Process Capability

Vermeulen, Andre (2011)
PROCESS CAPABILITY 1. INTRODUCTION In this literature as related to the criterias identified impacting on Business Process Maturity (BPM and BPMM)) and Business Process Capability (BPC) are discussed. Factors contributing to Business Process Capability Maturity and Performance (BPCMP) as identified highlight what should be included in a measurement instrument to measure performance, capability, and competitiveness, competitive priorities.
If organisations can produce / manufacture and deliver high-quality, low cost products that meet customer requirements in a timely manner, then its probability of success is increased. To understand business processes and how they can contribute to the success of an organisation, it is important to understand how: 1. 2. Integrated system and business processes add value to the organisation Knowledge and technology in the form of processes, and procedures impact on the performance of the organisation 3. Managers and well managed teamwork should achieve operating and organisational objectives
Organisations also consist out of a system and sub-systems as defined by Vonderembse, et al (1996). Vonderembse, et al, (1996:13) defined a system as a group of events, or actions in which an item, event, or action occurs independently. Noted is that subsystems are often referred to as functional areas and should be linked by common organisational goals and should be part of the organisations strategy.
In order to achieve organisation objectives, organisations should develop competitive capabilities that meet organisational goals and customer requirements. Capabilities are the result of organisational processes such as strategy development, product development, design of systems and processes, producing products or services, as well as order fulfilment at a defined level. Not adhering to above criterias could very much be the reason why organisations do experience problems for not achieving competitive capabilities.

2. BASIC BUSINESS PROCESS CAPABILITY PRINCIPLES Capability has an enormous extent of application and since non-scientific terms are inadequate for communication within the industrial community and will therefore be clearly defined in the literature study. However, the following concepts / definitions as defined by Gryna. F.M (2001, 516) is provided to the reader of the research document:
1.
Process: Refers a unique combination of machine, tools, methods, materials, and people engaged in operations or production.
2.
Capability: This word is used in the sense of a competence, based on tested performance, to achieve measurable results.
3.
Process capability refers to the reproducibility at a set standard over a long period of time with normal changes in workers, material, and other process conditions.
4.
Process capability is the measured, inherent reproducibility of the product turned out by a process.
5.
Measured: This refers to the fact that process capability is quantified from data which, in turn, are the results of measurement of work performed by the process.
6.
Inherent reproducibility: This refers to the product uniformity resulting from a process which is in a state of statistical control, i.e., in the absence of time to-time "drift" or other assignable causes of variation. "Instantaneous reproducibility" is a synonym.
7.
Product or Service: Physical / variable or tangible / attribute. The measurement thereof is made on the product / service due it is product variation which is the end result.
8.
Machine capability versus process capability: Some practitioners distinguish between these two terms. Machine capability refers to the reproducibility under one set of process conditions (e.g.: one operator, homogeneous raw material, uniform manufacturing practice).
9.
Process capability as defined above is a measurable property of the process. The resulting measure is expressed in terms of variation and is unrelated to the product tolerance; i.e., "the process doesn't know what the tolerance is." However, the capability measurement is compared to the tolerance in order to judge the adequacy of the process.
It is only evaluation of an organisations business process that organisations can stay competitive. In order to stay competitive originations should consider business processes, namely: 1. To be customer focused organisation

2. Predict and control change 3. Ability to compete 4. Means to effect major changes to very complex activities in a rapid manner 5. Managing organisations effectively 6. Keeping the focus on processes 7. Preventing errors 8. Understanding inputs become outputs 9. Providing the organisation with a measure of its poor quality 10. Provide a view of how errors occur and methods for correcting them (elimination of waste) 11. Development of a complete measurement system 12. Providing an understanding of how good the organisation can be and defining how to get there 13. Prepare organisations to meet future challenges
However, a more comprehensive integrated business system approach to business development and the management of processes is what distinguishes modern organisation businesses from traditional organisation businesses. What is proposed is that a broader view should be considered that should link together synergistically the key components of business success from Corporate strategy, functional planning to cross-functional cooperation, from supply chain management to customer value creation, to the art of continuous improvement, innovative and pragmatic view that can be applied to achieve sustainable organisation competitive advantage towards growth and competitive edge and business process capability. The goal of total systems thinking is to manage the rapidly growing complexity of the worlds of business and technology. The focus being to create systems, within a sensibly structured business, that empowers employees, enables people and for organisations to achieve higher productivity and greater competitive advantages. This approach deals with the whole business system from end-to end business processes and in terms of the interconnections and interactions of its organisation process towards process capability.
In order to understand the strategic importance of business processes, Krajewski, et al, proposed that it is essential to understand processes in view of cross-functional coordination and that processes must add value for customers throughout the supply chain. They stated

organisation must not miss strategic insight as it is processes that add value for customers throughout the supply chain and that the supply chain reinforces the link between processes and performance. Business processes will thus include organisations internal processes as well as those of its external customers and suppliers. To improve business processes Harrington stated that organisations should firstly (1) obtain management support, (2) have a long term commitment, (3) apply disciplined methodology, (4) assign process owners, (5) develop a measurement feedback system, and (6) focus on the process. 2.2.1 CORPORATE STRATEGY
2.2.1.1 Definition The Business Directory (20111) defines Corporate Strategy as the overall scope and direction of a corporation and the way in which its various business operations work together to achieve particular goals and defines Corporate Strategy Planning as the systematic process of determining goals to be achieved in the foreseeable future. It consists of: (1) Management's fundamental assumptions about the future economic, technological, and competitive environments. (2) Setting of goals to be achieved within a specified timeframe. (3) Performance of SWOT analysis. (4) Selecting main and alternative strategies to achieve the goals. (5) Formulating, implementing, and monitoring the operational or tactical plans to achieve interim objectives.
Top-Down Strategy Focusing on operations strategy as well as process strategy, Slack, et al, (2009:45), emphasised that operations / process strategy is one of several functional strategies that are governed by decisions at the top of the organisational tree (top down perspective) and that is mainly concerned with the day today running of the organisation processes. However, Slack, et al, stated that this should not conflict with the organisations overall strategy, but that a top down strategy should also take into account what is actually happening on the bottom. Corporate strategies should also therefore take into account (bottom up) the circumstances, experience and capabilities of the various business that form the organisation.
Top down strategy often identify three levels of strategy: corporate, business and functional. Slack, et al, Operations and Process Management, (2009:46), states that a corporate strategy should position the organisation in its global, economic, political and social environment. Decisions regarding the type of business the organisation want to be in and what parts of the

world it wishes to operate in have to be considered.
Slack, et al further stated that every business unit within the corporate group will have to put together a strategy that sets out the individual missions and objectives and guide the organisation in relation to its customers, markets and competitors and defines its role within the organisation. It is then required that each business function as the best they can interact with each other and should contribute towards the strategic objectives of the organisation.
Top Down Strategy should therefore reflect the needs of the whole organisation and the corporate strategy should position the organisation in its global economical, political and social environment. Decisions such as these forms the corporate strategy of the organisation should be aligned with t a bottom up perspective in providing a day to day experience of providing products and services to the market reveals problems and potential solutions which is formalised into a operation strategy.
2.2.1.2 Bottom Up Strategy In reviewing corporate strategies an organisation should also take into account the circumstances, experiences and capabilities of the various businesses that form the organisation. Slack, et al, stated that when reviewing strategies consultation between individual functions within the organisation will take place to evaluate their constraints and capabilities and those ideas come form each functions day to day experience. The principle of governing a bottom-up approach is to ensure that operations / process objectives and actions should be shaped by knowledge gains from its day to day activities.
Essential to achieve either a top-down or bottom up approach, Harrington, (2001, 21), propose the following methodology for organisation to manage their business: 1. Organise for improvement through- building leadership, understanding and commitment 2. Understanding all the dimensions of the current business 3. Streamlining processes to improve efficiency, effectiveness and adaptability of business processes 4. Measurement and controls through implementing system to control the process towards continuous improvement 5. Implementation of a continuous improvement process

2.3 Business Governance
The Cambridge Business English Dictionary describes corporate governance as - the way in which a company is managed by the people who are working at the highest level in it: good/poor, etc. corporate governance Effective corporate governance will contribute decisively to a company's success. Business governance should therefore includes policies, standards, guidelines and a process governance framework that works on three levels to align/innovate, optimize/improve, and operate/manage an organizations business processes. It therefore focuses on how well the business processes should be operating in order to obtain business process capability. According to Richardson (2006) Process Governance Best Practices, the term governance has over the past five years, gained prominence in information technology and business circles. Richardson states that term is used to define the set of rules that dictate or govern how an organisation how they should conduct a specific business function. Thus, process governance consists should consists of the set of guidelines and resources that an organisation utilise to facilitate collaboration and communication when it undertakes enterprise process initiatives, such as implementing a new contracts administration process or a new budgeting system.
Richardson stated that as organizations begin to deploy enterprise-wide solutions for managing key business processes, they are encountering many obstacles and challenges associated with cross departmental interaction and collaboration. Organizations are discovering that while intradepartmental business process initiatives typically execute with minimal issues, interdepartmental business process initiatives often become mired in cross departmental Although focusing on continues improvement. Slack, et al, 2010, 546, states that improvement is not getting employees to think improvement and that it just happens but should have some type of system that support the improvement effort. Thus it should: Define and cover all facts of an organizations operation, from identifying and meeting the needs and requirements of customers, design, planning, purchasing, manufacturing, packing, storage, delivery and service, together with all relevant activities carried out within these functions. It deals with organization, responsibility, procedures and processes.

Business Governance therefore emphasize business process performance using the analysis, monitoring, reporting and optimization of business processes and business activities, and including process simulation and optimization of desired business outcomes by using real-time, historical and estimated data. Good governance structures and quality input help growing businesses effectively utilize their entire resource base. However, to ensure that Corporate and Business Governance is adhering to clear objectives have to be set enabling all employees to obtain a desired level of performance and be capable of achieving these objectives. This should ensure that business processes are optimized and aligned with organisations objectives and should help to: Assess and document current processes and simulate new processes using "what if" scenarios Uphold the control that assess compliance and adherence to pre determined standards through self formal assessment Govern the entire lifecycle of business processes using policies, standards and guidelines providing a clear direction towards Business Process Capability and Performance Evaluate the deployed business processes against the stated operational and performance objectives to identify areas of potential improvement Policies and procedures be documented and communicated to all stakeholders Deliver critical, real-time business data to business leaders using dashboards and scorecards. Therefore a formal reporting process to relevant governing bodies should be in place supported by process to rectify non compliance and to take corrective action Business Governance can therefore best be described as a set of policies, procedures and laws affecting that set the way that the organizations business to be to executed in which manner people direct administer and control the interrelationship of the organizations processes amongst shareholders, management, employees, suppliers, regulators, the environment and the community at large. Good Business Governance will have an impact in Business Process Capability and should be included as key criterias and measurement tools towards Business Process Capability Maturity models focusing on:

1. Principles and policies 2. Roles and responsibilities 3. Standards and procedures 4. Models, data, and 5. Performance measurement 2.4 Business Process Principles
All organisations have business processes enabling organisations to satisfy internal and external customer needs. Slack, Chambers, Johnston, (2010:18) states that whenever a business attempts to satisfy customer needs it will use many processes.
However, in order for organisation organisations to obtain competitive advantage they should focus on the value chain. Krajewski, et al (2007 5-12) states that products that are produced through a series of interrelated business activities should be the cumulative work of the processes in a value chain and that there is an inter relationship of a series of processes that produces a product. In doing so each activity in a process should add value to the preceding activities. In doing so the value chain focus on the core processes in a chain and delivers value to the external customer whilst the support processes provide vital resources and inputs to the core processes.
Processes are therefore designed according to activities that they perform, the resources that they use, and are focused on end-to end set of activities that satisfy customers. In order to achieve end-to end satisfaction calls for business process reengineering which forces organisations to radically rethink their process design.
Of strategic importance is the management of processes focusing on the strategic impact in short term as well as long term in terms of cost, cost reduction, revenue, quality, effective capital investment, building of knowledge and skills within the business capabilities towards competitive advantage.
It must be noted that processes differs in characteristics in some way and therefore needs to be managed differently. Some of theses differences could be technical of nature due to the nature of skills and technology required to deliver products or services.

Business Processes is therefore unique in that it can be measured directly and the results thereof can become a key part of a scorecard measurement system for organisation and or can contribute competitive indicators of future business performance. It shows the transformation of inputs into outputs and defines the activities to which an organisation should respond to as well as the criteria required to measure business process capability and performance.
It also defines the role that all stakeholders adhere to and defines the guidance needed to carry out the process and attain the desired outcomes. It also defines the capabilities required from people, technology and facilities in order to succeed and become competitive. Business processes defines the required measurement system and performance targets to establish assessment criteria of an organization towards Business Processes Improvement, Performance, and Excellence.
In summary, a process has therefore its own set of objectives, utilise resources with capabilities to achieve organisational objectives, it involves a work flow that cuts across departmental boundaries and requires resources from several departments within an organisation.
2.5
Business Processes and Competitiveness
To obtain competitive advantage denote an organisations ability to achieve market superiority and competitive edge depending on the design of the production and service system through developing and executing a good strategy.
In developing and execution of good strategy requires the managing of consistent, accurate, sustainable, and timely information at all times across all functional areas of the organisation. Information in itself must provide real time information for evaluation and improvement of processes, products, and services to meet the organisations objectives and to address ever changing customer needs and assist in performance measurement towards competitiveness. Evans, (2008:184 - 230).
Evans further stated that organisations need performance measurements for three reasons: 1. to lead the organisation in a particular direction to drive strategies and organisational change 2. to manage resources by evaluating the effectiveness of action plans 3. to operate the business processes that make the organisation work and continuously improve
To be competitive, Krajewski, et al, (2010:33) stated that competitive priorities are critical operational dimensions that a process or a supply chain must possess to satisfy internal as well as external customers, both now and in the future. They further identified that Competitive Capabilities are (1) cost, (2) quality, (3) time and (4) flexibility dimensions that a process or supply chain actually possesses in order to deliver product or services and if these fall short of the priority attached to it then management must find ways to close the gap or revise the priority.
Table Definitions, Process Considerations, Of Competitive Priorities. Krajewski, et al, (2010:34)
COMPERTITIVE PRIORITY 1. COST
DEFINITION Delivering a service or product at the lowest possible cost to satisfy external or internal customers of the process or supply chain
PROCESS CONSIDERATIONS To reduce cost, processes must be designed and operate to make then efficient using rigorous process analysis that addresses workforce, methods, scrap and rework, overhead, and other factors, such as investments in new automated facilities or technologies to lower the cost per unit of the service or product
2. QAULITY 2.1 Top Quality Delivering an outstanding service or product To deliver top quality service according to high levels of customer service and product according to product features, tolerances and durability Processes designed and monitored to reduce errors, 2.2 Consistent Quality / Dependability 3. SPEED / TIME 3.1 Delivery Speed Quickly filling a customer order Meeting due dates 3.2 On-Time Delivery Introducing new product and 3.3 Product and Service Development services Process that reduce lead time, planning processes, scheduling, capacity, etc Processes to achieve cross-functional integration and involvement of critical external suppliers in the service or product development process 4. FLEXIBILITY 4.1 Customisation Satisfying the unique needs of each customer Handling a wide assortment of 1.2 Variety services or products efficiently Acceleration or deceleration rate of services or products to Processes supporting variety must be capable to handle large volume Processes with a customisation strategy in place Design processes to reduce lead time Producing services or products that meet design specifications on a consistent basis prevent defects, and eliminate waste consistently over time
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handle fluctuations in demand Processes must be designed for excess capacity and excess inventory to handle demand fluctuations. 1.3 Volume Flexibility
The objectives and benefits of good process design according to Slack et al are illustrated in Table 2.2 can only be achieved when whatever being processed enter a process and progress or flow through a series of activities whereby they are transformed in some way or another.
2.6
Business Process Classification Framework
The American Productivity and Quality Centre (APQC), http://www.apqc.org (tights and permission granted to use Classification Framework 1996) stated that Process Classification Framework serves as a high-level, generic enterprise model that should encourages businesses and organisations to view their activities from a cross-industry process viewpoint instead of from a narrow functional viewpoint.
According to APQC it is important that organisations communicate effectively across industry boundaries and overcome the vocabularies that obscure the underlying commonality of their business processes, therefore provides shared meaning in an organization through the use of common language.
APQC - Process Classification Framework supplies a generic view of business processes often found in multiple industries and sectors such as for manufacturing and service, healthcare, government, education, and many others.
It is stated that many organizations should seek to understand their inner workings from a horizontal process viewpoint, rather than from a vertical functional viewpoint. Process Classification Framework therefore seeks to represent major processes and sub-processes, not functions, through its structure and vocabulary. The Process Classification Framework should therefore be used by organizations to classify and understand all processes in the value chain, product or department as well as the scope and complexity of their business and business processes. What should be noted is that the Framework is a guide and does not list all processes within any specific organization. Nor every process listed in the Framework is necessarily presented in every organisation.
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What makes the Processes Classification Framework useful is that it could be used as a tool in understanding and mapping business processes and according to APQC a number of organisations have used the Framework to classify both internal and external information for the purpose of cross-functional and cross-divisional communication. The APQC classifies business into 13 largely namely seven basic business process and six support business process which furthermore subdivides the basic business process into 92 and support business process into 123 sub categories Table 2.2.8 1 APQC Key organisations process classification framework
1996 INTERNATIONAL BENCHMARKING CLEARINGHOUSE PERMISSION GRANTED TO PHOTOCOPY FOR PERSONAL USE . 1.1 Determine customer needs and wants 1. UNDERSTAND MARKETS AND 1.1.1 Conduct qualitative assessments CUSTOMERS 1.1.1.1 Conduct customer interviews 1.1.1.2 Conduct focus groups 1.1.2 Conduct quantitative assessments 1.1.2.1 Develop and implement surveys 1.1.3 Predict customer purchasing behaviour 1.2 Measure customer satisfaction 1.2.1 Monitor satisfaction with products and services 1.2.2 Monitor satisfaction with complaint resolution 1.2.3 Monitor satisfaction with communication 1.3 Monitor changes in market or customer expectations 1.3.1 Determine weaknesses of product/service offerings 1.3.2 Identify new innovations that meet customer needs 1.3.3 Determine customer reactions to competitive offerings 2. DEVELOP VISION AND STRATEGY 2.1 Monitor the external environment 2.1.1 Analyze and understand competition 2.1.2 Identify economic trends 2.1.3 Identify political and regulatory issues 2.1.4 Assess new technology innovations 2.1.5 Understand demographics 2.1.6 Identify social and cultural changes 2.1.7 Understand ecological concerns 2.2 Define the business concept and organizational strategy 2.2.1 Select relevant markets 2.2.2 Develop long-term vision 2.2.3 Formulate business unit strategy 2.2.4 Develop overall mission statement 2.3 Design the organizational structure and relationships between organizational units 2.4 Develop and set organizational goals 3.1 Develop new product/service concept and plans 3.1.1 Translate customer wants and needs into product and/or service requirements 3.1.2 Plan and deploy quality targets 3.1.3 Plan and deploy cost targets 3.1.4 Develop product life cycle and development timing targets 3.1.5 Develop and integrate leading technology into product/ service concept 3.2 Design, build, and evaluate prototype products and services 3.2.1 Develop product/service specifications 3.2.2 Conduct concurrent engineering 3.2.3 Implement value engineering 3.2.4 Document design specifications 3.2.5 Develop prototypes 3.2.6 Apply for patents
3. DESIGN PRODUCTS AND SERVICES
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3.3 Refine existing products/services 3.3.1 Develop product/service enhancements 3.3.2 Eliminate quality/reliability problems 3.3.3 Eliminate outdated products/services 3.4 Test effectiveness of new or revised products or services 3.5 Prepare for production 3.5.1 Develop and test prototype production process 3.5.2 Design and obtain necessary materials and equipment 3.5.3 Install and verify process or methodology 3.6 Manage the product/service development process 4. MARKET AND SELL 4.1 Market products or services to relevant customer segments 4.1.1 Develop pricing strategy 4.1.2 Develop advertising strategy 4.1.3 Develop marketing messages to communicate benefits 4.1.4 Estimate advertising resource and capital requirements 4.1.5 Identify specific target customers and their needs 4.1.6 Develop sales forecast 4.1.7 Sell products and services 4.1.8 Negotiate terms 4.2 Process customer orders 4.2.1 Accept orders from customers 4.2.2 Enter orders into production and delivery process 5.1 Plan for and acquire necessary resources 5.1.1 Select and certify suppliers 5.1.2 Purchase capital goods 5.1.3 Purchase materials and supplies 5.1.4 Acquire appropriate technology 5.2 Convert resources or inputs into products 5.2.1 Develop and adjust production delivery process (for existing process) 5.2.2 Schedule production 5.2.3 Move materials and resources 5.2.4 Make product 5.2.5 Package product 5.2.6 Warehouse or store product 5.2.7 Stage products for delivery 5.3 Deliver products 5.3.1 Arrange product shipment 5.3.2 Deliver products to customers 5.3.3 Install product 5.3.4 Confirm specific service requirements for individual customers 5.3.5 Identify and schedule resources to meet service requirements 5.3.6 Provide the service to specific customers 5.4 Manage production and delivery process 5.4.1 Document and monitor order status 5.4.2 Manage inventories 5.4.3 Ensure product quality 5.4.4 Schedule and perform maintenance 5.4.5 Monitor environmental constraints OPERATIN 6.1 Plan for and acquire necessary resources 6.1.1 Select and certify suppliers 6.1.2 Purchase materials and supplies 6.1.3 Acquire appropriate technology 6.2 Develop human resource skills 6.2.1 Define skill requirements 6.2.2 Identify and implement training 6.2.3 Monitor and manage skill development 6.3 Deliver service to the customer 6.3.1 Confirm specific service requirements for individual customer 6.3.2 Identify and schedule resources to meet service requirements 6.3.3 Provide the service to specific customers 6.4 Ensure quality of service 7.1 Bill the customer 7.1.1 Develop, deliver, and maintain customer billing 7.1.2 Invoice the customer 7.1.3 Respond to billing inquiries 7.2 Provide after-sales service 7.2.1 Provide post-sales service 7.2.2 Handle warranties and claims
5. PRODUCE AND DELIVER FOR MANUFACTURINGORIENTED ORGANIZATIONS PROCESES
6. PRODUCE AND DELIVER FOR SERVICE-ORIENTED ORGANIZATIONS
7. INVOICE AND SERVICE CUSTOMERS
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7.3 Respond to customer inquiries 7.3.1 Respond to information requests 7.3.2 Manage customer complaints MANAGEMENT&SUPPORTPROCESS 8.1 Create and manage human resource strategies 8.1.1 Identify organizational strategic demands 8.1.2 Determine human resource costs 8.1.3 Define human resource requirements 8.1.4 Define human resources organizational role 8.2 Cascade strategy to work level 8.2.1 Analyze, design, or redesign work 8.2.2 Define and align work outputs and metrics 8.2.3 Define work competencies 8.3 Manage deployment of personnel 8.3.1 Plan and forecast workforce requirements 8.3.2 Develop succession and career plans 8.3.3 Recruit, select and hire employees 8.3.4 Create and deploy teams 8.3.5 Relocate employees 8.3.6 Restructure and right size workforce 8.3.7 Manage employee retirement 8.3.8 Provide outplacement support 8.4 Develop and train employees 8.4.1 Align employee and organization development needs 8.4.2 Develop and manage training programs 8.4.3 Develop and manage employee orientation programs 8.4.4 Develop functional/process competencies 8.4.5 Develop management/leadership competencies 8.4.6 Develop team competencies 8.5 Manage employee performance, reward and recognition 8.5.1 Define performance measures 8.5.2 Develop performance management approaches/feedback 8.5.3 Manage team performance 8.5.4 Evaluate work for market value and internal equity 8.5.5 Develop and manage base and variable compensation 8.5.6 Manage reward and recognition programs 8.6 Ensure employee well-being and satisfaction 8.6.1 Manage employee satisfaction 8.6.2 Develop work and family support systems 8.6.3 Manage and administer employee benefits 8.6.4 Manage workplace health and safety 8.6.5 Manage internal communications 8.6.6 Manage and support workforce diversity 8.7 Ensure employee involvement 8.8 Manage labour-management relationships 8.8.1 Manage collective bargaining process 8.8.2 Manage labour-management partnerships 8.9 Develop Human Resource Information Systems (HRIS) 9.1 Plan for information resource management 9.1.1 Derive requirements from business strategies 9.1.2 Define enterprise system architectures 9.1.3 Plan and forecast information technologies/methodologies 9.1.4 Establish enterprise data standards 9.1.5 Establish quality standards and controls 9.2 Develop and deploy enterprise support systems 9.2.1 Conduct specific needs assessments 9.2.2 Select information technologies 9.2.3 Define data life cycles 9.2.4 Develop enterprise support systems 9.2.5 Test, evaluate, and deploy enterprise support systems 9.3 Implement systems security and controls 9.3.1 Establish systems security strategies and levels 9.3.2 Test, evaluate, and deploy systems security and controls 9.4 Manage information storage & retrieval 9.4.1 Establish information repositories (data bases) 9.4.2 Acquire & collect information 9.4.3 Store information9.4.4 Modify and update information 9.4.5 Enable retrieval of information 9.4.6 Delete information 9.5 Manage facilities and network operations 9.5.1 Manage centralized facilities 9.5.2 Manage distributed facilities
8. DEVELOP AND MANAGE HUMAN RESOURCES
9. MANAGE INFORMATION RESOURCES
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9.5.3 Manage network operations 9.6 Manage information services 9.6.1 Manage libraries and information canters 9.6.2 Manage business records and documents 9.7 Facilitate information sharing and communication 9.7.1 Manage external communications systems 9.7.2 Manage internal communications systems 9.7.3 Prepare and distribute publications 9.8 Evaluate and audit information quality
10. MANAGE FINANCIAL AND PHYSICAL RESOURCES
10.1 Manage financial resources 10.1.1 Develop budgets 10.1.2 Manage resource allocation 10.1.3 Design capital structure 10.1.4 Manage cash flow 10.1.5 Manage financial risk 10.2 Process finance and accounting transactions 10.2.1 Process accounts payable 10.2.2 Process payroll 10.2.3 Process accounts receivable, credit, and collections 10.2.4 Close the books 10.2.5 Process benefits and retiree information 10.2.6 Manage travel and entertainment expenses 10.3 Report information 10.3.1 Provide external financial information 10.3.2 Provide internal financial information 10.4 Conduct internal audits 10.5 Manage the tax function 10.5.1 Ensure tax compliance 10.5.2 Plan tax strategy 10.5.3 Employ effective technology 10.5.4 Manage tax controversies 10.5.5 Communicate tax issues to management 10.5.6 Manage tax administration 10.6 Manage physical resources 10.6.1 Manage capital planning 10.6.2 Acquire and redeploy fixed assets 10.6.3 Manage facilities 10.6.4 Manage physical risk 11.1 Formulate environmental management strategy 11.2 Ensure compliance with regulations 11.3 Train and educate employees 11.4 Implement pollution prevention program 11.5 Manage remediation efforts 11.6 Implement emergency response programs 11.7 Manage government agency and public relations 11.8 Manage acquisition/divestiture environmental issues 11.9 Develop and manage environmental information system 11.10 Monitor environmental management program 12.1 Communicate with shareholders 12.2 Manage government relationships 12.3 Build lender relationships 12.4 Develop public relations program 12.5 Interface with board of directors 12.6 Develop community relations 12.7 Manage legal and ethical issues 13.1 Measure organizational performance 13.1.1 Create measurement systems 13.1.2 Measure product and service quality 13.1.3 Measure cost of quality 13.1.4 Measure costs 13.1.5 Measure cycle time 13.1.6 Measure productivity 13.2 Conduct quality assessments 13.2.1 Conduct quality assessments based on external criteria 13.2.2 Conduct quality assessments based on internal criteria 13.3 Benchmark performance 13.3.1 Develop benchmarking capabilities 13.3.2 Conduct process benchmarking
11. EXECUTE ENVIRONMENTAL MANAGEMENT PROGRAM
12. MANAGE EXTERNAL RELATIONSHIPS
13. MANAGE IMPROVEMENT AND CHANGE
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13.3.3 Conduct competitive benchmarking 13.4 Improve processes and systems 13.4.1 Create commitment for improvement 13.4.2 Implement continuous process improvement 13.4.3 Reengineer business processes and systems 13.4.4 Manage transition to change 13.5 Implement TQM 13.5.1 Create commitment for TQM 13.5.2 Design and implement TQM systems 13.5.3 Manage TQM life cycle
The importance of the above table is that provides an overview of possible questions that may guide an organisation when evaluating Business Process Capability. It is important that organisations should be able to set-up a Business Process Classification Framework when designing and selecting business processes. This will enable organisations characterise and ensure process improvement when a business process have been selected. Some of the above categories and questions guided the researcher in compiling the research questionnaire.
Classification systems that partition a body of knowledge according to value chain or functional area are classified into main and sub processes and defines the subordinate relationship between respective levels of processes decomposition. This approach should lead to understanding all processes in the value chain, product or department, as well as the scope and complexity of the organisations processes.
What is required is to take lessons learned - knowledge from everyday experience evaluating existing processes and rules and re-produces renewed ones enabling that improved performance is made possible the next time through. If there is no specific knowledge management process to take lessons learned and evaluate them and change the capabilities on a consistency basis, either performance of the process will stagnate with no improvement or will degrade due to the process becoming out of touch with a changing set of stakeholder expectations. What is needed is a formal process or framework of improving the capability including updating the rules and the enablers within which they are embodied or embedded. All improved business processes will require commitment in a processmanaged environment as well as resources. However, new set of rules should be published and communicated regularly and enablers renewed regularly, improved performance will be delivered, staff will continuously learn and the organisation will adapt and thrive.
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2.7
Process Modelling / Mapping
According Harrington (2001:57), diagramming a process is to help in identifying the key business process steps for departments under evaluation, the process owner, as well a responsible people listed for each operation. It forces process owners to mentally and physically viewing the degree of visibility of each part of the total process under review.
Why flowcharting? Oakland (1994:72) states that flowcharting is a systematic planning or examination of any process, being it in manufacturing or managerial activity. It is necessary to record the series of events and activities, stages and decisions in a form that it can be easily understood and communicated to all stakeholders.
According Oakland, flowcharting is statements defining the process should lead to its understanding and provide the basis of any critical examination necessary for improvements.
Slack, et el, (2009, 143) states that process mapping or process blue printing in its most basic level involves describing processes in terms of how the activities within the process relate to each other.
According to Slack there are two main features in process mapping: They identify the different types of activities that take place during the process They show the flow of material or people or information through the process. Therefore, the sequencing of activities required in a business process is subjected to that include materials, people, or information.
Process modelling / mapping can be complex and business processes are normally mapped at an aggregated level. However, the objective of process mapping is a method for improving organisational efficiency and quality aims to improve business performance by optimising the efficiency of connecting activities in the provision of a product or service. The final output of process modelling is to improve the way how business processes should work.
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If business process modelling / mapping is done correctly and focuses on process improvements it should to add value towards actions that make the customer service and experience better, and on reducing effort, and eliminate waste. There are two main different types of Business Process Models: the 'as is' or baseline model (the current situation) and the 'to be' model (the intended new situation) Types of Process Models / Maps The aim of modelling is to illustrate a complete process, enabling managers, consultants and staff to improve the flow and streamline the process. The outcomes of a business process modelling are essentially: Value for the customer, and Reduced costs for the company, Increased profits. This research will not deal in detail all the different types of business process models / mapping. However, the following types can be used by organisations: 2.2.7.1.1 Value Stream Mapping
Value Stream mapping is a specific type of process mapping flowchart which will show the flows of material and information within an organisation from supplier to customer. The value stream map should indicate the length of time that product is within your organization as well as the total processing time so that you can ascertain exactly for what percentage of its time product is being worked on within your organization. 2.2.7.1.2 Business Process Mapping
Business process mapping is similar to value stream mapping in that an organisation analyse how value flows through the organization but for specific processes. The aim is to identify any wasteful steps in originations business processes. Once identified an organization should be able to have the opportunity to find ways to either remove these wasteful steps or reduce their impact on your organisation. 2.2.7.1.3 Workflow Diagrams
These diagrams depict the transfer of outputs produced by one process to another process
2.2.7.1.4
Activity Flow Diagrams
Is to show the flow of work between activities and the tasks to which the activities belong
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2.2.7.1.5 Data Flow Diagrams
The purpose of data flow diagrams is to show the flow of data through an organization processes.
Of critical importance is that: 1. Process classification must be agreed upon and designed for the organisation and all process must be clearly classified accordingly 2. All process maps should be structured according to the hierarchy with major functions 3. Process maps should be linked to provide a holistic view of all the organisation business processes (value chain) 4. Interfaces between high-level processes and sub-processes must be clearly indicated on process maps, and 5. Process maps must clearly indicate which functions the system must perform and process maps be utilised when system is designed
One of the important aspects of flowcharting is supported by Harrington, (2001:108) stating that flowcharts as diagrams is used to follow information through a process.
2.8
Sequencing in Business Process Modelling
Business Process Modelling / Mapping concentrates on modelling systems that defines the sequencing of activities since at an elemental level sequence is crucial to quality and related factors of business process, quality, monitoring, management, and change, etc. Also, at an elemental level, i.e., when a big activity is broken down into its constituent parts, the sequence thereof have a vital effect upon the effectiveness of each of the individual processes. However a wider consideration is that many large scale systems commonly contain related processes and resources for which a fixed related sequence is not a specific or crucial or predictable aspect, and for which consequently it is not always possible or easy (or in many cases necessary) to define the exact sequential relationship of processes on a big systemic scale. Sequence is always an important consideration, especially when trouble-shooting. It should assist at any level to be the key in finding dramatic improvements. However, sequencing is not a mandatory feature, and there is no need to search to apply sequential conditions within any stage of process modelling.
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In conclusion flowcharting and sequencing of activities provide excellent documentation and insight to enable organisations to optimize their processes and is therefore useful as a trouble shooting tool to discover inconsistencies and determine potential sources of process variations and problems. 2.9 Process Task and Capacity
Slack, et al, (2009, 147), states that process maps show how activities of any particular process are to be arranged and how they should possible be reconfigured. Of importance is how it relates to the total task and how task should be divided up within the process and to determine how capacity should be allocated. Slack states that getting to grips with process capacity means understanding the following criterias 1. Task precedence relationship. How individual activities comprise a total process task Interrelationship between individual activities Time necessary to perform the total task (work content) Time necessary to perform each individual activity within an task 2. Series and parallel configurations Should activities in a process be arranged in a single long thin configuration or in short flat configurations 3. Cycle time and process capacity The cycle time of a process is the time between completed units emerging from it. Slack states that cycle time is a Vitol factor in process design and has significant influence on detailed process design decisions. Cycle time sets the pace of a process and therefore processes should be designed to be able to meet its required cycle time. 4. Process balancing Involves attempting to allocate activities to each stage as equally as possible. The effectiveness of balancing activity is measure by balancing loss or time wasted through unequal allocation of activities as a total of processing time. 5. Throughput, cycle time and work in progress Cycle time of a process is a function of capacity. According to Slack, et al, for any given amount of work content in a process task, the greater the capacity required
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within the process, the smaller its cycle time. The reciprocal of cycle time is called throughput rate. If there is a large amount of units within a process, they then have to wait in work in process (inventory) for part of the time they are within the process (throughput time)
Critical diagnostic checklist, Slack, et al, (2009:162) 1. 2. 3. 4. Are processes configured correctly to match volume and variety? Are the details of task precedence known for each process? Have the correct process precedence relationship been established? Have the advantages and disadvantages of series and parallel configurations been explored 5. 6. Is the process balanced? Is the relationship between throughput, cycle time and work in process understood?
2.2.11 Process Variability Evans (2011: 48) in discussing Foundations OF Performance Excellence sighted Deming, Juran, and Crosby approaches to performance excellence. Of importance is that all Deming, Juran and Crosby highlight the fact that variability in processes should be minimised.
In analysis of process variability Slack, et al, (2009:156) highlighted the importance to determine reasons why variability effect processes and highlighted some reasons: Late arrival of material, information or customers at specific stage within the process Breakdowns of malfunctions of process technology Recycling of misprocessed material, information or customers Incorrect routing of material, information or customers within the process an needs redirecting Product or service characteristics is not the same and should therefore not be treated similarly Products or services may differ in treatment, repairs, diagnostics checks Human physical co-ordination and effort on the part of performing the task may result in a variation Variability in demand for processing at individual stage in the process Variation in the time taken to perform the activities at each stage
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Slack, et el, (2009:162) designed a checklist of diagnostic questions regarding process variation comprising of critical questions that can be usefully applied to any type of operations / process analysis namely: 1. Have a clear set of performance objectives been set for each process? 2. Do process design objectives clearly relate to the business strategic level? 3. Is the following information known for all key process in operation? 4. Are process documented using process mapping techniques? 5. Are formal process descriptions followed in practice? 6. Process descriptions include the degree of visibility at each stage of the process? 7. Are the resources of process variability recognised? 8. Has the effect of variability been recognised in the design of the process?
2.2.10 Process Control The effectiveness of any organisation depends on its people and to which extent every stakeholder performs their role to achieve a common goals and objective. Oakland (1994: 29) states that control is the process by which information or feedback is provided so as to keep all functions on track.
Gryna, M (2001, 146) states that organisations have many important cross-functional processes from which top management should select primary processes for the process management approach. Gryna further stated that processes selected be aligned with the organisations mission, strategic plans and key business objectives.
According to Gryna what is important is that processes should be evaluated and assed based on critical success factors and current process performance.
Evans, (2011, 117) states that control is the activity of ensuring conformance to the requirements and taking corrective action when necessary, to correct the problems and maintain a stable performance. He identified that any control system has three distinct components namely: 1. Standard and goals 2. By means of measuring accomplishments 3. Comparison of actual results with standard, along with feedback and corrective action
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Process control requires a well designed system of measurement to track quality and operational performance. Measurements should provide the ability to capture important quality and performance indicators and should be able to reveal patterns about process performance.
Key to the success of process control is to provide humans with all they need to meet quality objectives. According to Gryna, (2001:442), to do so people must be provided with the following criterions: Criterion 1: Knowledge of what they supposed to do. Therefore clear work procedures, performance standards, and training. Criterion 2: Knowledge of what they are actually doing (performance): Adequate review of work, and feedback on results Criterion 3: Ability and desire to regulate the process for minimum variation. Therefore a process and job design capable of meeting quality objectives, process adjustments that will minimise variation, adequate training in adjusting the process, maintaining of process capability, Strong quality culture and environment
2.10
Process Decision
Decision regarding the organisation of products depends on the choice and way of strategically structuring the process by organising the resources around the process or organising them around the products to be manufactured or services delivered.
Critical organisational decisions should have an impact in selecting processes and should be able to optimise process capability. In deciding how production and organisation of goods are being organised, Stevenson (2007: 227-263) stated that strategic process selection approaches is determined by the organisations process strategy and essentially involves choice of technology, capacity planning, and layout of facilities, equipment and the design of work systems.
Stevenson (1999:196) identified key criterias for process selection and highlighted the follow to be considered: 1. Make or buy. In-house or out sourced organisation 2. Capital intensity therefore the mix of equipment and labour that will be used by the organisation` 3. Process flexibility: The degree that the system adjust to changes in the processing
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requirements due to factors as change in product or service design, changes in volume processed and changes in technology
Whilst highlighting the primary questions Stevenson (2007: 229) considered the affects it has on the supply chain and therefore included a total system approach. Stevenson stated that the outcome of the questions should be focused on: 1 2 3 How much varieties in products a system need to be able to handle? What degree of equipment flexibility is required? What is the expected volume of output?
In support of Stevenson (2007), Krajewski, et al (2007:121), identified basic principles concerning process and extended the process selection that should include all processes in the value chain: 1 The key to successful process decisions is to make choices that fit the situation and make sense together and matches the key process characteristics that have a close strategic fit. 2 Process focused in terms of equipment, layout of facility and supervision 3 The cumulative effect of processes should be the building blocks towards the organisations value chain 4 Whether processes in the value chain are performed internally or by outside suppliers that management should pay particular attention to the interfaces between processes
In order for organisation organisations to make process decisions Krajewski, et al (2007:122) stated that manufacturers should consider four common process decisions that act as building blocks to be used in different ways to achieve effective processes .namely : (1) Process structure that determines how processes are designed relative to the type and kind of resources required. In organisation the level of volume and customisation pave the way for process re-engineering and process improvement. (2) Customer involvement in the processes (3) Resources flexibility whereby the ease that employees and equipment can handle a wide variety of products, output level, etc (4) Capital intensity with regard to the best mix of equipment and human skills in a process.
What should be important is that process strategy is to build organisational processes that meet customer requirements according to product specification within cost, quality and other
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organisation constraints.
2.10.1 Process Characteristics Many organisation systems and processes have different characteristics, from project systems designed to produce a single unit of a product at a site highly specialised or to high volume flow processes or a process designed for mass production that should not be efficient for low volume production and visa versa and a process itself that should only be compared to the design limits of the product type, process capability in order to determine if the process itself is or is not capable of producing the products within specifications. It is essential that selection of the right process should be selected in organisation and that the process selected will have a long-term effect on the efficiency and flexibility of production, as well as the cost and quality of goods produced.
3 3.1
BUSINESS INFORMATION AND TECHNOLOGY
Quality Information System (Qis)
Gryna, F.M. (2001:642), states that a quality information system is an organised approach of colleting, storing, analysing and reporting information on quality to assist decision makers at all levels to align quality related activities with the vision of the organisation and measure performance to drive improvement.
Gryna, F. M. states that QIS should not only recognise information that consists of data but should also knowledge needed for decision making and provide the following elements of QIS: 1. Market research information on quality; i.e. Customer satisfaction, improving fitness for use, etc 2. Product design; Test data, data on parts, supplier data 3. Information on design evaluation fro quality; review meetings, reliability, critical analysis, etc 4. Information on purchased parts and material; inspection data, supplier data, supplier survey information 5. In process data; Inspection system including all forms of waste, process control and process capability data 6. Final inspection data; data at final inspection 7. Field performance data; Examples of mean time between failures (MTBF) 8. Improvement data; summary of improvements along with compilation of improvement projects
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9. Results of departmental quality measurements; Examples include data from functional and administrative support activities. 10. Audit results; data include audits of processes, specific activities, and product 11. Complaint data; data on warranties and customer complaints 12. Management control data; Cost of poor quality 13. Information on the quality system; Examples include the quality policy manual, quality procedures, quality system documentation, and process control plans
Gryna (2001:656) argued that QIS is an organised method of collecting, storing, analysing, and reporting information on quality to assist all decision makers: 1. Achieving in quality is a key purpose of QIS and that goes beyond reporting on quality status 2. QIS must be aligned with organisational wide goals 3. Reports on quality focus on both operational and executive matters
4. Application of software packages are available to suite needs 5. Data quality has many dimensions and must be thoroughly defined for a QIS Enterprise Resources Planning Slack, et al, (2009:319) defines Norris, G. Hurley, JR. Hartley, KM. Dunleavy, JR. Balls, JD, (2000) E- Business and ERP States that all organisations need to update their business infrastructures and change the way they operate to respond more to customer needs. Hurley, et al, states that organisations should make use of Enterprise Resources Planning (ERP) and together with e-business provides organisations with options for raising profitability and creating substantial competitive advantage. When implementing ERP - optimal system architecture is of utmost importance, however, Hurley, et al, warns that technology should not be allowed to drive the enterprise, but rather that technology should fit the enterprise by meeting certain conditions of satisfaction.
Slack, et al, (2009) defines ERP system as a complete enterprise wide business solution. ERP system consists of software support modules such as marketing and sales, filed service, product design and development, production and inventory control, procurement, distribution, industrial facilities, process design and development, manufacturing, quality, human resources, finance and accounting, information services focusing on integrating all the modules without duplication of information. In summary an information system is an essential component of organisational strategies and
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defines the organisation information value chain, comprising out of business processes, integrated data system. Important is that organisations documentation such as policies, procedures, and business plans should be available to all stakeholders.
4. BUSINESS PROCESS OPTIMISATION, IMPROVEMENT AND PERFORMANCE
One of the biggest challenges today for organisations is to ensure overall business performance improvement which emanates from improving business processes and business should seek and implement strategies to ensure survival which depends on continuously improving and optimising their processes and resources.
If processes are in control, then the measure of process performance results enables organisations in determining their processes capability and therefore forces organisations to strive towards Business Process Capability Maturity thus leading to the understanding and application that there is a link between business processes optimisation, and to the degree of competiveness and how well the business is performing with respect to specific enablers to obtain Business Process Capability maturity
The solution to the above situation of business process optimisation as highlighted by the all authors referenced lies most probably in identifying a model that will guide a organisation to obtain process optimisation, capability and performance with specific reference to Business Process Maturity Model(s) (BPMM).
5. BUSINESS PROCESS OPTIMISATION, CAPABILITY AND PERFORMANCE 5.1 Business Process Maturity Model (BPMM)
BPMM is based on the work by Watts Humphrey at the Software Engineering Institute at Carnegie Mellon University. Humphrey developed Process Maturity Framework (PMF), which is the foundation of the Business Process Capability Maturity Model (BPCM). It is also noted that Capability Maturity Model (CMM) as introduced by Humphrey, W, as described in his book: Managing the Software Process (1989) was based on earlier work by Crosby, P, - Quality is Free (1979). As reference see Crosby's Quality Management Maturity
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Grid (QMMG), Ivancevich, Lorenzi, Skinner, Crosby (194:13). It can thus be assumed that Business Process Capability Maturity originated from Crosby. P. B. Business Process Maturity Model (BPMM), focus on business process optimisation and can best be describe as a dynamic evolutionary improvement path that guides organisations moving from immature, inconsistent processes to mature, disciplined processes. BPMM therefore provides a guide, and reference model(s) for appraising business processes as well providing a roadmap for business process improvement within an organisation therefore focusing and prioritising continuous improvements.
According to Curtis, B, Alden, D, (2004 & 2006), with reference to - BPMM and Organisational Maturity & Capability Measurement - BPMM can be described as an evolutionary improvement path that guides organisations as they move from immature, inconsistent business activities to mature, disciplined processes as illustrated in figure 2.3
Figure 2.2: Systems:
Dr. Alden, J, Dr. Curtis, B. (2006) Capability Measurement. The Ecology of Fail
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Curtis, et al, stated that BPMM focuses on improvements at each stage and should provide a foundation on which to build Improvements undertaken at the next stage of business process improvement. Thus, an improvement strategy drawn from the BPMM provides a roadmap for continuous process improvement.
In order to achieve BPMM, Curtis, et al, defined the following foundational principles: Attributes of a process should be evaluated to determine its capability to contribute to organizational objectives; Capable processes cannot survive unless the organization is mature enough to sustain them; Process improvement is best approached as an organisational change program that stages the improvements to achieve successively more predictable states of organizational capability Each stage or maturity level lays a required foundation on which future improvements can be built, and indicated how BPMM and appraisal methods can be used:
According to Curtis, et al, there are four primary ways in which the BPMM will be used and each will have different requirements for appraisals. Guiding business process improvement programs: BPMM should be designed to guide improvement programs, and should anticipate being its most frequent use. Improvement programs should be initiated with an evaluation of the organisations current strengths and weaknesses; Assessing risk for developing and deploying enterprise applications: BPMM should be used to identify risks to the successful implementation of systems and to provide guidance on the actions to be taken to improve them prior to system deployment; Evaluating the capability of suppliers: Organisations need a trusted and open standard against which to evaluate the capability of their vendors for meeting their service level, quality, price, and functionality commitments; Benchmarking: Management should evaluate where they stand relative to the maturity of business processes in their industry segment; Like all maturity models guided by the Process Maturity Framework (PMF), BPMM is divided into five maturity levels that represent different states through which an organisation is transformed as its processes are improved, evolving from poorly defined and inconsistent practices.
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(level 1), to repeatable practices at the workgroup level (level 2), to standard organization-wide end-to-end business processes (level 3), to statistically-managed and predictable processes (level 4), and finally to continuous process innovation and optimization (level 5). Achieving each maturity level also entails satisfying all the requirements of the lower levels. However, any successful BPMM model depends on business process improvement. It is therefore important to note that organisations needs continuous process improvement programs towards optimization and that they should take lessons learned from everyday experience with todays processes and rules and produces renewed ones so that improved performance to make it possible the next time around.
Management should therefore utilize the knowledge and lessons learned and evaluate them and institute change focusing on process capabilities on a regular basis or their performance of the process will stagnate with no improvement or will degrade due to the process becoming out of touch with a changing set of stakeholder expectations.
What is needed is a formal process of optimisation, improving the capability and performance of organisations including updating the rules and the enablers within which they are embodied or embedded. This Improved Guidance Creation Process should require resources and a commitment in a process-managed environment. With new rules published and communicate regularly and with enablers renewed regularly, improved performance will be delivered, staff will continuously learn and the organization will adapt and thrive
As identified by Crosbys QMMG and Humphreys, the BPMM consists of 5 maturity levels, each of consisting of criterias impacting on the capability of process areas and is therefore designed to establish the capability achieved at that level. .According to Curtis, eta l, each of the process areas is designed to accomplish a limited set of goals that includes a set of practices that should have proven beneficial in achieving these goals.
For the purposes of this research literature study an overview is provided to describe the criterias and intent of process improvement areas of BPMM at each level. Critical criterias and questions was developed using Curtis, B, Alden, J, Weber, C.V (2006) as guideline as part of the research questionnaire. This should enable the researcher to design an analytical tool for measuring business processes capability and performance.
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5.2
Capability Levels
The following capability levels from 1 5 for Process Maturity Models in Business Process was provided as a guideline by Curtis, B, Alden, J, Weber, C.V, (2006). Level 1: Initial Most organisations start their improvement project / programme at this level. At this level the organisation lacks consistent processes or practices for performing its business activities. It found that people / employees are often overloaded due management failure to balance the workload with the resources not being able to accomplishing it. Curtis, et al, states that the problem is usually not that people are incapable of performing the work, but that management is engaged in constant fire-fighting mode and has not yet established a stable environment in which people can perform their tasks consistently in a disciplined and professional manner. Crosby, (QMMG), also identifies this phenomenon at stage 1 Uncertainty, where problems are sorted out as they occur and seldom fully resolved and that fir-fighting dominates management actions. The success in these organisations is usually more the result of individual efforts and not due to the result of sustainable processes.
Curtis, et al, states that although an organisation at the Initial Level relatively good managers, that there is a considerable inconsistency in skills across managers and the organisation is not systematically developing the management skills required. According to Curtis the key problem areas effecting organisations at Level 1 is that: 1 The organisation is inconsistent; both in business results and in the manner business activities are conducted. 2 Undisciplined: Few repeatable processes exists and often scarifies under pressure 3 4 5 6 Individualistic: People rely on personal methods to accomplish work Inconsistent: Little preparation for managing the work unit Inefficient: Limited measures for analysing effectiveness of practices Stagnant: No foundation or commitment towards improvement
Summary of Level 1: Processes at level 1 is usually managed at an ad hoc basis and associated with organisations that usually do not provide a stable environment. Success in these organisations depends largely on the competence and effort people in the organisation
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and not on the use of proven processes. These organisations most probably does not adhere at all to competitive capabilities of (1) cost, (2) quality, (3) time and (4) flexibility that business processes or supply chain possesses should have in order to deliver product or services and therefore fall short of closing the competitive gap or revise and reengineer their business processes. However, in spite of this ad hoc, presumably chaotic environment, organisations may produce products and services that work. Level 2: Managed Curtis, et al states that the first step in most perspective organisational maturity models is to stabilise work even before trying to implement organisation-wide solutions the organization. Curtis stated that if people are constantly overloaded, untrained, and then no organization-wide initiatives will have much impact, since people are too stressed to adopt them.
The primary focus of Level 2 is to establish management control over the work unit environment. This should enable people to repeat practices or work procedures and have knowledge of how to perform successfully. Key to Level 2 is to capture the as-is process in each work unit to identify best practices and to determine how much variation take place in accordance to work methods and procedures. Work measurements taken at Level 2 should enable a work unit manager to plan and track work activities against the units assigned responsibilities.
According to Curtis, et al, The process areas that create a Level 2 capability should include the following: Organizational Business Governanceestablishing of executive accountability for the management and performance of the organisations work and results. Executive commit to improving processes; Organisational Process Leadership establishing of sponsorship of the program to improve the organisations business processes. Leaders take responsibility towards improving processes and become proactive rather than reactive; Work Unit Requirements Management establishing of documented and agreed-to requirements (e.g., commitments, results, compliances) that a work unit will be held accountable for meeting and ensures that changes to the requirements are managed against existing work commitments and resources;
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Work Unit Planning and Commitment establishing of plans for performing and managing the work required of a work unit to ensure that commitments are balanced with resources; Work Unit Monitoring and Control establishing of regular monitoring of work assignments, resources, and other work factors in the work unit in order to make the adjustments needed to keep performance and results in line with the work units requirements, commitments, and plans; Work Unit Performance establishing discipline and coordination among the individuals and workgroups within a work unit so that their aggregate efforts satisfy the work units requirements, commitments, and plans; Work Unit Change Management establishing of change and version control over the content of work products to be delivered to other work units or customers. Sourcing Management the management and acquisition of products and services from suppliers external to the organisation; Process and Product Assurance providing compliance guidance and objective review of the activities and work products within the organisation to ensure that they comply with applicable laws, regulations, standards, policies, process descriptions, and work procedures;
Summary Level 2 The key to level 2 is that Business Governance, leadership, management principles and process discipline should ensure that existing practices are retained. Managers ensure that work unit requirements, work units performance, work unit planning and commitment, work unit monitoring and control, and work unit change management should be in place, thus ensuring business process and product and service assurance. However, if not then the organisation should not be able to progress to Level 3. It is most probably true that numerous organisations do display all the characteristics as required for Level 2 but not necessary practice them.
Level 3: Standardized Curtis, et al, states that only once the organisation has stabilised its work units and is able to manage commitments at the local level, then it should be able to standardise processes across all work units. Curtis, et al, states that standardisation is only achieved by integrating best practices from the local methods and procedures that are
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producing the best results along with incorporating best practices from outside to fill gaps in the end-to-end workflow.
Implementation standard processes allows the organisation to learn from experience gained by establishing common measures at the process level, capturing and sharing lessons learned, and developing common competencies and learning activities. Guidelines should be established from experience tailor making standard process for use in different circumstances. Standard processes and capabilities should enable to provide the foundation for a common corporate culture to emerge.
According to Curtis, et al, The process areas that create a Level 3 capability should include the following: Organizational Process Management the establishing of standard processes and related measures for the organisation; therefore the development of repositories of experience, artefacts, and results from performing standard processes; and conducts improvement activities based on periodic appraisals of process strengths and weaknesses. Organisational Competency Development the development of competencies within the workforce that are required to develop, deploy, deliver, and support the organizations products and services using its standard processes. Organisational Resource Management the planning and managing of acquisition, allocation, and reassignment of the people, equipment, computing and communication infrastructure, supplies, and other resources that should be required to be developed, deployed, delivered, and support the organisations products and services. Organisational Configuration Management the identification, managing, and controlling of the content of and changes to product baselines that are released for external use and should be used in performing and managing the work efforts in the organisation. Product and Service Business Management the planning and managing the integrated end-to-end work for developing, deploying, operating, and supporting the organisations product and service offerings using defined processes tailored from the organizations standard processes and the organizations process assets. Product and Service Work Management the understanding of the market for a product and service offering, defining the capabilities and features of the products and service offered, and the establishing of the overall business plans for the offering, and the managing of the business and financial aspects of the offering
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Product and Service Preparation establishing the requirements for a product and service offering, the development thereof, and preparation for its deployment and use. Product and Service Deployment installs, modifies, replaces, or removes the people, equipment, computing and communication infrastructure, supplies, and other resources used in operating and supporting a product and service offering Product and Service Operations provides customers of an acceptable product and service offering within the capabilities and features of the offering. Product and Service Support maintaining of the physical infrastructure, equipment, computing and communication infrastructure, software, supplies, and other resources needed to sustain the operation and availability of a deployed product and service offering, and provides for handling incidents, disasters, and the continuance of business.
Curtis, et al, propose that Level 3 may be tailored for application to specific domains of business processes, such as, procure-to-pay, customer relationship management, supply chain, marketing, finance, technology enablement, security, or for industry types such as financial, healthcare, automotive, pharmaceutical. Curtis propose that by substituting domain specific process areas for the six process areas identified above that begins with the words Product and Service. Curtis states that these six process areas have proven adequate for many application of the BPMM, but that the model can be tailored by including process areas, primarily at Level 3, that contain the best practices specific to the processes typically used in particular domains. Summary Level 3 A critical distinction between level 2 and level 3 is the scope of standards, process descriptions, and procedures. At level 2, the standards, process descriptions, and procedures may be quite different in each specific work unit of the process. However, at level 3, the standards, process descriptions, and procedures are tailored from the organizations set of standard processes to suit a particular domain specific or organisational unit and focus on organisational goals of end to end, integrated business processes. The organisations set of standard processes, which is the basis for level 3, is established and improved over time. These standard processes are used to establish consistency across the organisation and is only qualitatively predictable.
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Level 4: Predictable The implementation of common measures at a Standardised Level should allow organisation to quantitatively manage processes. The primary objective this level is to predict results of end-to-end business processes during its performance. To accomplish this predictability, organisations should work to establish statistically stable processes those of whose results provide good predictors of the end results.
Therefore performing work and striving to understand and control sources of variation in their processes. This should assist management to use intermediate results to predict business outcomes. In addition, the organization should use common processes as a foundation exists for reuse of the knowledge, experience, and artefacts produced in the business process. This should enable full realisation of processes for knowledge management focusing on the ability to reuse what has been developed or learned in a different situation.
What must be noted is that the foundations for knowledge management have been established at the previous levels of the maturity model, and that at Level 4 are integrated to create a organisational capability. The results of creating standardisation at Level 3 should be now standardised functional processes and should been integrated into a workflow.
According to Curtis, et al, this enables the next step at Level 4 which is to integrate functional processes into a single product and service process incorporating functions as roles into an integrated process.
Curtis, et al, states that the process areas that created a Level 4 capability should include the following: Organisational Common Assets Management identifies and exploits commonalities in the organizations current and future product and service offerings to improve the performance, quality, cycle time, throughput, and predictability of the organizations processes. Product and Service Process Integration integrate standardised work processes of different disciplines and functions involved in a product and service offering as roles into an integrated product and service process to increase the efficiency and effectiveness of interdependent work. Organisational Capability and Performance Management the characterising the capability of the organisations standard processes quantitatively, and develops and provides the capability data, baselines, and models to quantitatively manage the performance of the organizations product and service offering work.
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Quantitative Product and Service Management plans and quantitatively manages the work involved in a product or service offering to achieve its quantitative performance and quality goals and to control sources of variation Quantitative Process Management statistically manages the end-to-end performance of work for developing, deploying, operating, and supporting a product or service offering to achieve its performance and quality goals. Summary Level 4 Key to level 4 is that business processes in an organisation become predictable Using precise measurements quantitatively, management should be able to effectively control process variation, performance and capability. Variation in processes is thus reduced through reuse, mentoring and statistical management.
Sub-processes are selected that significantly contribute to overall process performance. These selected sub-processes are controlled using statistical and other quantitative techniques. Outcomes should now be predictable from sub-processes capability and performance
It is noted that a critical distinction between maturity level 3 and maturity level 4 is the predictability of process performance at Level 4. At maturity level 4, the performance of processes is controlled using statistical and other quantitative techniques, and is therefore quantitatively predictable. People are should be now empowered through data and should be able to manage and monitor their own work. Level 5: Optimising Although at level 4 the organisation has stable and predictable processes, but that these processes may not be capable of achieving the outcomes management needs from the business process.
At Level 5 management should sets in place proactive improvement activities, continuous improvement practices and performance to close the gaps between the current capability of its various business processes and the capability needed to achieve business objectives. According Curtis, et al, and these improvement opportunities should include automation, process engineering, improved training, Research and Development (R&D) projects, and other actions to ensure that capability improvements necessary meet business objectives. Continuous improvement is institutionalised so that change management should become an ordinary business process, and that continual improvement should encouraged at the organisational, workgroup, and individual levels. The emerging business system is continually evaluated to
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ensure that the improvements do not sub-optimise the performance of the business system or its resource expenditures.
According Curtis, et al, the process areas that create a Level 5 capability should include the following: Organizational Improvement Planning should set the organisations quantitative performance and quality goals and establishes the infrastructure and strategy for making the improvements required to meet them. Defect and Problem Prevention should be able to identify and addresses the causes of defects and other problems interfering with achieving quantitative performance and quality goals so that they do not recur. Continuous Capability Improvement should improve performance by encouraging and motivating all levels of the organisation to continuously identify and deploy incremental improvements in work processes. Organizational Innovative Improvement should formulate a complete improvement solution that, when deployed, should be able to achieve specific quantitative performance and quality goals assigned to a planned improvement effort. Organizational Improvement Deployment should transitions improvements with demonstrated benefits into standard practice using institutionalised change management practices. Organizational Performance Alignment should maintain and align the organisations quantitative performance and quality goals as well as improvement strategies at all organisational levels and across the organisations from end to - end product and service offerings. Summary Level 5 Optimisation and Performance A critical distinction between maturity level 4 and maturity level 5 is the type of process variation addressed. At maturity level 4, processes are concerned with addressing special causes of process variation and providing statistical predictability of the results. Though processes may produce predictable results, the results may then be insufficient to achieve the established objectives or may be thought to be sufficient.
At maturity level 5, processes are concerned with addressing common causes of process variation and changing the process to improve overall process performance to be able to achieve the established quantitative process-improvement objectives.
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At Level 5 - Organisations main focus should be on continuously improving process performance through both incremental and innovative technological improvements. Quantitative process-improvement objectives for the organisation should be established, continuously revised to reflect changing, corporate goals, business environment, business objectives, and used as criteria in managing business process improvement from end-to-end, the supply chain, and value chain. The effects of deployed process improvements are measured and evaluated against the quantitative process-improvement objectives. Both the defined processes and the organisations set of standards for business processes should be targeted as integrated measurable improvement activities. Process improvements should address common causes (not symptoms) of process variation and measurably improve the organisations business processes. Optimising of identified business processes should be evaluated, adaptable. Innovativeness depends on the participation of an empowered workforce aligned with the business values and objectives of the organisation. Therefore the organisations ability to rapidly respond to changes and opportunities is enhanced by finding ways to accelerate and share learning, and should be deployed throughout the value chain. Key characteristics at Level 5 are: Being Proactive, Systematic, Continual, Aligned, and Preventative. Brief Summary of Curtis, et al, BPMM Level 1 is characterised by ad hoc management practices Level 2 is characterised by stable work units performing repeatable local procedures Level 3 is characterised by standard, integrated, end-to-end business processes Level 4 is characterised by statistically stable processes with predictable outcomes Level 5 is characterised by proactive improvement actions to achieve the process capability required to meet changing business objectives
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Level 5 Level 4 Level 3 Level 2 Level 1
Optimising Management Controlled Management Defined Management
Continuous Improvemen t Quality Process

Manage & Control
Repeatable Management Inconsistent Management
Measurable Processes Repeatable Practices
BPMM therefore identifies process deficiencies in an organisation and guides improvements to be made in logical, incremental steps in order to provide a roadmap for continuous process improvement.
BPMM thus focus on stages of process improvement towards capability maturity which activate improvements at each stage and then provide a foundation on which to build improvements undertaken at the next stage. Thus, an improvement strategy drawn from the BPMM should provide a roadmap towards continual improvement of business processes. It is therefore a mean to identify process inefficiencies in an organisation and guides the organisation towards continuous improvements in logical and incremental steps. Curtis, et al, states that this should ensure that at each level the organisation achieves a new stage of business capability, behaves differently, and exhibits a more mature culture.
In summary key characterises of BPMM towards improved organisational performance: BPMM is not focusing on the end product or service rather its focus is on the development of business processes capability itself; BPMM enhances business agility, control and accountability by streamlining internal and external processes; BPMM is forms the basis for integrating end-to end business processes
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BPMM allows organisations to record and measure their improvement in developing and applying improvement. Thus, this helps organisations to see their improvement. BPMM supports top-down bottom up process modelling across the value chain; involving business process stakeholders, systems, information and equipment; BPMM focus on organisations workforce and should tie workforce improvements to both their strategic plans and their operational plans. Thus, these organisations have a much clearer coupling of what their workforce does in terms of the plans and directions of the organisation. This improvement makes it easy for managers of an organisation to see how each persons knowledge, skills, and process abilities support the organisations operational and strategic plans; BPMM defines the ability to change business processes 5.4 Business Process Improvement Perspective
Harrington, H.J, (1991:246) states that no matter how good you are, how well you regarded your products and services, you cannot stop improving. You cannot stand still and if you do you are slipping backwards because the competition is constantly improving In defining improvement, Slack, et al, (2009: 424- 456) stated that improvement is the activity of closing the gap between the current performance and the desired performance of an operation or process. In doing so assessing of the gap between actual and desired performance should be the starting point. Slack, et al, stated that it requires two sets of activities: 1. Firstly assessing the operations and each process current performance establishing how performance is to be measured within operations. This involves deciding what aspects to measure and identifying which are most important aspects, and the what detailed measures should be used to assess each factor 2. Secondly deciding on an appropriate level of target performance.
Slack argue that a good starting point should be for performance measures to adopt is the use of the five generic performance objectives of an organisation namely quality, speed, dependability, flexibility and cost.
It is clear that the organisation vision and strategy for process optimisation should be in place as and be part of the Business Process Capability strategy plan. The organisation should therefore apply process optimisation strategies to increase business process capabilities.
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Therefore process improvement strategies should be defined from implementation, through supporting strategy and finally driving strategy, form end-to end focusing on process performance objectives that effect customer satisfaction and competitiveness and should be aligned with BPC strategy (i.e. The manner in which the organisation utilises resources and methodology to improve business processes towards Business Process Capability)
According to Slack, et al, (2009: 429), choosing the key performance measures is to try and achieve a balance between having a few key measures and having many detailed measures which is complex, but capable of conveying many nuance of performance. However, Slack, et al, states that their should be a clear link between the overall operations / process strategy (or key) performance indicators (KPIs) that reflects strategic objectives, and a bundle of detailed measures be applied to flesh out each key performance indicator. Slack, et al, argued that traditional financial measures only focus on past events and therefore does not take into account long-term capabilities, customer relationships which are critical to the success of an organisation. Slack, et al, stated that organisations should now create future value through investment in customers, suppliers, employees, processes, technology.
In summary, Ivancevich, et al, (1994:33) stated that to achieve the highest levels of quality and competitiveness requires a well defined and well executed approach to continuous improvement should be followed. Ivancevich, et al, stated that Improvement in it self is not only driven by the objective to provide better quality, but also the need to be responsive and efficient, and to meet the objectives of the continuous process improvement that contains a cycle of regular planning, execution, and evaluation. 6. IMPROVEMENT PROCESS The concept of continuous improvement is according to Evans, J. R, relatively new and was in its earliest form stimulated and initiated by the success that Toshiba (1946), Matsushita (1950) and Toyota (1951). Toyota particularly established Just-In-Time (JIT) philosophy as part of continuous improvement (Kaizen in Japanese).
According to Evans, J.R, (2011:139) improvement means changing the performance to a new level, and to be able to improve a process it should be repeatable and measureable. Evans, (2011:144) stated that a manger needs a systematic approach to drive continuous improvement programmes and used the example of Eastman Chemical who used seven approaches namely:
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1. Focus and pinpoint. Getting everybody on the same page specifying in measurable terms what is expected 2. Communicate by publicising key results areas, the vision, and mission statement so that all employees can answer the question: What is being improved? Why it is important to the customer and to themselves? What has the management team committed to help? How can employees help? 3. Translate and link to company wide objectives 4. Create an action plan with specific goals, including metrics to measure success 5. Improve processes; Team approach 6. Measure progress and provide feedback 7. Reinforce behaviours and results
However, if continuous improvement programmes is to be implemented to improve processes then management should focus on critical areas of eliminating waste. Slack, et al, (2009: 348) best describe waste in terms of lean synchronisation and according to, Slack, et al, lean synchronisation aims to meet demand instantaneously, with perfect quality and no waste. Lean synchronisation therefore aims to ensure the flow of products and services according to customer needs, in exact quantities, when and where needed, at the lowest possible cost. The key objectives are that items flow rapidly and smoothly through processes, operations and supply networks. Stevenson (2009: 696) stated that the ultimate goal of lean is to ensure a smooth, rapid flow of materials, and or work through a system. According Stevenson the overall goal depends on how well supporting goals are achieved. Stevenson identified, (1) disruptions (eliminate), (2) system to be flexible, (3) elimination of waste It is also important to note that there should be a clear understanding of what is meant by waste, as this will helps to understand the all encompassing extent of the philosophy of JIT. Waste thus can be defined as any activity which does not add value to any business processes or to products and services.
Waste - identified as anything that adds cost, but not value, to a product or service. Heizer, et al, (2008:642), Stevenson (2009) stated that waste represent unproductive resources and should be minimised. However, waste as identified by Taiichi Ohno, is noted for his work at Toyota Production Systems (TPS) and categorised the elimination of waste in seven areas:
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Heizer, et al, Stevenson, Slack, et al, including numerous authors in the field of operations and quality management identified the seven areas of waste according to Ohno criteria, namely:
Overproduction: Involves excessive use of manufacturing or operations resources
Waiting time: Also known as queuing, waiting refers to the periods of inactivity in a downstream process that occur because an upstream activity does not deliver on time, including bottle necks
Transportation: This is unnecessary motion or movement of materials, such as work-in-process (WIP) is being transported from one operation to another.
Processing waste. Extra Processing in terms of extra unnecessary operations, such as rework, reprocessing, handling or storage that occurs because of defects, overproduction or excess inventory.
Inventory. Beyond minimal quantities and also refers to inventory that is not directly required to fulfil demand. Inventory includes raw materials, work-inprocess and finished goods. Inventory all requires additional handling and space
Inefficient Work Methods, Motion or Activities. Refers to the unnecessary steps taken by employees and equipment to accommodate inefficient process layout, defects, reprocessing, overproduction or excess inventory. Motion takes time and adds no value to the product or service. Defects. Product or service quality is defective: and require rework and possible loss of sales. Wastes may also include wait time that increases costs and lead times for subsequent processes, defective material, and scrapping defective pieces
. The first step in eliminating the seven deadly wastes is to understand and identify each one within the operation. After that, managers should take corrective measures to reduce, control or eliminate the problems. In order to eliminate waste, each of the seven deadly wastes must be clearly understood to recognise their strategic impact and where it exists in organisations processes. Some wastes are noticeable, and some are more subtle. After understanding each and considering how it relates to the business processes, organisations should then strategically analyse the impact and ways to reduce or eliminate each one. It is of utmost importance that every organisation should develop a continuous improvement system that reduces cost and improve business
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processes operational effectiveness by endlessly pursuing elimination of these wastes towards process capability maturity.
7.
BUSINESS PROCESS IMPROVEMENT TECHNIQUES
7.1 INTRODUCTION It is of utmost importance that management must know how to, act, handle, control, and direct total quality as it set guiding principles and lay down the foundation towards continuous improvement, [7].
Oakland, J.S, [76] argue that an organisation can only be truly effective if every part in it work properly together. Furthermore, organisations consist of a series of internal suppliers and customers, which in turn is part of an integrated quality chain. This forms the core of any organisations quality improvement drive as it interfaces with the measurement of quality and capability. It focuses on two distinct but interrelated aspects of quality; (1) the design and measurement of how well a product or service perform, and (2) design conformance of well a product or service perform at its desired function.
In order to achieve the above organisations must apply and adapt techniques that will assist them in achieving business process capability, excellence and performance. Some of these performance enablers and quality techniques include:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Total Quality management (TQM), Quality Cost Analysis Continuous Improvement Business Process Improvement (BPI) Quality Improvement Projects Business Process Re-Engineering (BPR) Just-In- Time (JIT) Lean Synchronisation (LS) Six-Sigma Risk Analysis
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8 TOTAL QUALITY MANAGEMENT (TQM)
According to Besterfield, D.H, [10] -Total Quality Management (TQM) is a proven technique that guarantees survival in world-class competition and only by changing the actions of management will the culture and actions of an entire organization be transformed. TQM consist of three words, (1) Total whole organisation, (2) Quality as a degree of excellence, and (3) Management as the art of managing the whole organisation to achieve excellence, Key to the understanding of the TQM concept is that it is applied company wide and includes all business processes that occur in the organisation. It relies on total employee involvement, commitment and visibility in support of improvement. It calls for commitment and leadership (from the top) in an approach to improve the competitiveness, effectiveness and flexibility of a whole organisation. Excellence through TQM is only achievable when an organisation has: 1. An sound quality policy and management is dedicated towards improvement of quality 2. Created organisational culture toward quality and excellence focusing on the organisations core values, purpose, and mission 3. Control through information feedback keeping all business functions on track 4. Effective leadership starting with the Chief Executive Vision and strategy. To achieve TQM, Krajewski, et al, argue that a product or service must fulfil customer needs. This requires that Quality must be consistent to customer expectation. It also requires that the managing thereof means ensuring that quality must be understood, applied and improved throughout the entire business. Key focus and criteria for managing quality is to ensure that; 1. Quality must be well understood throughout the organisation. This implies that it is the responsibility of managers and every individual in the organisation to improve quality. 2. Quality need to be understood from a customer perspective. This view is most of the time the only way to apply quality gap analysis. 3. Without measuring quality will be difficult to control. According to Slack, et al, [90] various characteristics of quality can be measured, either as a variable or an attribute. This should be expressed via quality costs terminology.
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4. Monitoring and responding to any deviations from acceptable levels of quality using statistical process control (SPC) reduces variation in performance, and enhances knowledge, [1] [46]. 5. The management of quality should lead towards continuous improvement. Very often quality improvements are not sustained because there is no defined set of procedures to support and embed then in the day- to- day running of operations
Studying various experts in quality, it is become clear that certain variables are core to the management of quality: I. Employee empowerment; II. Quality assurance; III. Customer focus; IV. Quality philosophy; V. Process and product / service design VI. Information analysis VII. Strategic planning; VIII. Environment infrastructure; IX. Team approach; X. Focus on quality department; XI. Focus on quality in every department XII. Quality driven projects, and XIII. Breakthrough improvements by means of continuous improvement, A critical question is how well organisations apply quality management principles and techniques. Foster, S.T, probably provides the best answer when the author stated that the ultimate goals of strategic quality planning and control are that it aids the organisation to achieve sustainable competitive advantage and that this can only be achieved through the effective management of quality. Foster, further quoted D Garvin of the Harvard Business School as to quality is not just a control system but a quality management function. The greatest tangible benefit of TQM is increased market share, rather than just reduction in quality cost. Even more important is that TQM should be a way of life for everyone in the organisations in pursuit of continuous improvement. It requires commitment from management
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beginning with business process alignment of commitment, communication, and culture change. TQM emphasise the need for a never ending commitment towards improvement.
9. COST OF QUALITY PERSPECTIVE Crosby, P.B, - Quality is Free (1979) argue that real cost distract from the bottom line are the cost of inspection and fixing problems plus all other costs associated with not doing the job right the first time. One of the absolute necessities of Crosby Quality Management philosophy is that the cost of quality provides the only performance measurement of non-conformance. It is known that nonconformance impact on business process capability as well as the maturity status of an organisation. According to Oakland, J.S,, it is not enough to only deliver a product or service or performing a task. If organisations wish to satisfy customer the cost of quality associated achieving it should be carefully managed. If the cost of quality in its pursuit of quality improvement, customer satisfaction, market share, and profit is not properly managed then it will effect the organisation in the long term. According to Besterfield the cost of quality is the economic common denominator that forms the basic data for Total Quality Management (TQM). If not controlled properly it indicates ineffective management, provides a warning system against unacceptable financial situations, and lends credence to management commitment towards quality. Of importance is that the Quality Maturity Model included cost of quality as an essential barometer for measuring performance. The cost of quality may arise from a range of activities, such as, sales and marketing, design, research, product development, purchasing, storage, handling, production planning and control, production and operations, delivery, installation and service. According to Besterfield [9] the cost of poor quality can exceed 20% of cost of sales in manufacturing companies and 35% in service companies. According to Gryna, the cost of quality concept can be used to determine; I. The magnitude of quality problems terms of money. II. Traceability of assignable causes III. Opportunities to reduce customer dissatisfaction
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IV. Measure quality costs as a means of evaluating the progress of quality improvement programme V. Need to develop of a strategic quality plan that is consistent to the overall goals of the organisation. Gryna,] provides guidance to identify collectively the four categories on cost of quality and defines poor quality as internal and external failure categories, whereas appraisal and prevention are viewed as investment to achieve quality objectives. It is clear that the cost of quality will have a direct impact in determining business process capability and therefore the understanding of the above mentioned categories will be summarised according to Gryna. 9.1.1.1 9.1.1.1.1 Quality Cost Categories Internal Failure Cost
Cost of failing to meet customer requirements and needs. These costs would disappear if no defects existed prior to shipment to the customer. Internal failure Cost may include: Scrapped materials, goods and services; replacement, rework, and repair; re-inspection and re-testing; Modification permits and concessions; downgrading; reduced capacity/ yield/ increased downtime (downtime); rescheduling; service delays; disruption to the service process; troubleshooting or defect / failure analysis; inefficient processes, and non-value adding activities. 9.1.1.1.2 External Failure Cost
External Cost would disappear if no defects existed in the product or service after delivery to the customer. These costs include: Warranty claims and servicing costs; Product liability / Litigation; Product rejected and returned; Complaints and their administration; Concessions, cost of concession; Loss of sales; Loss of customer goodwill; Inconvenience to other customers; Product recall, Lost opportunity for sales revenue, customer defections: Loss of customers due to poor quality, New customers lost due to lack of capability to meet customer needs 9.1.1.1.3 Appraisal
These are costs in initially ascertaining the conformance of the product to quality requirements; they do not include costs from rework or inspection following failure. These costs include: Receiving inspection; Testing and Inspection of supplier goods and services; Laboratory
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acceptance testing; Testing and Inspection of internal service processes; Inspection and testing; Inspection and test equipment; Material consumed during inspection and testing; Analysis and reporting of tests and inspection results; Measurement of customer satisfaction after process 9.1.1.1.4 Prevention
These are the cost related to all activities to prevent defects from occurring and to keep appraisal and failure to a minimum. These costs include; Quality planning; Design of quality system; Calibration of and maintenance of quality measurement and test equipment; Calibration and maintenance of production equipment used to evaluate quality; Supplier assurance; Quality auditing; Staff quality training and development; Supplier development training; Quality improvement programs: Administering quality procedures ((e.g. ISO 9001:2000). Preventative maintenance; Acquisition analysis and reporting of quality data; Process planning; Process capability studies, inspection planning, and other activities associated with manufacturing and service processes; Process control: In-process inspection and testing to determine the status of the process. Key to cost of quality is the availability of information as it provides guidance on how to set up a program concerning quality improvements and quality cost reduction. It requires firstly, as in any quality improvement program that management must be willing to support a quality cost program. Secondly, that organisation has experts estimating the organisations total quality costs with available accounting or financial data to support a continuous improvement programme using cost of quality parameters. Applying cost of quality information and the analysis thereof should point out procedures that must be adopted to improve the overall quality and capability of the organisation. This however, depends on many factors: 1. The commitment of management to attaining acceptable quality levels in the most economical way. 2. The devising and implementation of quality related cost procedures. The identification reporting and analysis of quality costs 3. The formation of a quality cost action team who is responsible for overall direction, coordination ensuring that quality cost savings target are set and met 4. The implementation of a cost of quality training programme ensuring that everyone understands from the outset the financial implications of quality as it is vital to the success and growth of an organization.
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5. The presentation of significant quality cost savings in readily understandable terms to everybody. This might include displays of defective products; rework cost of defective products, and possible remedial action.
Finally quality related cost is not readily acceptable and ideas for the reduction of quality costs should emanate from all parts of the organisation. The introduction of a suitable cost of quality scheme for achieving maximum participation by all employees is advocated. This may include means of promoting, initiating, and receiving, discussing, appreciating, and auctioning new ideas. 9.1.2 CONTINUOUS IMPROVEMENT INITIATIVES
Due to competitive pressures, organisations should maintain and focus on continuous improvement and therefore require improvement projects. According to Gryna, the foundation for maintaining a focus on continuous improvement includes formalising a process for nominating and selecting improvement initiatives. These initiatives require the formation of quality teams, training and support.
Process improvement initiatives are a systematic study of activities and flows. It requires planning as it forms the basic requirement for effective quality, quality improvement systems and quality management system. The sole purpose is to determine the finer details of any process as it is only after understanding processes that it can be improved or be able to provide improved quality. In essence, this means that process improvement is an ongoing activity. Quality planning requires specific attention and techniques and according to Evans, the concept of continuous improvement is relatively new. In its earliest form was initiated by the success that Toshiba (1946), Matsushita (1950), and Toyota (1951). Toyota particularly established Just-InTime (JIT) philosophy as part of continuous improvement programme (Kaizen in Japanese). Recently improvement is an activity that closes the gap between current and desired performances. Its ultimate goal is to improve all management activities. Improvement means changing performance to a new level and requires that management needs a systematic approach to drive continuous improvement programmes. However, to
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improve processes require that they should be repeatable and measurable and attention be on the execution and sustainability of improvement programs. What is required to achieve performance excellence and effectiveness is an organisational structure that supports quality at every level of the organisation. The classification of authority, responsibility, reporting lines and performance standard amongst individuals at all levels of the organisation should inhibit process improvement and maintain stability. Organisation must focus on processes as a basic principle towards total quality and process owners are accountable for process performance. Process owners should therefore be empowered to accept the responsibility to improve their processes as their decisions will impact on strategic goals, value creation, and core business processes. Processes improvements is therefore a continuous and joint undertaking between staff, process owners, business units, and other stakeholder, emphasising the importance of team work to accomplish quality work. 9.1.2.1 Leadership Teams
When organisations undertake process improvement action should be taken to institutionalise and empower all employees. Stevenson, [93] postulates that organisations in their effort to become more productive, competitive and customer focused had to rethink how work is to be accomplished and in particular lean operations systems. Furthermore, the author stated that there different forms of teams which in the short term could address quality improvement, product or service design, or problem solving. The benefit of these teams includes higher quality, productivity and greater work satisfaction. The formation of teams should have a common purpose and a set of own performance objectives. Teams should be held accountable to improve processes and quality and is the most efficient way to solve process improvement problems. Teamwork changes individuals from independence to interdependence through communication, trust and the free exchange of ideas, knowledge, data, and information. When imprinting teamwork for quality improvement a structured disciplined approach to solve problems should be provided. It may mean a change in organisational culture supported by management. It is important that the formation of leadership teams, sometimes called steering committees or quality councils be established to set the way how organisations integrate performance excellence goals. This in itself promotes the development and empowerment of all employees.
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According to Evans, leadership teams can be categorised by four elements:
i.
Leadership - by promoting and articulating quality vision aligned to business processes, management with a quality approach, and visibility of commitment, involvement, education, methods and tools.
ii.
Planning - strategic quality goals, understanding customer needs and business capabilities, long-term goals, formulating human resources goals and policies, and understanding the employees perception of quality, and recognition system.
iii.
Implementation - formation of key business process teams chartered to manage, review and improve processes, inclusive of working with suppliers as business partners. Review by means of quality audit, system tracking through customer satisfaction, internal measures of quality, and monitoring of progress ensuring that quality objectives are achieved.
iv.
It is important to note that any changes or improvements to business processes have a profound impact on all levels of the organisation (end-to end) and that it includes everybody. It also influences on individuals work performance level and of most importance impacts on business process capability. 9.1.2.2 Design of work
Individual work performance levels have an impact on continuous improvement. Work or job design is an ongoing process and is required for all jobs in the entire organisation. Prior to job design, objective data is obtained, analysed in order to determine the single best way to perform the work or job. The key objective is to enhance employee performance and the way in which task must be performed. In essence all work and jobs must be aligned towards performance, be customer focused, and rapid response. When continuous improvement initiatives are required, then jobs or work many a times requires fundamental changes and have to be redesigned. When redesigned, attention must be paid as to what extent jobs and work affect other work systems and how it will improve the overall performance in the organisation. In reality, improved performance means that individual jobs or work contributes towards achieving goals and objectives of the organisation. It is important that business process never to remain static and by improving them does not necessary mean
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increasing workload but rather mean eliminating meaningless activities in jobs and work. [3] What is known is that is that high-performance work is characterised by flexibility, innovation, knowledge, and skill. 9.1.2.3 Elimination of Waste
According to Stevenson, [93] the ultimate goal of an organisation is to be lean. The objective is to ensure a smooth, rapid flow of materials, and or work through a system. This in itself depends on how well supporting goals is achievable. It requires that all waste be eliminated and forms the basis in understanding the all-encompassing extent of the philosophy of JIT. In essence, waste is defined as any activity that does not add value to the entire organisation business processes, to products and services. It therefore adds cost, but not value, to product or service. Waste therefore represents unproductive resources and should be minimized or eliminated. Waste contributes to underachievement of process capability and performance. The concept of waste was identified by Taiichi Ohno [Toyota Production Systems (TPS)] and categorised the elimination of waste in seven areas:
1. Overproduction which involves excessive use of resources
manufacturing or operations
2. Waiting time, known as queuing and refers to periods of inactivity in a downstream process. It occurs because an upstream activity does not deliver on time and includes bottle necks 3. Transportation due unnecessary motion or movement of materials 4. Process waste and is related to any extra unnecessary operations taking place. This occurs due to rework, re-processing, handling, or storage. This occurs due to defects, overproduction or excess inventory. 5. Inventory, not directly required fulfilling demand or capacity. Inventory includes raw materials, work-in-process and finished goods and requires additional handling and space 6. Inefficient work methods, motion, or unnecessary activities performed by employees and equipment. This is due to inefficient process layout, defects, reprocessing, overproduction or excess inventory. It also includes unnecessary motion time that adds no value to the product or service.
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7. Defects affecting the quality in products or services and require rework and possible loss of sales. It is important that waste must be eliminated and to understand why organisations and managers must take corrective measures to reduce, control or eliminate any problems. Of importance is that organisations must develop a continuous improvement system focusing on elimination of waste, reduce cost and will improve business processes effectiveness. According to Slack, et al, the best way to describe waste is in terms of lean synchronisation as it aims to meet demand instantaneously, with perfect quality and no waste. The objective of Lean Synchronisation is to ensure that the flow of products and services transpire according to customer needs, in exact quantities, when and where needed, at the lowest possible cost. It requires that items flow rapidly and smoothly through processes, operations and supply networks. 9.1.2.4 Symptoms and Causes Identification Techniques
Numerous techniques can be used to identify symptoms and causes assisting managers, supervisors and staff in solving problems on a daily basis and during continuous improvement initiatives. Some of the techniques that can be used are briefly discussed as follow:
Of importance is that an organisation should appoint a dedicated team(s) to oversee BPI implementation, [3]. According to Harrington, [50] an Executive Improvement Team (EIT) and a Process Improvement Team (PIT) should be formed with the primary objective to manage BPI activities. Furthermore, Harrington, [50] stated that PIT should apply fundamental and advanced BPI tools ensuring new ways of thinking and application. Tools and activities that should be applied include: i. ii. iii. iv. v. vi. vii. Flowcharting processes Gathering process costs and quality Establishment of measuring points and feedback loops Qualifying processes Developing and implementing improvement plans Reporting efficiency and effectiveness, and status change, and Ensuring process adaptability
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According to Harrington, BPI improvement and implementation projects consist of five critical stages. It is clear that organisations cannot achieve quality improvement unless obstacles such as lack of upper management commitment; unplanned organised approach; increased workloads; and lack of provision for reward are eliminated. The application of BPI projects assist organisations to improve towards long lasting results and performance. This however, this is only achievable when supported by a comprehensive improvement process involving all facets in the entire organisation. BPI projects are directly linked in obtaining BPC and will result in that organisations achieve business processes capability, [50] [63]. 1. Flowcharting or process mapping identifying what happened; what happens next; who makes decisions; what operation is performed; and how does it effect operations and processes. It involves people, staff, managers and customers, jobs, material flow, etcetera. 2. Check sheets as a aid in data collection and interpretation of data according to an attribute or variable 3. Histograms as graphical representation of data regarding the variations in a process 4. Pareto Analysis is a technique applied to prioritise different types of sources of problems separating the trivial few from the trivial few 5. Causeandeffect diagrams as a useful tool in identifying causes of problems. The Causeandeffect diagram is normally constructed during a brainstorming setting so that everybody should participate focusing on the problem identified and its causes, based on facts and not opinions 6. Control Charts as a backbone of statistical process control (SPC). Normally applied in identifying improvement opportunities and verifying that improvements really have the desired outcome. Symptoms and Causes Identification Techniques also assist managers and organisations when: 1. Flowcharting processes as a process modelling and mapping tool in process improvement, 2. Planning for purchasing and obtaining the correct equipment, material, and services, at the right quantity, time, and price as well as supplier performance,
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3. Planning for Just-In Time (JIT) 4. Continues improvement initiatives in order to determine and identify problems and to eliminate waste 5. Documentation of a total quality system, documenting of quality objectives, quality policies according to International Standards Organisations (ISO) series should enable organisations to follow a, Plan, Do, Check, Act cycle, [44]. Relating to ISO systems, Gryna, [48] argue that ISO 9000 standards provide the minimum criteria for a quality system. It focuses on business processes, products or services to be delivered at a consistent of quality level. ISO systems also include; management responsibility, quality system, contract review, design control, checking / measuring / inspection, non-conforming products or services, corrective action, protection of product service quality, quality records, quality system audits and reviews, training, servicing and statistical techniques.
The above-mentioned techniques form the basis of any continuous improvement and BPC initiatives and in most situations cannot be use as standalone techniques but rather used as a combination with each other. 9.1.2.5 Business Process Improvement (BPI)
BPI is a systematic methodology assisting organisations to make significant advances in how business processes should operate in the organisation. It provides a system that aids operations ensuring that both internal and external customers receive what they want. Andersen, states that organisations opting to make use of multiple improvements projects at once throughout the organisation to beware that if projects are not properly managed that they may become expensive and be neglected causing BPI efforts to loose focus and coordination. The main objective of BPI is to improve business processes by eliminating errors; minimise delays; maximise the use of assets; promote understanding; ease of use; satisfying changes in customers needs and to provide the organisation with a competitive advantage. BPI, [3] [50] therefore have three key objectives: i. ii. Making a process effective and therefore produce desired results Making processes efficient and therefore optimise resources
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iii. Making processes adaptable and therefore be able to adapt to changes in customer and business needs Table BPI improvement and implementation projects phases [Harrington (1991:21-23] BPI Phases Objectives Activities (1) Establish EIT; (2) appoint BPI champion; (3) Executive training; (4) To ensure success through Phase 1 leadership, understanding and commitment develop improvement model; (5) Communicate goals to employees; (6) review business strategy and customer requirements; (7) select critical processes; (8) appoint process owners; (9) select PIT (1) define process scope and mission; (2) define process boundaries; (3) provide Understand all the Phase 2 dimensions of the current business process team training; (4) develop process overview; (5) define customer and business requirements; (6) flowchart the process; (7) collect cost, time , value data; (8) perform process walkthrough; (9) resolve differences; (10) update documentation (1) provide team training, (2) identify improvement opportunities; (3) eliminate Improve the efficiency, Phase 3 effectiveness, and adaptability of business processes bureaucracy; (4) eliminate non adding activities; (5) simplify processes; (6) reduce process time; (7) error proof processes; (8) upgrade equipment; (9) standardise; (10) automate; (11) document the process; (12) select employees; (13) train employees Implement a system to Phase 4 control the process for ongoing improvement Implement continuous improvement process (1) develop in-process measurements and targets; (2) establish feedback; (3) audit the process periodically; (4) establish a poor quality cost system (1) qualify the process; (2) perform periodic qualification reviews; (3) define and
Phase 5
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eliminate process problems; (4) evaluate change impact on the business and customers; (5) benchmark the process; (6) provide advanced team training
9.1.2.6
Quality Improvement Projects (QIP)
According to Foster, organisations can only achieve quality improvement if managers prioritise improvement projects. QIP requires dedicated project team(s) to solve quality problems. Project team(s) should determine the scope of the quality improvement project. This can only be achieved from work performed starting with a diagnostic improvement projects journey and requires selected individuals from multiple departments.
It is important to note that the same principles and techniques required when managing any project also applies for business process improvement projects. This because many of the processes within project management are iterative in nature and is requires a progressive elaboration of detail decisions, re-adjustment of resources and schedule throughout the improvement project life cycle. The value of mapping a quality improvement project is that it identifies key milestones in obtaining quality at every phase as it is a set of activities with a defined start point (date) and defined end state (completion date), in pursuit of a defined goal utilising resources and entails scoping, planning and controlling of the project. According to Kerzner, [61] there are numerous types of projects and it was only by the 1990 that projects became a necessity and not a choice as organisations. It is only then when organisations started to realise the importance of project management. The author also identified maturity and excellence in projects and argue that maturity in projects is the implementation of a standard methodology occupying processes to the extent that there is a high likelihood that success is repeated when proper tools, techniques, processes, and culture exist in projects. This however is only achievable if projects managers create an environment in which a continuous stream of measure exists that is in the best interest to the organisation and the project.
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It is important to note that many capability models exist and that these have been developing for specific industries. Organisations should select the best fit model to obtain capability according to organisational culture, industry, and business objectives. Embarking on BPI and BPCM initiative requires the application of well-defined project management principles as it plays a major role in projects focusing on continuous improvement, performance, and excellence. 9.1.2.7 Business Process Redesign
Redesigning business process requires specific actions to be undertaken. It is a systematic approach for analysing processes in order to identifying opportunities for improvement and applies project management principles with planned and specific objectives.
Process analysis and redesign require steps. It starts with process analysis when opportunities for process improvements are identified and ends with implementing a revised process before going back to the first step, thus creating a cycle of continual improvement. According to Slack, et al, [91] there are two paths that organisations may apply to improve goals namely; breakthrough improvement and continuous improvement. Both of these focuses on business process redesign by means of process analysis and the design of workflows in order to achieve performance improvements. Many approaches can be applied for systematically analysing and redesigning processes. The most useful are (1) Process - reengineering, (2) Six-Sigma improvement model, (3) Quality Management and value stream mapping, and (4) designing Lean Systems.. Each of these will be discussed in broader detail. 9.1.2.8 Business Process Reengineering
According to Vonderembse, et al, [97] customer requirements for services and goods are satisfied by creating competitive capabilities. These competitive capabilities are created by designing and redesigning business processes, focusing on quality, time, and cost effectiveness according to customer requirements. It depends on how organisations reengineer and improve business process. It therefore requires a detailed process analysis monitoring performance over a period, [63].
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Business Process Reengineering (BPR) in reality means starting over. It can be defined as process reengineering, redesigning or reinventing organisations performance. When deciding to apply BPR organisations should understand the difference between total quality management (TQM), time-based competition (TBC), and productivity improvement programmes (PIP), [97]. Organisations must decide if they wish to focus on single performance measures or a general approach of improving multiple performances. They therefore must decide whether improvement is to be incremental or radical as illustrated in Table 2.5: - Comparing BPR and Other Improvement Techniques Table: Comparison of BPR to Other Improvement Techniques [Vonderembse, et al, (1996:145]
Focus on Single Performance Measure
General Approach for Improving Multiple Performance Measures Continuous Improvement: Holds
Incremental
TQM: Focuses on quality and uses
basic organisational structure, processes and facilities constant and seeks small improvements
Improvement Kaizen (continuous improvement)
Dramatic
TBC: Focus on time and uses BPR
BPR: Holds nothing constant and seeks dramatic improvements
Improvement to seek dramatic improvements
Furthermore, Vonderembse, et al, [97] postulate that continuous improvement assumes that the basic structure of the organisation, its processes, and its facilities are sound and that adjustments to be made is incrementally. Therefore small improvements gains over time whilst BPR examines all aspects of the process, keeping nothing safe from change. Critical question in process reengineering is why should this be done at all? The answer to this is that when organisations apply BPR immediate and dramatic changes will take place. It requires the application of supporting technical and behavioural concepts and techniques to implement process reengineering. To accomplish this organisations develop an organisational environment that encourages quantum leaps in improvement whereby the existing systems is terminated and new systems are invented and replaces replacing the old systems. According to Vonderembse, et al, [97] for an organisation to be successful continuous improvement and BPR should coexist.
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In order for BPR to be successful organisations should priorities the following: 1. Analyse and select a process or processes to be redesigned, i.e. eliminate waste 2. Select a team approach convincing others in the organisation to change, empower people and involve process owners and decision makers; 3. Commitment from top management, 4. Rethinking an redesigning work, jobs, organisational structures, measuring systems, values and norms of the organisation, 5. Apply state of the art information technology, 6. Benchmark against other organisations, 7. Remove causes of error in process to reduce rework, and 8. Use creative thinking techniques and to visionary leadership. [37] [48] [63] [97] BPR is a valuable concept and tool to if organisations dramatically want to streamline their businesses processes in an endeavour to achieve business processes capability. 9.1.2.9 Just-In-Time (JIT) and Lean Processes
JIT as an approach focus on continuous improvement forces organisations to solve problem solving focusing on throughput and inventory. In conjunction with Toyota Production System (TPS) and Lean Operations, it forms a comprehensive manufacturing strategy. According to Render, et al, [83] JIT, TPS, and Lean Systems are philosophies of continuous improvement towards sustaining a competitive edge, [63] [91].
The key objectives of JIT, TPS and Lean are to eliminate waste and variability and improve throughput. 9.1.2.9.1 JIT Principles
JIT focus on a pull system solving problems relating to inventory, eliminating waste and delay. It therefore reduces cost associated with excess inventory, process variability and waste, and undesired throughput..
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9.1.2.9.2 JIT Partnerships
According to Render, et al, [84] it is important that partnership exist between supplier and purchaser. It requires an open communication network and combined goal of removing and driving out waste. This entails leading organisations view suppliers as extension of their own organisation and it expects suppliers to be fully committed to improvement. 9.1.2.9.3 Toyota Production System (TPS)
TPS and continuous improvement means building an organisational culture and instilling in people a value system. TPS emphasize treating people as knowledgeable workers. This entails that workers are empowered to such an extent that they do have the authority to stop machines and processes when a problem arises ensuring that the standard of work be at the highest level.
According to Render, et al, [84] - TPS consist of three critical components. They are continuous improvement, respect for people, and standard of work. Furthermore TPS highlights gaps that occur between what is accepted and what occurs and therefore calls for immediate corrective action or continuous improvement. 9.1.2.9.4 Lean Processes and Synchronization
Lean operations identify customer values by analysing all the activities required producing the product and service. It then optimises the entire process from a customer prospective by removing waste and delays. This leads to continuous improvement and require three phases of implementation: Phase 1: Phase 2: Using operations to compete, and managing effective projects; Designing and managing processes by means of developing process strategy, analysing processes, managing quality, planning capacity, managing process constraints, and designing a lean system; Phase 3: Designing and managing supply chains by means of designing effective supply chains, integrating supply chain, locating facilities, managing inventories, forecasting demand, planning and scheduling, and planning sufficient resources. [63]
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9.1.2.9.5 Six-Sigma
Six- Sigma is a comprehensive and flexible system for achieving, sustaining and maximising business success. Slack, et al, [91] argue that Six Sigma is uniquely driven by understanding customer needs, disciplined facts, data, and diligent attention to managing. It is a systematic approach known as DMAIC cycle (Define, Measure, Analyse, Improve, and Control) that improves and reinventing business processes, [34] [90] [91]. According Slack, et al, Krajewski, et al, [63] although Six Sigma was mainly used to improve manufacturing processes it is also applied to optimise service processes and lends itself for improvement and performance available to all industries. [22] [91]
According to Puffer, J, [80] and LeVasseur, C, [58] Six-Sigma can be usefully applied with Capability Maturity Models. The authors argue that Six Sigma projects addresses process problems and produce a measurable return on investment, whilst CMM focus on organisational change reflecting steps an organisation should take to improve its process capability. However, although Six- Sigma projects are noted as process analysis and statistical technique it can be applied in the entire organisations to obtain maturity and performance, [58] [80]. 9.1.2.9.6 Risk management
Risk management is an important part of planning for businesses. Risk is potential and unwanted consequences that arise from events. Resilience is the ability to prevent, withstand, and recover from those events. Resilience starts with understanding the possible sources and consequences of failure and the potential sources of failure. Business processes are therefore always at risk and it is essential that when problems arises that the impact thereof and the risk associated with it be identified and the impact thereof minimised. When identified the organisation must create a plan of action to minimize or eliminate the impact of at risk factors. Variety of strategies is available, depending on the type of risk and the type of business. The process of risk management is designed to reduce or eliminate the risk of certain kinds of events happening or having an impact on the business. Risk can be categorised as supply failures, failures within an operations due to humans, organisational, technology, product or service, customer failures and failures caused by environmental conditions.
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There are a number of risk management standards, including those developed by the Project Management Institute, [79] and International Organization for Standardisation (ISO), [44]. The prevention or resilience of failure is of utmost importance as it becomes a critical and useful tool when organisations want to determine the status of processes capability. Attempts should always be made to eliminate the risk of failure and sometimes involves radical changes to business processes. 9.1.2.9.7 Process Review cycle
Todays organisations face tremendous changes in economical, technological, environmental, and governmental and therefore constantly require that their business processes be reviewed in an effort to become proactive and therefore to remain competitive.
According to Sinha, M. N, and Willborn, W.O, [89] organisations needs to remain competitive and therefore requires constant analysis and examination of the effectiveness of business processes.. Organisations should have an overall process review program in place that
manage the improvement and optimisation life cycle. Review cycle, or audit should be a frequent event in any organisation and authorised and qualified person should audit and examine documentations and performances against set standards. A quality audits is therefore a systematic and independent examination of the effectiveness and form an integral part of quality assurance programs. Audits includes quality analysis of products or services as well as and processes. It requires that an independent review is conducted to compare aspects of quality performance with a standard of that performance. According to Gryna, [48] the essential ingredients for a successful audit are that there must be an emphasis on facts, attitude on the part of the auditors, identification of opportunities for improvement, addressing human relations issues, and competence of the auditors. Furthermore, Gryna, [48] identified key steps in performing an audit namely planning, performing, reporting, follow-up on corrective action, and closure. It is important that the process review cycle will ensure that: 1. Individual business units and process owners have a process review plan which focuses on implementing significant continuous improvements to processes
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2. The workforce has the big picture regarding review of enterprise-wide core processes. 3. There is an integrated work plan that enforces the review of proposed processes by stakeholders during the improvement phase. 4. All resources are involved in the implementation of processes should be trained and empowered 5. All new process implementations have a post implementation assessment phase that would provide sufficient feedback on measurement aspects to management. 6. Processes should be implemented and managed to ensure that continuous improvement and review of processes be sustained during the operational phase of the process that follows process reengineering or BPI project.
It is essential that for any BPC project proper review policy exist in the organisation. Management must ensure that timely review of the entire organisations processes take place. Gaps must be identified gaps and the necessary measurement and the review process be controlled. 9.1.2.9.8 Process Standards and Measures
9.1.2.9.8.1 Introduction Traditionally, performance measure and indicators have been derived form cost accounting information and did not really support continuous improvement initiative as they were unable to map process performance. According to Oakland, [75] organisations must strive to survive over a long term and therefore performance must be measured and seen by the customer. It is essential that organisations must measure their performance, as it is not possible to control and manage them without measurement. Process measurements are the starting point for improvements as they enable organisations to understand what goals are to be achieved. Every subject to be controlled should have a quality goal. The control of subjects and associated goals differ for products, services, processes, and departments in the entire organisation. Each of these has a set of operational goals and features and therefore requires technological analysis. Critical is that encourages continuous improvement in goals and is based on a high level of achievement by deploying and aligning them to the organisational quality goals, [48].
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It is essential that processes be measured in order to control these processes and in performance improvement. It should provide information about how well processes and people are performing. Furthermore, many organisations only rely on financial measurements. According to Oakland, [75] measuring return on in vestment (ROI) can only be competed after profits have been calculated. The use of ROI for evaluating strategic requirements and performance leads to discriminatory allocation of resources and is after the fact. Traditionally these measures have not been linked to the process where value-adding activities and does not provide feedback to all areas of the organisation. Measurements provide critical data and information regarding key processes, outputs, and results. It ensures that the organisation is managed by facts and measurements such as customer satisfaction, defects rates, process cycle time should receive attention during strategic planning, [34].
It is important that performance measurements, standards, and compliance principles be determined, and adhered to as well as understood by all stakeholders in the entire organisation. 9.1.2.9.8.2 Measurement Techniques Organisational goals have to be set and deployed. It requires that these goals be identified and measured using different techniques. Each of techniques contributes directly or indirectly to performance improvement. This entails defining sub goals, business, plans, and projects and key measurements should be established to measure goals. 9.1.2.9.8.3 Balance Scorecard According to Gryna, [48] the use of a balance scorecard combined with the measurements from financial, customer, internal processes, and learning will assist when reviewing progress measurements, assessments, or audits. The balance scorecard should therefore be used in conjunction with four management processes; translating the vision, communicating and linking strategy to departmental and individual objectives, integrating business financial plans, and modifying strategies to reflect realtime learning. In essence, the Balance Scorecard attempts to bring together elements that reflect the organisations strategic position, including product or service quality measures, product or service development time, customer complaints, labour productivity, and so on.
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The advantage of the balance scorecard approach is that it represents an overall picture of the organisations performance measures in a single report. It is comprehensive in measures of performance and focuses on the entire organisation rather that sub-optimising around narrow measures. [90]. It therefore assists managers to determine their status of process capability highlighting weaknesses and shortcomings. 9.1.2.9.8.4 Benchmarking
Benchmarking is seen as a process of learning from others. It involves the organisations own performance or methods against other comparable operations, [69]. According to Slack, et al, [90] there are numerous types of benchmarking some of which he listed as follow;
1. Internal benchmarking within the same organisation 2. External benchmarking: comparison between an operation and other operations which is part of different organisation 3. Non-competitive between organisations which does not compete directly in the same market 4. Competitive benchmarking comparative between competitors 5. Performance benchmarking comparative between the levels of achieved
performance in different operations (own operations) 6. Practice benchmarking comparison between an organisations operations practices, or ways of doing things, and those adopted by another operation
In conclusion, benchmarking is based on ideas that highlight (a) problems in managing a process, and (b) the probability that another operation somewhere has been developed in a better way of doing things, [17] [70]. 9.1.2.9.8.5 Supplier Capabilities Measurement Supply chain management is one of the core competency required in any organisation. According to Burt, [14] supply managers and organisations should focus their decision making process to proactively improve and optimise their supply processes. The author argue that the supply chain should be fully understood as well as supply markets and be continuously
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monitored to any identify threats, [14]. Harrington, [50] postulates that process capabilities of suppliers and the requirements of customers should be understood in terms of process performances. According to the author it is essential that the customer should provide the supplier with documents specifying specific needs and expectations. Critical to these defined specifications is that the supplier agrees that it will be able to meet the specifications as agreed. Of importance is that supply chain objectives should be clear so that every process and product and business process design throughout the chain contribute towards a mix of quality, speed, dependability, flexibility and cost. Process capabilities of suppliers must therefore be understood in terms of all aspects of process performances. It therefore calls that the customer should provide the supplier with documents specifying the specific needs and expectations. It is also critical s that the supplier agrees that it will be able to meet the agreed specifications and cooperate, even to the extent of sharing skills and resources to achieve joint benefits, [3] [50] [90]. When choosing suppliers, Slack, et al, [90] further argued that that it is important to make trade off between four capabilities: 1. Technical capability the product or service knowledge to supply to a high level of specification 2. Operations capability process knowledge to ensure consistent, responsive, dependable and reasonable cost supply 3. Financial capability financial strength to fund the business in both short term and long-term 4. Managerial capability stable management, management talent, and energy to develop supply potential in future Supplier relationship contributes towards the success of processes capability and performance and that products and services. This must be measured against goals and objectives of BPC. In addition, consideration should be given on how well capacity balances processes variation focusing on demand and capacity. Therefore, capacity utilisation and performance measurements should be recognised and it is essential that measurements should include: 1. 2. 3. Resource planning and control system interface with customers Resource planning and control system interface with suppliers Resource planning and control information is integrated
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4. 5. 6. Lean Synchronisation applied throughout the supply network Lean Synchronisation understood within the organisation Waste caused by any variability and quality is calculated within the operation processes 7. 8. 9. Inventory information system integrates all inventory decisions JIT principles have been explored and applied Littles Law is understood and applied
10. All inventories are itemised and assessed 11. Methods of reducing waste and inventories are explored
In conclusion, the success of improvement strategies lies within the ability of business processes to perform at a desired level performance and excellence. This can only be achieved if proper measurements of performance were made against defined standards. It is therefore of utmost importance that organisations should know what, how, and when to measure business processes against set standards and measurements, namely: 1. Performance standards, compliance principles should be determined and included in all business processes during all appropriate stages of business process capability measurements 2. Performance standards as well as the responsibility and accountability of all stakeholders regarding set standards on all businesses processes (from en to end) should be properly be communicated and understood 3. Organisation should identify suitable measurement techniques that are aligned to enterprise-wide goals, and are integrated within the organisations. 4. Measurements of business processes performance should involve all stakeholders, employees, supply chain managers focusing on Total Quality including customer according to organisational objectives to obtain BPCM 5. Measurement techniques should be understood and results be
communicated to all stakeholders, employees, and supply chain managers. 6. An organisational quality culture should be installed. This must be aligned towards continuous improvement by means of measurement and standards. 7. Capacity utilisation and performance measurement results should be recognised in achieving lean synchronisation according to BPCM strategy
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Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Business Processes and Competitiveness

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Table Definitions, Process Considerations, Of Competitive Priorities. Krajewski, et al, (2010:34)

COMPERTITIVE PRIORITY 1. COST

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Business Process Classification Framework

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3. DESIGN PRODUCTS AND SERVICES

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5. PRODUCE AND DELIVER FOR MANUFACTURINGORIENTED ORGANIZATIONS PROCESES

6. PRODUCE AND DELIVER FOR SERVICE-ORIENTED ORGANIZATIONS

7. INVOICE AND SERVICE CUSTOMERS

Vermeulen, Andre (2011)

8. DEVELOP AND MANAGE HUMAN RESOURCES

9. MANAGE INFORMATION RESOURCES

Vermeulen, Andre (2011)

10. MANAGE FINANCIAL AND PHYSICAL RESOURCES

11. EXECUTE ENVIRONMENTAL MANAGEMENT PROGRAM

12. MANAGE EXTERNAL RELATIONSHIPS

13. MANAGE IMPROVEMENT AND CHANGE

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Process Modelling / Mapping

Vermeulen, Andre (2011)

Activity Flow Diagrams

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Sequencing in Business Process Modelling

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BUSINESS INFORMATION AND TECHNOLOGY

Quality Information System (Qis)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

4. BUSINESS PROCESS OPTIMISATION, IMPROVEMENT AND PERFORMANCE

Vermeulen, Andre (2011)

Figure 2.2: Systems:

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Vermeulen, Andre (2011)

Level 5 Level 4 Level 3 Level 2 Level 1

Optimising Management Controlled Management Defined Management

Continuous Improvemen t Quality Process