Chapter 1:
Introduction to Process Management
Process Management: Creating Value Along the Supply Chain (1 st
edition)
Wisner and Stanley
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Chapter Outline
Introduction
Processes and Process Management
Defined
Process Management and Supply Chain
Management
The Eight Supply Chain Processes
Inventory and Process Management
Lean Thinking and Process Management
Summary
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Chapter Outline (cont.)
Quality and Process Management
Business Process Management—
Formalizing Process Improvement
Measuring Process Performance
Trends in Process Management
Summary
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Learning Objectives
After completing this chapter, you should be
able to:
Define and discuss process management,
using examples.
Understand the business value of process
management.
Describe the eight processes linking
organizations along the supply chain.
Discuss the importance of process
management in services.
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Learning Objectives (cont.)
After completing this chapter, you should be
able to:
Describe why quality management and JIT
are important process management activities.
Describe how processes are modeled and
improved, and how firms measure process
performance.
Discuss the use of information technologies
to integrate supply chain processes, and
discuss other trends in process management.
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Introduction
Processes
A network of activities performed by resources that
What is a process? transform inputs into
outputs
Can you provide examples?
Process management
Importance of process management, for
both manufacturing and services
Impact of effective process management
on costs, profits and productivity
How world-class businesses are managing
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Processes and Process Management
Defined
Process improvement
Business value of process management /
improvement
Importance of process improvement:
continuous process evaluation.
Business process management (BPM):
design, analysis, and improvement of
business processes.
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Generic Process Elements
Inputs Outputs
- labor Internal/External:
- materials Transformation - physical goods
- training Sequenced steps of: - services
Internal & - decisions and Internal &
external - equipment - machine operations external
- time - physical/mental information
suppliers customers
- capital activities
- facilities
- information
Process Management
Figure 1.1
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Process Management and Supply
Chain Management
Shift in focus: internal silos external sharing and
coordination of key processes
Traditional organization structures drive functional
thinking-managers begin to see the world from a
narrow, functional perspective.
Process thinking –aligning decisions with corporate
strategy and coordinating activities across functions.
Business process integration
Vertical integration outsourcing
Business process re-engineering (BPR)
Supply chain management
Collaborative process management
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Eight Key Supply Chain Processes
Identified by the Global Supply Chain
Forum
These processes link organizations across
the supply chain
Each process includes a set of functional
activities, which should be integrated with
other applicable functions
Each process should be integrated with
other applicable processes
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Eight Key Supply Chain Processes
(cont.)
Customer Relationship Management: creating and
maintaining successful relationships with customers.
Customer Service Management: designing,
implementing and improving customer service activities.
A perfect order
Seven R’s rule: having the right product, in the right
quantity, in the right condition, at the right place, at
the right time, for the right customer, at the right cost.
Demand Management: balancing customer demand
with the firm’s capacity.
Collaborative planning, forecasting, and
replenishment (CPFR): a tool for reducing forecast
error.
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Eight Key Supply Chain Processes
(cont.)
Order Fulfillment: delivery of products and services to
customers.
Third-party transportation services
Flow Management: making the product or service
and managing inventories, customers, and
information.
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Eight Key Supply Chain Processes
(cont.)
Supplier Relationship Management: selecting the
right supply partners and managing relationships.
Product Development and Commercialization:
designing and producing new products that
customers want
Concurrent engineering
Returns Management: managing product returns
effectively.
Reverse supply chains
A source for customer satisfaction and product
improvement ideas
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Inventory and Process Management
Inventory management : critical activity of
supply chain.
Having too much vs. too little inventory
Bullwhip effect Ineffective communication between buyers
and suppliers and infrequent
delivery of materials, combined with
Independent demand production based on poor forecasts along a
supply
chain, results in either too little or too much
Dependent demand inventory at various points of storage and
consumption
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Lean Thinking and Process
Management
Just-In-Time (JIT) get products where they are needed on time, and
at the desired quality and price.
Pull system supplies and assemblies are “pulled” through
the system when and where they are needed.
An important process management
activity
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Quality and Process Management
Total Quality Management (TQM)
TQM processes
An important process management
activity
philosophy encompassing a collection of processes that seek to assess and
improve quality continuously to please customers, reduce costs, and, ultimately,
create competitive advantage for the firm
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Business Process Management –
Formalizing Process Improvement
Structured approach to process
assessment and organizational
improvement.
BPM tools: benchmarking, reengineering,
six sigma
Business process re-engineering (BPR)
Difference between BPM and BPR
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Measuring Business Performance
Continuously monitoring process performance is
important.
Important points to consider when designing
performance measurements:
Link measures to the firms’ vision and goals
Measure what customer care about
Should monitor the quality, cost and timing of outputs
along with the volume
Effectiveness trumps efficiency
More measurements are better
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