Exam #1 Topic: Analyzing Business Processes

two categories of organizations

1) For Profit 2) Not for Profit

WHAT businesses do

1) sell "things" 2) buy "things" 2) make "things" -to sell using "things" they buy, or customize "things" they buy to get them ready for resale **"things" being services or goods

key roles in negotiation

1) verify the need 2) select the vendor 3) communicate requested terms for the potential order

business process

A collection of related activities that combine different resources and inputs to create an output that is of value to the organization, its stakeholders and/or its customers. These outputs may be products or services. -cookbook for running a business and reaching business goals

What triggers the purchaser having authorization to take delivery of goods or services?

A purchase order that was properly authorized and has not yet been filled by the vendor (valid open purchase order)

extended enterprise business processes

Because the value/supply chain encompasses many parties, we design processes that are not only linked within an organization but business processes span organization boundaries.

HOW businesses work

through business processes and their subsequent events

WHY companies (buy, sell, make)

to achieve objectives; implement vision and strategies to do so Sell (OTC)- Attract and retain customers, help customers select goods and services, deliver the goods and services requested, and collect payments for the goods and services. Buy (P2P) -Acquire needed resources for the organization's order to cash and conversion processes at an optimal price, and at the time when and location where the resources are needed. Make (Conversion) - Generate quality products or relevant and reliable services that will be made available to sell to the final customer.

what is the goal of the organization

to add value to stakeholders

Objective of OTC process

to retain existing customers and attract new ones

T/F: purchasing and paying can happen at the same time

true; but there also can be a time lag

outsourcing

when businesses hire other companies or individuals to produce their services or goods

are business processes helpful to the organization?

when well managed, they greatly enhance the organization's ability to achieve its objective of providing value to its customers

agents

who participate in a significant way in executing each event.

Order to Cash Business Process

Activities of the SELLER. Includes the sequence of activities that collectively serve to attract customers, help customers select goods and services, deliver the goods and services requested, and collect payments for the goods and services. events: -Market goods or services & provide customer service -negotiate sales order -select and inspect goods -prepare goods or services for delivery -deliver goods or services -receive payment for goods or services -Negotiate returns

economic business events

Business events that are economic in nature increase or decrease the physical quantity (balance) of a firm's economic resource ex. delivery of goods and receivement of payment

subobjectives of OTC

Minimizing the amount of time between the customer's selection of products and services and the organization's collection of cash from the customer. • Minimizing the amount of cash that is not collected from customers for goods and services provided. • Structuring product quality and price to balance customer value and organization profitability. • Providing quality, timely customer support and service that increase customer satisfaction, resulting in return customers and customer referrals. • Designing a lean process that maximizes the creation of value for the end customer and eliminates wasted resources while creating that value. • Reducing operating costs and increasing cash flow.

How are internal processes linked?

One business event could be triggered by another. You can't sell without having first bought and made things

Analysis of WHO, HOW, WHEN, and WHERE

Step 1: Research the organization's environment and objectives Step 2: decompose each business process by identifying the strategically significant business events that comprise each business process and understand the timing and triggers of each event Step 3: identifying key components (resources, agents, and locations) related to each event identified in each business process Step 4: ID the relevant business rules (behaviors, characteristics, and attributes of the events, resources, agents, and locations) to understand how a business process should be executed Step 5: validate your analysis with business process owners and participants

Who has more responsibility during a OTC sales negotiation? the store clerk or the customer?

Store clerk bc 1) can the seller fulfull his responsibilities by providing the requested goods or services 2) does the seller feel that the customer will fulfill his responsibilities by remitting valid payment??

Conversion Business Process

The third business process, the conversion process, deals with how resources acquired by the company are transformed into goods and services that will be made available to the customer -most diverse of the business processes events: Assembly Growing. Excavating. Harvesting Steps that define a manufacturing process Steps that result in a deliverable service (e.g., mowing a lawn, raking leaves, trimming trees) Steps involved in preparing a meal to sell in a restaurant. Transforming knowledge into valued intellectual property. Steps in educating or training. Discovering (e.g., research and development activities).

Subobjectives of conversion

Using efficient conversion methods that optimize capacity. • Enhancing safety during conversion. • Generating products or services in a timely manner. • Reducing the number of errors, repairs or rejects during conversion. • Using less organizational resources (such as inventory or space), resulting in lower total operating costs. • Minimizing the time necessary to convert raw materials into finished products or services. • Meeting conversion goals such as deadlines, output levels, capacity use, etc.

Procure to Pay Business Process

When an organization buys "things", they might acquire and pay for any number of resources (e.g. financing, human skills, materials and supplies, plant and equipment, services, etc. Events: -Monitor Inventory & Identify Need -Request purchase of goods or services -Negotiate Purchase Order -Receive & Inspect Goods -Store and/or maintain goods -Pay vendor for goods or services -Return good to vendor

Can a company have more than one conversion process?

Yes

what is an OPEN purchase order

a purchase order that has not yet become a purchase

event trigger

action that initiates or authorizes an event

_____ first, _______ second

business first, technology second

with a business first, technology second mindset, what are some of the first things we have to think about concerning a company

businesses and orgs come in all shapes, sizes, and forms -sole pro, partnership, corp,etc. -brick & morta vs online only, hybrid -primary profit generative activities of a business: manufacturers, service businesses, retailers, distributors, agricultures, mining, etc.

information management

collection and management of information, gathered from a variety of sources and distribution of that info to one or more stakeholders

integrated value chain system

comprised of the set of value chains in an entire industry and it encompasses the value chains of tiers of suppliers, channels, and customers.

Primary activity

events that create customer value and provide organization distinctiveness in the marketplace. They are viewed as the critical activities in running a business.

Support activities

facilitate accomplishing the primary activities Procurement, Tech Development, Human Resource Mgmt, Firm Infrastructure

REAL Business Process Modeling Template

help identify and represent the essential characteristics that collectively describe business processes and event *Started by BILL MCCARTHY

what event triggers the negotiation of PO

identifying a need

valid, open purchase order

if the negotiation with vendor is successful (terms of order request are accepted)

decision/management business events

including making decisions about planning, controlling, and evaluating business processes. Examples include managing resources

why is value chain analysis important

it forces you to understand both the internal operations of a firm as well as the forces and parties outside the firm that affect its ability to create value.

when is payment due?

once the goods or services are received (purchased)

just in time inventory processes

only wants enough inventories on hand for one day's work (or sometimes even less)

Value activites

physical and technological activities performed by an organization

in the P2P scenario where purchasers are required to prepay in part of in full before the purchase, what would be the trigger to receive goods

prepaid, open purchase order

2 types of value activities in the value chain

primary and support

what are business strategies composed of

series of related business processes

value chain

set of (primary and support) activities through which a product or service is created and delivered to customers. - links provide opportunities for competitive advantage -introduced by Michael Porter **know diagram Inbound logistics-operations-outbound logistics-marketing & sales-service

who negotiates purchase orders with vendors

specific personnel with authority

how do you achieve your business goals?

strategies & managing relationships (employees, customers, suppliers, regulatory agencies, competitors, etc)

in the P2P process, what is the point of purchase

the arrival of the goods/services

profit margin

the difference between total value and the cost of performing the activities

what authorizes an organization to accept payment

the executed sale results in legal right to owed funds

linkages

the flows of information, goods and services, as well as systems and processes for adjusting activities; Managing the linkages between activities impacts the ability to realize a profit margin

business event

the operating activities performed within a business process to provide goods and services to customers

why is there a time lag between when the vendor is selected/contacted and the next phase

the purchasing organization has to wait for vendor acceptance or rejection of the purchase order

Goal of primary and support activites

to offer the customer a level of value that exceeds the cost of the activities, resulting in a profit margin

Objective of P2P process

to provide needed resources for the organization's order to cash and conversion processes at an optimal price, and at the time when and location where the resources are needed.

Objective of Conversion Process

to use a lean set of activities to generate quality products or relevant and reliable services that will be made available to sell to the final customer

semantic understanding

which is an understanding of real world actions or phenomenon

sub objectives of P2P

• Acquire only those goods or services that an organization needs and can afford. • Purchase items from reliable vendors. • Purchase high quality items, or at least items of the desired quality. • Obtain the desired items at the best possible price. • Purchase only those items that are properly authorized and are for legitimate company purposes. • Have resources available and in useful condition when they are needed by the company. • Receive only those items ordered and receive all the items ordered. • Control and safeguard items received so they are not lost, stolen, or damaged. • Pay only for items actually received and pay in a timely manner to the appropriate party.