Professional Documents
Culture Documents
231 Green Vista Drive Cambridge, Ontario, CANADA N1T 1Z1 Toll free: 877.877.9769 Phone: 519.623.4797 Fax: 519.623.0316 Web: www.demandclarity.com Email: info@demandclarity.com
Demand Clarity Inc. 2005
Its certainly much easier and more cost effective to erase and redraw lines than it is to demolish a partially built house and start all over again! Building a Business Process Building a house is a well defined, step-by-step process, with the blueprint as your guide for executing it. The blueprint tells you what people and materials are needed (inputs) and the sequence of the work (process) in order to produce a house (output).
Inputs
Process
Output
A business is nothing more than a series of processes, executed in sequence, that deliver a beneficial output to its customers. The outputs of business processes can sometimes be less concrete than a house a demand forecast, an advertising campaign or a budget, for example but they are still created using inputs and a series of transformation steps. And just like construction projects, new business processes should be thoroughly worked out on paper before you do anything else (like install software or modify existing systems). As with building a house, not spending enough time on the design stage will make the implementation much longer and costlier. So how do you go about designing a business process on paper? Its actually quite similar to creating blueprints for a house: 1. Start out by describing the high level activities in your business. 2. Once a high level design is agreed upon, drill down to add details that are consistent with the design. 3. Continue drilling down to the specific activities and tasks that people in the organization will perform, to ensure that day-in, day-out activities are congruent with the high level design. At any stage there may be several iterations before agreement
Page 2
Starting with these initial guidelines (others will be introduced later), well walk through a sample business process blueprinting exercise for fulfilling consumer demand in a typical retail business. Developing a Level 1 Blueprint The process box depicted in Fig. 2 below represents the most important but most often overlooked process in the blueprinting exercise. It seems obvious, but if the consumer doesnt execute this process, then there is no retail business!
The input received by the consumer is product displayed on the store shelf. The action they perform on the input is to Acquire Product and the output of this process is the point of sale information that is recorded when the purchase is made. Now we can start tracing back from the consumer. Where did the output Product on Store Shelf come from? What process created it? Think about the activities that occur just prior to when consumers take the product off the shelf. The retail store would need to have received the product and placed it on the shelf:
Product on Store Shelf Point of Sale Information
Acquire Product
Fig. 3: The process that gets product onto the store shelf
The output of the process Receive and Present Product is the input of the process Acquire Product. By continuing backwards in this manner, we may end up with a Level 1 process map that looks like this:
Page 4
Consumer Processes
1 Acquire Product
Assortment Changes
Event Information
2 Manage Assortment
Distribution Processes
Operational Schedules
DC Replenishment Plan
Manufacturing Processes
11 Prepare Shipment
Finished Goods
10 Manufacture Product
Production Plan
Raw Materials
Fig. 4: Level 1 business process blueprint for the Fulfill Consumer Demand process
Youll notice that a few elements have been added to make the blueprint easier to understand: Process boxes have been numbered. This will make it easier to follow drill downs. Coloured arrows have been used to differentiate between the flow of information and the flow of product. On the left hand side, a functional overlay has been added to categorize the sub-processes you can see that some of the sub-processes (2, 3 and 4) span across functions Also, notice that the process flow is intuitive. If, in the course of doing this exercise yourself, you find that you have an unmanageable number of boxes, or that flow lines cross over each other, then you may have too much detail on the page or your process may have redundancy. It may be necessary to combine a few activities into one box and push the details down a level. Once the Level 1 process blueprint has been agreed upon by everyone involved, you would then and only then drill down to Level 2. You may choose to do a Level 2 drill-down on every box or only on a select few processes that youre considering changing.
Demand Clarity Inc. 2005 Page 5
Consumer Processes
1 Acquire Product
Assortment Changes
Event Information
2 Manage Assortment
Distribution Processes
Operational Schedules
DC Replenishment Plan
Manufacturing Processes
11 Prepare Shipment
Finished Goods
10 Manufacture Product
Production Plan
Raw Materials
Fig. 5: Identifying the inputs and outputs for the Forecast Consumer Demand sub-process
First, lets create a new blueprint template with the Inputs on the left and the Outputs on the right, as in Fig. 6 below.
Page 6
1 Acquire Product
2 Manage Assortment
Assortment Changes
Event Information
Fig. 6: Sub-process drill down template for the Forecast Consumer Demand sub-process
Now we need to connect the dots. Using boxes and arrows again, well document the steps that are required to transform the 3 inputs (Point of Sale Information, Assortment Changes, and Event Information) into the final output (Consumer Demand Forecast). This ensures that lower level drill downs will always link up with the higher level processes that spawn them. We end up with a peek into whats happening inside the Forecast Consumer Demand sub-process. The flow should be smooth and sequential from left to right as in Fig. 7 below:
Page 7
1 Acquire Product
Baseline Forecast
Assortment Changes 4.4 Determine Promotional Lift Forecast Promotional Lift Forecast
2 Manage Assortment Event Information 3 Plan Promotions and Events Event Information
Note that there are 5 more granular sub-processes within the Forecast Consumer Demand process. Also, the numbering convention is inherited from the higher level to ensure consistency throughout the blueprinting exercise. You can continue to drill down in this fashion as much as you want, so long as the additional detail is useful. As before, dont proceed down to the next level until everyone is in agreement on the current level. Once youre down to Level 3 or 4, it may not be necessary to continue using boxes and arrows. You may instead want to just use a sequential list to document the details. For example, the drill down for the Archive Consumer Demand History sub-process might look like this:
Page 8
4.1 Archive Consumer Demand History 4.1.1. 4.1.2. 4.1.3. 4.1.4. Extract date-stamped POS and inventory history from data warehouse Smooth POS demand across historical stockout periods Determine which items entered the assortment less than a year ago Retrieve superseded items and scaling factors for items with less than a years worth of POS history 4.1.5. Copy scaled history from superseded items to new items 4.1.6. Delete history for superseded items
Fig. 8: A Level 3 drill down of the Archive Consumer Demand History sub-process
Supporting Documentation One of the advantages to having business process blueprints is that you can make future process changes and see what the impacts will be early on in the project. For example, if you want to delete an activity for efficiencys sake, youll be able to see what other processes will also need to be changed to accommodate it. This can be very useful for change management purposes down the road. For this reason, its a good idea to have some background information about each sub-process, including: What the purpose of the sub-process is Which other sub-processes provide the input What input is supplied by these sub-processes Why the input is needed by the sub-process For example, accompanying our Level 2 process blueprint would be the following table:
Page 9
Process Inputs
Supplier Process Input Supplied Why Supplied To provide the historical demand data that will be used to generate a mathematical forecast model of future consumer demand activity.
1 Acquire Product
2 Manage Assortment
Assortment Changes
To provide information about past events so that we know which historical demand needs to be filtered from the baseline forecast calculation. 3 Plan Promotions and Events Event Information To provide information about future events so that we can figure out how much additional demand needs to be added to the baseline forecast.
Summary Implementing a new business process is much like building a house. The time spent working out the details on paper before construction activities begin is well worth it. Business process blueprinting is most effective when its done as a collaborative team effort. This can sometimes make the process more time consuming, but its the best way to make sure youve captured everything. To keep things on track, get broad agreement on the high level design first, then go after the details.
Page 10
Page 11