Business Process Management in a Manufacturing EnterpriseAn Overview

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About the Author

Michael McClellan has over 30 years of experience serving and managing manufacturing enterprises. He has held a number of positions in general management, marketingand engineering, including President and CEO for a multi-division equipment systems supplier.In 1984 he and a group of associates founded Integrated Production Systems, a company thatpioneered the use of computer systems to manage and track production events on the plant floor. His first book, Applying Manufacturing Execution Systems , defines manufacturing execution systems and explains the reasoning and history behind them. He is a frequent speaker at companies and manufacturing conferences, has presented a number of papers on plant information systems, and holds one patent. He has recently completed a new book, CollaborativeManufacturing: Using Real-time Information to Support the Supply Chain.

He currently lives in Washington state and is President of Collaboration Synergies Inc. , anadvisory company providing consulting services in the areas of business process management, collaborative manufacturing system development and implementation, plant floor information systems and manufacturing execution systems.

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Business Process Management in a Manufacturing Environment – An Overview

Business Process Management (BPM) is a rapidly growing technology application idea with gre atp otential for operational improvement and cost savings within manufacturing enterprises and theirvalue chains. If you are like most companies the new Enterprise Re s o u rce Planning (ERP) system isfirmly in place and the Customer Re q u i rements Management (CRM), Product Life c ycle Management(PLM), and supply chain applications are on line. But, even with all the newe st technology firmly inplace, there are some operational capabilities missing.

1 . Major info r m ation system applications are still merely islands of info r m ation leaving o bvious gaps that prevent full info r m ation exchange between participants.

2 . The promise of collaboration between entities (departments and/or companies) seems impossible due to wide systems disparity and the high cost of pro g ramming re q u i red to make the desired changes.

3. Functional info r m ation inte ro p e ra b i l i ty as seen from the managerial perspective is still frust ratingly lacking. Departments are still inte racting by “throwing it over the wa l l ” .

Solving these problems has long been the objective of many people but real help may be on the way ifwe start to look at operations in a somew h at diffe rent view and examine our pro c e s s e s .

W h at is a pro c e s s? A process is a series of steps or tasks aimed at accomplishing a defined businesso b j e c t i ve. Th e re are manufacturing processes, accounting processes, credit approval processes, mate r i a lreceiving processes, inspection processes, product design processes, and so on. A business can have hun-d reds of processes and most processes can be bro ken into smaller and lowe r- l evel processes and pro c e s scomponents that include people and/or info r m ation system sources.

Id e a l l y, processes within a company are re l ated and all aimed, directly or indire c t l y, at serving custo m e r sm o st effe c t i ve l y. In many industries it is not the product that diffe re n t i ates one company from anot h e rbut the processes within the companies used to meet customer re q u i rements. It is this process centricv i ew that successful companies are using to meet modern compet i t i ve achievement objectives.

Processes have generally developed around commonly accepted business practices. In many companiesthese practices and consequent processes have never been questioned. To d ay, exte n s i ve operat i o n a li m p rovements can be gained through simple observation of how ex i sting processes work and seekingi m p rovement alte r n at i ves. Exa m i n ation of how work gets done has come about due to modern businesssystems such as ERP that are based on and re q u i re consistent business processes. Opt i m i st i c a l l y, whatthese systems have delive red are, in fact, best practices. Unfo r t u n ate l y, we all know even the best systems are silos of info r m ation with obvious voids that re q u i re people to do mundane tasks to make the business perform.

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Business Process Management (BPM) is aimed at filling those voids between your ex i sting pro c e s s e s .A few examples of BPM will include:

■ Adding functionality to ex i sting business systems such as CRM, ERP, manufacturing execution systems (MES), wa rehouse management systems (WMS), etc

■ It is pro bably less ex p e n s i ve and quicker to extend an older ex i sting a p p l i c ation using BPM than to install new sof twa re or re p ro g ram the ex i sting sof twa re .

■ Design and add new processes as re q u i rements change. ■ Link business systems to aggre g ate data and pro c e s s e s .

■ Build new processes between acquired company systems to provide a full v i ew of inve n tory info r m at i o n .

■ Connect the MES systems within a value chain to support where - to-build st rategies with real-time info r m at i o n .

■ Connect disparate sources of business intelligence within the company or a c ross the value chain to support Sarba n e s - O x l ey compliance.

■ Link a number of systems to provide and support new pro c e s s e s .■ Build a process to provide demand driven schedule data across a

value chain.■ Connect the manufacturing execution systems to the planning and

scheduling syste m .■ D evelop a process that allows certain CRM users to view and exchange

d ata with the wa rehouse management and the manufacturing scheduling syste m s .

■ Design, build, simulate, and finalize new stand alone business processes using data f rom any sourc e .

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In most manufacturing companies these ideas would re q u i re a significant inve stment in time and money and, most like l y, will not fully sat i sfy the re q u i rements when the project is finished.Typical implementation usually fo l l ows these steps.

S tep 1. The functional manager or the operations committee is re q u i red to define the desired new process outlining in detail what is to be changed. This usually re q u i res an "as is" view along with a “to be” vision.

S tep 2. When the operations committee has completed their homework the project is turned over to the IT department for development and implementation. IT is n ot typically sitting on their hands with nothing to do. Th ey have an ex i sting backlog of work that re q u i res the new project to be examined for its worth and put into the queue based on some eva l u ation process.

S tep 3. The IT analyst begins by delving into the project re q u i rements and examining the ability to sat i sfy the project needs using as much ex i sting info r m ation tools and data as possible. A budget has been set and it is the analyst ’s job to m e et the re q u i rements within the cost const raints. Based on the analyst ’s c o n c e pt, a detailed plan is built identifying all the systems work necessary to do the job. A fundamental part of this is the graphical outline of the process i n d i c ating process steps such as events, inputs, decision points, etc.

S tep 4. The pro g rammers swing into action developing new code to fit the applicat i o nbased on what they inte r p ret from the analyst ’s pre s e n t ation. Code is written and te sted, and equipment is purc h a s e d .

S tep 5. The finished product is pre s e n ted to operations. Necessary changes are made to debug the system, respond to new re q u i rements, and address re q u i rements t h at could not be met.

S tep 6. The operations committee finalizes and accepts the end product in spite of changes that should be made based on items not seen prior to coding and i m p l e m e n t ation. Business conditions have changed and some revisions to fully s at i sfy the users are re q u e sted. IT is busy so the re q u e sted changes must be again put into the queue awaiting action. Ty p i c a l l y, when there is available staff to make the changes, the original person or group is on another project and the learning curve re starts from some point just above ze ro.

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In some companies this development process goes a long way to build what has been called the gre atIT divide – that no-mans-land between IT departments and the operational departments that rely on their expertise. A significant promise of BPM is to radically alter this very difficult re l ationship by a) va stly shortening the process; b) putting the process more or fully in the hands of operations; and c) building and implementing processes in a way that they can be easily and quickly designed, d eveloped, simulated, revised, implemented, and revised again and again as necessary to meet changing business needs.

BPM is a far advancement from hard pro g rammed wo r k f l ow systems but you are still NOT going toturn process development over to the janito r. This is very serious work that re q u i res understanding thec u r rent st ate of ex i sting processes within the company and being able to visualize the new. A key p e r s p e c t i ve here is to see BPM as an enabler of business unit processes, not as a te c h n o l o g y. Wherea p p l i c ations such as CRM, manufacturing execution systems or wa rehouse management systems arean assortment of technology functions, BPM is a tool that allows users to design, build, and implementfunctions and processes that suit their needs. As Micro s oft Wo rd is a tool to cre ate and manage documents, BPM is a tool to cre ate and manage processes.

With BPM process development is speeded up by system modules used to model the new pro c e s s ,i d e n t i fy the operations re q u i red, identify and locate the data sources and convert this to an operat i n gp rocess. The process can be simulated to identify any operational problems or design faults. Th ep rocess can be revised with each change identified and tra c ked, thus building a process life c ycle h i sto r y. Other versions of the same process could be used to accomplish other tasks. The beauty ofthis approach is the ease of process development and implementation. The ability to simulate thep rocess and observe actual performance brings gre at real-time management control. Process changesdo not re q u i re coding but are accomplished through applying icons from a palet te. In fact it is like l yt h at a large number of processes will be developed and applied with copies held in libraries for late ruse in other re q u i rements. Another approach is to use slightly varied instances of a process such aso rder entry for a retail item, each designed to fit a specific customer or group of customers such asWalMart, Sears, Safeway, Albertsons, and Ta rg et. It is likely that each company would have its specificp rocess or processes.

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Earlier the steps to develop or make changes to business processes the old fashioned way we re show n .The time and effort to make the same changes using BPM is substantially easier and fa ste r.

S tep 1. S tep one still re q u i res identifying what the revised process is to do, the necessary process steps and logic, data sources, and necessary human i n te r vention. BPM brings nothing new here until we have a library of p rocesses to rev i ew, modify, and re u s e .

S tep 2. Model the process using graphical icons re p resenting the steps and flows within the process and between the process and all re s o u rces. Flow is modeled by using icons re p resenting diffe rent activity types. The model is c re ated graphically and saved in a process modeling language that is also used to generate the runtime components. Modeling the process does not re q u i re pro g ramming or significant IT skills. My pre fe rence is that the modeling should be done by operations people that best understand the c o n text behind how the process is to function.

S tep 3. S i m u l ate the process in operation and make changes using the graphic icons. At this point the logic of the process has been fully developed with no code d evelopment. Id e n t i fying and connecting to the process re s o u rces is likely to re q u i re IT presence depending on the breadth of the new process but most of the sof twa re to make the connections should ex i st in the library of the BPM system supplier. Simulation allows viewing the process under operating conditions and provides an env i ronment where changes can be made prior to actual use.

S tep 4. Run the new process. The BPM system comes with modules that convert the model to an operating process and run the process. The process can be managed, viewed, tra c ked, changed and measured. Th e re can be any number of instances of the process and the full history of the process life c ycle is available. Instead of specific sof twa re coding the process now is similar to a ny document, available for reuse or revision as necessary.

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A modern BPM system is typically made up of these modules.

Process modeling The new business process is modeled and developed through the use of graphical tools that define steps and events in the process. By using 30 to 40 d rag and drop modeling icons available from a palet te the process can be outlined and rev i ewed.

Process connecto r s BPM packages come with a library of sof twa re components t h at form the links with the new process and the various connect points of the process such as ERP systems or MES systems. This could include ex i sting processes and p ro c e d u res from ex i sting process sources. The connectors are frequently based on web access to various systems but connecters can be provided to legacy systems without web access.

Process manager One of the more significant impacts of a BPM system is the ability to manage processes and make changes easily and quickly. It is possible to simulate a p rocess using real data prior to actual use to identify potential problems and make changes. Measurement of the performance of a process to see fre q u e n c y, cycle time, and process histories is common. Process life c ycle management provides the ability to t race the full development and history of the process much like rev i ewing the revision l evels on a product design. It is possible to use instances of the process with va r i ations to suit specific business needs. One example is a shipping process that is tailored to fit individual customers.

Process system serve r This is the core system component that provides the t ransactional execution of the processes.

Th e re are many (over 100 at last count) system vendors in this area. Some have grown from ideasbased on wo r k f l ow. Others have built their product on very new modeling technologies and st a n d a rd s .IBM, Micro s oft, and SAP are significant players in this market but smaller companies such as Fu e g oand Intalio may have bet ter answers depending on your specific re q u i rements. Like other major system inve stments, choosing the vendor is important as this is likely to be a long term arrangement.

Begin by assessing where you are and how the technology might affect your company over the nextfew years. Examine your ability to make changes to processes or even understand how the ex i st i n gp rocesses work and/or we re developed. Think in terms of cross functional re q u i rements that beginwith the customer and conclude as a sat i sfying financial return. If the vision is adequately holistic andseen from the highest level, lower level processes and their intersection with departments and info r-m ation sources will be somew h at self-evident.

This is a rapidly growing area of manufacturing enterprise management pro g ress with major analystfirms est i m ating growth as high as 30% or more per ye a r. After some initial assessment it would besurprising if you could not see major opportunities for improvement by using this tool. Initial demon-st ration and pro of of concept can be very inex p e n s i ve and frequently done in a mat ter of days. Rev i ewother areas of the Collaboration Synergies Inc we b s i te to go over our manufacturing info r m ation technology system st rategies, needs assessments, and implementation methods. You will also findi n fo r m ation on application suitability assessment, exe c u t i ve ove r v i ew pre s e n t ations, and user leve lt raining. Call if you have any quest i o n s .

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1. Functional management defines the new process outlining in detail what is to be changed developing the “as is” and “to be” visions.

2 . The process is modeled by functional management using g raphic icons to identify the “ to be” process ste p s .

3. The modeled process is s i m u l ated to te st the a s s u m ptions and examine p e r formance.

4. Changes are made to suit and the process is conve r ted to a run env i ro n m e n t .

5. The process is viewed, tra c ked, m e a s u red, and changed, using the BPM system. Changes a re easily made to fit new business issues and modified versions of the process are used elsew h e re.

functionalmanagement IT analysis programmers operations

finishedbusinessprocess

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Time to beneficial use – days to weeks

1. Functional management defines the new process, outlining in detail what is to be changed. Provide an “as is” v i ew and a “to be” vision.

4. The analyst re l ays his re q u i rements to pro g rammers. Coding of the process and i n fo r m ation sources (other systems) gets developed and te sted. Equipment and available sof twa re is purchased.

5. The finished product is p re s e n ted to operations. Some changes are made. Time is a major const ra i n t .

6 . O p e rations finalizes and a c c e pts the delive rable in s p i te of revisions necessary due to business changes and conditions not seen prior to coding. Te m p o rary wo r ka rounds a re put in place.

7. IT puts the project back in their schedule to make the revisions until there is a c c e ptance.

2 . Turn project over to IT for i m p l e m e n t ation. IT provides n ew input, accepts the project places the project into the c u r rent queue.

3. IT begins analysis. Detail work includes est i m ating costs, p rocess event and data definitions, schedule, equipment, p ro g ramming needs, etc .

Fewer people involvedSubstantially less timeSignificantly less cost

Collaboration Synergies Inc.P.O.Box 871555

Vancouver, WA 98687

360.833.8400

www.cosyninc.com