Reference no: EM13837133
Business Process Management
Objective
Upon successfully completing this assignment you will have demonstrated that you can provide clear written advice, and recommendations for change, to a business owner, in relation to business process management (BPM). Your advice will offer the business owner several reasons for adopting a business process management approach;
• an explanation as to what the current business processes are and why they should be redesigned
• a proposed redesign solution
• special considerations that need to be taken into account to deliver the proposed solution successfully; and succinct recommendations.
In providing your advice to the business owner you will take into account various perspectives and circumstances encompassing the business.
Overview of Technobuild Pty Ltd
Business processes permeate all aspects of business and it is arguable that if a business is not adopting a business process management approach to realise its strategies, and its subsequent goals and objectives, then it may reduce its chances for success - even its very survival. By taking a business process management approach, organisations can improve their chances of succeeding in their quests for sustained competitive advantages through greater efficiencies, quality, innovation and customer responsiveness. In, what is now, a highly competitive, global, interconnected and uncertain business environment, there has never been a better time to draw on the advantages offered by applying the BPM discipline to any business or organisation anywhere.
Keith Toms is in his late forrties and is the inventor of the Technobuild. The Technobuild is a revolutionary building device that measures the amount of moisture in different types of soils and then computes exactly how deep foundation footings must be and how much concrete is required to provide the optimal level of structural support. The Technobuild is three metres long and is encased in water-resistant Kevlar. One end of the rod is made from titanium and acts as a probe to take moisture readings when inserted into the ground.
Computation of footing depth and concrete requirements is carried out by a mini computer which is built into the epicentre of the rod. The mini computer is powered by a revolutionary lithium compound battery which has a life of 1000 hours when fully charged. In addition to this functionality, the Technobuild can also provide the operator with a 3D view of the building site along with a detailed chemical composition of the soil. The Technobuild also contains a database with a 50 terabyte storage capacity allowing immediate access to all details from previous building contracts.
As a builder himself, Keith was constantly frustrated by the lack of information available on soil composition and moisture levels and the impact on construction timeframes. Following years of development and testing he finally launched his Technobuild in a new business that he established in 2009.
Keith's business is a company called Technobuild Pty Ltd. The business manufactures the Technobuild but obtains parts from external suppliers. Most parts suppliers are located in Australia but one is based in Thailand (supplying the Technobuild Kevlar casing) and another in Singapore (supplying the mini computer and digital interface). The Sinagpore based supplier is the only company in the world capable of manufacturing these critical components. Keith has built the business to perform most major functions that are typical of a medium sized enterprise. The company's organisational structure chart is shown below.
The departmental directors are named in their respective function boxes in the chart. The number of employees working under each director is shown below the function boxes respectively. The sales function is also charged with marketing and service responsibilities; service requests though are usually referred to the logistics department. The accounting function is also charged with finance responsibilities. The production function manufactures the Technobuild and manages the warehouse. The firm has a centralised IT function which provides all the firm's IT needs. Technobuild Pty Ltd currently employs 56 individuals, including Keith.
The business experienced strong growth in its first few years and this enabled it to grow quickly. In 2013 things started to change. Sales were down and profits reduced (see profit table below). Although the building industry in Australia was robust, sales of the Technobuild began to fall as builders chose to focus on standard and less expensive building devices. Sales of the Technobuild essentially relied upon word of mouth communication and a solid marketing strategy had not been developed at all. Worse still, Keith had never put much time or effort into developing streamlined and computer based business processes and rather, resorted to many paper based manual methods to get things done, including purchasing material, controlling production, satisfying customer orders and managing all the accounts.
2009 2010 2011 2012 2013 2014 2015
Revenue $m 3 4 7 8 6 4 3
Expenses $m 1 1.5 3.5 4 3 2.5 2.5
Profit $m 2 2.5 3.5 4 3 1.5 .5
Keith's business strategy has always centred on differentiating from potential competitors such as Bunnings, Mitre 10 and Masters through the functionality provided by the Technobuild. He underpins this strategy with a focus on quality and customer responsiveness. He realises though that most of his competitive advantage comes from innovation - no other firm has been able to match the Technobuild's looks and features in a single unit. He also realises that, given a recent rise in customer complaints about delays in receiving orders, his firm's customer responsiveness is waning and needs redress. Keith wishes to maintain his strategic stance but knows that organisational change must occur urgently if it is to work as intended.
Keith decided to hold a meeting with his directors. They assembled during the morning around the board room table where Keith asked "What happens when a customer places an order for a Technobuild?" (Keith's question assumed that the group would understand that a customer might be a wholesale or retail customer or an individual purchasing directly from the company either online (via eBay) or via phone or fax. Technobuild Pty Ltd does not have a retail store front).
Peter spoke up and said, "well, we write up a sales order form and send it to production." Bob said, " when we get to the sales order form, usually within a week, we physically check to see if there is a Technobuild (or number of Technobuilds) in stock that suits the configuration required), if there is, we pack it, label it and write stock details onto the sales form and send it over to Mike's guys to ship it out and we also send a duplicate copy to Phoebe so she can organise the accounts. We keep a triplicate in a box in my office - I guess I should get a filing cabinet one of these days, last week Helen tripped over the box and I had papers all over the place, half of which ended up in the bin! - ah well, we shoved most of them all back into the box in about two minutes, not a problem! I also keep ‘post it' notes of sales orders on my office whiteboard - these usually match the triplicates in the box so I don't need to fiddle with the papers in the box." When the box is full, we send it to Phoebe in Accounting.
Then Mike said, "well, when we get the sales order from Peter, we sign it and make notations of the date and time, then, when we pack the order onto one of the trucks for local delivery or get Linfox to collect it for interstate or international delivery, we forward the sales order along with a shipping note to Phoebe in accounting. We don't know what she does with it but we've always done this. We keep a photocopy of the shipping note in a ring binder in the warehouse office.
When the photocopier is broken we just slap a ‘post it' note on the order in the folder. This seems to work well because we don't lose the details for many orders.
Then Phoebe spoke up and said, "when we receive the sales order from Peter we file it and wait for the shipping order to come in from Mike. We usually cross check all sales orders and shipping orders that are sitting on our desks every day to ascertain whether an invoice action can be taken. When we see a sales order and a shipping order for the same sale (which we ascertain by looking at the name of the customer on the order), we send the customer an invoice to the customer's address, either their shipping or head office address - it doesn't really matter, we just choose whichever address appears first on the order. Payment terms are net 20 days and the majority of our customers pay within this time which means that there is very little action required in following up debtors."
Keith sighed quietly to himself and then asked, "well, what happens if we haven't got any suitable Technobuilds in stock?" Bob said, "well when we get the sales order from Peter and check for suitable stock, if we find that we've run out, we organise a purchase request and send it to Bette so that we can get the necessary materials to make more. It only takes us a few days to get the purchase request organised and sent." Bette then spoke up and said, "when we get the purchase request from Bob, we file it for action so that purchase requests are tended to in order of date received. That's how we prioritise things in my department! When we finally find time to get to the request, we study it and then organise purchase order forms which we complete and send to our respective suppliers. We send these in the surface mail. It usually takes about six weeks before we receive dispatch confirmations and invoices from our suppliers indicating that our orders have been filled and sent. Then we send the original invoices from our suppliers, with a payment order, to Phoebe so that she can organise payment for the materials. Our job is done!"
Phoebe then said, "when we receive the invoices and payment orders from Bette, we pay these immediately. We'd hate to ruin our relationships with our suppliers."
Keith sensed tensions between members of the group. He particularly noticed a strong three way tension between Bob, Bette and Phoebe. Peter seemed to be the most positive member of the group, even though sales were down, and whenever he spoke, Keith noticed that all other members of the group became anxious.
Keith was beginning to see the consequences of his neglect of the firm's business processes and sensed that if all of this were to continue, he could be out of business within a couple of years or even sooner. He is confident that the Technobuild can adapt to changing times and will remain very popular for many years to come but he knows that he must match this fantastic product with excellent business processes.
Keith calls you in as his BPM Consultant to help make sense of the current organisational approach and to provide some preliminary advice about redesigning processes so that the current downward trend in performance can be reversed. He gives you the transcript of his meeting with his directors (as seen above). He also provides you with some other basic information that he quickly gathered together for you including some Balance Sheet items (to help you to form a view of the firm's position to invest in change) and some other miscellaneous information which might help you to determine the extent of change necessary. No other information is available to you to develop a solution. Keith states that he has at least been conscious of accumulating some cash reserves for the firm's development and that it seems the day has come to use some of these! All of this is revealed in the tables shown below.
Balance Sheet Items (summarised as at June 2014) $
Cash at Bank (based on latest statement found on floor) 3,000,000
Debtors (estimated) 2,500,000
Percentage of debtors outstanding more than 2 months 70%
Creditors 600,000
Stock on Hand (based on rough estimate count in warehouse) 150,000
Other Assets (including land, buildings, equipment and vehicles (straight line depreciation), investments, patents, trademarks and goodwill. 3 million Other Liabilities (including bank loans, venture capital) 600,000
Loan expiry and review date 30 June, 2015
Other information (based on Keith's investigations only; no other information is available)
Item Units/Info
Organisational Personal Computers (Core 2, basic peripherals) 15
Laser Printers (Hewlett Packard, 3 years old) 2
Local Area Network 10 PCs connected
Internet Access 10 PCs connected
Software - Microsoft Office 2003, Microsoft XP 12 Licences only
Telecommunication Networks - Cable available to whole business Cable
Telecommunications provider Telstra
Some client data are currently held on spreadsheets Excel and Open Office
Two MS Access databases hold some data on employees Name, Address, Employee Number and Title only.
A Filemaker Pro database on a standalone PC holds some data on the Technobuild configurations and stock holdings; it is out of date Product names, Stock Keeping Unit number, number available
Managers are not equipped with mobile devices but some have their own mobile phones that they occasionally use on the job. An company intranet has not been established Computer literate staff (basic and intermediate levels; no power users)
Total product lines 3 approx.
Suppliers (one in Singapore, one in Thailand, 6 in Australia - all have Internet access 8 approx.
Customers (i.e. retail stores and some distributors) 50 approx.
Retail Price for a Technobuild $2000
Cost of producing a Technobuild unit $500
Individual Directors' salaries p.a. $150,000
Staff's average annual income $50,000
Production time for one Technobuild 10 hours
Task: Preliminary Business Report (40 marks)
This assignment must be completed by teams of 3 individuals.
Your task is to prepare a preliminary business report for Keith. Keith has an in-house style which he expects for business reports, so the main body of your report must be structured using the following headings. An explanation of what each section of the report must address is also provided.
BPM and Strategy
? Advise Keith why a BPM approach should now become part of the way ‘Technobuild' does business.
? Introduce Keith to Business Process Management by stating in plain terms what it actually is and how it can help his business
? In describing the benefits of BPM to Keith, ensure that you briefly highlight how BPM connects to business strategy (internal and external perspectives), positioning, structure and value propositions. Briefly describe the meaning of value chains and how using BPM, in conjunction with this concept, can assist Keith to improve the business. Problem Analysis
? Keith is aware that there are a number of problems within his company and whilst he is happy for you to briefly describe these, he would like you to concentrate your efforts on the problem which you believe to be the most urgent. In relation to this problem, Keith would like you to identify the causes of the problem, the problem and the consequences of the problem; refer to the capabilities gap and the performance gap here if relevant
? Show the current ‘As Is' process using a simple diagram
? Identify any process flow problems and/or day to day management problems; output and input problems; and problems with controls and enablers; develop a project scoping diagram to illustrate the problem which you have identified Proposed Solution
? Advise Keith what it means to develop a ‘business process architecture' and, particularly, how valuable this can be to him and the success of the business
? Bridge the identified gap, revealed in the previous section, by describing a ‘To Be' process; what will the ‘To Be' process do, or not do, when the change project is rolled out
? Support your ‘To Be' process with a BPMN process flow diagram (MS Word, PowerPoint or any other simple drawing tool will be fine for this, ie. you don't have to use a formal BPMN software program such as Tibco, unless you are comfortable with this)
? Are there any key aspects in your proposed solution that you should clearly describe to Keith, for example: SOA; ERP; Master Data; Core, Support and Management processes; alignment issues; etc?
Solution Considerations
Large BPM driven organisational changes can be extremely valuable, they are also complex undertakings impacting the organisation, its people and its use of modern technologies.
? Identify and briefly describe significant considerations that might impact ‘Technobuild Pty Ltd', both during the redesign development stage and upon the implementation of your proposed solution. Some considerations might pertain to the costs of bridging the gap (time, effort, money, etc.), risks, opportunity costs, politics, etc. Recommendations
? Provide Keith with a succinct list of recommendations to conclude your report
Written Assignment Administrative Details
You may include a brief executive summary, table of contents and brief appendices. Do not include extensive appendices - this is a preliminary report - extensive appendices may result in a reduction of marks. Use the section headings above to structure the main body of your report (you should not need sub-headings). Keith will not read the report if it does not use the above headings in the body of your report.
Keith wants to see considerable use of references. While textbook references can be used, Keith would prefer that you use industry research reports, case studies and any other industry-based evidence which can justify why his organisation should implement your proposed BPM solution.
You do not need to specify a particular commercial solution (such as SAP or another enterprise system), although you may specify commercial solutions to help you to clarify and support your proposed solution recommendations.
The report must be no longer than 2,000 words (approximately 4 to 5 pages of words, but by including diagrams and any other graphics or figures it will be considerably longer. Words in diagrams such as the Gap Model, Project Scoping Diagram and As-Is and To-Be process diagrams will not be included in the word count provided they are used to explain necessary steps and highlight critical information. If paragraphs of text are included in these diagrams, they will be included in the word count. Words in tables are included in the word count of the main body of your report.
Note that the 2,000 word count does not include your cover page, your executive summary, your reference list or your appendices.
Note also that 10% of the total available marks for the assignment may be deducted from your final assignment mark for every 100 words that exceed the 2000 word limit. For example, assignments of 2300 words (not including cover page, executive summary reference list or appendices) may receive a penalty deduction of 30% of the total available marks for the assignment. Please do not exceed the word limit for the assignment.
It is strongly recommended that the process to produce your report be an iterative one, with interim reports and drafts produced early so that you and your partners can reflect on progress and refine the work as necessary. This is a major unit assignment, get started early as the trimester moves very quickly.