Chapter 1: Introduction to Process Management Process Management: Creating Value Along the Supply Chain (1st edition) Wisner and Stanley

Chapter Outline Introduction Processes and Process Management Defined Process Management and Supply Chain Management The Eight Supply Chain Processes Inventory and Process Management Lean Thinking and Process Management Summary

Chapter Outline (cont.) Quality and Process Management Business Process Management—Formalizing Process Improvement Measuring Process Performance Trends in Process Management Summary

Learning Objectives After completing this chapter, you should be able to: Define and discuss process management, using examples. Understand the business value of process management. Describe the eight processes linking organizations along the supply chain. Discuss the importance of process management in services.

Learning Objectives (cont.) After completing this chapter, you should be able to: Describe why quality management and JIT are important process management activities. Describe how processes are modeled and improved, and how firms measure process performance. Discuss the use of information technologies to integrate supply chain processes, and discuss other trends in process management.

Introduction Processes Process management What is a process? Can you provide examples? Process management Importance of process management, for both manufacturing and services Impact of effective process management on costs, profits and productivity How world-class businesses are managing their processes

Processes and Process Management Defined Process improvement Business value of process management / improvement Importance of process improvement: continuous process evaluation. Business process management (BPM): design, analysis, and improvement of business processes.

Generic Process Elements Inputs - labor - materials - training - equipment - time - capital - facilities - information Transformation Sequenced steps of: - machine operations physical/mental activities Outputs Internal/External: - physical goods - services - decisions and information Process Management Internal & external suppliers Internal & external customers Figure 1.1

Process Management and Supply Chain Management Shift in focus: internal silos  external sharing and coordination of key processes Traditional organization structures drive functional thinking-managers begin to see the world from a narrow, functional perspective. Process thinking –aligning decisions with corporate strategy and coordinating activities across functions. Business process integration Vertical integration  outsourcing Business process re-engineering (BPR) Supply chain management Collaborative process management

Eight Key Supply Chain Processes Identified by the Global Supply Chain Forum These processes link organizations across the supply chain Each process includes a set of functional activities, which should be integrated with other applicable functions Each process should be integrated with other applicable processes

Eight Key Supply Chain Processes (cont.) Customer Relationship Management: creating and maintaining successful relationships with customers. Customer Service Management: designing, implementing and improving customer service activities. A perfect order Seven R’s rule: having the right product, in the right quantity, in the right condition, at the right place, at the right time, for the right customer, at the right cost. Demand Management: balancing customer demand with the firm’s capacity. Collaborative planning, forecasting, and replenishment (CPFR): a tool for reducing forecast error.

Eight Key Supply Chain Processes (cont.) Order Fulfillment: delivery of products and services to customers. Third-party transportation services Flow Management: making the product or service and managing inventories, customers, and information.

Eight Key Supply Chain Processes (cont.) Supplier Relationship Management: selecting the right supply partners and managing relationships. Product Development and Commercialization: designing and producing new products that customers want Concurrent engineering Returns Management: managing product returns effectively. Reverse supply chains A source for customer satisfaction and product improvement ideas

Inventory and Process Management Inventory management : critical activity of supply chain. Having too much vs. too little inventory Bullwhip effect Independent demand Dependent demand

Lean Thinking and Process Management Just-In-Time (JIT) Pull system An important process management activity

Quality and Process Management Total Quality Management (TQM) TQM processes An important process management activity

Business Process Management – Formalizing Process Improvement Structured approach to process assessment and organizational improvement. BPM tools: benchmarking, reengineering, six sigma Business process re-engineering (BPR) Difference between BPM and BPR

Measuring Business Performance Continuously monitoring process performance is important. Important points to consider when designing performance measurements: Link measures to the firms’ vision and goals Measure what customer care about Should monitor the quality, cost and timing of outputs along with the volume Effectiveness trumps efficiency More measurements are better