Business Process

Distribution channels are very important for transferring the product from the manufacturer to the consumer. They help in division of labor and provide contact efficiency to the manufacturer. These channels help in maintaining good relations with the customers. These channels consist of various intermediaries. New Ireland Wools can gain benefit from them in a number of ways. The intermediaries associated with the distribution channels perform three main functions, that are, logistical, transactional and facilitating functions.

These intermediaries give the necessary market information about sales and assist in marketing research. They help in identifying the needs of the customers and coordinate with various promotional activities of the company. They also assist the manufacturer in managing the activities like transportation, inventory control, material handling and warehousing. There are basically three types of intermediaries in the channels. They are retailer, wholesaler and brokers. The distribution channel that the company should follow to sell its product in the overseas market and in US is as described: Manufacturer

Agents Wholesaler Retailer Consumers Distribution Channel for the company in the international market (Baker, 2002). Supply Chain management: The Company should consider this concept as a very significant one. It will help in proper and effective coordination of all the activities of the supply chain. It will manage the activities of the members of supply chain from the point of production to the point of consumption. It will also assist in communicating the demand of the customers to the company. It also aims at managing the relations in the supply chain and will look after the logistics of the company.

The cost of the supply chain will also be managed with the help of effective supply chain management (Baker, 2002). Promotion & Advertising To sell the product in the global market; it is very important for the company to use a variety of advertising and promotional tools. They will be effective and will help in promoting the goods of the company in the global market. To create awareness about the product and to gain profit and popularity it is very important that a company makes use of various advertising and promotional tools.

The organization can also make use of various sales promotional activities that will assist in attracting maximum number of customers. Sales Promotion Tools: The Company should focus on using effective sales promotion tools. It can make use of free gifts with the woolen clothes. There can also be a scheme of sweepstakes along with the products. An initial discount scheme can also be introduced with the products. There can also be rewards for frequent purchases for the customers. These tools will surely attract more and more customers to purchase the products of the company and will increase its profitability, as well as, popularity.

An efficient sales force should be maintained by the firm for the promotion and sales of its products in the overseas market. Public Relations: The Corporation should also develop strong public relations with the help of a variety of tools like product publicity, corporate communications, press relations, dealing with legislators and Government officials in the intercontinental market etc. Various conferences, seminars and trade shows can be organized to improve public relations. Advertisements: This can also be an effective way of inducing the customer to buy the products.

Advertisements can be given in newspapers, magazines and can also be shown to the public through media. The company can also make use internet for advertising its products. It can also use celebrity advertising i. e. using a popular personality to advertise the product. The organization can also make use advertising for social cause i. e. AIDS, deforestation, poverty, illiteracy etc. This will be known as ‘Public Service Advertising’ (Different Types of Advertising, 2009). The advertising message should be clear and should convey the right message to the people.

It should be easily comprehensible and should communicate the advertising objectives in the right sense. The advertisement should be creative and catchy. Emotional advertising and personality advertising can be used to advertise the products of the organization. The advertisements should be appealing for the people. Graphics and animations can be used in the advertisements, which will help in attracting children for buying the particular brand of woolen clothes. The ad should undergo various stages before taking a final shape. It should be tested and diagnosed properly to know its effectiveness

Bay remains true to providing this service of connecting buyers and sellers today. EBay’s original goal was to create an exciting, flea market feeling being a market place for auctioning off unique and “collectible”. Items for its individual buyers and sellers. On eBay, buyers get exposed to new online experiences browsing through unique items, placing bids, waiting and finally getting connected to the sellers to settle the purchases. Sellers also get a taste of having something Like an online shop, only that the potential revenues have no upper limit because bids could go as high as the errs want them to.

Sellers only need to place their items online, Walt for bids and finally get connected to the buyers and settle the transactions. Unlike newspaper ads and actual auction events, doing business on eBay Is cheaper and more efficient. This is because sellers would not need to actively monitor the bids, and the minimal transaction fees that eBay charges sellers are cheaper than those of classified ads. After being guaranteed a sale and need not take on so much risk. As time went by, eBay started exploring additional services it can possibly provide.

In 2000, eBay introduced the fixed-price trading and the “Buy-let-NoW’ features, as an effort to increase sales velocity and thereby revenues. EBay also went on to start side businesses, which included acquiring the Ballpoint payment system, offering shipping and logistics services as well as selling advertising space on its website. While the collectibles category remains as eBay’s bread-and-butter business, revenues from other services have started to increase. For example, eBay’s fixed-price trading, the “Buy-let-NoW’ feature, (source: Case page 5), represented 11% of eBay’s revenues in 001.

Also, eBay has been expanding its customer base not. Just by increasing its numbers but also by diversifying their types. Corporate sellers have started to enter eBay’s marketplace, especially because of eBay’s noticeably large community, which will provide them with a wider reach for their products. As eBay’s user base grows larger, its main challenge now is to figure out how to best manage and sustain it.

The Role of Customers

What role do its customers (sellers and buyers) have in providing this service? As mentioned above, eBay is basically an online marketplace where sellers and errs (eBay’s customers) interact in the form of transactions. Like a real marketplace, eBay, as the landowner, simply rents out space for sellers to display their merchandise, while the buyers come to the marketplace to make their purchases. EBay’s interaction with the buyers and sellers is limited to providing them a channel to complete their transaction. EBay emails both the buyer and seller their contact details after closing each auction. It can be discerned that the whole business and the demand for the services of eBay revolve around its buyers and sellers. Without them, eBay would not have reached the prosperous level of existence hat it has today.

Buyers

In 2001, eBay buyers purchased 1 piece of clothing every 3 seconds (Case Exhibit 1). (Case Exhibit 1). This is a sign of how popular eBay has become. A piece of clothing in eBay is sold faster than the time it takes for a person to walk from his living room to his kitchen. EBay’s buyers have helped skyrocket the company’s sales to 9 billion dollars (USED) in 2001. This is roughly 12,000 times the revenue that the company generated during its year of establishment.

Auction prices are driven upwards by the respective bids of eBay’s buyers. In some resistances, the winning bid is higher than the retail price of the item. Because of this, eBay’s sellers are said to be able to recover quickly the cost of their items on sale. This benefits eBay’s sellers, and this gives them an incentive to list more items eBay’s success and dominance in the online auction market. EBay’s buyers attract the thousands of online sellers because of the vast profit opportunities and potential market for these sellers to tap into.

In addition, eBay’s buyers post reviews and ratings to eBay’s sellers for purchases made from them. This helps sellers to improve for future transactions and also helps allow buyers to determine whether particular sellers can be trusted for proper transactions. This encourages sustainability of transactions and better credibility towards not Just eBay’s sellers but eBay itself. These feedbacks alert eBay’s management to fraudulent activities by some sellers and address the problems as well. In conclusion, the main role of eBay’s buyers for the company is that they attract a large number of online sellers to Join the eBay community. This increases traffic for the company and thereby increases profits.

Sellers

On the other hand, eBay’s sellers also attract a wide crowd of buyers that help eBay. Bay’s sellers have an extremely diverse range of products, from time-shares to Beanie Babies to diamond rings. This reels in buyers to the eBay community because joining this online platform gives them the privilege of conveniently shopping for all their needs without having to go from one online store to another. In 2001 , eBay had approximately 423,000,000 product listings by sellers.

In addition, eBay’s sellers increase the company’s profit through commission for each successful bid from buyers. EBay also collects listing fees, both optional and mandatory, from its sellers. Even though each transaction yields only a small original amount, with eBay’s base of thousands of sellers, the fees generate huge revenues for the company. As eBay is merely the “landowner” who waits for the rent, the company doesn’t incur any of the costs the renters (eBay sellers) need to pay. EBay doesn’t suffer any inventory holding costs or warehousing costs unlike other online auction sites.

With low cost of sales, the company is able to retain a high percentage of its sales.  “Our best ideas are our user’s ideas,” stated Meg Whitman, CEO of eBay. This is how much importance eBay places on its buyers and sellers and the huge role the customers play in shaping eBay’s success. The community of the buyers and sellers together is the main reason for eBay’s massive success. As stated above, the buyers are drawn to eBay because of the seller’s items while the sellers are attracted to the sales potential because of the large number of buyers.

Therefore together, they have increased eBay’s value and profits. Plus, they are the ones who draw more people to eBay’s website and make transactions. Companies. Retailers compete with each other to obtain a position in the eBay market. Those who do are able to tap into its established market with huge profit attention. EBay’s popularity grows because of its users and also profits from companies through successful auction fees. In addition, companies are willing to allocate funds for eBay advertising because the large network of users means that advertisements will reach a large crowd. Bay earns non-auction revenues from companies through online advertisements. Advertising is a relatively large source of revenue for eBay, accounting for up to 10% of revenues in 2001 ($18 million dollars). It was also the community that helped eBay improve its services and they are eBay’s source of knowledge. It was the users’ activity that guided eBay to create the “Cars” category. This led to eBay becoming the largest auto site in the Internet. There were also times when eBay’s users informed the management of some system problems that had to be resolved.

The community high degree of interaction with eBay, and within itself has led to sustainable sales, better understanding of customer needs and thus better services. All this contribute to the company’s success.  How effective is eBay in managing its customers and their behavior? What would you recommend eBay do in thee regard? Bay’s efforts center around its customers and users because they have generated eBay’s profits, value and worldwide recognition. If eBay’s users were to suddenly turn their backs against the company, eBay might as well has lost its greatest assets.

Therefore, eBay should not only serve but also manage its users well to retain its community, its positive image to existing users and potential users image and keep its profits growing. EBay has experienced its share of ups and downs in handling its users. “We believe people are basically good. ” This is eBay’s motto. It has proven to be true n most cases, as the company has maintained a low 0. 001% registered fraud incidents. Nevertheless, eBay has implemented its own fraud protection program to deal with buyers’ complaints regarding this matter as well as to prevent and mitigate fraud.

In addition, eBay takes disciplinary action against fraudulent sellers by issuing warnings and permanent suspensions. EBay has also decreased its cheating incidents by implementing a rating and feedback system amongst buyers and sellers. Because other people’s ratings of sellers will always be shown on the seller’s page, people will be less willing to buy room a seller with negative feedback and low rating. In addition, eBay can take note action if further deception occurs. This allows eBay to effectively regulate its users actions and ensure that sellers retain a minimum “good seller” standard.

However, eBay’s users have an unusually high control over eBay’s actions. For example, Mary Lou Song, eBay’s senior product manager, made a simple change to the color of eBay’s feedback stars. She got continuously criticized by eBay’s users for two weeks. EBay’s management were slow to react to the situation that had escalated from this simple user issue. There is an underlying issue in why eBay’s management wasn’t able to control the situation- which is a poor feedback system. If eBay had quickly addressed this concern by its users then this wouldn’t have become “big news”.

Therefore, eBay should create a better feedback system to address user’s issues and concerns (further explanation will be seen below). In addition, eBay has fostered a sense of community in its site that has caused eBay’s users to be loyal. This loyalty towards eBay has made its users eBay’s own ambassadors, addressing concerns that will only propel eBay forward. Therefore, it is in fact eBay’s poor feedback response system that has caused eBay’s users to have an unusually high control over the company. In addition, eBay has successfully attracted attention from large companies (e. G. MM, Dell, Disney) that are potential drivers of increased volume sales. EBay treats its corporate users differently from its other users by giving them extra support to be up to eBay’s user standards and to be knowledgeable about eBay’s feedback system. Despite this, eBay has not been able to effectively manage these corporate sellers and user’s reactions towards them. Bay’s buyers demand more attention from these large companies than what these companies are used to giving. For example, buyers expect these corporations to ship their items quickly and be contacted right after their successful bids.

Some corporations needed a large degree of adjustment to accommodate these demanding users. Other corporate sellers have received negative feedback regarding broken merchandise and the inability to contact the company. Large corporations are known to ignore eBay’s users and this has angered the users, as seen from constant complaints to eBay’s management. EBay has yet to succeed in tackling this sticky situation properly to appease both the large corporations’ and users’ frustration towards each other. Our group believes that the solution lies in building a corporate service hotlist. Bay currently has a support system that is exclusively for eBay’s large corporations, as stated above. With the new hotlist service, this team will also handle the complaints buyers have towards these large corporations. This team will act as the middle man for both the buyers and large companies to appease both parties and ensure transactions are completed well and without further complaints. Recommendations mentioned in this section will be further discussed in the last section. How successful is eBay?

How Successful Is EBay

Increasing Net Profit & Revenue eBay’s financial statements tell us a story of consistent growth. Its revenue rose from $32 million in 1996 to $748 million in 2001. Specifically, it enjoyed a 73% increase in revenue from 2000 to 2001. This led to an 87% increase in net profits in the same p of time. (See Figures 1 and 2) b. Low Inventory Costs consistently lower than that of industry standards. This is attributed to eBay’s business model. Bay’s core service is being the connecting platform between a diverse network of buyers and sellers. Once an auction is won, the rest of the transaction, such as courier and payments, are left to the buyers and sellers to complete.

To the buyers and sellers, this set-up may be a curse or a blessing. It is thought to be an inconvenience to arrange one’s own courier and payment, but this may also be good because each buyer-seller pair can come up with the least costly way of completing their transaction. For eBay, this arrangement means much more than convenience?it cuts their inventory costs. By letting their sellers deliver and store their own inventory, the need to rent out a warehouse for stocks, as well as to account for inventory and spoilage, is eliminated altogether.

In terms of expenses, we can see that eBay’s efforts in Sales and Marketing have been expenses towards Sales and Marketing, its revenue has been growing at a faster rate. We can also see that although costs for Sales and Marketing have been growing over the past 5 years, they comprise a smaller portion of total operating expenses in 2001 than they did in 1996. This is due to eBay incurring more miscellaneous expenses such as stock option taxes, amortization and intangibles among other things.

This increasing absolute allocation to Sales & Marketing could possibly have increased their pull within the market, and it is shown in their sharp increase in revenue and net profit. By keeping their revenues high, and their costs low, we can see that eBay has succeeded in being a profitable firm. We have narrowed down two things that contribute to eBay’s success: its growing network of users and its innovative low-cost operations.  How Corporate Sellers tap into eBay’s market eBay has become much more than an exchange platform. It has morphed into an immense network of buyers and sellers.

The large eBay network has attracted corporate retailers to Join eBay. EBay has accommodated these corporate sellers through a segment called eBay Stores, where large retailers can tap into the extensive eBay network. This only shows how much eBay’s network has grown?the market no longer looks for sellers. The sellers actively look for the market. B. Loyalty of the Market eBay’s network has such a great human pull that even during the 9/1 1 crisis, the company managed to outperform the analysts’ forecasts. How did this come to be? Bay auctions are highly personal in nature.

Buyers will usually expect to receive high attention from the sellers, which range from personal notes to speedy responses. Through these personal interactions, both buyers and sellers would develop a sense of attachment to eBay, forming what can be called an eBay community. EBay’s online discussion forums also help foster a great sense of community into the members. Members don’t only get to interact with each other through bidding transactions. These discussion forums are also a platform for users to voice out their concerns with regards to the eBay service itself.

Issues would range from technical glitches in the system to simple color schemes. Users also come together to talk about what features they like or don’t like, or even what features they would like to see. Because eBay listens to its members in such an attentive manner, these users become more and more loyal to the website. EBay’s operations do not lie in sales. The website has strategically left all logistical dealings to its community of buyers and sellers, although not purely. This means that the success of eBay’s main operating process is centralized around keeping the beset technologically up to date.

This involves debugging errors and constantly improving the website. In this process, eBay has to keep in mind the expectations and needs of customers. This kind of process is heavily based on reactions from users and this is something eBay must pay attention to. EBay has managed to understand this nature and they have taken appropriate steps to integrate their users into the decision making process for their website updates. EBay has taken much initiative into integrating its user feedback into the company’s decision-making process.

There are twenty community help boards, and other user discussion forums that are set up not only for gathering feedback, but also to promote the high interaction of eBay’s customers. Comments from these areas are submitted to eBay’s developers so that the company could be constantly updated and connected to its customers’ opinions. A focus group series called Voices” was also hosted in their headquarters. This focus group brought together both buyers and sellers from all over the country to meet with eBay’s executives. These users would then share with them their opinions on owe eBay is run as well as on eBay’s policies and future changes.

Only thing to do is to continually improve the technology We know that eBay’s main service depends highly on how functional and trustworthy their service is. While eBay has managed to succeed in terms of user trust, it seems that work needs to be done to make their feedback system more efficient. EBay has established multiple channels to gather feedback from buyers and sellers (the fastest of which would be the online community boards). Knowing this, we believe that the remaining challenge is to find a way to quickly respond to these customer needs in a way that would not place the other parties at a disadvantage. Bay’s identity of being the middleman leaves it in a tricky balancing act that requires deftness, skill, and a careful awareness of the mark it leaves. Online market, providing a unique shopping experience to its customers and shipping the products to their doorstep. Wall-Mart, while not found on the internet, can be considered as eBay’s competitor because of its large presence in the retail industry. Wall-Mart also offers a wide range of products that may rival eBay in terms of diversity.

 Introduction

Business Process Management (BPM) is the medium by which management’s involvement is instigate and sustained. A common feature of the new approaches to organisation is that the internal activities of firms are seen as a process or a set of processes and that the organisation problem of the firm centres round optimising the outcomes of internal processes. Processes take inputs and convert them to outputs on behalf of the ‘customers’ of a given process.

A business process is defined as the “specific ordering of work activities across time and place, with a beginning, and end, and clearly identified inputs and outputs: a structure for action” (Davenport, 1993, p. 5).

Elements of BPM

Elements of BPM have been around for some time. They can be distinguished in literature on ‘value’ and ‘quality’ going back some time. The more cynical might be forgiven for feeling that what has been reengineered is the wheel.

Even so, amongst its distinctive features, and one which perhaps elucidates its attractiveness (and saying much about its dangers) is it’s assert to socio-technical systematicity. Leaving aside this entire means for the moment, one thing this systematicity doe’s involve is effective measurement. This is why technology is so central in the BPM literature. Even though BPM can be variously typified as a recipe for basic change or as a more modest and progressive modification of business objectives in terms of core processes (Harrington 1991), the role of IT is more or less universally seen as critical. Particularly, IT is significant since it is able of magnifying the accuracy and the scope of measurement. Thus:

“Measurements are key. If you cannot measure it, you cannot control it. If you cannot control it you cannot manage it. If you cannot manage it you cannot improve it”. (Harrington 1991:82)

However, in spite of placing IT at the centre of the change-management process, BPM is predicated on the recognition that traditional design has, in many instances, failed to produce the productivity gains anticipated for business, particularly in its ‘white collar’ sectors. That is, at the same time as being fundamentally a method for changing the organization, implicitly at least, BPM problematises and challenges orthodox approaches to systems design. BPM proponents make a distance from the modeling activities related with traditional design by arguing that:

“All these techniques come from the computer world. It is as though we learned to think in a way that works for computer systems, and we realized we could apply the same way of thinking to describe an organization…we find this unacceptable…we shall introduce… the basis for a modelling technique for people, not machines”. (Jacobson et al. 1995:36)

Elzinga et al. (1995) observed that numerous companies are engaged in assessing ways to develop their productivity, product quality, and operations. They found that Business Process Management is a new area of such improvements. BPM can be any planned approach used to analyze and persistently improve fundamental activities, such as manufacturing, marketing, communications, and other main elements of a company’s operation.

BPM and Implementations

BPM is a means by which an enterprise’s ‘Quality’ programme (e.g. TQM) is implemented. A part of BPM is the recognition of CSFs to facilitate an enterprise to focus on its vision, mission and goals. The statements of the enterprise’s vision, mission and goals are essential to promulgate and must be made widely known to the enterprise’s employees as the guiding principles for the enterprise.

Jenster (1987) introduced a strategy planning and strategic control process that is firmly integrated with the firm’s information system. The way is used for developing, monitoring and assimilating critical information into effective strategic management decision support. The CSFs clearly and briefly communicate critical elements of the strategy to members of the organization. More significant, the CSFs direct the attention of key managers to focus on the vital premises of the firm’s strategy.

Shriberg et al. (1997) described how the BPM method can be used as a tool for strategy execution. This technique describes CSFs as the primary step towards strategic execution. These few factors should be executed with excellence to gain and protract competitive advantage. Once CSFs (or driving forces or core competencies) have been identified, the next step in BPM is to widen performance measures for the CSFs. CSFs specify to the firm what has to be done to attain goals. Performance measures determine how well the firm should perform and whether it has been successful.

Lots of authors suggest that CSFs can be used in an organization’s planning function. Additionally, they can be used in increasing strategic plans, implementing a plan, helping managers attain high performance, managing resources and monitoring a corporation’s activities (Ferguson and Dickinson 1984).

George Eckes (2001) illustrates key elements of Business Process Management are:

1. Creation and agreement of strategic business objectives.
2. Creation of core, key sub- and enabling processes.
3. Identification of process owners.
4. Creation and validation of the key measures of effectiveness and efficiency for each process (also known as measurement “dashboards”).
5. Collection of data on agreed dashboards.
6. Creation of project selection criteria.
7. Using the project selection criteria for project selection.
8. Continual management of the processes to achieve strategic objectives of the organization.

According to Hammer and Champy (1993 p. 35) “a business process is a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer.

They further go on to suggest that business processes correspond to natural business activities, but they are often fragmented and obscured by the organisational structures. Processes are invisible and unnamed because people think about the individual departments, not the process with which all of them are involved”.

Giving examples, they suggest that the name given to a process ‘must imply all the work that gets done between the start and the finish’, what they also call the ‘state-change’.

One good instance of the design of a complete business process is the order completion system of a major American multinational. As order completion is the key process within the firm, the process is planned and monitored from the start—the number of times the phone rings—through implementation (checking the item in the catalogue, transmitting the order to the computer regulated delivery belt, picking and packing) to delivery.

Economic Conception of the ‘Business Processes’

A desire to offer an economic conception of the term ‘business processes, centering on two aspects. First, the term ‘process’ entails a dynamic character, dealing with the activities and mechanisms by means of which outcomes are achieved rather than solely the outcomes themselves. And second, business processes are collections of activities which are not distinguishable by the normal organizational compartments of firms, but which may be dispersed amongst the functional units of the organization.

Briefly put, just as internalization is an option to the market in resource allocation, then the business processes are the inner counterpart of the market process. And insofar as the market process coincides with the initiative of entrepreneurship (Kirzner 1979), then consider that the internal processes of firms are a facet of entrepreneurship.

Consider the nature of ‘activities’ within the firm and their relation to the conventional theory of the firm’s choice. The usual marginalize analysis is concerned with the outcomes of maximizing behavior, rather than with the processes through which choices are made and implemented.

Making choices often entails, as Nelson and Winter have pointed out (1982:65-71), a process linking deliberation. Activities within firms involve the deliberations and information processing that is necessary for firms to decide the actions they will take and also to react to unfolding events as decisions are implemented. While orthodox analysis provides powerful pro-positions about nature of the choices which maximize a firm’s objective function, these are suitable only if the deliberative process has successfully discovered and implemented the most favorable choice.

The nature of these deliberative activities which allow firms to make and implement decisions are the generation and fusion of knowledge (tacit and explicit) and the collection and transmission of information and data concerning to that knowledge for the purpose of making choices and responding to relating events as these choices are implemented.

According to North

“In fact, the real tasks of management are to plan and discover markets, to evaluate products and product techniques, and to manage energetically the actions of employees; these are all tasks in which there is uncertainty and in which investment in information must be acquired”

This process is entrepreneurial in character. In effect, entrepreneurship is a process concerned with discovering, developing and using opportunities for gains from trade.

As Casson has pointed out: “The key function of the entrepreneur—the one that can be regarded as defining his role—is to take significant decisions that are difficult to make”.

By extension, the deliberative processes, those activities which take inputs and ‘create’ outputs (cf. the quote from Hammer and Champy 1993), are entrepreneurship internalized within the firm.

A significant aspect of Hammer and Champy’s definition is that business processes comprise a collection of activities. As the division of labor within firms has often been described in the context of Adam Smith’s pin factory, it has been progressively more the case during the current century that there is a division of managerial labor. See, for example, Radner (1992). Certainly the division of managerial labor is a primary reason for the organisational problem within the firm (Radner 1992; Carter 1995).

Casson has suggested the term ‘team entrepreneurship’ for the state in which no single individual possesses the requisite skill or capability to undertake all the difficult decisions (Casson 1985b:184-6) and managerial, deliberative activities are shared among several individuals. The problem of organizing business processes is the problem of organizing an entrepreneurial team.

Buckley and Carter 1996 suggested that there are three problems which must be overcome in the organizational design of a business process team. One arises from the allocation of information, when one member of the team can have access to knowledge or information that would aid another member. The second is organization, since there is frequently interaction or complementarity between actions that are the responsibility of different individuals. That is to say, as the choice made for one action can affect the value to the firm of the choice made for another action.

While activities are complementary, it may be significant to ensure that the deliberative choices are made mutually so as to optimize the generally gains from trade for the firm. The final problem is motivation: of ensuring that the individual members of the entrepreneurial team each perform their individual activities in pursuit of the shared interests of the team, rather than in their own individual interests. These organizational problems are mainly acute in a multinational firm, where team members are geologically separated and where they may also have differences in tacit knowledge and cultural background.

Summary and Conclusion

In summary, the following economic conception of a business process: a set of complementary deliberative (entrepreneurial) choices linking the collection and synthesis of knowledge for the generation of gains from trade. High complementarity between activities provides a natural definition of the activities which comprise a given process. (Hammer and Champy’s). When complementarity is low between activities, then they are separable into distinct processes, for which coordination is less significant.

Thus in conclusion I should say that Business process is an internal focus for continuous improvement. The term process means any relationship, such as billing customers or issuing credit notes, that has an input, steps to follow, and output. A process is a blend of methods, materials, manpower, machinery, etc., which taken together produce a product or service.

All processes contain intrinsic variability and one approach to quality improvement is to progressively reduce variation, first by removing deviation due to special causes and then by driving down common cause variation, thus bringing the process under control and then improving its capability. Diverse statistical methods (e.g. histograms, Pareto analysis, control, charts, scatter diagram) are extensively used by quality managers and others for process improvement purposes (Kanji and Asher 1993).

Work Cited

1. Buckley, P.J. and Carter, M.J. (1996) ‘The Economics of Business Process Design: Motivation, Information and Coordination Within the Firm’ , International Journal of the Economics of Business ,3 : 5-25 .
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3. Casson, M. (1985b) ‘Entrepreneurship and the Dynamics of Foreign Direct Investment’, Chap. 8 of P.J. Buckley and M. Casson (eds) The Economic Theory of the Multinational Enterprise, London: Macmillan.
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7. George Eckes (2001) The Six Sigma Revolution: How General Electric and Others Turned Process into Profits, John Wiley ; Sons.
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17. Shriberg, A., Lloyd, C., Shriberg, D. and Williamson, M. (1997) Practicing Leadership: Principles and Applications, John Wiley ; Sons.

Business Process Management (BPM) can be defined as a field of management which is based upon the needs and wants of the organization’s customers and clients. Business process management is a holistic approach of management which deals with effectiveness and efficiency of the organization, in this case it would be IKEA and it encourages innovation, flexibility and integration with technology. This approach of management is also called the ‘process optimization’ process as well, because it is continuously trying to improve the IKEA’s process.

Business process management is based on five categories. These categories include design, modeling, execution, monitoring and optimization. They are as follows:- Design Design is based on the identification of a process and also based upon activities that would be conducted or needed for the process (Jetson & Nelis, 2006). Modeling Modeling can be considered as a theoretical design of the process. Modeling basically includes different combinations of variables like increase in rent or a change in the cost of materials etc.

This process also includes the ‘What If’ scenarios as well. Execution Execution helps with automation of the process that is it automates all the processes, so that it is able to develop a process that helps to execute the required steps that are needed for the production of IKEA’s products. For example, a manufacturing system accepts raw materials (like wood, nails etc. ) and produces finished goods (like beds, chairs, tables etc. ) An information system that accepts resources as input and processes them into products like furniture as outputs.

A business organization like IKEA is a system where economic resources are transformed by various business processes into goods and services. Monitoring Monitoring means to keep a check on the processes of IKEA’s products, to make sure that everything is right on track. Monitoring is a form of controlling and evaluating to determine as to whether the system is moving towards the desired goal or not. If monitoring is being done is a continuous way, then in case a problem arises, the problems will is dealt is a quick and efficient manner by the management of IKEA.

For example, a sales manager of IKEA exercises control when reassigning salespersons to new sales territories after evaluating their sales performances (Daft, 1997). Optimization Optimization process in the business process management cycle would include; identifying the potential bottlenecks of IKEA, it would also help with identifying the opportunities like cost savings or other improvements that were done in IKEA’s processes. Optimization will help create a huge business value for IKEA.

For example, you could try to determine the highest possible levels of profits that could be achieved by varying the values for selected revenue sources and expense categories. There may also be some constraints that can restrict changes to variables such as the limited capacity of a production process. (Jetson & Nelis, 2006) Internal and External Drivers of Business Process Management Business Drivers Business drivers are basically business requirements that are caused by the nature of the industry and its competitive or environmental forces.

For example, companies like IKEA that have global customers, that is, customers who buy their products from their outlets worldwide, such companies will need global information technologies for online transactions so that they can provide fast, convenient services to their customers of face losing them to their competitors. Business drivers for global information technology for IKEA would be its products, customers, operations, resources and collaboration. For example, global e- commerce websites and customer service systems for IKEA’s customers and global supply chain management systems for IKEA’s suppliers.

Internal Drivers As it is a known fact that internal drivers are considered to be a company’s factors which are related to the business of the company. The actual drivers of a company would include liabilities, assets, revenue, income, products, management, production process, profit, and share volume of the company in our case it would be IKEA’s. The internal drivers for business process management are 1) direct access to the clients, and 2) the scope of ‘offshore- able’. But the major internal driver of business process management is a direct access to the company’s client.

Direct access to clients would mean that IKEA has a direct link with their customer that is there is no third party included link. As it is a known that in today’s time customers are always in charge, that is it has become very easy for the customers to make a comparison in products and companies and they can switch any time they want to from one company to another. Therefore companies like IKEA are building strong relationships with their customers, and as a result these relationships are worth more than IKEA’s products, stores, factories, web addresses and even its employees. Therefore IKEA is a customer focused business.

(Jetson & Nelis, 2006) The scope of ‘offshore- able’ is based upon IKEA’s efficiency, effectiveness and economy. Therefore the success of any company like IKEAS’s is heavily dependent on information technology. And here efficiency should not be measured only in terms of minimizing costs, time and the use of information resources, but it should also be measured by the effectiveness of technology in supporting IKEA’s business strategies, enabling its business processes, enhancing the company’s structure and culture alike and as well as increasing the customer and business value too.

External Driver External drivers are usually those factors that are outside the company and these factors are not in control of the company, yet these factors have a huge effect on the processes of the company. External drivers or factor usually include competition, government regulations, economic environment, social interest of the employees and groups and technology. The external drivers of business process management are 1) an acceptable level of interaction and 2) an acceptable level of risk. (Jetson & Nelis, 2006)

An acceptable level of interaction IKEA would be based upon the specialization and the compartmentalization of the company’s processes. The level of interaction is connected with the markets of IKEA, which would by the furniture industry. Compartmentalization would help business process management by communicating with their clients and employees alike. The system will help to make that the groups collaborate but with an emphasis on customer service as well. And an acceptable level of risk is mostly based on salivating over potential labor cost savings of the company in this case would be IKEA.

The article written by Dr. Raj Ramesh talks about Management Process focusing on the new course to take in business process management entitled A Systems Approach to Business Process Management. (Ramesh, 20 November 2007). It discusses the challenges encountered by business companies, their mistakes on taking a solution for it and the best ways on how to deal with it. According to the article, companies usually have the quick-fix and the problems-that-can-never-be-solved issues, and that with these perception of things, either ways will lead to the worsening of the given problem.

The author suggests that the best way to plan solutions for these is to take a systematic approach and apply the theories for analysis and design approaches to the crisis. It also points out that the company’s departments should cooperate and interact in making the plan of action because each department’s functions contribute to the whole solution. Organizational transformation deals with the changes in phases of the company for them to solve them their problems.

It includes analysis of its model – the present and the preferred process, the design which includes the IT and business architecture, implementation of data mechanisms, access and systems, and of course the implementation of these chosen modifications. (Ramesh, 20 November 2007) In the analysis of its models, the study of the present structure and its comparison with the desired model can already show solutions to the current problem. In addition, in this first step, it would also be the best time to develop business architecture for the company and formulate steps in order to meet the legal requirements of the state.

However, in the second step which is the designing of the company’s structure by function, it may include the restructuring of the company’s rules, data and user interfaces, and also the IT architecture which shows the connection of each department and its significance to the company as a whole. In this step, we ca see the importance of everyone’s interaction and cooperation in taking an action to solve company matters problem. Since we already have analyzed and designed the actions to make, the third step, which is the implementation is next.

First, a system should be utilized so that we have an order in the implementation, the business process management can be used. Then put into action the mechanism and interfaces that are needed to implement the procedure. And lastly, after the designs and structures are implemented within the company, the operation and management takes action. Distribute the products, monitor sales performance and feedbacks to further improve the product’s performance in the market. (Ramesh, 20 November 2007)

The article is very informative especially to the companies that are experiencing internal problems and finds it hard to make an approach on solving it. It also reemphasized the significance of taking systemized ways in dealing with the processes in organizations, and that the it should work as a whole in facing the challenges it encounters overtime. This high level of process gives the organization a high level of maturity in dealing with problems and making solutions, and with this as time goes by, their level will be higher and higher resulting to a continuous improvement of their company’s performance.

If all organizations will adapt this process, then in the future, every part of the business can be competitive and will last the test of time especially that in the business world, change is a constant movement and that in order to survive, flexibility and the skill in decision making should be exemplary.

References Ramesh, Raj. A Systems Approach to Business Process Management. November 24, 2007 retrieved from http://www. bpminstitute. org/articles/article/article/a-systems-approach-to-business-process-management. html.

Business Process Reengineering (BPR) is a change management tool that organizations all over the world are now implementing in order to get competitive advantage over their rivals. The organization initiates and controls most of the process changes. Business process reengineering involves changes in business processes, management systems, hierarchies, workflows, job definitions and even organizational beliefs and attitudes. According to Ezigbo (2003), business process reengineering involves rethinking the current theories of the business. Remarkable improvements are made by breaking away from following the old methods and adopting the newer ones.

Technology is an essential aspect because few changes in today’s world can be made to improve processes without using technology. According to Lowell Greenberg (1996), it is most appropriate to appoint a senior partner or executive as the leader in the business process reengineering process. He convinces people that something is wrong in the current processes and why making certain changes would help the organization overcome those problems. This would also help the organization regarding feedback on the business process reengineering (Greenberg 1996).

In this paper, we will review how Chase National Bank (now JP Morgan Chase and Co.) implemented business process reengineering in many of its business processes. We will also identify the pros and cons of BPR that were experienced by Chase Manhattan Bank. Chase Manhattan Bank was created when Chase National Bank merged with The Manhattan Company in 1955.  It was in 1996 that the companies Chase Manhattan Corporation and Chemical Banking Corporation merged together to become United States’ largest bank holding company. Later in 2000, Chase Manhattan Corp merged with J.P. Morgan & Co. to form J.P. Morgan Chase & Co.

Chase National Bank’s approach to business process reengineering was very similar to the five steps suggested by Davenport and Short (1990). Firstly, establish your vision and objectives at all levels. Secondly, recognize the process that would benefit the organization. Most companies choose processes that are conflicting with the vision or goals of the business.

Others choose the most critical processes whose reengineering would benefit the organization the most. Thirdly, evaluate the current process. This would help in avoiding the mistakes that were previously being made. Fourthly, identify the level of technology that you can bring into the process and how much would it effect the entire process and eventually the organization. Lastly, design and build a sample of the new process and evaluate its performance. See if you can further improve it and then build your actual process.

Business process reengineering helped Chase Manhattan Bank to reengineer its name and address process to live up to their pledge of “one and done”. The team worked together with the Credit Card, Auto Finance and Mortgage to get a grasp of the present processes of Chase Manhattan Bank. The team then reinvented and restructured the model using newer technologies. This new model enabled Chase Manhattan Bank to accept client requests through any means of contact, at any time.

It got rid of errors in entering the data, duplicated entries and updated customer accounts regularly. The clients now did not need to call several times hence the “one and done” policy was being portrayed. Upgrade in technology also included launch of E-funds disbursement cards. This allowed a variety of cards such as payroll and gift cards to be customized. Funding and reporting became much suppler. Use of multimedia helped in enabling clients to open mass accounts.

Another component of business process reengineering was the new Branch Cash management. There was previously no computerized way, at Chase Manhattan Bank’s branch and ATMs, of forecasting how much cash would the customers demand. Chase Manhattan Bank needed to maintain adequate cash reserves so that the clients were never refused cash by the ATM machines. Through business process reengineering, Chase Manhattan Bank developed a cash tracking process which would aid the bank in keeping just the right amount of cash on a given day. This meant more happy customers and also lesser opportunity cost of too much idle cash. This development contributed in increasing revenue by $2.4 million (Shin & Jemmella 2002).

Previously service charges that were refunded were recorded and documented manually in the branch and were faxed to the back office for further processing. The business process reengineering team conducted two lengthy focus group sessions with the staffs of the branch and the call center. The result was Service Charge Reengineering. The existing processes were improved and made computerized.

Customers’ requests were now credited to their accounts on the same day and branches were able to process requests the contact point. Due to this the bank saved around $500 million annually. A new redesigned model was also developed that enabled automated decision making concerning approval or declination on customer requests (Shin & Jemmella 2002).

The business process reengineering also included Retail funds transfer reengineering. The entire retail fund transfer process was first evaluated. Then, some changes were brought to make the process better and more efficient. The previous manual method of transferring funds in the back office area was replaced by real time processors. This considerably improved the service of the bank and reduced operating costs worth $1.4 million.

The bank’s legal compliance, levies processing and other money decision documents are handled and dealt with the Centralized Holds and Levies department. Through business process reengineering, the processing of legal documents was reengineered. It was now much speedier due to automation. This improved the service quality of Chase Manhattan Bank and also boosted relations with attorneys and law agencies. Hence loss was minimized. Workshops with government agencies and officers were held and this led to getting of the New York State Congress sponsorship to change the law regarding bank handling of levies and judgments. This further reduced expenses by $790 million and increased income by $995 due to the new legal processing fees (Shin and Jemmellav 2002).

The two most important pillars that make up the foundation of an organization are people and processes. Both of them have to be efficient and effective. If, for example, you have a very motivated workforce but inefficient, obsolete and burdensome business processes then the organization would undoubtedly suffer. That is why business process reengineering is so important. It changes the way people carry out the procedures. It makes existing processes efficient and hence contributes in benefitting the entire organization. Many companies have done business process reengineering with dramatic results to show for it.

While implementing business process reengineering, the human resource should be managed very effectively. The new vision and all planned changes should be conveyed to the middle managers and the low level employees. This promotes a sense of direction among the personnel of the organization. Everyone feels motivated contributing to the change in the organization. The improved processes and latest technology helps employees become more productive.

The increase in productivity benefits the business and also boosts the motivation of the employees. Many employees enjoy the transition from the previous slow, outdated and laborious processes to new, innovative and more efficient ones. The reengineering also gives workers and managers something new to look forward too. The people in the organization also take pride in the fact that their department or function is going through a massive change to get more proficient (Johansson, 1994).

However, there exist a few drawbacks of business process reengineering regarding human resource. Some employees are hesitant to change. They might be technology averse or they just might like the older way of doing things. Some employees are reluctant to adapt to the new processes because the planned changes were not communicated to them. Also, often it is the case that some employees are asked to leave the organization because the new processes are more technological and can be managed without those employees. This creates a very discouraging environment because everyone feels insecure about his or her job (Jeston &  Nelis, 2008).

Every organization is different. Hence, even though there are some general guidelines or steps to implement business process reengineering, each organization is distinctive and needs customized reengineering to cater to its unique conditions. The way Chase Manhattan Bank implemented its reengineering is just an example for some financial institutes to take heed and apply it to its benefits.

As Davidson (1993) pointed out that successful reengineering eventually leads to business transformation. Business process reengineering not only modifies previous processes, it also comes up with newer automated processes and even newer products and services. The dramatic results obtained by reengineering helps the business get competitive edge over its rivals. An organization should however not forget the massive impact business process reengineering has on human resource and thus manage it effectively.

References

Davenport T H and Short J.E (1990) The New Industrial Engineering: Information Technology and Business Process Redesign, Slogan Management Review, Viewed may 5, 2010 pp. 11 – 27.

Davidson, W.H.,1993, “Beyond re-engineering: the three phases of business transformation’’ IBMSystems Journal

Ezigbo, C.A.,2003,Advanced Management Theory Immaculate Pub, Enugu.

Greenberg, L.,1996, Business Process Reengineering: constantly adapting to change. Online. Available at: http://earthrenewal.org/bpr.htm [viewed May 5, 2010]

Greenberg, L.,1996, Business Process Reengineering: Pitfalls. Online. Available at:

 http://earthrenewal.org/bprmist.htm [viewed May 5, 2010 ]

Jeston, J. &  Nelis, J., 2008, Business Process Management. Butterworth-Heinemann

Johansson, H.J.,1994, Business Process Reengineering: Breakpoint Strategies for Market Dominance. Wiley

Shin & Jemmella.,2002, Business Process Reengineering and performance improvement: A case of Chase Manhattan Bank. Business Process Management Journal, volume 8- 4. [viewed May 5, 2010 ]

As trained industrial engineers, it seems pretty basic to us. Its simplicity is what makes it work. While the Japanese are rightfully given credit for re-vitiating the concept of lean, its roots really go back to Frederick Winslow Taylor of Bethlehem Steel in the asses and asses. Then it was called “Scientific Management. ” The Taylor approach starts with a clean slate – it designs the process to, as much as possible, only include steps that create value in the product. It is well suited for new plants, new products or new processes. The Japanese approach addresses existing plants, products and processes.

It is focused on eliminating “waste” (anything that is not adding value). As waste is reduced, quality improves, production times are reduced and cost is minimized. Various methodologies are used as tools to achieve this including Value Stream Mapping, AS, Kanata (pull systems) and error-proofing. Our view is that starting with Tailor’s approach lets you establish the perfect world as a base line. Using the Japanese approach then helps you work toward the perfect world. Let’s use a casting example. A typical process might be to cast, clean, finish, re-clean, machine and ship.

Why do we clean, finish and machine? We now these processes often can’t be eliminated but why not try? If the casting can be produced as-cast either by achieving best practice methods or changing casting methods (investment casting and lost foam often achieve as-cast parts), machining can be eliminated or minimized. If you don’t put the stock on you don’t have to take it off. Why is finishing (or at least why is so much) required? We know a state-of-the-art MEMO producing iron castings in green sand that require almost no finishing. Are you grinding/trimming parting lines?

Then your patterns or molds may need attention. Are you grinding rough casting surfaces? Then your sand is not right or your die casting practices need improvement. Grinding gates? Can they be relocated to areas where they can be left untouched and minimized using knife gating? Are you welding? If you are not Joining parts in welding all you are doing is fixing mistakes. Why do you clean before finishing? Good sand and shake-out practices should produce castings that are clean enough for finishing. Just clean one time after finishing. What’s your scrap level?

If you’re not under 3% total scrap, no matter what casting method you use, you are not achieving best practice. That’s without welding and other salvage operations by the way. There are metal casters achieving these levels every day. How do they do it? They share a lot of common traits. First, they understand what best practice is for the process they are using. That includes melting, molding, sand preparation, finishing or what-ever process they are using. They know the best practice way to do everything. You would be surprised at how many metal casters we visit who don’t know what can be done.

Next, they are fanatic about doing it the right way. That means equipment 2009 The Folk Group, Adolescent, PA, 18901. 1. 215. 340. 9072 www. Foolproof. Com Page 2 of 8 s well maintained, systems are defined, documented and implemented the same way every time and everyone is well trained and does their Job right. After that they focus on problem Jobs – ones that require re-design, special gating, handling or other steps to insure they are scrap free. Finally, they document all scrap and attack issues. There are other lean practices to implement. If production flows perfectly, there is no inventory waiting to be worked on.

Metal casters have helped minimize work-in-process by installing conveyor lines to keep castings moving right through to finished goods storage. This eliminated putting the castings in totes and the added handling. One low to medium volume gray/ductile iron Jobbing foundry (casting weights under 50 pounds) we know now ships 30% of its production the same day and believes they can achieve 70% same day shipment. These standards aren’t Just for the high volume or dedicated metal casting companies any more. “Automation” or “smart automation” is a part of lean manufacturing as well.

Automation refers to automating the process so humans can focus on what humans do best. The objective here is to design the machine so it knows when it is working abnormally and alerts human. The human no longer has to monitor normal production but can focus on abnormal or fault conditions. Removing routine and repetitive activity reduces the chance for error. Lean manufacturing is focused on doing the right tasks, at the right place, at the right time, in the right quantity to achieve perfect work flow while eliminating waste (scrap) and with the ability and flexibility to change.

Implementing lean manufacturing often requires a cultural change in all levels of the organization. Once management is committed, a program needs to be started that begins with small successes and grows to include the entire organization. The Toyota Production System (TAPS) focuses on murk and mud. Murk focuses on the preparation and planning of the process, or what work can be eliminated in the design process. Mud are those waste steps and processes that add cost. Murk is used in new product design and mud is used to improve existing operations. TAPS identifies 7 key mud*.

They are: 0 Transportation (moving products that is not actually required to perform the processing) 0 Inventory (all components, work-unprocessed and finished stock not being processed) 0 Motion (people or equipment moving or walking more than is required to perform he processing) 0 Waiting (waiting for the next production step) 0 Overproduction (production ahead of demand) 0 Over Processing (due to poor tool or product design creating activity) 0 Defects (the effort involved in inspecting for and fixing/scrapping defects) *From “Lean Thinking”, Woman, James P. ND Jones, Daniel T. , Free press, 2003, p. 352 What are the steps to developing a lean culture? 1 . Senior management needs to agree on a lean vision. Page 3 of 8 2. Identify the project leader and set objectives for the leader. 3. Communicate the plan and vision to the workforce 4. Solicit volunteers to form the Lean Implementation Team. Five to seven people with varied backgrounds seems to work best. 5. Appoint the Lean Manufacturing Implementation Team 6. Train the team in various lean tools. AS is often a good starting point. 7. Select pilot project implementation. . Implement the pilot. Evaluate the results, review and learn from mistakes made. 9. Roll out the next project(s). 10. Train supervisors how to teach and train their employees. 11. Continue adding and training in additional lean manufacturing tools. Page 4 of 8 FIVE S Companies frequently select AS as a method to start their lean manufacturing program. Five S is a manageable process that is relatively easy for people to understand and get their arms around. Five S is a reference to five Japanese words that have been transliterated and translated into English.

The technique is characterized, incorrectly, “standardized cleanup. ” It is more than that. Five S is a method to organize and manage the workspace and work flow with the intent of improving efficiency by eliminating waste, improving work flow and reducing process inefficiencies. The ass’s are: Sort (Series), Straighten (Sexton), Sweep (Skies), Standardize (Quickest) and Sustain (Skittish). Sort – This means going through the work area and making sure only essential items are present. This is eliminating tools, materials, fixtures or any other items not used in the process.

Everything else is stored or, preferably, discarded. Straighten – Straighten focuses on setting the workplace in order to focus on efficiency. This is more than Just arranging the tools and equipment where they will be used and in the sequence they will be used. It is “straightening” the work path for materials, tools and the work process. Of all the steps this is the one that typically produces the greatest cost reductions. Straightening the work process can include changes in dies or tooling that reduces finishing labor, for example.

It may include interaction with the customer to implement design changes that result in cost reduction or quality improvement. It is also the step that bears the most repeat visits to implement continual improvement. Sweep – This is Just what it says: keeping the workplace clean as well as neat. At the end of the shift, the work area is cleaned and everything is restored to its proper place. In straighten, the workplace is clearly marked where things go and gives confidence in the ability to find hat is needed when it is needed.

The key point here is that cleanliness is a regular part of the daily work effort, not an effort initiated when the workplace gets too messy. Standardize – Standardizing the work practices means operating in a consistent and standardized fashion. Everyone knows their role and exactly what his or her responsibilities are. Actions are taken the same way – the right way – every time. Sustain – This means more than Just maintaining what has been established. Five S becomes a way of life and a new way to operate. It is important that management does not allow a gradual cline back to the old ways of operating.

Sustain also means that when an issue arises – a suggested improvement, a new tool becomes available, or a new output requirement – the process is reviewed improvement. Page 5 of 8 At times a sixth S – for Safety – is added. Five S purists argue that implementation of the AS protocols will result in safety. Implementation of the AS program usually starts with a manageable project. These tend to be in limited work areas or warehouse locations. Once implemented, the results are publicized and the concept is expanded to other areas. The strength of AS is the ease of understanding and implementing the concept.