process-analysis2366.ppt

Process AnalysisProcess Analysis&&

ReengineeringReengineering

2002.4.2

MAI Lab. Seminar

Park Jung Joon

Process Analysis & ReengineeringProcess Analysis & Reengineering

Armen Zakarian*, Andrew Kusiak**

* Department of Industrial and Manufacturing Systems Engineering, University of Michigan, Dearborn, Dearborn, MI 48128-1491, USA

** Department of Industrial Engineering, Intelligent Systems Laboratory, The University of Iowa, Iowa City, IA 52242-1527, USA

Computers & Industrial Engineering 41(2001) 135-150Revised 2 May 2001; accepted 27 June 2001.

ContentsContents

Introduction IDEF methodology Stream analysis approach Analysis methodology Dynamic analysis of processes Conclusions

IntroductionIntroduction

Process reengineering is concerned with the redesign of strategic, value adding processes, systems, policies, and organizational structures to optimize the processes of an organization

Hammer* estimated that 50¯70% of companies that attem

pt to reengineer their processes fail To increase the likelihood of a successful change, a comp

rehensive modeling methodology is required

*Hammer, M.S. and Champy, J.Reengineering the corporation: a manifesto for business revolution (1993)

To perform the change process successfully,– Be flexible to be easy to learn– Ask a question all aspects of processes and their activities, both

as they exist now, and later– Provide a mechanism to identify and evaluate the impact of the

process changes incorporated as well as an alternative vision for process being reengineered

Table.1 The differences between process improvements and process reengineering

To perform analysis and reengineering of processesTo perform analysis and reengineering of processes

Structured and unified approach is requiredStructured and unified approach is required

Framework based onFramework based on

IDEF methodologyIDEF methodology

Stream analysis approachStream analysis approach

Dynamic simulationDynamic simulation

Methodologies & ToolsMethodologies & Tools

Process modeling methodologies– CIM-OSA methodology (European and Beekman)– O-O Modeling Methodology ( Kim, Kim & Choi, 1993)– MOSYS software tool ( Mertins, Rabe & Stiegennnroth, 1993)– Petri Nets ( Peterson, 1981)– IDEF (US Air Force 1981)

Process modeling tools – ARIS (Germany)– FirstStep (Canada)– PrimeObjects (Italy)– TEMAS (Switzerland)

IDEF(ICAM DEFinition)IDEF(ICAM DEFinition)

Use

IDEF0 (IDEF Function Modeling) IDEF1 (IDEF Information Modeling) IDEF1X (IDEF Data Modeling) IDEF2 (IDEF Dynamics Modeling) IDEF3 (IDEF Process Modeling)

IDEF4 (IDEF Object-Oriented Design) IDEF5 (IDEF Ontology Description Capture)

IDEF methodologyIDEF methodology

Inputs (I) enter the box from the left, are transferred by the function, and exit the box to the right as an output (O)

Control (C) enters the top of the box and influences or determines the function performed

Replacing activity of the IDEF3 block in Fig. 1 with a function and entering a mechanism (M) interface from the bottom of box results in an IDEF0 block

Fig. 1 IDEF activity box and interface arrows

IDEF Example (1/3)IDEF Example (1/3)

Fig.2 IDEF0 Function Box & Interface Arrows

Fig.3 IDEF3 Process Description Diagram


Fig.4 IDEF1 Diagram


Fig.5 Organization of the IDEF4 Model

Stream diagnostic chartStream diagnostic chart

In order to improve a process, it is important to identify the core problems causing its ineffective functioning

Road map is required– To guide the diagnosis of process deficiencies, to track down the

core problem issues, and to set the stage for effective changes of the process

Stream analysis* approach– Be based on the systems theory and it assumes that a process is o

pen, consisting of subsystems, each including a stream of variables, with many of these variables connected either causally or merely relationally within the same stream or across streams

*Porras, J.I. Stream analysis: a powerful way to diagnose and manage organizational change (1990)

Fig.6 Stream diagnostic chart

The stream analysis approach is used for analysis, diagnosis, and management of process changes represented with an IDEF3 model

To evaluate the impact of changes considered, support the process analysis, and to model performance of the proposed process, a dynamic simulation is used

Fig.7 Stream analysis and simulation applied to process models

Analysis methodologyAnalysis methodology

1. System diagnosis

2. Planning intervention1. Forming a change management team

2. Collecting data

3. Categorizing problems

4. Identifying interconnections

5. Analyzing the problem chart

6. Formulating an action plan

Illustrative exampleIllustrative example

Consider the IDEF3 representation of the research and development (R&D) process in a manufacturing company (see Fig. 8)

Assume that the team responsible for management of large scale R&D projects intends to redesign the project management process to minimize the time overruns

Fig.8 IDEF3 model of an R&D project

Fig.9 Stream diagnostic chart corresponding to the IDEF3 model in fig.8

Fig.10 Stream diagnostic chart to the IDEF3 model in fig.8

Fig.11 Modified IDEF3 process model corresponding to the stream planning chart in Fig.10

Fig.12 The system flow diagram of the IDEF3 process model in Fig.11 represented with the notation of system dynamics

Dynamic analysis of processesDynamic analysis of processes

DYNAMO modeling language* The model represents a set of linked differential

equations describing a closed loop feedback system Assumption

– Project is divided into 45,000 tasks and the required completion date of the project is 30 months

– Average person productivity is 30 tasks/person/month – Management wants to determine the optimal level of the initial

personnel thus resulting in less hiring/firing and allowing completion of the project on time

*Richardson, G.P. and Pugh, A.L. Introduction to system dynamics modeling with DYNAMO (1991)

Fig.13 Simulation output for the initial level of PERSONNEL=10

ConclusionConclusion

Comprehensive modeling tool Allow easy integration of IDEF3 methodology with the d

ynamic simulation approach The significance of the results presented in the paper aris

es from the fact that many companies*

*Lockheed-Martin, General Motors, Rockwell International, are using IDEF for representing their processes

Supply chain reengineering using a core process Supply chain reengineering using a core process analysis matrix and object-oriented simulation analysis matrix and object-oriented simulation

S. Wesley Changchien, and Hsiao-Yun Shen

Department of Information Management, Chaoyang University of Technology, 168 GiFeng E. Road, WuFeng, Taichung County, Taiwan, ROC

Information and Management 39(2002) 345-358

Revised 13 April 2000; accepted 16 March 2001

ContentsContents

Introduction SCM & BPR Inter-organizational relations Approach A case study of a motorcycle manufacturer Discussions and conclusions

IntroductionIntroduction

Today, companies face severe competitive challenges The agility of a company's response to customer demand

Supply chain management (SCM)

But, Companies to rethink the way they perform operations

Business process reengineering (BPR)

SCM & BPRSCM & BPR

Both need fundamental rethinking and consideration of strategies and are process-based

Also they generally reduce the duration of the processes Information technology is used as a catalyst for both

Inter-organizational relations(1/2)Inter-organizational relations(1/2)

Virtual organization– One of the advantages of forming a virtual organization is its

flexibility– Creation or assembly of new production resources very quickly– Creation or assembly of new productive resources frequently and

concurrently– Access to a wider range of world-class competencies– Information system + Computer Network

Inter-organizational relations(2/2)Inter-organizational relations(2/2)

Strategic alliances ( R.M. Kanter* , eight I's criteria)

– Individual excellence– Important– Interdependence– Investment– Information– Integration– Institutionalization– and Integrity

* R.M. Kanter, Collaborative advantage. Harvard Business Review 72 4 (1994)

Approach - BPR frameworkApproach - BPR framework

Fig.1 A proposed business process reengineering framework

7 steps in BPR framework7 steps in BPR framework

1. Creating vision

2. Identifying core processes to be redesigned -> CPAM*

3. Analyzing current core processes -> OOS

4. Designing for innovation -> IT structure process

5. Evaluating the new processes -> OOS

6. Selecting the best -> MCDM**

7. Transforming and implementing the resulting design

* CPAM(Core process analysis matrix)

** MCDM(Multi-criteria decision-making method)

The core process analysis matrix(CPAM)The core process analysis matrix(CPAM)

Fig. 2. The structure of core process analysis matrix (CPAM)

< WHATs >Strategic ViewFunction ViewLogistics ViewInformation - Management view

< WHATs >Strategic ViewFunction ViewLogistics ViewInformation - Management view

< HOWs >Customer relationshipCustomer serviceDemandOrder fulfillmentManufacturing flowProcurementDevelopment & commercialization

< HOWs >Customer relationshipCustomer serviceDemandOrder fulfillmentManufacturing flowProcurementDevelopment & commercialization

WHATs criteria and viewpoints affecting business vision

HOWs candidate business processes WHYs weighting factors on WHATs

1. The relative evaluation value

2. The adjusted criteria (WHATs) importance

WHATs versus HOWs

Target Mix– An index of importance for each business process can next be

calculated

1. The raw importance index

– where CI is criteria importance and CO is the correlation between business processes and perspectives

2. The importance index for business process

Table 1. An example of CPAM (by a group member) associated

with seven processes and four criteria views

*Strong 9 Medium 5 Weak 1

Object-oriented simulation frameworkObject-oriented simulation framework

A system consists of objects and processes in accordance with business rules– The system component perspective describes the static, structural

components of the system– The system workflow perspective represents the processes during

system execution– The system control perspective describes dynamic system state

changes

The UML notation is used for implementing the simulation modeling method

O-O Modeling MethodO-O Modeling Method

Step 1 - Initialize objects in the system Step 2 - Put objects into the object list ordered by their time attribute Step 3 - Get the most recent object from the object list Step 4 - Check its type Step 5 - Process the object and perform tasks according to its type Step 6 - Delete the processed object or add it into the object list, if

necessary Step 7 - If needed, create new objects and go to Step 2 Step 8 - Check the condition for termination. If not termination, go to

Step 3 Step 9 - Terminate

Case study of motorcycle manufacturerCase study of motorcycle manufacturer

Motorcycle manufacturer in Taiwan Companies face severe competitive challenges

– Customer demand– Cost Reduction, Quality improvement, Competitors…

Production management division is the main concern

This example focuses on Steps 2¯6 of the framework

Fig. 3 The components of a simulation system

Fig. 4 Process described with an activity diagram

Identify core processes (CPAM)Identify core processes (CPAM)

Group decision making method – Product Development– Procurement– Demand Management

Table 2. Averaged importance for each process

Analyze current core processesAnalyze current core processes

Collected data on one specific motorcycle model A decision making group is then formed of people from

the production and marketing divisions

Demand Management – Forecasting activity– Mean absolute difference (MAD) between market sales and

manufacturer forecasting is 209 units– MAD between manufacturing forecasting and sales to franchisee

is 156 units

Procurement - Procurement process

Design innovationDesign innovation

Forecasting activity– Abandoning the old multi-stage forecasting process– Moving average– Exponential Smoothing– Factors decomposition– Bayesian methods

Procurement process– The original monthly procurement policy was changed to bi-

weekly procurement– Quick response by adjusting purchasing orders or shortening the

cycle time of the joint meeting during the procurement process

Evaluate new processesEvaluate new processes

Fig. 5 MADs for current process and a number of forecasting methods

Fig. 6 Simulation data with exponential smoothing forecasting and real market demand (normal distribution) per month during 5 years

Innovation - the procurement processesInnovation - the procurement processes

Policies 1. Current procurement

2. Adjusting orders in the current period(delay/cancel)

3. Shortening the cycle time of production¯marketing joint meeting

and purchasing

Fig. 7 Cost impacts for current procurement process and two new policies at current safety stock level

Select a new processSelect a new process

The manufacturer next considered the implementation cost, the applicability of the process, and whether suppliers could accommodate the new process

An appropriate multi-criteria decision making method was required

Let A={A1,A2,...,An} be a set of alternatives and C={C1,C2,...,Cm} be a set of criteria characterizing the decision situation. Moreover, W={w1,w2,...,wm} is a set of weights that indicates the relative importance of criteria set C

The universe of discourse, U, is a finite set of fuzzy numbers within [0, 1] ; They are used to express an imprecise concept or level.

1. Universe of discourse domainLet

2. Membership functions for u

for k=2, 3, 4, 5, 6

Fig. 8 Membership function for universe of discourse*

*E. Triantaphyllou and C.T. Lin Development and evaluation of five fuzzy multi-attribute decision-making methods (1996)

Fig. 9 Membership functions of the two alternatives of the new procurement processes according to the fuzzy approach.

BPR cycle focusing on strategic allianceBPR cycle focusing on strategic alliance

New process that shortens the purchasing and production¯marketing

cycle time to 2 weeks

The order sharing policies for a virtual organization imply1. All orders are allocated to companies on the basis of equal capacity

utilization (policy 1)

2. All orders are allocated to companies on the basis of predefined percentages (policy 2)

3. Each order is first allocated to the company that originally received the order. If that company's capacity is inadequate, the excess portion is reallocated to a company that has the least current capacity utilization (policy 3)

4. If a company capacity is inadequate, the excess portion of the order is reallocated to a company that has the least current accumulated capacity utilization (policy 4)

Table 3. Comparisons of capacity utilization

Table 4. Comparisons of lost quantities

Discussions and conclusionsDiscussions and conclusions

BPR framework CPAM & OOS schema Systematic approach for industrial practice This is expected to reduce the high failure rate of BPR pr

ojects.

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