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Business Process Blueprinting

by Mike Doherty Jeff Harrop

231 Green Vista Drive Cambridge, Ontario, CANADA N1T 1Z1 Toll free: 877.877.9769 Phone: 519.623.4797 Fax: 519.623.0316 Web: www.demandclarity.com Email: info@demandclarity.com
Demand Clarity Inc. 2005

Business Process Blueprinting


Most people wouldnt dare take on a building project without first having a set of plans drawn up. The same logic should apply when changing business processes, but its often tempting to dive right into installing software or changing procedures without really knowing what the impact will be on the organization as a whole. If you cant make something work on paper, then youll have a tough time trying to implement it. This paper will teach you how to blueprint your business processes to give your implementation the best chance of success. Building a House Pouring the foundation, laying bricks, framing, insulating, running wires and conduits, plumbing, wallboard, flooring, paint, fixtures the list goes on. Lots of different materials and a myriad of people working on different aspects of a house construction project at different times. An endeavour like this requires a plan. Thats why your first step is to work with a designer or architect to create a blueprint. Youll start by getting your high level requirements jotted down. For example, you want a stone and stucco exterior, 3 bedrooms and 2 baths, a sunroom that faces south, a large kitchen, etc. Then the architect will draw a rough sketch that includes as many of your desired elements as possible. With something more concrete, you suggest changes to the design that better reflect what youre looking for. Based on this discussion, the architect will erase and redraw lines to better suit your needs. This process may repeat again, but will become more refined at each step. When you finally come to an agreement on the sketch, you can start filling in all the details and drawing detailed blueprints. The blueprint will be to scale and will include specific locations for walls, windows, doorways, electrical outlets and plumbing that are based on the agreed-to sketch. Another round of discussion and refinement will occur until agreement is reached on the details. You now have a final blueprint that is a paper representation of what your house will be. You can use this blueprint to: Buy property with the correct dimensions and features Get a building permit Solicit bids from contractors Determine work schedules and material requirements Make interior design decisions While it may be a significant investment of up-front time and effort, its well worth it to have everything worked out on paper before you start pouring a foundation or buying wallboard. After all, if you cant make it work on paper, how can you possibly build it?
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Business Process Blueprinting

Its certainly much easier and more cost effective to erase and redraw lines than it is to demolish a partially built house and start all over again! Building a Business Process Building a house is a well defined, step-by-step process, with the blueprint as your guide for executing it. The blueprint tells you what people and materials are needed (inputs) and the sequence of the work (process) in order to produce a house (output).

Inputs

Process

Output

Fig. 1: The process of building a house

A business is nothing more than a series of processes, executed in sequence, that deliver a beneficial output to its customers. The outputs of business processes can sometimes be less concrete than a house a demand forecast, an advertising campaign or a budget, for example but they are still created using inputs and a series of transformation steps. And just like construction projects, new business processes should be thoroughly worked out on paper before you do anything else (like install software or modify existing systems). As with building a house, not spending enough time on the design stage will make the implementation much longer and costlier. So how do you go about designing a business process on paper? Its actually quite similar to creating blueprints for a house: 1. Start out by describing the high level activities in your business. 2. Once a high level design is agreed upon, drill down to add details that are consistent with the design. 3. Continue drilling down to the specific activities and tasks that people in the organization will perform, to ensure that day-in, day-out activities are congruent with the high level design. At any stage there may be several iterations before agreement

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Business Process Blueprinting


When youre done, youll have a paper representation (or blueprint) of what your business will be, which you can then use to: Make changes to existing policies and procedures Select new software and/or make changes to existing systems Develop education and training materials Design jobs and compensation schemes that support the process Develop measurements and key performance indicators (KPIs) Business Process Blueprinting To do a good job of business process blueprinting, we recommend that it be done among a small team of people with diverse backgrounds and roles within the organization. This wont make the job particularly easy, but expediency is not the goal you want to implement processes that have been well thought out from different perspectives. While business process blueprinting can be used to document current business processes, a word of caution is in order. If you get too wrapped up in documenting the current state in a lot of detail, it can become very frustrating. Imagine what it would be like if someone built a house without detailed plans and you were given the job of producing detailed blueprints after the fact! We recommend a clean slate approach that allows people to explore how things should work with a clear mind. As for documenting the current state, we suggest that you only do so at a high level, to point out redundancies that are addressed by the future state design and to help management and others to understand the impacts of moving to the future state. Business Process Blueprinting Guidelines Before we get into the mechanics of business process blueprinting, we need to establish some guidelines that will help to focus the activity and keep it on track: Always start with the ultimate consumer of your business activity and work all the way back. Think primarily in terms of what is being done and why. Put less emphasis on how the activity is performed and who performs it. Keep the company specific jargon and acronyms to an absolute minimum. Someone who has never worked for your company before should be able to pick up the blueprint and understand it. Express sub-processes as boxes and inputs/outputs as arrows. Make sure process boxes are labelled using a verb as the first word. Input/output arrows should be nouns. Any process or sub-process may have multiple inputs, but should only have one output. This makes sense every time you follow a recipe for chocolate cake, you should end up with a chocolate cake as output.
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Business Process Blueprinting

Starting with these initial guidelines (others will be introduced later), well walk through a sample business process blueprinting exercise for fulfilling consumer demand in a typical retail business. Developing a Level 1 Blueprint The process box depicted in Fig. 2 below represents the most important but most often overlooked process in the blueprinting exercise. It seems obvious, but if the consumer doesnt execute this process, then there is no retail business!

Fig. 2: The consumer process in the retail supply chain

The input received by the consumer is product displayed on the store shelf. The action they perform on the input is to Acquire Product and the output of this process is the point of sale information that is recorded when the purchase is made. Now we can start tracing back from the consumer. Where did the output Product on Store Shelf come from? What process created it? Think about the activities that occur just prior to when consumers take the product off the shelf. The retail store would need to have received the product and placed it on the shelf:
Product on Store Shelf Point of Sale Information

Acquire Product

Receive and Present Product

Fig. 3: The process that gets product onto the store shelf

The output of the process Receive and Present Product is the input of the process Acquire Product. By continuing backwards in this manner, we may end up with a Level 1 process map that looks like this:

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Level 1: Fulfill Consumer Demand

Consumer Processes

Product on Store Shelf

1 Acquire Product

Point of Sale Information

Retail Store Processes

13 Receive and Present Product

5 Determine Store Requirements

Consumer Demand Forecast 4 Forecast Consumer Demand

Assortment Changes

Selling & Administrative Processes

Store Replenishment Plan Product Delivered To Store

Store Replenishment Plan

Event Information

3 Plan Promotions and Events

2 Manage Assortment

Distribution Processes

12 Execute Physical Operations

Operational Schedules

7 Plan Physical Operations

DC Replenishment Plan

6 Determine Distribution Requirements DC Replenishment Plan

Product Available For Delivery

Manufacturing Processes

11 Prepare Shipment

Finished Goods

10 Manufacture Product

Production Plan

8 Determine Manufacturing Requirements Production Plan

Raw Materials

9 Acquire Raw Materials

INFORMATION FLOW PRODUCT FLOW

Fig. 4: Level 1 business process blueprint for the Fulfill Consumer Demand process

Youll notice that a few elements have been added to make the blueprint easier to understand: Process boxes have been numbered. This will make it easier to follow drill downs. Coloured arrows have been used to differentiate between the flow of information and the flow of product. On the left hand side, a functional overlay has been added to categorize the sub-processes you can see that some of the sub-processes (2, 3 and 4) span across functions Also, notice that the process flow is intuitive. If, in the course of doing this exercise yourself, you find that you have an unmanageable number of boxes, or that flow lines cross over each other, then you may have too much detail on the page or your process may have redundancy. It may be necessary to combine a few activities into one box and push the details down a level. Once the Level 1 process blueprint has been agreed upon by everyone involved, you would then and only then drill down to Level 2. You may choose to do a Level 2 drill-down on every box or only on a select few processes that youre considering changing.
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Drilling Down With the Level 1 blueprint finalized, we can begin to explode each of the boxes into its own blueprint. Take, for example, the Forecast Consumer Demand subprocess from the Level 1 blueprint. From Fig. 5 below, you can see that there are three sub-processes that provide input (green) and once sub-process that receives its output (blue):
Level 1: Fulfill Consumer Demand

Consumer Processes

Product on Store Shelf

1 Acquire Product

Point of Sale Information

Retail Store Processes

13 Receive and Present Product

5 Determine Store Requirements

Consumer Demand Forecast 4 Forecast Consumer Demand

Assortment Changes

Selling & Administrative Processes

Store Replenishment Plan Product Delivered To Store

Store Replenishment Plan

Event Information

3 Plan Promotions and Events

2 Manage Assortment

Distribution Processes

12 Execute Physical Operations

Operational Schedules

7 Plan Physical Operations

DC Replenishment Plan

6 Determine Distribution Requirements DC Replenishment Plan

Product Available For Delivery

Manufacturing Processes

11 Prepare Shipment

Finished Goods

10 Manufacture Product

Production Plan

8 Determine Manufacturing Requirements Production Plan

Raw Materials

9 Acquire Raw Materials

INFORMATION FLOW PRODUCT FLOW

Fig. 5: Identifying the inputs and outputs for the Forecast Consumer Demand sub-process

First, lets create a new blueprint template with the Inputs on the left and the Outputs on the right, as in Fig. 6 below.

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Business Process Blueprinting


4 Forecast Consumer Demand
INPUTS Consumer Processes PROCESS OUTPUTS

1 Acquire Product

Point of Sale Information

Retail Store Processes

Consumer Demand Forecast

5 Determine Store Requirements

Selling & Administrative Processes

2 Manage Assortment

Assortment Changes

3 Plan Promotions and Events

Event Information

Fig. 6: Sub-process drill down template for the Forecast Consumer Demand sub-process

Now we need to connect the dots. Using boxes and arrows again, well document the steps that are required to transform the 3 inputs (Point of Sale Information, Assortment Changes, and Event Information) into the final output (Consumer Demand Forecast). This ensures that lower level drill downs will always link up with the higher level processes that spawn them. We end up with a peek into whats happening inside the Forecast Consumer Demand sub-process. The flow should be smooth and sequential from left to right as in Fig. 7 below:

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Business Process Blueprinting


4 Forecast Consumer Demand
INPUTS Consumer Processes PROCESS OUTPUTS

1 Acquire Product

Point of Sale Information

4.1 Archive Consumer Demand History

Consumer Demand History

4.3 Calculate Baseline Forecast

Baseline Forecast

Retail Store Processes

4.2 Filter Events from Consumer Demand History

Filtered Consumer Demand History

4.5 Calculate Consumer Demand Forecast

Consumer Demand Forecast

5 Determine Store Requirements

Assortment Changes 4.4 Determine Promotional Lift Forecast Promotional Lift Forecast

Selling & Administrative Processes

2 Manage Assortment Event Information 3 Plan Promotions and Events Event Information

Fig. 7: A Level 2 drill down of the Forecast Consumer Demand sub-process

Note that there are 5 more granular sub-processes within the Forecast Consumer Demand process. Also, the numbering convention is inherited from the higher level to ensure consistency throughout the blueprinting exercise. You can continue to drill down in this fashion as much as you want, so long as the additional detail is useful. As before, dont proceed down to the next level until everyone is in agreement on the current level. Once youre down to Level 3 or 4, it may not be necessary to continue using boxes and arrows. You may instead want to just use a sequential list to document the details. For example, the drill down for the Archive Consumer Demand History sub-process might look like this:

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Business Process Blueprinting

4.1 Archive Consumer Demand History 4.1.1. 4.1.2. 4.1.3. 4.1.4. Extract date-stamped POS and inventory history from data warehouse Smooth POS demand across historical stockout periods Determine which items entered the assortment less than a year ago Retrieve superseded items and scaling factors for items with less than a years worth of POS history 4.1.5. Copy scaled history from superseded items to new items 4.1.6. Delete history for superseded items
Fig. 8: A Level 3 drill down of the Archive Consumer Demand History sub-process

Supporting Documentation One of the advantages to having business process blueprints is that you can make future process changes and see what the impacts will be early on in the project. For example, if you want to delete an activity for efficiencys sake, youll be able to see what other processes will also need to be changed to accommodate it. This can be very useful for change management purposes down the road. For this reason, its a good idea to have some background information about each sub-process, including: What the purpose of the sub-process is Which other sub-processes provide the input What input is supplied by these sub-processes Why the input is needed by the sub-process For example, accompanying our Level 2 process blueprint would be the following table:

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Business Process Blueprinting

4 Forecast Consumer Demand


Process Purpose To predict, by item, the time-phased demands of consumers that will need to be satisfied by each retail store

Process Inputs
Supplier Process Input Supplied Why Supplied To provide the historical demand data that will be used to generate a mathematical forecast model of future consumer demand activity.

1 Acquire Product

Point of Sale Information

2 Manage Assortment

Assortment Changes

To provide information about product introductions and discontinuations.

To provide information about past events so that we know which historical demand needs to be filtered from the baseline forecast calculation. 3 Plan Promotions and Events Event Information To provide information about future events so that we can figure out how much additional demand needs to be added to the baseline forecast.

Summary Implementing a new business process is much like building a house. The time spent working out the details on paper before construction activities begin is well worth it. Business process blueprinting is most effective when its done as a collaborative team effort. This can sometimes make the process more time consuming, but its the best way to make sure youve captured everything. To keep things on track, get broad agreement on the high level design first, then go after the details.

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Business Process Blueprinting


Remember these key process blueprinting guidelines: Always start with the consumer and work backward. A process blueprint is about what is done and why, not how its done and who does it. When describing a process, use a verb as the first word. A process can have many inputs, but only one output. When your blueprint is complete, the flow of the process should be easy to follow. If you have a large number of boxes or flow lines that cross, look for ways to combine some activities and relegate the details to the next level down. Always get agreement on the level youre working on before drilling down to the next. Always provide supporting documentation that defines the purpose and inputs of each sub-process, so that, down the road, people will know what you were thinking.
About Demand Clarity: Demand Clarity Inc. is a focused consulting firm whose mandate is to simplify supply chain planning. For more information on this topic or others, please phone us toll free at 1-877-877-9769, send an email to info@demandclarity.com, or visit us on the web at www.demandclarity.com.

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