacted at: ssiha@kennesaw.edu
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