Process Analysis

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Process AnalysisReengineering

• 2002.4.2
• MAI Lab. Seminar
• Park Jung Joon

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Process Analysis Reengineering

• Armen Zakarian, Andrew Kusiak
• Department of Industrial and
  Manufacturing Systems Engineering,
• University of Michigan, Dearborn,
  Dearborn, MI 48128-1491, USA
• Department of Industrial
  Engineering, Intelligent Systems Laboratory,
• The University of Iowa, Iowa City, IA
  52242-1527, USA
• Computers Industrial Engineering 41(2001)
  135-150
• Revised 2 May 2001 accepted 27 June 2001.

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Contents

• Introduction
• IDEF methodology
• Stream analysis approach
• Analysis methodology
• Dynamic analysis of processes
• Conclusions

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Introduction

• Process reengineering is concerned with the
  redesign of strategic, value adding processes,
  systems, policies, and organizational structures
  to optimize the processes of an organization
• Hammer estimated that 5070 of companies that
  attempt to reengineer their processes fail
• To increase the likelihood of a successful
  change, a comprehensive modeling methodology is
  required
• Hammer, M.S. and Champy, J.Reengineering the
  corporation a manifesto for business revolution
  (1993)

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Table.1 The differences between process
improvements and process reengineering

• To perform the change process successfully,
• Be flexible to be easy to learn
• Ask a question all aspects of processes and their
  activities, both as they exist now, and later
• Provide a mechanism to identify and evaluate the
  impact of the process changes incorporated as
  well as an alternative vision for process being
  reengineered

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Methodologies Tools

• Process modeling methodologies
• CIM-OSA methodology (European and Beekman)
• O-O Modeling Methodology ( Kim, Kim Choi, 1993)
• MOSYS software tool ( Mertins, Rabe
  Stiegennnroth, 1993)
• Petri Nets ( Peterson, 1981)
• IDEF (US Air Force 1981)
• Process modeling tools
• ARIS (Germany)
• FirstStep (Canada)
• PrimeObjects (Italy)
• TEMAS (Switzerland)

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IDEF(ICAM DEFinition)

• IDEF0 (IDEF Function Modeling)
• IDEF1 (IDEF Information Modeling)
• IDEF1X (IDEF Data Modeling)
• IDEF2 (IDEF Dynamics Modeling)
• IDEF3 (IDEF Process Modeling)
• IDEF4 (IDEF Object-Oriented Design)
• IDEF5 (IDEF Ontology Description Capture)

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IDEF methodology
Fig. 1 IDEF activity box and interface arrows

• Inputs (I) enter the box from the left, are
  transferred by the function, and exit the box to
  the right as an output (O)
• Control (C) enters the top of the box and
  influences or determines the function performed
• Replacing activity of the IDEF3 block in Fig. 1
  with a function and entering a mechanism (M)
  interface from the bottom of box results in an
  IDEF0 block

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IDEF Example (1/3)
Fig.2 IDEF0 Function Box Interface Arrows
Fig.3 IDEF3 Process Description Diagram
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IDEF Example (2/3)
Fig.4 IDEF1 Diagram
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IDEF Example (3/3)
Fig.5 Organization of the IDEF4 Model
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Stream diagnostic chart

• In order to improve a process, it is important to
  identify the core problems causing its
  ineffective functioning
• Road map is required
• To guide the diagnosis of process deficiencies,
  to track down the core problem issues, and to set
  the stage for effective changes of the process
• Stream analysis approach
• Be based on the systems theory and it assumes
  that a process is open, consisting of subsystems,
  each including a stream of variables, with many
  of these variables connected either causally or
  merely relationally within the same stream or
  across streams
• Porras, J.I. Stream analysis a powerful way
  to diagnose and manage organizational change
  (1990)

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Fig.6 Stream diagnostic chart
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Fig.7 Stream analysis and simulation applied to
process models

• The stream analysis approach is used for
  analysis, diagnosis, and management of process
  changes represented with an IDEF3 model
• To evaluate the impact of changes considered,
  support the process analysis, and to model
  performance of the proposed process, a dynamic
  simulation is used

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Analysis methodology

• System diagnosis
• Planning intervention
• Forming a change management team
• Collecting data
• Categorizing problems
• Identifying interconnections
• Analyzing the problem chart
• Formulating an action plan

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Illustrative example
Fig.8 IDEF3 model of an RD project

• Consider the IDEF3 representation of the research
  and development (RD) process in a manufacturing
  company (see Fig. 8)
• Assume that the team responsible for management
  of large scale RD projects intends to redesign
  the project management process to minimize the
  time overruns

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Fig.9 Stream diagnostic chart corresponding to
the IDEF3 model in fig.8
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Fig.10 Stream diagnostic chart to the IDEF3 model
in fig.8
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Fig.11 Modified IDEF3 process model corresponding
to the stream planning chart in Fig.10
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Fig.12 The system flow diagram of the IDEF3
process model in Fig.11 represented with the
notation of system dynamics
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Dynamic analysis of processes

• DYNAMO modeling language
• The model represents a set of linked differential
  equations describing a closed loop feedback
  system
• Assumption
• Project is divided into 45,000 tasks and the
  required completion date of the project is 30
  months
• Average person productivity is 30
  tasks/person/month
• Management wants to determine the optimal level
  of the initial personnel thus resulting in less
  hiring/firing and allowing completion of the
  project on time
• Richardson, G.P. and Pugh, A.L. Introduction
  to system dynamics modeling with DYNAMO (1991)

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Fig.13 Simulation output for the initial level of
PERSONNEL10
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Fig.14 Simulation output for the initial level of
PERSONNEL110
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Fig.15 Simulation output for the initial level of
PERSONNEL50
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Conclusion

• Comprehensive modeling tool
• Allow easy integration of IDEF3 methodology with
  the dynamic simulation approach
• The significance of the results presented in the
  paper arises from the fact that many companies
• Lockheed-Martin, General Motors, Rockwell
  International, are using IDEF for representing
  their processes

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Supply chain reengineering using a core process
analysis matrix and object-oriented simulation

• S. Wesley Changchien, and Hsiao-Yun Shen
• Department of Information Management, Chaoyang
  University of Technology, 168 GiFeng E. Road,
  WuFeng, Taichung County, Taiwan, ROC
• Information and Management 39(2002) 345-358
• Revised 13 April 2000 accepted 16 March 2001

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Contents

• Introduction
• SCM BPR
• Inter-organizational relations
• Approach
• A case study of a motorcycle manufacturer
• Discussions and conclusions

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Introduction

• Today, companies face severe competitive
  challenges
• The agility of a company's response to customer
  demand
• Supply chain management (SCM)
• But, Companies to rethink the way they perform
  operations
• Business process reengineering (BPR)

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SCM BPR

• Both need fundamental rethinking and
  consideration of strategies and are process-based
• Also they generally reduce the duration of the
  processes
• Information technology is used as a catalyst for
  both

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Inter-organizational relations(1/2)

• Virtual organization
• One of the advantages of forming a virtual
  organization is its flexibility
• Creation or assembly of new production resources
  very quickly
• Creation or assembly of new productive resources
  frequently and concurrently
• Access to a wider range of world-class
  competencies
• Information system Computer Network

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Inter-organizational relations(2/2)

• Strategic alliances ( R.M. Kanter , eight I's
  criteria)
• Individual excellence
• Important
• Interdependence
• Investment
• Information
• Integration
• Institutionalization
• and Integrity
• R.M. Kanter, Collaborative advantage. Harvard
  Business Review 72 4 (1994)

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Approach - BPR framework
Fig.1 A proposed business process reengineering
framework
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7 steps in BPR framework

• Creating vision
• Identifying core processes to be redesigned -gt
  CPAM
• Analyzing current core processes -gt OOS
• Designing for innovation -gt IT structure process
• Evaluating the new processes -gt OOS
• Selecting the best -gt MCDM
• Transforming and implementing the resulting
  design
• CPAM(Core process analysis matrix)
• MCDM(Multi-criteria decision-making method)

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The core process analysis matrix(CPAM)
lt HOWs gt Customer relationship Customer
service Demand Order fulfillment Manufacturing
flow Procurement Development
commercialization
lt WHATs gt Strategic View Function View Logistics
View Information - Management view
Fig. 2. The structure of core process analysis
matrix (CPAM)
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• WHATs criteria and viewpoints affecting business
  vision
• HOWs candidate business processes
• WHYs weighting factors on WHATs
• The relative evaluation value
• The adjusted criteria (WHATs) importance
• WHATs versus HOWs

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• Target Mix
• An index of importance for each business process
  can next be calculated
• The raw importance index
• where CI is criteria importance and CO is the
  correlation between business processes and
  perspectives
• The importance index for business process

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Strong 9 Medium 5 Weak 1
Table 1. An example of CPAM (by a group member)
associated with seven processes and four criteria
views
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Object-oriented simulation framework

• A system consists of objects and processes in
  accordance with business rules
• The system component perspective describes the
  static, structural components of the system
• The system workflow perspective represents the
  processes during system execution
• The system control perspective describes dynamic
  system state changes
• The UML notation is used for implementing the
  simulation modeling method

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O-O Modeling Method

• Step 1 - Initialize objects in the system
• Step 2 - Put objects into the object list ordered
  by their time attribute
• Step 3 - Get the most recent object from the
  object list
• Step 4 - Check its type
• Step 5 - Process the object and perform tasks
  according to its type
• Step 6 - Delete the processed object or add it
  into the object list, if necessary
• Step 7 - If needed, create new objects and go to
  Step 2
• Step 8 - Check the condition for termination. If
  not termination, go to Step 3
• Step 9 - Terminate

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Case study of motorcycle manufacturer

• Motorcycle manufacturer in Taiwan
• Companies face severe competitive challenges
• Customer demand
• Cost Reduction, Quality improvement, Competitors
• Production management division is the main
  concern
• This example focuses on Steps 26 of the
  framework

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Fig. 3 The components of a simulation system
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Fig. 4 Process described with an activity diagram
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Identify core processes (CPAM)
Table 2. Averaged importance for each process

• Group decision making method
• Product Development
• Procurement
• Demand Management

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Analyze current core processes

• Collected data on one specific motorcycle model
• A decision making group is then formed of people
  from the production and marketing divisions
• Demand Management Forecasting activity
• Mean absolute difference (MAD) between market
  sales and manufacturer forecasting is 209 units
• MAD between manufacturing forecasting and sales
  to franchisee is 156 units
• Procurement - Procurement process

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Design innovation

• Forecasting activity
• Abandoning the old multi-stage forecasting
  process
• Moving average
• Exponential Smoothing
• Factors decomposition
• Bayesian methods
• Procurement process
• The original monthly procurement policy was
  changed to bi-weekly procurement
• Quick response by adjusting purchasing orders or
  shortening the cycle time of the joint meeting
  during the procurement process

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Evaluate new processes
Fig. 5 MADs for current process and a number of
forecasting methods
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Fig. 6 Simulation data with exponential smoothing
forecasting and real market demand (normal
distribution) per month during 5 years
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Innovation - the procurement processes

• Policies
• Current procurement
• Adjusting orders in the current
  period(delay/cancel)
• Shortening the cycle time of productionmarketing
  joint meeting and purchasing

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Fig. 7 Cost impacts for current procurement
process and two new policies at current safety
stock level
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Select a new process

• The manufacturer next considered the
  implementation cost, the applicability of the
  process, and whether suppliers could accommodate
  the new process
• An appropriate multi-criteria decision making
  method was required
• Let AA1,A2,...,An be a set of alternatives and
  CC1,C2,...,Cm be a set of criteria
  characterizing the decision situation. Moreover,
  Ww1,w2,...,wm is a set of weights that
  indicates the relative importance of criteria set
  C
• The universe of discourse, U, is a finite set of
  fuzzy numbers within 0, 1 They are used to
  express an imprecise concept or level.

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• 1. Universe of discourse domainLet
• 2. Membership functions for u
• for k2, 3, 4, 5, 6

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Fig. 8 Membership function for universe of
discourse E. Triantaphyllou and C.T. Lin
Development and evaluation of five fuzzy
multi-attribute decision-making methods (1996)
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Fig. 9 Membership functions of the two
alternatives of the new procurement processes
according to the fuzzy approach.
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BPR cycle focusing on strategic alliance

• New process that shortens the purchasing and
  productionmarketing cycle time to 2 weeks
• The order sharing policies for a virtual
  organization imply
• All orders are allocated to companies on the
  basis of equal capacity utilization (policy 1)
• All orders are allocated to companies on the
  basis of predefined percentages (policy 2)
• Each order is first allocated to the company that
  originally received the order. If that company's
  capacity is inadequate, the excess portion is
  reallocated to a company that has the least
  current capacity utilization (policy 3)
• If a company capacity is inadequate, the excess
  portion of the order is reallocated to a company
  that has the least current accumulated capacity
  utilization (policy 4)

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Table 3. Comparisons of capacity utilization
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Table 4. Comparisons of lost quantities
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Discussions and conclusions

• BPR framework
• CPAM OOS schema
• Systematic approach for industrial practice
• This is expected to reduce the high failure rate
  of BPR projects.