Organization Types: Hierarchical vs.

Flattened

 Hierarchical organizations of past years

 Today
 Process-oriented, Learning, Team-based, and Fast-cycle

organizational models
 Collaborative, Technology aided

 End-to-end cross functional, and often cross company

 Flat, flexible, focused on core competence

 Inside, empowered, inter-functional teams of knowledge

workers are reengineering and continually improving core
business processes.
 Think globally and act locally
 Functions

Sales orders and distribution

Materials, stores , inventory
Production
Testing
Quality
Dispatches
Warehousing
Accounting and Finance

3
 Functions contd…

Personnel
Administration
Marketing

4
What is a Process?

• A specific ordering of work activities across time and space,

with a beginning, an end, and clearly identified inputs and
outputs: a structure for action.
(Davenport, 1993)
• Has sequence, purpose/ desired outcome, interaction
What is a Business Process?

• Every service is supported by a set of business processes,

which provides approach and guidance to deliver the service
• Business System is a collection of processes that take one or
more inputs and create output that is of value to all stakeholders
• Business Process is a group of logically related tasks that use
the firm's resources to provide customer-oriented results in
support of the organization's objectives
• Business Process is a collection of activities that, taken together,
create value for customer e.g. new product for customer.
• Business processes move information and / or materials across
several units and functions, to accomplish a specific end result
Service: Providing a Passport to a Citizen

Process: all activities carried out by Citizen, Government & its agencies
- From: Receipt of a passport application form
- To: Delivery of Passport / Communication of Rejection
Sub-Process: The Passport process can be sub-divided into
- Passport Application Collection
- Document Verification
- Fees Collection
- Passport Processing
- Passport Delivery
Activity: various steps in the process, e.g.
- Receipt Issuance: Printing a receipt for the Fee collected
See the content of a word file and a gif file for difference between
Process-Sub Process-Activity-Task
Advantage of a Business Process

The inherent advantage of a business process is that its

performance can easily be measured against the attainment
of the goal
The New Product Development Process

Needs Market Component Product Product Process Equip- Prod-

Analysis Research Test Desing Test Design ment uction
Release
Desing Start

Marketing R&D/Engineering Manufacturing

 The Order Fulfillment Process

Process Commit- Config- Credit Collec-

Proposal Delivery Billing
ment uration Checking tions

Functions Sales Manufacturing Finance Logistics

The Journey: From Functional Silos to Process Centricity

Functional Process Process

Organization Orientation Organization

Sales Process

Sales & Marketing

Sales & Marketing

Administration
Administration

Development
Production
Development
Production

Reserch &
Reserch &

Customer Delivery Process

Product Development Process

Functions lead Core processes Core processes

business defined, lead the
activity functions still business activity
dominate
Function Vs. Process

Function Process
Focus on “What” Focus on “How”
Vertical Horizontal

Static Dynamic

Task-centered Customer-oriented

Individual/Specialist Team/Generalist

Parochial Holistic
 Silo (Functional) Perspective

• The silo perspective views the business as discrete functions

(accounting, sales, production, etc.). Figure shows a traditional org
chart which is how a functional business is organized.
• Each functional area determines its core competencies and focuses
on what it does best.
• Job descriptions are narrow and limited within heavy, multilevel,
hierarchical organization
Advantages:
• Allows optimization of expertise.
• Group like functions together for learning.
Disadvantages:
• Significant sub-optimization as departmental objectives dominate
thinking and action
• Tend to lose sight of overall organizational objectives.
 Problems With Current Work Organization
(Functional)

• Cross-functional, cross-departmental, cross-hierarchical

information sharing problems
• Too many non-value-adding steps (e.g. check, monitor,
control, authorize, reconcile, transfer)
• Too many wait stages
• Sequential instead of parallel tasks
• Complex procedures with many exceptions
•
• Too much rework (due to errors)
• Not properly supported by IT:
-- timely, accurate information
-- input once, available to all
-- processing capability where you need it.
Process Perspective

• Keeps the big picture in view.

• Focuses on work being done to create optimal value for the
business.

Advantages:
• Helps avoid or reduce duplicate work.
• Facilitate cross-functional communication.
• Optimize business processes.
• Figure shows a typical procurement process.
• Figure shows the cross-functional view of processes as they
cross departments (functions).
Figure – Sample business process
Figure- Cross-functional nature of business processes
Process Perspective (continued)

• When managers gain the process perspective they begin to lead

their organizations to change.
• Question status quo.
• Don’t accept “because we have always done it that way” as an
answer to why business is done in a particular way.
• Allows managers to analyze business’s processes in light of
larger goals.
How can Companies Identify their Business Processes.
Examples

• Manufacturing: As the procurement-to-shipment

process

• Product development as the concept-to-prototype

process

• Sales as the prospect-to-order process

• Order fulfillment as the the order-to-payment

process

• Service as the inquiry-to-resolution process

Process Integration with Enterprise Systems
 Business Process

Run MRP

Sales Order
Check
Entry
Availability

Sales Order
Process Pick
Receipt of Materials
Payment

Post Goods
Invoice Issue
Customer
 Process Integration
Purchase
Requisition
Purchase
Order
Run MRP

Check Goods
Sales Order Procurement
Availability Receipt
Entry Process

Sales Order Invoice

Process Receipt
Pick
Materials
Receipt of Payment
Payment to Vendor

Post Goods
Invoice Issue
Customer
 Process Integration Purchase
Order

Purchase
Requisition
Convert Production Goods
Proposal Receipt
Schedule Procurement
and Release Process
Run MPS
w/MRP Invoice
Completion Receipt
Production
Check Confirmation
Availability Process Goods
Sales Order Issue Payment
Entry to Vendor
Quality
Sales Order Inspection
Pick Goods
Process Receipt
Materials
Order
Receipt of Settlement
Payment
Post Goods
Issue
Invoice
Customer