Managing Business Process Flows – Flashcards

POSITIVE: Increase flow of information, production, business flows; Improve quality of decision making and products; Reduce overall cost of doing business; Ability to communicate inexpensively, effectively worldwide; Creates more competitive market; ERP systems help to manage / process data collection; Advertising costs decreased as social media / networking sky rockets.

NEGATIVE: Decreases small business opportunities - trying to compete in global market. Small fish in a big pond.

1. Corporate 2. Business 3. Functional

1. Defines business in which company will participate and specifies how key corporate resources will be acquired and allocated to each business. 2. Selecting mix of divisions and product lines to ensure synergy and competitive advantages. 3. Focus: reach; competitive contact; managing activities and relationships; and management practices.

1. Define scope of each business, division, and unit. 2. Strategic positioning is determined through this strategy. 3. Goal: differentiate firm from competition. 4. Focus: positioning business rivals; anticipating changes in demand and technologies and adjusting the strategy to accommodate; influence the nature of competition.

1. Define purpose for 1. marketing; 2. operations; and 3. finance. a. Marketing: identifies and targets customers, needs, and competition; b. Operations: design, plan, and manage processes for desired products; and, c. Finance: acquires and allocates resources to operate unit business processes.

Flow time measurements can be formulated through direct measurements. Direct measurements is a four step process. Observe, Select, Measure, and Compute. O - Observe: the process over a extended specified period of time. S - Select: random sample of flow units over the extended specified period of time. M - Measure: the flow time, from entry to exit, of each flow unit in the sample. C - Compute: calculate the average of the flow times measured.

When, over the long run, the average INFLOW rate is the same as the average OUTFLOW rate. INFLOW = OUTFLOW = STABLE PROCESS.

Important Because: in order to determine average flow rate (throughput). Throughput is the average number of flow units that flow through (into and out of) the process per unit of time. A stable process provides the company a method to determine whether or not the company is meeting the customer demand.

Provides a method to determine the average flow rate or throughput. Throughput is the average number of flow units that flow through (into and out of) the process per unit of time. Determines whether or not the company is meeting customer demand.

Flow rate is the number of flow units that flow through a specific point in the process per unit of time. There are 2 types: 1. INFLOW and 2. OUTFLOW. Inflow > Outflow = Bottleneck and excessive inventory. Important because: being able to identify bottlenecks allows the company the opportunity to adjust the processes and improve economic value. Failure to evaluate flow rates, creates problems: 1. Too many flow units in process - working beyond demand. 2. Inventory build-up / increases. 3. Labor hrs being paid with no 'true' work available.

IO 1. Inputs and Outputs: Tangible / Intangible items that flow IN and OUT of the processing environment. FU 2. Flow Units: Items being analyzed (books, money, orders,etc.) NAB 3. Network of Activities and Buffers: activity is the simplest form of transformation; it is the bldg block of processes. Buffers store finished flow units when one activity and waiting for the next. R 4. Resources: tangible assets that are usually divided into two categories: 1. Capital and 2. Labor. IS 3. Information Structure: shows that information is needed and available in order to perform activities or make managerial decisions.

Slowest part (resource pool) of any process. Situations/processes where the performance or capacity of an entire system is limited by a single or small number of components or resources. Sets the production / process speed. Process can only produce output at the pace of the this...

Bottlenecks arise when INFLOW > OUTFLOW. By evaluating bottlenecks, the company increases the capacity of that part of the process; therefore, increase output, and economic value of the process, increases revenue, and decreases losses. Shifting bottlenecks is an continual process. Once you increase the efficiency in one area, another area/process is now the slowest area and sets the pace of production.

Bottlenecks are never eliminated, entirely - they simply shift. There will always be one point in every process that is slower than another.

Economic Order Quantity The EOC is the optimal order size that minimizes total fixed and variable costs.

A tool, a formula used to estimate the range in which they should batch order items to minimize its total annual costs. Used to determine areas of improvement - like reducing overall fixed cost per order (S). Shows the flow rate (R) may quadruple; order quantity should only double and frequency of orders would increase. S INCREASES = Q INCREASES S DECREASES = Q DECREASES