BA302: Business Process Management

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1.

Activity
Diagrams

- Shows the relationship between a process

and the functional units (such as
departments) responsible for that process
- swim lanes and shapes

17.

Challenges
with Processes

1. They are highly complex

2. they are rarely optimally efficient
3. It is difficult to visualize them
4. People are often resistant to changes

2.

Actors and
Elements

you must have several to have a system.

Attributes are characteristics of those
elements

18.

Channels

number of servers

19.

Clark-Fisher
Hypothesis

as productivity increases in one sector, the

labor force moves into another

Arrival

a person, machine, part etc. that arrives and

demands service

3.

4.

Arrival Rate

= mean arrival rate

ex: 4 customers/ hour

5.

Balking

customer sees a long queue and decides not

to wait for service

6.

Batch Service

Group of customers treated simultaneously

ex: airline

7.

Black Box

you can't see how the system does it work

8.

Bottlenecks

- is the factor limits productivity

- it may be the slowest or longest activity
- it places a constraint on a system
- lines (or queues) are often indicative of a
bottleneck

9.

Boundary

where the system meets the outside world

10.

BPM= OM +
MIS

1. Business Process Management

2. Operations Management
3. Management Information Systems

11.

Business
Processes

- collection of structured activities or tasks

- serve a particular goal
- focus on satisfying a customer
- represented by flow charts

12.

Business
Process
Reengineering
(BPR)

- Improve quality
- Better customer experience
- Better worker experience
- Identifying and eliminating bottlenecks

13.

Capacity and
Demand

Capacity is static
Demand is stochastic
Demand < Capacity= Lost Rev

Capacity
Formula

1/CT
is a measure of output per unit time when
fully busy

15.

Capacity
Utilization

is the ration of how much output is actually

achieved relative to the system capacity
when fully busy

16.

Challenges of
ERP

- complexity of system
- loss of flexibility; ERP imposes its own logic
on an organization
- not for every business

14.

- pre-industrial (extraction) iron, heavy

labor
- industrial (manufacturing) steel,
mechanization
- post-industrial (services) information,
automation
20.

Continuous
Service

Uninterrupted delivery
ex: electric utility

21.

Control Chart

- is used to plot values of a measure of

process to determine if the process is in
control.
- When a measurement is above the upper
control limit ( UCL) or below the lower control
limit ( LCL) the process is considered to be
out of control; consequently, the system is in
need of attention.

22.

Conventional
View of
Quality

- must be balanced with cost, and the goal

- zero defects is too expensive

23.

Cp

- is the capability index that measures how

well data fits between upper and lower
specification limits. (higher the value, the
better the fit)
-Cp reduce the variationeliminate
assignable special causes (surprises)
24.

Cpk

- is the centering capability index that

measures how well data is centered
between specification limits. (higher the
value, the more centered the data)
- Cpk get it centered -eliminate common,
natural causes (unsurprising)
25.

Creative
Dynamic

dentist office- anesthetic, X-ray, etc.

26.

Customization
and
Judgement

extent to which personnel exercise

judgement in meeting customer needs
Degree of customization

27.

Cycle Time (CT)

the average time it takes to complete the

activity

28.

Cycle Time
Formula

CT = setup time + wait time + move time +

process time + other time

29.

Decision

a diamond represents a question or

branch

30.

Decision Shape

31.

Decomposition

an element can be a system (a subsystem)

modeled in detail

32.

Deterministic
Processes

- always generate the same result for the

given set of inputs
- no randomness in the system
- Results are the same each time

Dimensions of
Service Quality

1. Assurance: Ability to convey trust and

confidence. Ex: being polite and showing
respect for customer.
2. Empathy: Caring & individualized
attention. Ex: being a good listener.
3. Tangibles: Physical facilities and
facilitating goods; appearance. Ex:
cleanliness.
4. Reliability: Perform promised service
dependably and accurately. Ex: receive
mail at same time each day.
5. Responsiveness: Willingness to help
customers promptly. Ex: avoid keeping
customers waiting for no apparent reason.

33.

34.

35.

36.

37.

Direct Labor
Content

is the actual amount of work time

consumed- touch time, billable hours, not
overhead

Direct Labor
Utilization

[ TDLC / (Process Cycle Time * # of workers)

]
is a measure of the percentage of time that
workers are actually contributing value to
the service.

Distinctive
Characteristics
of Services

DMAIC (Six
Sigma)

- customer participation in the service

process
- simultaneity
- perishability
- intangibility
- heterogeneity
Define
Measure
Analyze
Improve
Control

38.

Document
Shape

39.

DPMO (six
sigma)

Defects Per Million Opportunities- is the

average number of defects per unit observed
during an average production run divided by
the number of opportunities to make a defect
on the product under study during that run
normalized to one million.

40.

Efficiency

efficiency is the ration of measured

productivity to an established productivity
standard/norm. It is dimensionless

41.

Efficiency
Formula

Productivity/ Standard Productivity

42.

Enterprise
Resource
Planning
(ERP)

- ERP systems use IT to integrate business

processes
- ERP began in early 1970s
- Growth in ERP grew due to maturity and
competitive pressure to increase productivity
- Stronger, faster computers

43.

ERP Systems

Enterprise Resource Planning (ERP) software

systems manage information and processes
across an organization:
1. Execute the process
2. Capture & store process data
3. Monitor process performance
44.

ERP Vendors

1. SAP
2. Oracle
3. Sage Group
4. Microsoft Dynamics
5. SSA Global Technologies

45.

Expected
Loss
Formula

(Loss * Probability Loss)

46.

Exponential
Distribution

inter-arrival time of customers

47.

Exponential
Probability
Distribution

- is useful in describing the time it takes to

complete a task.
- the exponential distribution is often used for
service times.

48.

Exponential
Probability
Distribution
Formula
First in First
Out (FIFO)

First Come First Served (FCFS)

50.

Fitzimmons
Service
Process
Matrix

degree of labor intensity

degree of interaction and customization

Flow

( ) movement of customers, goods or

information

52.

Flow Service

Fixed sequence of operations

ex: cafeteria

53.

Gap Model

The gap between customer expectations and

perceptions is defined as GAP 5. Customer
satisfaction depends on minimizing gaps 1
through 4 associated with delivery of the
services.

54.

55.

56.

Historical
Perspective
of Processes

Information
Silo

Inter-arrival
Time

Last in First
Out (LIFO)

62.

LCL Formula

63.

Learning
Curve
Formula

T2n= L * Tn

64.

Management
Information
Systems
(MIS)

- a study of the interaction of information,

people, process and technology
- information data bases

65.

MBWAManagement
by Walking
Around

In MBWA practice, managers spend a

significant amount of their time making
informal visits to work area and listening to the
employees. The purpose of this exercise is to
collect qualitative information, listen to
suggestions and complaints, and keep a finger
on the pulse of the organization.

66.

Measuring
Variation

x= time between arrivals or service time

49.

51.

61.

- historically handcrafted by one person or

small team
- industrial revolution (1780-1920) created
divisions of labor to seek efficiencies
- free markets allow manufacturers to balance
quality with lower production cost
- refining processes is part of competitive
nature of business
- is a management system incapable of
reciprocal operation with other, related
information systems.
- is a pejorative expression that is useful for
describing the absence of operational
reciprocity.
1/ = mean inter-arrival time
ex: 1/ = 1/(4 cust/hour) = 1 hour per 4
customers=1/4 hour per customer = 15 min per
customer

57.

Isolated
Functional
Systems

- Often departments automate their functional

processes without considering the larger
organizational needs
- This causes:
1. Duplication of information
2. Disjointed business processes
3. Lack of integrated information
4. Inefficiency
5. Increased costs

58.

Jenkin's
Corollary

However, when you switch to another other

line, the line you left moves faster.

59.

Job Shop
Service

many specialize departments

ex: hospital

60.

Jockeying

customers in a multiple-queue system leaving

one queue to join another

the office worker: a person can only handle

one page at a time, so the top piece of paper
added to a pile is the first off.

Standard Deviation Formula

67.

Method of
Service
Delivery

method of service delivery

availability of service outlets

68.

Moments of
Truth

Each customer contact is called a moment of

truth: You have the ability to either satisfy or
dissatisfy them when you contact them

69.

Monte Carlo
Simulation
Technique

- Setup probability distributions for important

stochastic variables
- For each model run or trial, sample from
these distributions
- Use repeated (many times) random samples
to compute results
- Conduct multiple runs to predict hundreds
(or thousands) of possible outcomes and
collect results
- Study the results (e.g., min, max, mean,
standard deviation, etc.)

70.

Moore's Law:
ERP Growth

71.

Move Time

72.

Multi
Channel,
Multi Phase

- Observation by Gordon Moore, co-founder

of Intel that computing power doubles every
24 months.
- The number of transistors on integrated
circuits doubles approximately every two
years.
- Today's computers are more capable and
powerful than predecessors

79.

Overbooking

Reservations are beneficial because

- Presells , a potential service
- Helps forecast levels of demand
- Guarantees service availability
- Reduces waiting time
Overbooking is common strategy
- Overbooking hedges against possible noshows
- But overbooking creates loss of goodwill for
customer who has a reservation and is
turned away

job has to be physically moved elsewhere

consequences of overbooking < opportunity

cost of no overbooking
73.

74.

Multi
Channel,
Single Phase

80.

Phases

81.

Poisson
Distribution

Multiple
Queue

75.

Nature of
Service Act

76.

Normal
Distribution

number of steps in service for each arrival

customers arriving in certain time period

tangible actions and intangible actions

direct recipients of the service

82.

Poisson
Probability
Distribution

83.

Poisson
Probability
Function
x = the number of occurrences in an interval
f(x) = the probability of x occurrences in an
interval
= = mean number of occurrences in an
interval
e = 2.71828
x! = x(x - 1)(x - 2) . . . (2)(1)

follows a normal distribution

77.

Operation

a rectangle represents a process or action step

78.

Operations
Management
(OM)

- is the business discipline historically

concerned with process improvement
- mathematical analysis
- goal is to increase value added content and
optimize organization

is often useful in estimating the number of

occurrences over a specified interval of time
or space

84.

Poka-Yoke
Method

fail-safeing or foolproof design

85.

Preemptive
Priority

ongoing service is interrupted for a new

arrival; e.g., emergency rooms, MASH.

86.

Primary

Extractive, agriculture, mining, finish,

forestry

87.

Process
Analysis

- identifying the steps in a process can help

identify bottle necks and inefficiencies

88.

Process
Capability

A process is considered "capable" if control

limits are within the specification limits
- control limit: variability caused by common
(natural) causes
- specification limit: value a product or
service must meet

89.

Process
Information
Flow

90.

Process Shape

- In processes, activities either generate

information or consume information (or
both)
- Most process flows also have a
corresponding information flow

104.

Reasons for
Isolated
Functional
Systems

- Cheaper to build than a fully integrated

one; The original isolated system may have
been a significant improvement over
previous processes or the company cannot
afford an integrated solutions
- Isolated systems are easier to manage

105.

Regression
Analysis

- competitive factors
- demand generators
- area demographics
- market awareness
- physical attributes

106.

Relationships

how the elements interact or the system

interacts with the outside world

107.

Relationship
Shape

91.

Process Time

job is being worked on

92.

Productivity

is a measure of output from a production

process, per unit of time, a rate

93.

Progressive
Steps to Quality
Development

1. INSPECTION
2. COST OF QUALITY
3. UNCONDITIONAL SERVICE
GUARANTEE
4. QUALITY SERVICE BY DESIGN
5. STATISTICAL PROCESS CONTROL

94.

Project Service

One-of-a-kind engagement
ex: consulting

95.

Quality

is "the totality of features and

characteristics of a product or service that
bears on its ability to satisfy given needs."

108.

Relationship
with
Customers

relationship with customers

type of relationship between service and
customer

96.

Quality Tools for

Analysis and
Problem Solving

Check Sheet
Run Chart
Histogram
Pareto Chart
Flowchart
Cause-and-Effect Diagram
Scatter Diagram
Control Chart
Benchmarking

109.

Reneging

occurs when a customer in queue departs

before obtaining service

110.

Role of MIS in
Process

- IT is a process improvement enabler

- MIS supports: individual process activities,
coordinate activities across function,
decreases delays, duplication of data, excess
inventory, and increases visibility

111.

Rush Order
Flow Time

is the time to go through the system without

any queue time

112.

SAP AG

- A German multinational software

corporation that makes enterprise software
to manage business operations and
customer relations.
- One of the largest software companies in
the world

113.

Scope
Statements

The scope statement details the project

deliverables and describes the major
objectives. The objectives should include
measurable success criteria for the project.

114.

Secondary

Goods Producing: manufacturing processing

115.

Server

person or equipment performing the service

116.

Service
Classification

1. Nature of the service act

2. Relationship with customers
3. Customization and judgement
4. Nature of demand and supply
5. Method of service delivery

97.

Quaternary

Trade and Commerce: transportation,

communication, retailing, finance

98.

Queue

Waiting Line

99.

Queue
Configuration

ex: multiple, single, take a number

100.

Queue
Discipline

ex: FIFO, LIFO

101.

Queue
Discipline

Rules for determining the order that

arrivals receive service (e.g. first come first
served)

102.

Queuing Theory

- Certain types of lines can be described

mathematically
- Requires that assumptions are valid for
your situation

103.

Quinary

Extending Human Potential: health,

education, research

117.

Service
Location
Planning

- competitive positioning
- demand management
- flexibility

118.

Service
Package Model
Components

- supporting facility
- explicit service
- implicit services
- information
- facilitating goods

119.

Service Process

walk-in appts

120.

The Service
Process Matrix

degree of labor intensity

degree of interaction and customization

121.

Service Quality

- is measured by comparing a customer's

expected service, with their perception of
the service.
- is a measure of whether the expectations
were met, which is difficult to measure

122.

Service Rate

= mean service rate

ex: 20 meals/hour

123.

Service
Recovery

A service recovery is satisfying a previously

dissatisfied customer and making them a
loyal customer.

Servicescapes

Designing Physical Surroundings to Affect

Employee and Customer Behavior
- ambient conditions
- spatial layout and functionality
- signs, symbols, and artifacts

124.

125.

Service Time

1/ = mean service time

ex: 1/(20 meals/hour) = 1 hour/20 meals =
(1/20 hour)/meal = 3 minutes/meal

131.

Single Queue

132.

Site
Considerations

1. access
2. visibility
3. traffic
4. parking
5. expansion
6. environment
7. competition
8. government

133.

Six Sigma

Quality improvement framework

134.

Skinner's Law

The other line always moves faster.

135.

Stages of
Economic
Activity

1. Quinary
2. Quaternary
3. Tertiary
4. Secondary
5. Primary

136.

Stochastic
Processes

- normal distribution
- uniform distribution
- poisson distribution
- exponential distribution

137.

Stored Data
Shape

126.

Setup Time

time needed to change existing capacity so

it can accept and process the new work

127.

Shortest
Processing
Time (SPT)

serve the short service time ones first

long line during office hours.

138.

System

Simulation

Computer models to predict and improve

queue performance

is a group of two or more interrelated

components or subsystems that serve a
common purpose

139.

System
Capacity

1/CTb
is a function of the bottleneck cycle time

140.

Systems: input
processing
output

- interconnected parts
- model systems can identify factors,
elements, and attributes

141.

Taguchi
Method

- Robust design
- The Taguchi method considers design to
be more important than the
manufacturing process in quality control
and tries to eliminate variances in
production before they can occur.

128.

129.

130.

Single Channel,
Multi Phase

Single Channel,
Single Phase

142.

Take a Number
Queue

155.

Variability in Processes

As variance is reduced, quality

can increase
- Cost of prevention decreases
- Cost of defects decreases
- Customer loyalty (revenue)
increases

156.

Wait

a triangle represents a delay or

inventory of goods

143.

Terminator

an ellipse represents a start or strop in

a process

157.

Wait Time

job is waiting for the next

process step to start

144.

Tertiary

Domestic: restaurants, hotels, laundry,

maintenance

158.

Walk-Thru Audit

145.

Throughput Time

(critical path + queue time)

is the time to complete a process from
time of arrival to time of exit

146.

Total Direct Labor

Content

is the sum of all direct labor

147.

Total Quality 3
Fundamental
Principles

- a focus on customers and

stakeholders
- participation and teamwork
throughout the organization
- a focus on continuous improvement
and learning

- Need detailed service audit

from a customer's perspective.
- Customer impression of service
influenced by use of all senses.
- Service managers lose
sensitivity due to familiarity.
- Develop a flowchart of the
delivery process from start to
finish
- Design questions to assess
each phase

159.

WBS- Work Breakdown

Structure

WBS displays the relationship of

each task to the other tasks, to
the whole and the end product
(goal or objective). It shows the
allocation of responsibility, and
identifies resources required
and time available, at each stage
for project monitoring and
management.

160.

What are Business

Processes?

- the sequence of activities they

perform in an organization
- activities result in revenue or
value added

161.

What are Services?

- the action of helping or doing

work for someone
- a services is a time-perishable,
intangible experience,
performed for customer, acting
in the role of a co-producer

162.

Why Manage Business

Processes?

- Standardization
- Efficiency: decrease resources
required, increase output

163.

You're a planner for

Viking Ships. The first
boat took 125,000 laborhours to make. Boats 2 &
3 were produced with a
learning factor of 80%.
How long will the 4th
boat take so that raiding
can begin?

1st unit: t1= 125,000

2nd unit: t2= .80 x 125,000=
100,000 hr
4th unit: t4= .80 x 100,000=
80,000 hr

148.

Total Quality
Management View

quality is free!

149.

Two Common
Strategies to
Manage Yield

1. Level Service Capacity (manage

demand)
ex: take reservations
2. Chase Demand (manage capacity)
ex: use part time employees

150.

Two ways to
address waiting
lines

1. Queuing Theory
2. Simulation

151.

Types of Services

1. Project
2. Job Shop
3. Batch
4. Flow
5. Continuous

152.

UCL Formula

153.

Uniform
Distribution

all outcomes are equally likely

154.

Value Chains

a network of value-creating activities (or

processes)

164.

Arrival Rate ...Average number of arrivals per time period

165.

Service rate ...Average number of people or items served per time period