All organisations have to react to the changing environment within which they are situated. Such change impacts upon the operations and business processes
Subject:
All organisations have to react to the changing environment within which they are situated. Such change impacts upon the operations and business processes within organisations.
a) Using a selection of established operations change tools and techniques, evaluate the potential benefits of incremental versus major change, for improving the performance of operations.
b) Using your current or previous organisation as an exemplar, critically evaluate the notion that business processes are about delivering customer satisfaction.
Part A:
Introduction:
All organisations have to react to the changing environment within which they are situated. Such change impacts upon the operations and business processes within organisations.
Change is generally a response to some significant threat or opportunity arising outside of the organisation. According to Pettigrew: " Changes within an organisation take place both in response to business and economic events and to processes of managerial perception, choice and actions. Managers in this sense see events taking place that, to them, signal the need for change." In this sense it is important that an organisation continually monitors what is happening around it; that is it develops a sense of awareness which stems from realising the need to set in motion changes that will keep it in, or ahead of, the game. Since the environment is dynamic, strategies have to be developed against a backdrop of continual change (David Farnham, 1999).
It is evident that for the organisation to survive, let alone thrive, change needs to be considered by management at all levels. It is necessary to consider what the causes of change are and what actually needs changing. External causes of change can be as a result of changes in the level of technology used, market place changes, customer expectations, competitor activities, quality and standarts, government legislation or political values, as well as changes in the economy. Internal context of change relates to management philosophy, structure, culture, and the system of power and control. (Vic Gilgeous, 1997)
According to the author, the organisations should know that the ability to manage change which is at the heart of effective operations management. Since the heart of an organisation is operations management, the author claims that an organisation should know first what operations management means and adopt its principles in its business.
Operations management is about the way organisations produce goods and services. Everything you wear, eat, sit on, use, read or knock about on the sports field comes to you courtesy of the operations managers who organised its production. Every book you borrow from a library, every treatment you receive at the hospital, every service you expect in shops and every lecture you attend at university - all have been produced. While the people who supervised their 'production' may not always be called operations managers, that is what they really are (Nigel Slack, Stuart Chambers, Robert Johnston, 2001)
Operations management is the central core function of every company. It is the business function that plans, co-ordinates, and controls the resources needed to produce a company's products and services. It involves managing people, processes, equipment, technology, information, and many other resources in order to provide the required goods and services to a specified level of quality, doing so in the most cost-effective way (Sang M. Lee, Mare J. Schniederjans, 1994).
The role of operations management is to transform a company's inputs into the finished products or services. Inputs include human resources (such as workers and managers), facilities and processes (such as buildings and equipment), as well as materials, technology, and information. Outputs are the goods and services a company produces (Operations Management Module, Course Slide:"What is operations management").
Approach To Change:
Vic Gilgeous (1997) remarks that generally, there are two approaches of change: revolutionary change (incremental change) and evolutionary change (major change). In evolutionary approach, change occurs slowly in a very controlled and throughly planned manner. Here, many people will be involved in planning and implementing the change programme, taking great care to be patient, get people involved and minimise the resistance. Consequently, much investment and effort would be put into education, problem-solving training, organisational development, supervisory retraining and teambuilding to achieve this. However, in the revolutionary approach, changes are often planned by a few people and implemented in a rapid manner by those who agree with the changes or those who are coerced to do so.
Operations and Change Initiatives (The Operations Change Tools and Techniques):
Vic Gilgeous (1997) categorizes the operations change tools as the hard and the soft initiatives of change.
Hard Initiatives:
The hard initiatives are involved with the technical and system aspects of the company's product and processes and the systems, technology and equipment needed to design, plan, execute and control them. They are Total Quality Management (TQM), Material Requirements Planning (MRP), Just-in-time (JIT), Optimised Production Technology (OPT) and Computer Integrated Manufacture (CIM).
Soft Initiatives:
The soft initiatives are those, which harness the capabilities of people through initiatives such as Teams, Empowerment, The Learning Organisation and Business Process Re-engineering (BPR).
Total Quality Management (TQM):
Chase and Aquilano define TQM as, "Managing the entire organisation so that it excels on all dimensions of products and services that are important to the customer". Also Markland, Vickery and Davies mention that "TQM is a philosophy and a set of guiding principles and tools for improving quality and a way to manage an organisation based on total customer satisfaction and a continuous process of improvement". According to them, experience has revealed several requirements that companies must meet in successfully implementing TQM. They are strategic quality planning, clear focus on customer satisfaction, effective collecting and analysis of information, effective use of teamwork and training, effective design of products and services, effective leadership.
Feigenbaum introduced the notion of total quality management in 1957. He defined TQM as; "An effective system for integrating the quality development, quality maintenance and quality improvement efforts of the various groups in an organisation, so as to enable production and service at the most economical levels which allow for full customer satisfaction".
Moreover the author outlines that there are some approaches that strengthen TQM. On one hand, Dr. W. Edwards-Deming argues for striving for reduction in the variation of processes in his approach. He points out that there can be both common and special causes of process variation and that it is management's task to identify and deal with the common causes. On the other hand, Deming thinks that all managers should be trained in statistical methods because their use should lead to quality improvement and effective management. He states that the elimination of common causes is a new job for management, but managers can only tackle these common causes within the process they control. Deming sees the aspects of quality in both improvement of and innovation in products, service and processes. However, Ishikawa considered worker participation to be important to successful implementation of TQM, and he believed that quality circles were an important way to achieve this. Ishikawa states that, from his experience, as much as 95 per cent of all company problems can be solved by elementary methods. In particular, he advocates the use of elementary, intermediate and advanced methods to assist in quality control. According to Dr. J. M. Juran quality is properly determined from the customer's viewpoint and not the manufacturer's. Juran believes that top management must be involved, as producing quality products is a survival issue for the company. In particular, top management must take responsibility for annual improvement quality, hands-on leadership and extensive training in quality for all managers. Juran thinks that attitudes will be changed as a consequence of changing behaviour. Hence, if a structure is created where people are forced to consider quality, then a change in attitude to quality will flow. Nevertheless, Philip B. Crosby created the concept of 'zero defects' in his first book Quality is Free. The main thrust of Crosby's approach is that nothing will improve in an organisation until its management begins to take quality as seriously as it does finance or production. In his book Quality Without Tears, he presents his four absolutes of quality. They are the definition of quality is conformance to requirements, the system of quality is prevention, the performance standart is zero defects and the measurement of quality is the price of non-conformance. Crosby recommends that top managers need to find out where they are in terms of quality maturity to see what extent they are ready to tackle a quality improvement programme. However, Genichi Taguchi developed a quality loss function (QLF) that deals with warranty costs, customer complaints and loss of customer good-will etc. Taguchi uses the loss function to measure quality costs. The loss function suggests that the concept of zero defects, based on a conformance to specifications, does not always result in a quality product. The objective should be to reduce the variation on the ideal value of the desired functional characteristics. The reduction of this variation should be a measure of quality improvement.
Material Requirements Planning (MRP):
MRP is a computerised system for managing dependent demand inventories, so called because they are dependent on demand for higher-level parts and components, which comprise the end item, or product required by the customer. Examples of dependent-demand inventories are raw materials and work-in-progress inventories, used in manufacturing companies to support the manufacturing process itself. The MRP file accesses the master production schedule file to identify the quantity of end items that will be required in each time period. Using this information, the MRP file accesses the bill of materials file to identify the ...
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Material Requirements Planning (MRP):
MRP is a computerised system for managing dependent demand inventories, so called because they are dependent on demand for higher-level parts and components, which comprise the end item, or product required by the customer. Examples of dependent-demand inventories are raw materials and work-in-progress inventories, used in manufacturing companies to support the manufacturing process itself. The MRP file accesses the master production schedule file to identify the quantity of end items that will be required in each time period. Using this information, the MRP file accesses the bill of materials file to identify the parts, materials, and their quantities, needed to manufacture the end item in the master production schedule.
According to Schoeder (1993), five elements are required for the success of MRP. They are implementation planning, adequate computer support, accurate data, management support, and education and user knowledge. However some companies do not adopt an MRP system, or are disappointed with its results. The greatest users of MRP are those industries, which tend to have many BOM levels. Consequently, MRP seems to be most attractive to firms that have positioned themselves with an intermadiate strategy. They produce in batches, experience low to medium demand volumes, tend to offer a number of product options, and make products that have relatively short life cycles.
The benefits of MRP can be numerous and include; increased sales, reduced sales prices, reduced inventory, better customer service and better response to market demands, possibility of considering batch sizes, safety stock and lead times so as to make improvements, advance notive so managers can see the planned schedule and to see the effect of changing the master schedule therefore aiding capacity planning, prioritising orders, expediting, reduced set-up and tear-down costs, increased productivity of labour and plant, reduced idle time, reduced costs of quality, reduced transport costs and product structure clarity.
Just-In-Time (JIT):
Just-in-time (JIT) is a philosophy concerned with the provision of products and services only when they are needed or 'just-in-time' for use by either internal or external customers. A through consideration of the origins, nature and use of JIT is provided by Schonberger and Harrison. The aim is to ensure that the correct quantities are purchased and made at the right time with little or no waste. In effect, by adopting the JIT philosophy, an improvement circle began with an improvement in one area facilitating and demanding improvement in another. The whole concept of JIT soon spread to incorporate the suppliers and led to the lean and efficient movement of material through the factory to the customers.
The scope of JIT is to improve overall productivity and reduce waste. It provides for the cost-effective production and delivery of only the necessary quality parts, in the right quantitiy, at the right time and place, while using a minimum amount of facilities, equipment, materials and human resources. JIT accomplished through the application of a range of approaches which require total employee involvement and teamwork.
The potential benefits of JIT are numerous and can be classified as 'hard' and 'soft' cost benefits. Hard benefits are inventory reduction, work-in-progress reduction, increased productivity, improved purchasing, reduced obsolescence, redyced transportation costs, more space, improved maintenance, improved layout, less scrap, standardisation, reduced lead times. Soft benefits are increased sales, increased customer service, increased quality, improved visibility, multi-function workforce, and increased flexibility.
Whether JIT is more applicable than MRP depends on the complexity of the product structure and routings, the volume and variety levels of the company's products, and the level of co-ordination and control of material and parts. Where the product structures are simpler and so is the complexity of the product flow paths, JIT is more applicable than MRP. When the variety is high, the volume low, and the level of control high, an MRP system would be more applicable than a JIT system of planning and control. MRP could be used to schedule dependent demand items, which lie within a medium-volume, medium-variety product category. If the items lie within a high volume, low-variety product category then a JIT scheduling approach might well be more appropriate. When JIT and MRP are combined, sometimes referred to as 'synchro MRP', scheduling benefits arise. The delay in signalling customer demand changes to earlier upstream operations that would normally be experienced through JIT pull-type scheduling can be avoided through MRP pushing work out to them in accordance with the demand changes.
Optimised Production Technology (OPT):
OPT was initially developed on Israel by Dr Eli Goldratt during the 1970's. He defines that the OPT approach is concerned with improving productivity to take a company closer to its goal of making money by increasing throughput and decreasing inventory and operating expenses. OPT seeks to do this through the use of an analytical technique which aims to synchronise production to work in accordance with realistic optimised schedules.
The success of OPT is assessed by measuring the three bottom-line financial aspects of shopfloor performance; they are net profit, return on investment and cash flow. OPT considers activities on the shopfloor to be critical. Therefore, shopfloor issues, such as bottlenecks, set-ups, lot sizes, priorities, random fluctuations and performance measurements, are treated in great depth.
Business Process Re-engineering (BPR):
The term 'business process re-engineering', or BPR, wast first coined in 1988 by Michael Hammer. He urged business people to 'obliterate, don't automate'. His argument was that IT and TQM needed to stop fighting and work together. In practice this meant tightening processes and eliminating unnecessary and redundant steps, rather than supporting the present process systems with complex IT systems. BPR is a controversial management technique, since there is no definitive guide as to what BPR, or re-engineering as it sometimes called, stands for.
A BPR programme is effectively a change management programme (Zairi and Sinclair, 1995; Taylor, 1998), its implementation often leading to fundamental change within an organisation's structure, culture and management process (Fowler, 1998; Stebbins et al., 1998; Al-Mashari and Zairi, 2000).
Manganelli and Klein viewed re-engineering as the rapid and radical redesign of strategic, value-added business processes, and the systems, policies and organisational structures that support them, to optimise workflows and productivity in the organisation. This focuses on the strategic value of re-engineering and associated systems, whereas the most widely known definition, from Hammer and Champy is broader and includes all processes within the definition: " BPR is the the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed" (Hammer and Champy, 1993).
This and the quick definition provided by Hammer, associated with 'starting over', highlight the clean-sheet approach to process redesign, i.e. not simply tinkering with what already exists or making incremental changes that leave basic structures intact. It means abandoning long-established procedures and looking afresh at the work required to create a company's product or service and deliver value to the customer. However, Coulson-Thomas (1995) contrasts between "process simplification", which results in incremental change, and "process re-engineering", which aims for a more fundamental change: in practice, both are labelled as BPR. Nevertheless, Talwar prefers an alternative definition of BPR:"Changing mindset, attitudes, and behaviour to allow the fundamental rethinking and redesign of business activities, structures and working relationships in order to maximise value added and achieve radical and sustainable improvements in all aspects of business performance".
The concepts of BPR provide a source for many useful ideas, chief among these being the idea that organisations may not increase competitiveness if they follow traditional rulebooks. Managers need to challenge the way things are as well as their own mind-set. They need to realise that the existing ways are not fixed in stone; they are limitations to what could be. The opprotunuties are there for organisations to consider themselves from an holistic perspective and radically transfrom processes in order to achieve dramatic improvements.
Carr and Johansson examined that two-thirds of BPR efforts fail. Research by Hall, Rosenthal showed that most BPR projects result in little overall improvement in financial performance, even if they appear to have changed the operational system out of all recognition. However McKenna (1995) argues BPR over-focuses on process but ignores the behavioural change as the key to organisational success. Consequently, BPR failure can frequently be traced to ineffective communication, ineffective management of organisational resistance to change, or the failure to create the new organisational culture and structure needed to supprot it (Hill and Collins, 1998; Al-Mashari and Zairi, 1999). Conversely, it is evident that a BPR programme can be a powerful change approach if it is integrated with a variety of change initiatives such as cultural and structural change (Stebbins et al., 1998). Coulson states that in many cases the existing workforce is likely to be unhappy with the new vision. There is evidence to show that organisations have lost a number of staff at once that had no desire to be part of such an approach and have a significant minority of 20 to 40 per cent who would strongly prefer to return to the traditional ways. It could be argued, as Peppard and Rowland do, that the above type of problems are due to a lack of consideration of the behavioural aspects of change. For Morris and Brandon the main risks are concerned with the inability of organisations to complete the implementation of BPR rather than any inherent weaknesses concerning its principles. According to them; re-engineering cannot be done halfheartedly, and executive management should be involved from start to finish. Pendlebury et. al provide a different angle on BPR projects. Their BPR objective is breakthrough rather than simply improvement. In this case companies must first consider how to improve their processes before the more radical work of re-engineering core business processes. Companies thus need to have completed more tactical process-oriented techniques such as JIT or TQM.
It is possible to say that, with the right culture, support of top management and careful planning, there is no reason why most companies would not benefit from implementing a BPR initiative. Since BPR is designed to operate on processes, it will be more suitable for organizations that operate in a traditional hierarchical structure, and less benificial to those companies which operate less rigidly. In order to apply BPR successfully, Galliers and Baker (1995) argues that "For BPR to be taken seriously, for the proportion of BPR success stories to improve from the current low levels of 30 percent or so, a more balanced, holistic stance has to be taken".
Conclusion:
It is axiomatic that the rate of change in our world is ever increasing - new technology is continuously being introduced, political situations change almost daily, and the flow of information regarding both is now instantaneous and overwhelming (Dixon, 1998). And each new change brings with it new challenges and new opportunities.
According to the author, the only way to survive in the markets where great competitions exist, all organisations should adapt themselves to the changing environment by adopting the change tools and techniques in their operations management and they should continually monitor the environmental changes. Moreover, the author states that although the scopes of change tools and techniques are various, their purposes are common and they have some common and similar properties. Authors such as Love and Gunasekaran have presented TQM as a good starter for BPR, and McDonald and Dale believe that BPR and TQM can be used jointly, since they have many common features. For instance, both TQM and BPR are process focus and their emphasises are on teams and shared values. TQM works on improvement of precess within functional boundaries, whereas BPR redefines process boundaries then radically improve the few strategies. Nevertheless, the author claims that none of the change tools and techniques has predominance over the other or others, and he believes the success will come if these tools and techniques work in collaborately.
Analyzing the similarities between TQM and BPR, Hammer and Champy (1993) recognized that some people questioned the authenticity of the latter approach and so put forward the view that, re-engineering and TQM are neither identical nor in conflict; they are complementary. While they share a focus on customers and processes, there are also important differences between them. Reengineering gets a company where it needs to be fast; TQM moves a company in the same direction, but more slowly. Re-engineering is about dramatic, radical change; TQM involves incremental adjustment. TQM should be used to keep a company's processes tuned up between the periodic process replacements that only re-engineering could accomplish. In addition, TQM is built into a company's culture, and can go on working without much day-to-day attention from management. Reengineering, in contrast, is an intensive, top-down, vision driven effort that requires non-stop senior management participation and support. Analysis of the management innovation and change literature reveals that another important issue to be noted is the relative speed at which new panaceas enter the marketplace (Currie and Willcocks 1995). For example, TQM has many similarities with BPR and process innovation. Furthermore, JIT, according to some observers, incorporates many of the concepts and practices of TQM, particularly from a Japanese perspective (Gilbert 1989). In making these claims, it is important to adopt a more cautionary perspective on the theoretical and practical value of management innovation and change programs, since a critical and comparative analysis suggests they are largely the products of management consultancy firms, which, like other products, have a relatively short shelf life!
TQM versus BPR:
Differences between TQM and BPR
Factors
TQM
BPR
Type of change
Evolutionary - a better way to compete
Adds value to existing processes
Revolutionary - a new way of doing business
Challenges process fundamentals and their very existance
Scope
Encompasses whole organisation
Focuses on core business processes
Role of technology
Traditional support
Use as enabler
The Comparison of TQM, JIT and BPR:
Element
TQM
JIT
BPR
Focus
Quality
Attitudes to customers
Reduced inventory
Raised throughput
Processes
Minimise non-value added
Improvement scale
Continuous incremental
Continuous incremental
Radical
Organisation
Common goals accross functions
Cells and team working
Process based
Customer focus
Internal and internal satisfaction
Initiator of action 'pulls' production
'Outcomes' driven
Process focus
Simplify improve
Measure and control
Work flow / throughput efficieny
'Idea' or streamlined
Techniques
Process maps
Benchmarking
Self-assessment
SPC diagrams
Visibility
Kanban
Small batches
Quick set-up
Process maps
Benchmarking
Self-assessment
IS/IT
Creativity
References:
* Vic Gilgeous, 1997, "Operations and The Management of Change", Financial Times - Prentice Halls, pp. viii, 3, 174-179, 184-187, 194-196, 202-206, 339-342, 353.
* Nigel Slack, Stuart Chambers, Robert Johnston, 2001, "Operations Management", 3rd ed., Financial Times - Prentice Hall, p. 3.
* Sang M. Lee, Mare J. Schniederjans, 1994, "Operations Management", Houghton Mifflin Company, p. 4.
* David Farnham, 1999, "Managing in a Business Context", Short Run Press, p. 23-24.
* Guangming Cao, Steve Clarke and Brian Lehaney, 2001, "A critique of BPR from a holistic perspective", Business Process Management Journal, Vol.7 No.4, p. 332-339.
* Colin Armistead, Simon Machin, 1998, "Business process management: implications for productivity in multi-stage service networks", International Journal of Service Industry Management, Vol. 9 No. 4, p. 323-336.
* Thomas J. Douglas, Lawrence D. Fredendall, Summer 2004, "Evaluating the Deming management model of total quality in services", Decision Sciences, Vol. 35 No. 3.
* Michael Clargo, 2004, "The designer organization: Organisations too can benefit from the application of design and quality tools, and with startling results!", International Journal of Quality & Reliability Management, Vol. 21 No. 9, p. 973-983.
* A. Williams, J. Davidson, S. Waterworth, R. Partington, 2003, "Total quality management versus business process re-engineering: a question of degree", Design and Innovation Research Group, Proc. Instn Mech. Engrs, Vol. 217, Part B: J. Engineering Manufacture.
* Wendy Currie, Vlatka Hlupic, Winter 2000, "Simulation modelling: The link between change management panaceas", Proceedings of the 2000 Winter Simulation Conference, J. A. Joines, R. R. Barton, K. Kang, and P. A. Fishwick, eds.
* Operations Management Module, Course slide: "What is operations management".
PART B:
Introduction:
The approaches and the style of the management the most senior decision makers in the organisation adopt are crucial to the success of the business. Peters and Waterman studied 62 of America's most successful companies and showed that success is achieved by having a culture which fosters more people involvement, better organisation and more emphasis on customer needs (Vic Gilgeous, 1997). In here, the author claims that the success comes with the business only if the business adopts the business process management in its operations, and establishes and applies this principle on customer satisfaction.
The early 20th century, there was a period of rapid growth of global economy based on expansion of international trade and free capital movement under the gold standard many economist accepted that 1900's globalization starting point , this regime came and end with first World War. These events, in turn, reshaped prevailling ideas on how to stabilize global and national economies and the role of international trade and capital movement as engine of growth and prosperity. This idea based on global and national regulated market economy. These turm called "golden age of capitallism" and ran out wiht oli price shock nad the stagflation during 1970's. And today globalization creates, through export-led expansion, the potential of rapid everall output growth, increasing national wealth and contributing to imporve living standards on all countries. In today's world business environment, all organizations or companies have to operate in a global economy where the all competition is getting difficult and harder and the customers' expectations are continuously increasing day by day.
Operations management is generally a critical and main function within organizations and It is the part of the organization that makes the goods and/or delivers the services to the customer ( Schroeder, 1989). The customer always choose more satisfaction by the profit and quality. Using technology or improving service quality can empower the all organisation to deliver the highest level of customer service and convenience to their customers. A more contentious issue is whether a set of generic business processes can be defined with universal applicability. In this paper author gives one of the essential step in business process.(Customer Satisfaction)
Business Process:
A process is "a structured, measured set of activities designed to produce a specified output for a particular customer or market. It implies a strong emphasis on how work is done within an organisation" (Davenport, 1993). When we speak of processes, we imply event-driven process chains. According to Scheer (1993), "a process is an occurrence of some duration that is started by an event and completed by an event". Processes are generally identified in terms of beginning and end points, interfaces, and organisation units involved, particularly the customer unit. Examples of processes include developing a new product, ordering good sfrom a supplier, creating a marketing plan, etc.
Davenport and Short (1990) define a business process as "a set of logically related tasks to achieve a defined business outcome". According to them, business processes have two important characterictics: customers (internal and external) and cross organisational boundaries that occur across or between organisations and its subunits. "A business process is the logical ordering of sequential, functional level activities which take inputs and produce outputs which are of value to the customer." (slayt). "The main goal of any business process is to produce an output that is valuable to a customer. The realm of customers of a business process is not restricted to external entities who purchase finish goods, but also includes other business processes that need output from upstream processes to perform their respective tasks" (Operations Management Course Slides).
Business process composes of three basic leves; Level 1:total process (The process from start to finish with the minimum of detail and identifies where exceptions and subroutines occur), Level 2: process operations (The details of the specific actions taken at each stage) and Level 3: process detail (This looks at the detail of the process, potentially down to operatives' hand movements (i.e. work study)).
In considering the nature of business processes it is useful to group processes into four categories:
(1) direction setting processes;
(2) operational processes;
(3) supporting processes;
(4) managerial processes.
Direction setting processes are those concerned with setting strategy for the organization, its markets and the location of resources, as well as managing change within the organization. Direction setting processes involve a mix of the prescribed steps within a formal planning process but also less well defined schemes reflecting the behaviours of the managers involved. Operational processes are the way in which work gets done within the organization to produce goods and services. These processes are the ones which have been the subject of most of the process focus in BPR and TQM. Support processes are those processes which support or enable the operating processes in particular. They are concerned with provision of support technology or systems, with personnel and human resource management, and with accounting management. The processes lend themselves to some degree to the standard operating procedures but also often contain less formal elements because of the nature of the activity. Managerial processes contain the decision-making and communication activities. Some organizations have tried to formalise these processes and adopt structured approaches to decision making and communication, while these approaches may fit some organizations, they are less well received in others.
Business Process Management:
Business Process Management or BPM, is the practice of improving the efficiency and effectiveness of any organization by automating the organization's business processes. BPM used to be also know as Business Process Reengineering (BPR) (http://www.bpmtutorial.com?BPM/BPM.aspx?ref=aw).
Many companies have business processes that are unique to its business model. Since these processes tend to evolve over time as the business reacts to market conditions, the BPM solution that is chosen must be easily adaptable to the new conditions and requirements and continue to be a perfect fit for the company. In order to use BPM effectively, organizations must stop focusing exclusively on data and data management, and adopt a process-oriented approach that makes no distinction between work done by a human and a computer. The idea of BPM is to bring processes, people and information together. Identifying the business processes is relatively easy. Breaking down the barriers between business areas, and finding owners for the processes is difficult. BPM not only involves managing business processes within the enterprise but also involves real-time integration of the processes of a company with those of its suppliers, business partners, and customers. BPM involves looking at automation horizontally instead of vertically.
(http://www.bpmtutorial.com?BPM/BPM.aspx?ref=aw)
Regardless of whether organizations have re-designed their processes, or are simply considering their organizations from a process perspective and striving to improve their processes (perhaps driven by the "adoption" of a quality model), they are still faced with the task of how to manage the processes. It is the management of the organization by the consideration of these business processes which is referred to as business process management (Armistead and Rowland, 1996).
Business process management is a structured approach to analyse and continually improve fundamental activities such as manufacturing, marketing, communications and other major elements of a company's operation. Essentially, BPM is concerned with the main aspects of business operations where there is high leverage and a big proportion of added value."
BPM has 5 core phases: Organising for quality, Understanding the process, Streamlining the process, Implementation, measurement, and controls, Continuous improvement. BPM is therefore a potential template for organisational change and transformation. Generally it focuses on the total process i.e. level 1, but functional BPM abounds also (with a focus on level 2 process operation). (Other such templates include TQM, BPR specifically, and I argue, also benchmarking.
There is the need to manage business processes which are operational, direction setting, supporting and managerial. How this is done has implications for the whole of the organization and hence, productivity. Organization designers are being encouraged to consider processes to achieve effective organization designs. Galbraith (1995) demonstrates the role of processes (alongside dimensions of products, markets, geography and functions) in organizational design and categorises the approaches of informal / voluntary groups, formal groups and process integrators in managing the processes. The design of cross functional processes brings a tension between functions and processes (Armistead and Grant, 1996) and requires organizations to pay attention to some of the softer structural and cultural issues that should be addressed, as contrasted with the BPR approach which has been criticised for the lack of consideration to people issues (Strassmann, 1994). Here the concept of the team is central to those organizations that have progressed furthest and is accompanied by a reduction in the supervisory role of middle managers. A business process can employ several thousand people, so the use of information systems is central for their integration.
Customer Satisfaction:
Customers are the primary reason for any organisation to exist. They provide useful information for operation managers on product improvements and quality. Fundamental to quality is the concept of satisfying customer, both the external and the internal next-in-line customer (Sang M. Lee, Mare J. Schniederjans, 1994).
The successful companies have embarked upon programmes such as Total Quality or Total Service or cutting the time it takes to respond to the market. They have made these issues strategic by tightly coupling the programmes to the needs of customers. They have achieved this through building relationships with the customers, which are very difficult for the competitiors to match. Having determined their customers' requirements, the companies are organised to push control as far down the line as possible, via educational programmes and empowering people. (Vic Gilgeous, 1997)
According to Waterman, what makes these top-performing companies different is:
"They are better organised to meet the needs of their people, so that they attract better people than their competitors do and their people are more greately motivated to do a superior job, whatever it is they do".
"They are better organised to meet the needs of theh customers so that they are more innovative in anticipating customer needs, more reliable in meeting customer expectations, better able to deliver their products or services more cheaply, or some combination of the above".
Obtaining a few opinions on the level of customer satisfaction is not rigorous enough. An organisation must know who its customers are and then stay close to them. This should be achieved by continually measuring and monitoring service and product performance across a range of carefully considered and well-defined objectives based on customer needs and expectations. When required, the organisation must respond quickly to customer requirements, being obsessive about quality andservice. This requires commitment, communication and inspired leadership (Vic Gilgeous, 1997).
According to Vic Gilgeous (1997), the prerequisite for an organisation is its customers because customers are the decision makers who agree the purchase since they are the ones that use the products or services. Satisfying the internal customers (employees) can be just as important as satisfying the external customers.
In order to understand the uses of business processes and BPM on customer satifaction and its effects, the author goes further with McDonald's.
The History of McDonald's:
McDonald's is the world's leading food service retailer with more than 30,000 restaurants in 119 countries serving 47 million customers each day. The number of employees in McDonald's restaurants is exceeding 1.5 million all over the world. McDonald's is one of the world's most well-known and valuable brands and holds a leading share in the globally branded quick service restaurant segment of the informal eating-out market in virtually every country in food business sector.
Dick and Mac McDonald brothers in San Bernardino, California, established the first McDonald's restaurant in 1940. Actually, McDonald's restaurant chains' rich history began with its real founder, Ray Kroc. He offered the idea of opening up several restaurants to the brothers Dick and Mac McDonald. Then, Roy Kroc opened the first restaurant in Des Plaines, Illinois in 1955 by buying the copyrights of the name "McDonald's". Furthermore, keeping the main principles of McDonald's brothers, Ray Kroc added the "Quality-Service-Cleanness" principles that create the today's institutional policy of McDonald's. In the following years, Ray Kroc established the McDonald's chains that expanding all over the world.
Today, McDonald's business center is in Oak Brook, Chicago, and USA where lots of McDonald's managers and employees from all over the world are being trained.
(http://www.mcdonalds.com.tr/mcdonalds/mcdonalds_international.asp)
McDonald's adopts customer contact is an opportunity in order to identify the meal diverstiy and the taste of meals.
References:
* Colin Armistead, Simon Machin, 1998, "Business process management: implications for productivity in multi-stage service networks", International Journal of Service Industry Management, Vol.9 No.4, p. 323-336.
* Thomas R. Gulledge Jr, Rainer A. Sommer, 2002, "Business process management: public sector implications", Business Process Management Journal, Vol. 8 No. 4, p. 364-376.
* Operations management course slides, "Business Process".
* Official web site of MCDonald's, http://www.mcdonalds.com.tr/mcdonalds/mcdonalds_international.asp
* Vic Gilgeous, 1997, "Operations and the Management of Change", Financial Times - Prentice Halls, p. 52, 74-75, 371-374
* http://www.bpmtutorial.com?BPM/BPM.aspx?ref=aw
* Sang M. Lee, Mare J. Schniederjans, 1994, "Operations Management", Houghton Mifflin Company, p. 32.
