Centre for Strategic Manufacturing Assessing the impact of e-business in business processes : a simulation approach Pável Albores Peter D. Ball Jillian MacBryde

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Agenda l Research Need l Project Aims/Plan l Project Elements l Project Framework l Pilot Case Study l Conclusions and Future Work

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 E-business involvement by sector Source: Farish 2001,Engineering

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Drivers and issues of e-business Key business drivers for e-business Key issues in developing an e-business strategy Source: PMP Conspectus Dec 2001

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Research Need l Reduce uncertainty of e-business implementation in manufacturing companies l Need to understand the dynamics of processes and their interaction l Evaluate the real benefit of e- business l Speed-up adoption of e-business

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Project aims l To investigate the suitability of simulation as a technique to analyse the effects that e-business has on the business processes of manufacturing companies. l To develop e-business templates of different e-business scenarios in the manufacturing sector. l To develop the methodology for the use of these tools and techniques.

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Project plan l First Year è Literature Review è Gap analysis è Software analysis è Pilot Study l Second Year è Theoretical Templates development è Validation of the templates (Case Studies) è Analysis of the data obtained from the Case Studies l Third Year è Review of Templates è Formalisation of implementation methodology è Thesis writing

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Contributions l Use of simulation in a new context l e-process templates l Methods and procedures for integration of tools and techniques

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Project Elements l E-business è Demand is erratic and difficult to predict è Last-second orders and expectation of overnight fulfilment è Internet as a complement to, not a cannibal of, traditional ways of competing l Business Processes Modelling è Well established methodology è CIMOSA BP model: Operate, Manage and Support è Simulation work in BPR

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Project Elements l Simulation Mimics the behaviour of a real system, generally with a computer and appropriate software Decision support tool (What-if Scenarios) Applications: Design, optimisation, training, risk reduction Allows the study of the system under specific conditions. Has the ability to model the behaviour of a system as time progress.

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 E-business Scenarios Traditional Business Processes Simulation Visualisation of dynamic interactions Effect on internal resources - People, Machines Effect on external resources - Suppliers, subcontractors, distributors Planning and control implications Confident adoption of e-business strategies B2B B2C DTO MTO MTS e- business process templates Business Performance Measures Strategic Priorities Strategic Options e-FACTORY FRAMEWORK Methods and Procedures for integration of tools and techniques

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Pilot Case Study l Highland Spring. l Leading UK water bottling company l Approx. 250 employees l ERP system in place l Order processing è Telephone è Fax è EDI è Process of interest: Purchase order for haulier

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Process Map l Comparison of current process l Vs e-enabled process

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Conclusions l A methodology to adopt e-business is required l Strategic and operational considerations should be addressed by the models. l Simulation has been applied to BPR efforts, reducing the uncertainty of implementation. Can it be applied to e- business? l Eureka

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Future Work l Theoretical templates development l Case Studies l Data analysis l Validation/Review of templates l Simulation workshop / Tools comparison

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Questions? Pavel Albores

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Research Approach l Research Methodology è Case Study è Action Research l Modelling methodology è Simulation (General purpose tool) è Interviews è ERP system data

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 E-process templates

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 POH Experiment Results l Average of 10 iterations of 1 month, considering 8 hours shifts. l Cost base £30/hour salary

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Project Scope OPERATE PROCESSES Develop Product Generate Order Fulfil Order Support Product Electronic Commerce impact Integrated approach needed: E-business + Simulation Current Simulation research

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Evaluated Simulation Tools l General Purpose è Arena è Witness è Simul8 è Extend è ServiceModel è Ithink l Business process è Work Flow Modeler è Simprocess è Process Charter è Igrafx è Processmodel è Showflow

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Performance Measurement l...is the process of quantifying purposeful action where the process of quantification is measurement and purposeful action equates with performance. Neely et al (1996) l Quantification and comparison simulation model. l Finding the "purposeful actions" business process management.

Centre for Strategic Manufacturing © Pavel Albores 2002 RPD 24 January 2002 Process Map