Week 9 - Redesigned Process (2) 

Reference:

1. Leslie Behnke & Forrest Breyfogl (2004). Focusing the Power of Six Sigma in the Healthcare
    Insurance Industry: Lowering Medical Costs while Improving Patient Service and Outcomes.
    Retrieved April 11, 2011

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Three remaining re-enginneering principles

     There are several strategies for minding the processes are also introduced via Maxtor and the measures to improve or redesign the processes. Furthermore, the 3 principles of changing knowledge management around the process are also introduced. In the last part of this journal, I would like to use 3 examples to explain some principles. They are CIGNA, TOSHIBA and UPS.

Principle #8 - Analyze and Synthesize

-  Enhance the interactive analysis & synthesis capabilities around a process to generate value added. This
    principle is mostly applied to business like agents that have to make recommendation to customers by    
    summarizing and analyzing the information. 

Common Tactics:

1)      Provide what-if capabilities to analyze decision choices

2)      Provide slice and dice data analysis capabilities that detect patterns

3)      Provide intelligent integration capabilities across multiple information sources

Principle #9 - Connect, Collect & Create

-   Capture intelligent and reusable knowledge around the process through all who touch it. One of the
    examples is the creation of Knowledge Repository through collecting the answer in the repetitive
    queries/FAQ. Therefore, the most suitable answer can be collectively derived from these knowledge
    creation processes.

Common Tactics:

1)      Define procedures to collect the knowledge

2)      Create physical/ virtual spaces for storing the knowledge

Principle #10 – Personalize

-  Make the process intimate with the preferences & habits of participants. By repeating execution of a
   process, this will built up a knowledge repository of customers’ preference. Base on the information
   gathered and generated from the repository, the process can offer more personalized services to
   customers.

Common Tactics:

1)      Learn preferences of customers and doers of the process through profiling

2)      Insert business rules that are triggered by personal profiles

3)      Use collaborative filtering techniques

4)      Keep track of personal process execution habits

Reflection

Case Study on TOSHIBA & UPS

     The material I found is about the Principle #2: Orchestrate. There is a common tactic called “Insourcing”. United Parcel Service (UPS) is an American courier company which performed logistics operations for Toshiba. UPS would deliver Toshiba computer equipment from the factory.  Toshiba were criticized that there was a long time delay from the pickup for repair to delivery of the fixed product. Therefore, to avoid the unnecessary timely transport to and from the Toshiba factory, UPS employees are trained to repair the products on UPS premises. 

     In the other words, TOSHIBA has in-sourced the maintenance and repairs logistics process to UPS. As a result, both parties are benefited a lot from insourcing. For TOSHIBA, their service time is shorter than before and reputation & company images are improved gradually. For UPS, it alsoreduces its transportation time and cost and not just focus on delivery but also maintenance skills which provides more knowledge to the workers and enhance the diversity of the company.

Case Study on CIGNA (part2)

Again, I would like to apply all principles learnt in last lecture on CIGNA case study. 

Brief Introduction

 CIGNA is a leading provider of insurance and related financial services throughout the United States and the world. Between 1989 and 1993, CIGNA introduced business reengineering into its organization and saved more than $100 million.

 Analysis

Principle	Explanation	Applied?
Principle #0 - Streamline the process	CIGNA has applied this principle. In the case, it reduced 14 hand-offs to zero. It is because the content of hand-offs can be placed on the network. The staff with authorized rights can see the notices. Also, both the cycle time and the working hours were reduced because the employees can share information together on the network. Therefore, they can save the time of searching information. BPR made the business process and the information systems to be consolidating.	Yes
Principle #1 - Lose wait	CIGNA has changed to team-based management, each team serve different districts in US and every team member can manage several cases concurrently.	Yes
Principle #2 - Orchestrate	The CIO and his management team brought in a new CIGNA Reengineering director from an outside consultancy that focused on dramatic operational improvement, bringing the organization’s cost structures in line with changed market conditions. In this case, it used “Outsourcing” tactic.	Yes
Principle # 3 - Mass-customize	CIGNA has utilized a national database to share the data and information; therefore, staff can have flexible time to access the information.	Yes
Principle # 4 – Synchronize	CIGNA has provided a common process platform as it applied Local Area Network (LAN) that linked up 1000-person unit of the company where they can work together.	Yes
Principle # 5 - Digitize and propagate	CIGNA obviously satisfies this principle because there are totally 3 hours for a Corporate Medical Presale Process instead of 6 hours because of the digitization of process and paperless information.	Yes
Principle # 6 – Vitrify	The authorized staffs can track the information by accessing the database.	Yes
Principle # 7 – Sensitize	The article I read doesn't mention anything about how to collect customer feedbacks. Instead, it has mentioned customer service process in CIGNA International that delivered a 50% improvement in customer satisfaction. Therefore, I think it has applied.	Not sure
Principle #8 - Analyze and Synthesize	Six Sigma team in CIGNA used their brand new skills and tools to “slice and dice” the data a number of ways and identify more precisely the highest risk groups and their respective top causal factors so as to recommend to professional case manager. As a result, costs went down but member satisfaction went up. Besides, it also construct "what if" scenarios to see how customers’ plan choices will affect their out-of-pocket costs, based on projected utilization	Yes
Principle #9 - Connect, Collect & Create	CIGNA has automated its underwriting process and also provided users with quick access to additional knowledge resources, including contact details of experts for different facets of the process	Yes
Principle #10 – Personalize	CIGNA let consumers customize their health benefit selections, what they pay for them and the way they customize their everyday Internet purchases	Yes

Week 8 - Redesigned Process 

Reference:

1. Caron, J.R., Jarvenpa, S.L. and Stoddard, D.B. (1994), “Business Reengineering at CIGNA   
    Corporation: Experiences and Lessons Lerned From the First Five Years”, Management
    Information System Quarterly, 18(3), http://www.misq.org/archivist/vol/no18/issue3/sim94/sim94.html.

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Seven Reengineering Principles

There are several reengineering principles of restructuring and configuring and changing information flows around processes to us. I am going to give a brief summary of those principles and lastly I would use a real case study to apply those principles.

There are three types of redesign principles and tactics, they are “restructuring and configuring around processes”, “changing information around processes” and “changing knowledge management around processes” respectively. The lecture today only talked about the principles of the first two types.

0. Streamline the process

- Minimize waste

- Eliminate worthless complexities

- Obliterate unnecessary and outdated activities

- Combine similar activities

1. Lose wait

- Reduce the time within which no actual work is done but waiting

- Waiting time reduction helps reducing costs. The larger portion of waiting in the whole-process time, the
   more is the money spent for the production.

Common Tactics:

1) Concurrent Process – use parallel process to decrease the communication cost and the cost of sharing  
     data

2) Closed-Loop Teams – create closed-loop teams for quicker flexible interaction to save the time of
     coordination among the participants

3) Not Gating Main Process – do not allow a support activity or management activity to delay a core value
     adding process

4) Continuous Flow – design for real-time processing

5) Upstream Relives Downstream – modify some practices of upstream to benefit the downstream

2. Orchestrate

- Different parts of the processes are accomplished by different parties who are good at it

Common Tactics:

1) Partnering

2) Outsourcing

3) Insourcing – insource a process back into the enterprise to have a better control

4) Routing through an Intermediary – route the process through an intermediary, like online middlemen

3. Mass-customize

- Flex the process wherever, whatever, whenever it is appropriate

Common Tactics:

1) Flexing Time – expand the time window for the process

2) Flexing Space – create more options for the physical spaces in which the process is executed

3) Modularity – create modular process platforms which can be resequenced easily

4) Dynamic Customization – enable dynamic customization

5) Modularity & Dynamic Customization – allow different process outcomes to be generated

4.  Synchronize

- Synchronize the physical & logical parts of the process

Common Tactics:

1) Match Offerings – match the offerings

2) Common Process Platforms – create common process platforms for physical and electronic processes

3) Track Movement – track the movement of physical products electronically

5. Digitize and propagate

- Capture information digitally at the source & propagate it

Common Tactics:

1) Digitize at Source – shift the data entry to customers and digitize it

2) Make the Process Paperless – make the process paperless

3) Make Information Accessible Upstream and Downstream

4) Shrink the Distance between the Information and the Decision

6.  Vitrify

- Provide visible information about the process status

Common Tactics:

1) On-demand Information Tracking – provide on-demand tracking information for customers of the
     process

2) On-the-fly Reporting and Analysis – provide reporting facilities for on-the-fly analysis

3) Standard Partner Interface – design standard partner interface processes for seamless exchange of
     information

7. Sensitize

- Fit the process with sensor and feedback loops to prompt action

Common Tactics:

1) Process Dysfunction – build in customer feedback loops to detect process dysfunctions

2) Monitor Environmental Change – enable software smarts to trigger quick business reflexes, or attach
     environmental probes to the process to monitor change

Case Study on CIGNA

I would like to apply all principles learnt in lecture on CIGNA case study. 

Brief Introduction

CIGNA is a leading provider of insurance and related financial services throughout the United States and the world. Between 1989 and 1993, CIGNA introduced business reengineering into its organization and saved more than $100 million.

Analysis

Principle	Explanation	Applied?
Principle #0 - Streamline the process	CIGNA has applied this principle. In the case, it reduced 14 hand-offs to zero. It is because the content of hand-offs can be placed on the network. The staff with authorized rights can see the notices. Also, both the cycle time and the working hours were reduced because the employees can share information together on the network. Therefore, they can save the time of searching information. BPR made the business process and the information systems to be consolidating.	Yes
Principle #1 - Lose wait	CIGNA has changed to team-based management, each team serve different districts in US and every team member can manage several cases concurrently.	Yes
Principle #2 - Orchestrate	The CIO and his management team brought in a new CIGNA Reengineering director from an outside consultancy that focused on dramatic operational improvement, bringing the organization’s cost structures in line with changed market conditions. In this case, it used “Outsourcing” tactic.	Yes
Principle # 3 - Mass-customize	CIGNA has utilized a national database to share the data and information; therefore, staff can have flexible time to access the information.	Yes
Principle # 4 – Synchronize	CIGNA has provided a common process platform as it applied Local Area Network (LAN) that linked up 1000-person unit of the company where they can work together.	Yes
Principle # 5 - Digitize and propagate	CIGNA obviously satisfies this principle because there are totally 3 hours for a Corporate Medical Presale Process instead of 6 hours because of the digitization of process and paperless information.	Yes
Principle # 6 – Vitrify	The authorized staffs can track the information by accessing the database.	Yes
Principle # 7 – Sensitize	The article I read doesn’t mention anything about how to collect customer feedbacks. Instead, it has mentioned customer service process in CIGNA International that delivered a 50% improvement in customer satisfaction. Therefore, I think it has applied.	Not sure

Week 7 - BRP methodologies
Reference:

1. Crowe, T.J., Fong, P.M. and Zayas-Castro, J.L. (2002),“Quantative risk level estimation of business process   
    reengineering efforts”, Business Process Management Journal, Vol. 8 No. 5, pp. 490-511.

2. Neda Abdolvand, Amir Albadvi and Zahra Ferdowsi (2008), “Assessing readiness for business process 
    reengineering”,Business Process Management Journal, Vol. 14 No. 4, 2008, pp. 497-511

3. "Hammer, M., 1990, "Re-engineering work, don’t automate, obliterate", Harvard Business Review, Vol. 68, No. 4, pp. 104-112

4.  Teng, J.T.C. et al., 1994, "Business process re-engineering: charting a strategic path for the information age", California Management Review, Vol. 36, No. 3, pp. 9-31

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Consolidated Methodology:

   A consolidated methodology has been developed from the five methodologies previously presented and an IDEF0 model was developed to provide a structured approach and to facilitate understanding. But for the sake of brevity, we have shown only the major activities in the IDEF0 model in Figure 1. In the ensuing section, we deal with the details of our methodology.

1: Prepare for Reengineering:

“If you fail to plan, you plan to fail”. Planning and Preparation are vital factors for any activity or event to be successful and reengineering is no exception. Before attempting reengineering, the question ‘Is BPR necessary?’ should be asked? There should be a significant need for the process to be reengineered. The justification of this need marks the beginning of the Preparation activity.

This activity begins with the development of executive consensus on the importance of reengineering and the link between breakthrough business goals and reengineering projects. A mandate for change is produced and a cross-functional team is established with a game plan for the process of reengineering. While forming the cross-functional team, steps should be taken to ensure that the organization continues to function in the absence of several key players. As typical BPR projects involve cross-functional cooperation and significant changes to the status quo, the planning for organizational changes is difficult to conduct without strategic direction from the top. The impact of the environmental changes that serve as the impetus for the reengineering effort must also be considered in establishing guidelines for the reengineering project. Another important factor to be considered while establishing the strategic goals for the reengineering effort, is to make it your first priority to understand the expectations of your customers and where your existing process falls short of meeting those requirements. Having identified the customer driven objectives, the mission or vision statement is formulated. The vision is what a company believes it wants to achieve when it is done, and a well-defined vision will sustain a company’s resolve through the stress of the reengineering process. It can act as the flag around which to rally the troops when the morale begins to sag and it provides the yard stick for measuring the company’s progress. 

2: Map and Analyze As-Is Process:

Before the reengineering team can proceed to redesign the process, they should understand the existing process. Although some BPR proponents (in particular Hammer and Champy) argue against analyzing the current enterprise, saying that it inhibits the creative process, that might not always hold true. It varies from case to case. While some organizations which are in dire straits might go the Hammer and Champy way (attempt a new process design while totally ignoring the existing processes) most organizations need to map the existing processes first,

analyze and improve on it to design new processes. The important aspect of BPR (what makes BPR, BPR) is that the improvement should provide dramatic results. Many people do not understand the value of an As-Is analysis and rather prefer to spend a larger chunk of their valuable time on designing the To-Be model directly. What follows is an illustration that illustrates this fallacy.

A large manufacturer spent six million dollars over a period of one year in a bid to develop a parts-tracking system and was all set to go online. Only then did he realize that he had totally overlooked a small piece of information – ‘the mode of transmission of information between the scheduling staff and the shop floor was through a phone call.’ But just because this small yet vital information had not been documented all his efforts added up to naught and the whole system that he had so painstakingly developed had to be scrapped. Alas! He had recognized the need for an As-Is analysis, way too late.

The main objective of this phase is to identify disconnects (anything that prevents the process from achieving desired results and in particular information transfer between organizations or people) and value adding processes. This is initiated by first creation and documentation of Activity and Process models making use of the various modeling methods available. Then, the amount of time that each activity takes and the cost that each activity requires in terms of resources is calculated through simulation and activity based costing(ABC). All the groundwork required having been completed, the processes that need to be reengineered are identified.

3: Design To-Be process:

The objective of this phase is to produce one or more alternatives to the current situation, which satisfy the strategic goals of the enterprise. The first step in this phase is benchmarking. “Benchmarking is the comparing of both the performance of the organization’s processes and the way those processes are conducted with those relevant peer organizations to obtain ideas for improvement.” The peer organizations need not be competitors or even from the same industry. Innovative practices can be adopted from anywhere, no matter what their source.

Having identified the potential improvements to the existing processes, the development of the To-Be models is done using the various modeling methods available, bearing in mind the principles of process design. Then, similar to the As-Is model, we perform simulation and ABC to analyze factors like the time and cost involved. It should be noted that this activity is an iterative process and cannot be done overnight. The several To-Be models that are finally arrived at are validated. By performing Trade off Analysis the best possible To-Be scenarios are selected for implementation.

4: Implement Reengineered Process:

The implementation stage is where reengineering efforts meet the most resistance and hence it is by far the most difficult one. If we expect that the environment would be conducive to the reengineering effort we are sadly mistaken. The question that confronts us would be,’ If BPR promises such breath taking results then why wasn’t it adopted much earlier?’ We could expect to face all kinds of opposition - from blatantly hostile antagonists to passive adversaries: all of them determined to kill the effort. When so much time and effort is spent on analyzing the current processes, redesigning them and planning the migration, it would indeed be prudent to run a culture change program simultaneously with all the planning and preparation. This would enable the organization to undergo a much more facile transition. But whatever may be the juncture in time that the culture change program may be initiated, it should be rooted in our minds that ‘winning the hearts and minds of everyone involved in the BPR effort is most vital for the success of the effort. Once this has been done, the next step is to develop a transition plan from the As-Is to the redesigned process. This plan must align the organizational structure, information systems, and the business policies and procedures with the redesigned processes. “Rapid implementation of the information system that is required to support a reengineered business process is critical to the success of the BPR project. The IDEF models that were created in the As-Is can be mapped to those created during the To-Be and an initial list of change requirements generated. Additional requirements for the construction of the To-Be components can be added and the result organized into a Work Breakdown Structure (WBS). Recent developments in BPR software technologies enable automatic migration of these WBS activity/relationships into a process modeling environment. The benefit here is that we can now define the causal and time sequential relationships between the activities planned.” Using prototyping and simulation techniques, the transition plan is validated and it’s pilot versions are designed and demonstrated. Training programs for the workers are initiated and the plan is executed in full scale.

5: Improve Process Continuously:

       A process cannot be reengineered overnight. A very vital part in the success of every reengineering effort lies in improving the reengineered process continuously. The first step in this activity is monitoring. Two things have to be monitored – the progress of action and the results. The progress of action is measured by seeing how much more informed the people feel, how much more commitment the management shows and how well the change teams are accepted in the broader perspective of the organization. This can be achieved by conducting attitude surveys and discrete ‘fireside chats’ with those initially not directly involved with the change. As for monitoring the results, the monitoring should include such measures as employee attitudes, customer perceptions, supplier responsiveness etc. Communication is strengthened throughout the organization, ongoing measurement is initiated, team reviewing of performance against clearly defined targets is done and a feedback loop is set up wherein the process is remapped, reanalyzed and redesigned. Thereby continuous improvement of performance is ensured through a performance tracking system and application of problem solving skills. Continuous improvement (TQM) and BPR have always been considered mutually exclusive to each other. But on the contrary, if performed simultaneously they would complement each other wonderfully well. In fact TQM can be used as a tool to handle the various problems encountered during the BPR effort and to continuously improve the process. In corporations that have not adopted the TQM culture as yet, application of TQM to the newly designed processes should be undertaken as a part of the reengineering effort.