Chapter 1
Introduction to Business Process
1 Magal and Word | Integrated Business Processes with ERP Systems | © 2011
Learning Objectives
1. Describe the functional organizational structure, and
explain why this structure creates problems for modern
businesses.
2. Describe key business processes in an organization.
3. Identify the main integration points between and among
processes.
4. Understand the cross-functional nature of processes and
their relationship to organizational areas.
5. Adopt and apply an integrated perspective to business
processes.
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Learning Objectives (Continued)
6. Describe GBI’s organizational structure.
7. Explain how the SAP system promotes an integrated
approach to business processes
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Questions
1. Describe the functional organizational structure. Why do
you think this structure is so common?
2. What is the silo effect? Why does it exist? How can an
organization reduce or eliminate the silo effect?
3. What is a business processes? Why is a process view of
organizations essential to becoming a successful
manager?
4. Briefly describe the key business processes included in this
chapter in terms of their key steps.
5. Explain the interrelationships among the key processes
discussed in this chapter. Why are these interrelationships
important?
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Functional Organizational Structure
Most common organizational structure
Functional structure divided into functions or departments
Functions perform specialized tasks or activities
Processes cut across functions
Why is the functional structure so common?
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Purchasing
Operations
Warehouse
Sales & Marketing
Research & Development
Finance & Accounting
Functional organizational
Human Resources
Information Technology
Functions vs. processes
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Purchasing
Operations
Warehouse
Sales & Marketing
Research & Development
Finance & Accounting
The Functional Structure
Human Resources
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Information Technology
The Cross-Functional Structure
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The Silo effect
Communication and collaboration between functions
What must be communicated?
What information must be exchanged?
How is this coordinated
Paper based processes
Processes supported by functional systems
Processes supported by enterprise systems
Paper-based process
Sales Warehouse Accounting
Receive
Prepare Send Send Receive
Customer
Shipment Shipment Invoice Payment
Order
Create/ Create/ Create/
Update Send Paperwork Update Send Paperwork Update
Paperwork Paperwork Paperwork
Delay! Delay! Delay! Delay! Delay!
Consequences of delays
Delays
Increased lead times
Increased cycle times
Excess inventory
“just in case”
Lack of visibility across the process
Status: “where is my order”
How is the process doing
Why accept these delays?
Delays are no longer acceptable
Why?
Globalization
Increased competition
Pressure to do better
Reliance on technology!
Process using functional systems
Sales Warehouse Accounting
Receive
Prepare Send Send Receive
Customer
Shipment Shipment Invoice Payment
Order
Send Paperwork Send Paperwork
Enter/Update Enter/Update Enter/Update Enter/Update Enter/Update
Data Data Data Data Data
Delay! Delay!
Sales Warehouse Accounting
Information Information Information
System System System
Processes using Enterprise Systems
Sales Warehouse Accounting
Receive
Prepare Send Send Receive
Customer
Shipment Shipment Invoice Payment
Order
Enter/Update Enter/Update Enter/Update Enter/Update Enter/Update
Data Data Data Data Data
Enterprise
Information
System
Enterprise Systems
Impossible to manage processes that are geographically
dispersed without utilizing modern information systems
Enterprise systems (ES) support end-to-end processes
Investments in ES have provided
Increased profitability
Increased productivity
Competitive edge (advantage)
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Business Processes
Sequence of tasks or activities that produce desired outcomes
Key processes
Procurement
Fulfillment
Production
Processes interrelated with other processes
Processes may have sub-processes
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A Generic Business Process
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Key Business Processes
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A Procurement Process
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A Production Process
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A Fulfillment Process
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Inventory and Warehouse Management
Process
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An Asset Management Process
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A Customer Service Process
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A Project Management Process
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Global Bicycle, Incorporated (GBI)
Fictional company
Background on GBI can be found in the overview document
on the SAP University Alliance Community
([Link]
GBI data is used throughout the book to illustrate key
concepts and processes
Hands-on exercises and demos use GBI data
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GBI - Global Bike Incorporated
GBI has three lines of business:
Deluxe and Professional touring bikes
Men’s and women’s off-road bikes
Bike accessories
GBI sells it products to a network of specialized dealers
throughout the world and it produces its raw materials from
a variety of supplies globally.
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GBI Organizational Structure
(Global Bike Incorporated)
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Business Process Modeling and
Notation (BPMN)
Business Process Model and Notation (BPMN) is a
graphical representation for specifying business
process models.
BPMN uses a series of symbols to represent the
elements of a process
The first challenge is to recognize each of these
symbols and interpret them in context
The list of symbols used by the BPMN standard
is relatively longer. There are for instance more than
thirty different symbols to represent events.
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Business Process Modeling and
Notation (BPMN)
Process flow Activity
Message flow (Work)
Start of process Exclusive process split / decision
(follow only one path)
End of process Set of tasks, for which details
Event are not important or
(May trigger the start of a process, documented elsewhere
or occur during a process)
BPMN Example
BPMN: Job roles
Lanes are used for different job roles
One lane for each job role
The role name is placed at left or at the top of each
lane
Start, end, tasks, decisions etc. are all placed within
the lanes to show who is responsible for that task,
decision, etc.
Process flow arrows that cross lane boundaries
represent the handoff of responsibility from one role
to another
The visual similarity to swimming pool lanes is where
the term “swim-lane flow chart” comes from
Also called a cross-functional flow chart
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© Derick Lyle 2014-2017.
BPMN example with roles
Use BPMN to model the card sorting
process
How many roles? Which?
Where/how does the process start?
Where does the process end?
What are the decisions and process splits?
What should we treat as a sub-process?
Card sorting game
- Form teams of 4-5 students.
- Each team will make a BP by drawing its steps on cards.
- The BP will be moved to other team.
- Each student in the other team will pick up a step (on a card)
of the business process and put it in order (do not discuss with
other members).
- Finish the business process.
- Select a spokesperson from each team.
- Each spokesperson must present and explain team’s diagram.
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Discussion
What would be different if you were allowed to put cards on
the table?
Idle/wait states?
Batch processing?
What are problems during the game?