MPM701 Business Process Management Written Assignment Trimester 2, 2016 Due: Friday 2nd September, 2016 Marks: 40% of Unit Assessment Objective Upon successfully completing this assignment you will have demonstrated that you can provide clear written advice, and recommendations for change, to a business owner, in relation to business process management (BPM). Your advice will offer the business owner several reasons for adopting a business process management approach; • an explanation as to what the current business processes are and why they should be redesigned • a proposed redesign solution • any special considerations that need to be taken into account to deliver the proposed solution successfully; and succinct recommendations In providing your advice to the business owner you will take into account various perspectives and circumstances encompassing the business. Overview of Pete’s Dynatrix Pty Ltd Business processes permeate all aspects of business and it is arguable that if a business is not adopting a business process management approach to realise its strategies, and its subsequent goals and objectives, then it may reduce its chances for success – even its very survival. By taking a business process management approach, organisations can improve their chances of succeeding in their quests for sustained competitive advantages through greater efficiencies, quality, innovation and customer responsiveness. In, what is now, a highly competitive, global, interconnected and uncertain business environment, there has never been a better time to draw on the advantages offered by applying the BPM discipline to any business or organisation anywhere. Pete Playwright is in his late forties and is the inventor of the Dynatrix. The Dynatrix is a hand-held device, similar in appearance to a mobile phone. It sits in the palm of the hand during exercise so that resting and active pulse rates can be easily taken. One of its many features includes a very advanced digital interface, two terabytes of storage capacity, full internet connectivity, an inbuilt heart-rate monitor, oxygen readout, pedometer, blood pressure reader and inbuilt scales recording weight to within 500 grams. As well as these features, the Dynatrix includes a database that tracks physical movement during exercise and gives the reader immediate access to a ten week integrated personal training and nutrition program. The Dynatrix has attracted enormous popularity from a wide range of people in various walks of life but most particularly, with people aged roughly between 25-50 who are interested in maintaining a healthy lifestyle. Pete commenced working on his Dynatrix invention during his twenties. His family had a history of medical problems including diabetes, heart failure and obesity and he believed that many of these problems could be prevented if he were able to invent a device which made it easy for people to monitor and continually improve their health. Pete had also seen a number of his close friends develop severe medical problems because they did not pay enough attention to exercise. Following years of testing, he finally launched his Dynatrix in a new business that he established in 2010. Pete’s business is a company called Pete’s Dynatrix Pty. Ltd. The business manufactures the Dynatrix but obtains parts from external suppliers. Most parts suppliers are located in Australia but one is based in Singapore (supplying the Dynatrix’s rubberised casing) and another in Hong Kong (supplying the digital screen and the Dynatrix’s special internal power supply). The Hong Kong supplier is the only company in the world capable of manufacturing this critical component. Pete has built the business to perform most major functions that are typical of a medium sized enterprise. The company’s organisational structure chart is shown below: The departmental directors are named in their respective function boxes in the chart. The number of employees working under each director is shown in each of the function boxes respectively (numbers of employees in each department include the directors of those departments). The sales function is also charged with marketing and service responsibilities; service requests though are usually referred to the logistics department. The accounting function is also charged with finance responsibilities. The production function manufactures the Dynatrix and manages the warehouse. The firm has a centralised IT function which provides some of the firm’s IT needs. Dynatrix Pty Ltd currently employs 56 individuals, including Pete. The business experienced strong growth in its first few years and this enabled it to grow quickly. In 2015 things started to change. Sales were down and profits reduced (see profit table below). By 2016 things were worse. By mid-year, consumers were focusing on necessities rather than luxury items and panicking about what the future might hold for them financially. 2010 2011 2012 2013 2014 2015 2016 Revenue $m 8 9 10 12 14 12 8.0 Expenses $m 3 3 3 3.2 4 3.6 3.0 Profit $m 5 6 7 8.8 10 8.4 5.0 Sales of the Dynatrix essentially relied upon word of mouth communication and a solid marketing strategy had not been developed at all. Worse still, Pete had never put much time or effort into developing streamlined and computer based business processes and rather, resorted to many paper based manual methods to get things done, including purchasing material, controlling production, satisfying customer orders and managing all the accounts. Pete’s business strategy has always centred on differentiation from potential competitors such as heart rate monitor manufacturers and portable blood pressure monitor manufacturers. He underpins this strategy with a focus on quality and customer responsiveness. He realises that most of his competitive advantage comes from innovation – no other company has been able to match the Dynatrix’s looks and features in a single unit. He also realises that, given a recent rise in customer complaints about delays in receiving orders, his firm’s customer responsiveness is waning and needs redress. Pete wishes to maintain his strategic stance but knows that organisational change must occur urgently if it is to work as intended. Pete decided to hold a meeting with his directors. They assembled during the morning around the board room table where Pete asked “What happens when a customer places an order for a Dynatrix?” (Pete’s question assumed that the group would understand that a customer might be a wholesale or retail customer or an individual purchasing directly from the company either online (via eBay) or via phone or fax. Pete’s Dynatrix Pty Ltd does not have a retail store front). Nick spoke up and said, “well, we write up a sales order form and send it to production.” Jan said, “when we get to the sales order form, usually within a week, we physically check to see if there is a Dynatrix (or number of Dynatrixs’) in stock that suits the configuration required and if there is, we pack it, label it and write stock details onto the sales form and send it over to Dave’s guys to ship it out and we also send a duplicate copy to James so he can organise the accounts. We keep a triplicate in a box in my office – I guess I should get a filing cabinet one of these days, last week Leanne tripped over the box and I had papers all over the place, half of which ended up in the bin! Ah well, we shoved most of them all back into the box in about two minutes, not a problem! I also keep ‘post it’ notes of sales orders on my office whiteboard – these usually match the triplicates in the box so I don’t need to fiddle with the papers in the box.” When the box is full, we send it to James in Accounting. Then Dave said, “well, when we get the sales order from Nick, we sign it and make notations of the date and time, then, when we pack the order onto one of the trucks for local delivery or get Toll to collect it for interstate or international delivery, we forward the sales order along with a shipping note to James in accounting. We don’t know what he does with it but we’ve always done this. We keep a photocopy of the shipping note in a ring binder in the warehouse office. When the photocopier is broken we just slap a ‘post it’ note on the order in the folder. This seems to work well because we don’t lose the details for many orders”. Then James spoke up and said, “when we receive the sales order from Nick we file it and wait for the shipping order to come in from Dave. We usually cross check all sales orders and shipping orders that are sitting on our desks every day to ascertain whether an invoice action can be taken. When we see a sales order and a shipping order for the same sale (which we ascertain by looking at the name of the customer on the order), we send the customer an invoice to the customer’s address, either their shipping or head office address – it doesn’t really matter, we just choose whichever address appears first on the order. Payment terms are net 21 days and the majority of our customers pay within this time which means that there is very little action required in following up debtors.” Pete sighed quietly to himself and then asked, “well, what happens if we haven’t got any suitable Dynatrixs in stock?” Jan said, “well, when we get the sales order from Nick and check for suitable stock, if we find that we’ve run out, we organise a purchase request and send it to Bette so that we can get the necessary materials to make more. It only takes us a few days to get the purchase request organised and sent.” Bette then spoke up and said, “when we get the purchase request from Jan, we file it for action so that purchase requests are tended to in order of date received. That’s how we prioritise things in my department! When we finally find time to get to the request, we study it and then organise purchase order forms which we complete and send to our respective suppliers. We send these in the surface mail. It usually takes about four and a half weeks before we receive dispatch confirmations and invoices from our suppliers indicating that our orders have been filled and sent. Then we send the original invoices from our suppliers, with a payment order, to James so that he can organise payment for the materials. Our job is done!” James then said, “when we receive the invoices and payment orders from Bette, we pay these immediately. We’d hate to ruin our relationships with our suppliers.” Pete sensed tensions between members of the group. He particularly noticed a strong three way tension between Nick, James and Bette. Jan seemed to be the most positive member of the group, even though sales were down, and whenever she spoke, Pete noticed that all other members of the group became anxious. Pete was beginning to see the consequences of his neglect of the firm’s business processes and sensed that if all of this were to continue, he could be out of business within a couple of years or even sooner. He is confident that the Dynatrix can adapt to changing times and will remain very popular for many years to come but he knows that he must match this fantastic product with excellent business processes. Pete calls you in as his BPM Consultant to help make sense of the current organisational approach and to provide some preliminary advice about redesigning processes so that the current downward trend in performance can be reversed. He gives you the transcript of his meeting with his directors (as seen above). He also provides you with some other basic information that he quickly gathered together for you including some Balance Sheet items (to help you to form a view of the firm’s position to invest in change) and some other miscellaneous information which might help you to determine the extent of change necessary. No other information is available to you to develop a solution. Pete states that he has at least been conscious of accumulating some cash reserves for the firm’s development and that it seems the day has come to use some (or possibly all) of these! All of this is revealed in the tables shown below. Balance Sheet Items (summarised as at June 2016) $ Cash at Bank (based on latest statement found on floor) 300,000 Debtors (estimated) 200,000 Percentage of debtors outstanding more than 2 months 22% Creditors 205,000 Stock on Hand (based on rough estimate count in warehouse) 50,500 Other Assets (including land, buildings, equipment and vehicles (straight line depreciation), investments, patents, trademarks and goodwill. 1,258,900 Other Liabilities (including bank loans, venture capital) 456,000 Loan expiry and review date 30 November, 2016 Other information (based on Pete’s investigations only; no other information is available) Item Units/Info Organisational Personal Computers (Quad Core, basic peripherals) 11 Laser Printers (Hewlett Packard, 4 years old) 3 Local Area Network 6 PCs connected Internet Access 7 PCs connected Software – Microsoft Office 2010, Microsoft Vista 12 Licences only Telecommunication Networks – Cable available to whole business Cable Telecommunications provider Optus Some client data are currently held on spreadsheets Excel and Open Office Three MS Access databases hold some data on employees Name, Address, Employee Number and Title only. A company intranet has not been established Computer literate staff (basic and intermediate levels; no power users) 22 Total product lines 3 approx. Suppliers (one in Singapore, one in Hong Kong, both have Internet access 2 approx. Customers (i.e. retail stores and some distributors) 27 approx. Retail Price for a Dynatrix $1560 Cost of producing a Dynatrix unit $850 Individual Directors’ salaries p.a. $130,000 Staff average annual income $55,000 Production time for one Dynatrix 7.5 hours Task: Preliminary Business Report (40 marks) This assignment must be completed by teams of 3 individuals. Your task is to prepare a preliminary business report for Pete. Pete has an in-house style which he expects for business reports, so the main body of your report must be structured using the following headings. A brief about what each section of the report must address is also provided. BPM and Strategy ? Advise Pete why a BPM approach should now become part of the way Pete’s Dynatrix does business. ? Introduce Pete to Business Process Management by stating in plain terms what it actually is and how it can help his business ? In describing the benefits of BPM to Pete, ensure that you briefly highlight how BPM connects to business strategy (internal and external perspectives), positioning, structure and value propositions. Briefly describe the meaning of value chains and how using BPM, in conjunction with this concept, can assist Pete to improve the business. Problem Analysis ? Pete is aware that there are a number of problems within his company and whilst he is happy for you to briefly describe these, he would like you to concentrate your efforts on the problem which you determine to be the most urgent. In relation to this problem, Pete would like you to identify the causes of the problem, the problem and the consequences of the problem; refer to the capabilities gap and the performance gap here if relevant ? Show the current ‘As Is’ process using Bizagi Modeler software ? Identify any process flow problems and/or day to day management problems; output and input problems; and problems with controls and enablers; develop a project scoping diagram to illustrate the problem which you have identified Proposed Solution ? Advise Pete what it means to develop a ‘business process architecture’ and, particularly, how valuable this can be to him and the success of the business ? Bridge the identified gap, revealed in the previous section, by describing a ‘To Be’ process; what will the ‘To Be’ process do, or not do, when the change project is rolled out ? Support your ‘To Be’ process with a BPMN process flow diagram using Bizagi Modeler software ? Are there any key aspects in your proposed solution that you should clearly describe to Pete, for example: SOA; ERP; Master Data; Core, Support and Management processes; alignment issues; etc? Solution Considerations Large BPM driven organisational changes can be extremely valuable, they are also complex undertakings impacting the organisation, its people and its use of modern technologies. ? Identify and briefly describe significant considerations that might impact ‘Pete’s Dynatrix Pty Ltd’, both during the redesign development stage and upon the implementation of your proposed solution. Some considerations might pertain to the costs of bridging the gap (time, effort, money, etc.), risks, opportunity costs, politics, etc. Recommendations ? Provide Pete with a succinct list of recommendations to conclude your report Written Assignment Administrative Details You may include a brief executive summary, table of contents and brief appendices. Do not include extensive appendices – this is a preliminary report – extensive appendices may result in a reduction of marks. Use the section headings above to structure the main body of your report (you should not need sub-headings). Pete will not read the report if it does not use the above headings in the body of your report. Pete wants to see a reasonable use of references. While textbook references can be used, Pete would prefer that you use industry research reports, case studies and any other industry-based evidence which can justify why his organisation should implement your proposed BPM solution. You do not need to specify a particular commercial solution (such as SAP or another enterprise system), although you may specify commercial solutions to help you to clarify and support your proposed solution recommendations. The report must be no longer than 2,000 words (approximately 4 to 5 pages of words, but by including diagrams and any other graphics or figures it will be considerably longer. Words in diagrams such as the Gap Model, Project Scoping Diagram and As-Is and To-Be process diagrams will not be included in the word count provided they are used to explain necessary steps and highlight critical information. If paragraphs of text are included in these diagrams, they will be included in the word count. Words in tables are included in the word count of the main body of your report. Note that the 2,000 word count does not include your cover page, your executive summary, your reference list or your appendices. Note also that 10% of the total available marks for the assignment may be deducted from your final assignment mark for every 100 words that exceed the 2000 word limit. For example, assignments of 2300 words (not including cover page, executive summary reference list or appendices) may receive a penalty deduction of 30% of the total available marks for the assignment. Please do not exceed the word limit for the assignment. It is strongly recommended that the process to produce your report be an iterative one, with interim reports and drafts produced early so that you and your partners can reflect on progress and refine the work as necessary. You might be asked in your seminars to present a brief update about the progress of your report. This is a major unit assignment, get started early as the trimester moves very quickly. Assessment Business Report (40 marks) Your report will be assessed using the marking criteria shown below: Marking Criteria Mark BPM and Strategy 15 Problem Analysis 20 Proposed Solution 20 Solution Considerations 15 Recommendations 10 Overall Quality of the Report ? Presentation ? Spelling and Grammar ? Quality and use of References 20 Total 100 (will be converted to a mark out of 40) It is expected that you and your partners will contribute significantly and equally to the team’s efforts and will therefore receive 100% of the final assignment mark out of 40. However, if you do not make a significant contribution you will receive less than 100% of the assignment mark. In particular, in the past, some members of some teams have only made a contribution in the last few days before submission – they are usually awarded a very low percentage of the assignment mark, sometimes 0%. Also note that it is not sufficient to simply research aspects of the solution that your team proposes without also contributing to the overall final report. You must normally make regular, at least weekly, contributions to the work; if you are unable to do so you must make necessary arrangements with your partners. Other team-working skills may be discussed in seminars and online in Cloud Deakin. The first page of the business report must contain the names of all team members with the proportional contribution of each team member agreed to by all team members. The total proportion must sum to (or round up to – see below) 100%. For example: Clint Eastwood: 33.3% Cameron Diaz: 33.3% Tom Cruise: 33.3% Rounded Total 100% In case of dispute, your seminar facilitator will be able to provide advice on determining each team member’s contribution, and may in certain instances intervene to determine the allocations. Individuals will be awarded a percentage of the final team mark based on the proportions reported, with the student(s) receiving the highest proportion obtaining 100% of the team marks and all other team members receiving a proportional allocation. For example, if the team above obtained a team mark of 32/40, both team members would receive the full 32 marks (they contributed equally). Online areas and getting help A ‘Written Assignment’ link is in the ‘Unit Assessment’ area in the MPM701 Cloud Deakin site (in the Unit Resources folder) and it accessible to all students enrolled in MPM701. The written assignment area contains resources to support your work for this assignment. The Written Assignment area contains a Written Assignment Discussion area for questions and discussions of a general nature about the assignment. It is open to all students so that all students can benefit. Submission instructions (Up to 5 marks may be lost if these instructions are not followed correctly) Your work must be submitted in accordance with the instructions shown below. 1. You lodge your assignment via the ‘Drop Box’ which is accessible in the Written Assignment area of the MPM701 Cloud Deakin site. 2. Your assignment must be submitted in Word format. The Word document you submit must be named using the Deakin user ID of the student who is to do the actual submission in Cloud Deakin. The format is: MPM701WrittenAssignment-DeakinuserID For example, if Clint Eastwood is going to submit an assignment via Cloud Deakin and his Deakin user ID is ‘clinte’, then the Word document would be named MPM701WrittenAssignment-clinte 3. Your names and student numbers must be at the start of the business report. Again, the front page must also contain the proportional contribution of each team member, agreed to by you and your partners. The total proportion must sum to (or round up to – see below) 100%. For example: Clint Eastwood: 33.3% Cameron Diaz: 33.3% Tom Cruise: 33.3% 4. Submit the Word document (preliminary business report) via the Written Assignment Submission link. Only ONE member of the team completes this step – that is, there must be only one submission from the group. Notes ? If you submit your assignment after 11:59pm on the due date it will be considered late. If you need to, you can look up your local time at http://www.whitepages.com.au/wp/search/time.html. ? No extensions will be considered for assignment submission due dates, unless a written request is submitted well prior to the due date and approved by the unit chair or the offcampus coordinator. ? Assignments submitted late without an extension being granted will not be marked and will therefore receive a mark of zero. Approximately three weeks after the due date, your results and feedback will be accessible in your MPM701 Cloud Deakin grades area. If there is a change to the release date, this will be announced on the front page of our MPM701 Cloud Deakin site.