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MPM701 - BUSINESS PROJECT MANAGEMENT

TRIMESTER 3 2015

WRITTEN ASSIGNMENT
DEAKIN UNIVERSITY
COMPOSTWIZ Pty. Ltd.
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TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................
BPM & STRATEGY.......................................................................................
PROBLEM ANALYSIS..................................................................................
PROPOSED SOLUTION................................................................................
SOLUTION CONSIDERATIONS................................................................
RECOMMENDATIONS...............................................................................
REFERENCE LIST.......................................................................................
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EXECUTIVE SUMMARY
This report provides a brief knowledge about Business Process Management (BPM) and the
enhancements it will give to Jennys Compostwiz pty. Ltd. when it is related with business
strategy, organization structure and value chains of the company.

Although Jennys business strategy has always centered on innovation, while examining the
business process of the company, limited execution of technology has been seen found. Delay in
order fulfilment process is considered the major cause for the problems like lack of
communication and disputes amongst the managers of the different departments. The second
main problem is the use of paper based and manual work which has caused delays in processing
the orders. The problems has been analyzed in this report with the current running of Jennys
business with the support of simple As Is Process diagram with the perspective of The To-Be
diagram. Simultaneously, the management problems are explained in the Project Scoping
Diagram. Business Process Architecture (BPA) has been explained in the proposal solution, to
provide the outline of the companys problems and the business processes. Therefore, it is
profitable for the company to adopt an ERP (Enterprise Resource Planning) system which will
benefit the firm to get rid of the management problems. Finally recommendations are provided to
help Jennys Compostwiz pty. Ltd. to gain competitive advantage and earn profits through
enterprise database system, automation of prices and process management.
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1) BPM AND STRATEGY

The objective of a business process is to achieve an organizational goal, which is geared to the
needs of a customer. The business process perspective designs organizations, making sure that
interaction and coordination are present so that information is readily accessible. The reduced
hierarchy in the process organization, with flows across the organization at lower levels, allows
the process to be completed quickly and efficiently.

Compostwiz pty. Ltd. Is experiencing decrease in the revenue and lack of coordination among
the departments which has given rise to the downfall of the business. Therefore, adopting a BPM
approach will help the organization to be competitive and cost-efficient. Accordingly, BPM
approach would be helpful to Compostwiz Pty Ltd in the following ways:

Relief from the paper- based system which helps in saving the cost and time.
Increased staffs efficiency due to reduced manual effort.
Controlled and monitored divisions by performing the task online.

The primary intention of executing BPM for the company is that it helps in the enrichment of the
processes that supports value chains and positioning of the business encircling the internal and
external perspectives. Processes that do not add value along the value chain need to be
eradicated. This gets accomplished through the internal procedures that relate sub-processes to
the external measures and value chains which postulate the overall consequences for functioning
of the value chain. For example, Toyota was able to realize significant benefits of BPM by
introducing a process focus into its vehicle manufacturing operations (Consdine, Parkers, Olesen,
Yvette, Blount, Speer Pg.: 52)

Successively, if Jennys company adopts a BPM, it will help it to connect with organizations
internal and external environment, balancing and matching the resources such as processes,
systems and people throughout the organization.
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2) PROBLEM ANALYSIS
Major issue being inventory procurement and delivery due to manual set up of the organisation is
done on emailing basis. Computerisation of work is very much necessary for the organisation.
Another major issue is paper work needs to be minimized, low cost database management can be
done through online forms usage and integrating in to the system and a few having control of it.
Whereas at a higher level there can be two steps for Jenny, one is implementation of ERP
systems and two implement a higher speed internet network to disseminate information.

The input costs will be high for the implementation of intranet, SAP and network in the
organisation. The training costs will also increase as only 22 employees have a basic or
intermediate knowledge of computers. However, the training process can be implemented on a
gradual scale, the directors and top level managers if any should be provided training initially
and it can be slowly implemented on others as well as hands on experience and supervision
under the manager and director of respective departments.

Another challenge for Compostwiz is the availability of stainless steel probe which could operate
effectively in all soils and all temperatures. Again, this probe is supplied only by the supplier in
Istanbul. The supplier is considered to be a monopolist and hence it takes decision of price
fixation.

Another important factor of under management is the accounts receivables section, most of the
files are kept in physical format and it is not stacked up serially in case of any miss happening,
the total stacking also gets disarrayed and it is trashed. So, there is no tracing of an order from
client and as a result the firm is losing its customers base. So, again things should go from
manual format to computerized form to keep a proper track of debtors. It can be efficiently
managed through ERP system. It will reduce the total operating cycle of the firm.
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Fig. 2.1 PROJECT SCOPING DIAGRAM FOR COMPOSTWIZ PTY. LTD.


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Fig. 2.2 As- is Process diagram of Compostwiz Pty. Ltd.


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Fig. 2.3 Causes, Problems and Consequences Model

Hence the firm should take care of the above problems and re-engineering the process would
result into profit increasing. However, it is very much necessary at this level as the operating
costs needs to be curbed if the firm wants to survive the market conditions. Steps should also be
taken to improve the marketing aspect of the product and research and development because in
the meeting this department was totally silent about what latest developments are being taking
place in similar product segment and what can be the future scope of the product in the market
which in turn will decide the life cycle of the product.
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Fig. 2.4 GAP MODEL FOR COMPOESTWIZ PTY. LTD.


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3 PROPOSED SOLUTION
The business process architecture (BPA) for any organisation is a collection of processes that are
carried out and the relationship among these processes (Barros 2007, p.1). By incorporating
architecture process, helps in efficient and smooth running of business. By connecting different
processes in a business, it helps in building relationships between different departments like
finance, production, logistics etc. Along with this, it helps in maintaining value chain as well as
maintaining crucial functions like finances, IT, procurement, logistics and so on. By strategically
developing business process architecture from the existing process, helps in proper execution and
future business development. By linking all processes together in an enterprise not only ensures
smooth flow across end to end process but also avoids any mistakes that could happen while
carrying out day-to-day processes, saves time, improves efficiency with which more work can be
done.

BPA would bring a difference in jennys company since there is no proper check
to the flow of the process in the company. Also work is carried out manually and by maintaining
files or post-its which cannot be relied on. By incorporating BPA, all the departments in the
company will be interconnected and a set flow can be maintained so that there is no question of
ever ill-functioning. This will lead to more productivity in the work and efficient working in the
company. Since the company sales are down at the moment, they have to identify the current
flow and formulate strategically an architectural plan for betterment of the company.

To-Be Process-

By formulating and implementing BPM process, they would be able to identify and rectify the
mistakes so that the profit of the company which is seen to be going down over last two years
could be changed. Work can be carried out faster and efficiently between the production,
logistics and accounting departments without delay. This will give a clear picture whether the
plans developed by the company to generate profits/increase sales are the same as the To-Be
process that is formulated so that they can be followed. A picture view of Compostwiz Pty Ltd of
how their process should be is given in fig.1.2. The company would be able to function more
efficiently by incorporation of Enterprise Resource Planning System (ERP).

Fig. 3.1 To Be Process Diagram for Jennys Compostwiz Pty. Ltd


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Incorporation of ERP-

ERP is a software that can connect different functional departments together and facilitate
communications across departments. Resources can be aligned with the help of this software and
in case of any mal-functioning, can be corrected and aligned with companys strategies and the
goals that are to be achieved and connected with other departments (Harmon 2007, p.90).
Different advantages of implementing this software are as follows-

The biggest benefit that compostwiz will have is the time management. Like Mike
requires three days to physically check the availability and then convey the message
further. This can be avoided by using the intranet, by incorporating ERP it will automate
the system fully.
Compostwiz Pty Ltd is maintaining lot of paper work and post-its which has the risk of
loosing in causes of any adverse events as well as they have to follow-up through these
paper.
ERP will help in maintaining the invoices generated for customers and receiving invoices
from the suppliers.
ERP would also be helpful in keeping a tract of revenues that the company will be having
so that they can plan future strategies.
ERP would also ensure that supply chain in the company in maintained and followed
efficiently.
Automating procedure from receiving order from customers, making sales order,
checking inventory, receiving sales order by logistics and accounting, storing shipping
details in software and categorizing and making invoices as well as making payments, all
can be automated increasing productivity.
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4 Solution considerations

Cost of implementation

The cost of the ERP system can be the first factor need to be considered. Price varies from
different brand or different type of software. The normal bottom line is $150,000-$750,000.

Elements that affect the cost of implement SAP Business One include: functional requirements,
data conversation, geography, reporting requirements, skill set of users, number of users,
integration requirements, and development requirements.

Here is an example for implement SAP Business One (comprehensive implementation) 50


users Finance, Distribution, manufacturing, mobility, business intelligence reporting and CRM
requirements. Total solution pricing estimate $190,000. This includes 50 users of SAP Business
One software, year one annual maintenance and all implementation services

Risk of implementation

1. Training & education

Most urgent risk of changing the business to totally new management system is the employees
may not get used to the new system. Training and education can be expensive but necessary for
the business. Trained and skilled system users can make the best benefit for company (Umble et
al., 2003 Edwards and Humphries, 2005).

2. Employee resistance the change

Some employees may refuse to use the new system because they are not getting used to a totally
different work process (Stanton et al., 1992). Habits can affect peoples activities. It would be a
waste if no one is using the new system. And whats more, the business process does not change
at all. The companys profit cannot get improved.

3. Conflicts & coordination

There may be a chance that employees from different departments do not work on well together.
Coordination and cooperation is significant. The conflicts among employees make the work
process less efficient.

4. Lack of resources of IT support


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A different new information system may be confusing for some employees. IT supports is
significant in the whole working process. Some previous failure was caused by lack of IT
support (Bashein et al., 1994).

Recommendations:
The recommendations that could be considered by jenny which could be beneficial for
Compostwiz Pty Ltd is as follows-

The primary issue that needs to be considered is installation of ERP software which
would save time, money, improvement.
In case of unavailability of desired inventory, purchase order can be sent to suppliers by
using the internet access and the software since the suppliers also possess an internet
access. Four and a half weeks of time taken to send order and receive dispatch
confirmation through surface mail can be minimized considerably.
Accounts needs to be taken under consideration as $600,000 are with the debtors, out of
which $168,000 are to be collected as soon as possible considering 28% percentage of
debtors outstanding are more than 2 months. Even though according to john, payment by
the costumers is done within 21 days and very little follow-up is required. The above
problem needs to be addressed as huge some of company is stuck with the debtors with
no follow-up or action taken.
When delivering the device directly to customers, personnel personally can assist the
delivery and show the demonstration to avoid any confusion later.
More IT professional needs to be recruited to understand and carry out working of the
ERP software and training has to be given to people
The cost of installing ERP software in a small company of 50 individuals can incur more
costs since their cash at hand is $1,000,000 with $50,247 net from Compostwiz, installing
ERP can prove to be a risky proposition. If Jenny does not want to invest such huge
amount at, Best option with Jenny could be use of Microsoft Access.
Finally, jenny sensed tension between Mike, John, and Jake and even though the sales
were down, Bette seemed to be positive. Hence the root cause of the problem needs to be
addressed for example in accounting as mentioned earlier, John need not follow up but
still there is huge accounts receivable.
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REFERENCES

Bashein, B., Markus, L. and Riley P. (1994), Precondition for BPR success, Information
System Management, Vol. 11 No. 2, pp. 7-13.

Cusumano, MA 1988, Manufacturing innovation: lessons from the Japanese auto


industry, Sloan Management Review, vol. 30, Fall, pp. 29-39.

Edwards, H.M. and Humphries, L.P. (2005), Change management of people and
technology in an ERP implementation, Journal of Cases on Information Technology,
Vol. 7 No. 4, pp. 143-159.

Harmon, P 2007, Business Process Change A guide for Business Managers and BPM and Six Sigma

Professionals, 2nd edition, Morgan Kaufmann Publishers, MA.

Stanton, S., Hammer, M and Power, B. (1992), from resistance to results: mastering the
organizational issues of reengineering, Insights Quarterly, Vol.2 No. 2, pp.6-16

Umble, E.J., Haft, R.R. and Umble, M.M. (2003), Enterprise resource planning:
implementation procedures and critical success factors, European Journal of Operational
Research, Vol. 146 No. 2, pp. 241-257.