Business Process at Organo Fridges - Case Study Example

Business Process Analysis Report Name: Tutor: Course: Date: Table of Contents List of Figures 3 1.0 Introduction 4 1.1 Mission 4 1.2 Target market 4 1.3 Strategy 4 2.0 Business Process Identification 5 2.1 Purchasing 5 2.2 Sales 6 2.3 Repair Service 6 3.0 Relationships and Cross-Functional Maps 6 3.1 Relationship Maps 6 Figure 1: Purchasing Department Relationship Map 7 Figure 2: Sales Department Relationship Map 7 Figure 3: Fridge Repair Relationship Map 8 3.2 Cross-functional Maps 8 8 Figure 4: Purchasing Cross-functional Map 8 Figure 5: Sales Management Cross-functional Map 9 4.0 Analysis 10 5.0 Discussion 11 6.0 Conclusion 12 7.0 Recommendations 12 References 14 Brocke, J.V. & Rosemann, M. (2014). Handbook on Business Process Management 1: Introduction, Methods, and Information Systems. Springer. 14 Jacka, J.M., & Keller, P.J. (2011). Business Process Mapping: Improving Customer Satisfaction, John Wiley and Sons. 14 List of Figures Figure 1: Purchasing Department Relationship Map 7 Figure 2: Sales Department Relationship Map 7 Figure 3: Fridge Repair Relationship Map 8 Figure 4: Purchasing Cross-functional Map 8 Figure 5: Sales Management Cross-functional Map 9 Figure 6: Repair Process Flow cross-functional map 9 1.0 Introduction The chosen organization is Organo Fridges, a private company that manufactures and repairs refrigerators and freezers. The firm has 88 employees with 5 outlets in Wollongong, Australia. The organization has not streamlined its operations and most of its processes reflect waste, inefficiency and losses. The introduction of business process improvement strategies will help the firm increase its profitability, customer satisfaction and functional efficiency. Employee effort and time will be substantially saved when automated business processes are incorporated and manual re-keying terminated (Harrington, 1997). The report starts with mission, target market and strategy then identifies three business processes of concern. The relationship and cross-functional maps are then illustrated, analyzed and discussed. The last section concludes and advises Organo Fridges to consider some of the recommendations. 1.1 Mission To be a leading manufacturer and service provider of quality, reliable and responsive refrigeration services in Australia. 1.2 Target market Wollongong has a population of 18,000 households with accessible population of 340,000 people. Each household requires a fridge or freezer for preserving food items owing to hot weather. The target will be families, hotels, offices, butcheries and hospitals in the region that purchase based on the needs and psychological desires. The market is segmented with hotels, hospitals and butcheries buying freezers while families and offices buy large to medium sized fridges. All the segments have the buying power and decisions compelled by their geographical location (Abramowicz, 2011). 1.3 Strategy The firm is determined to achieve its mission by adhering to the following strategies; 1) Manufacturer of quality, reliable and responsive refrigeration equipment 2) Providing quick and effective refrigeration repair services 3) Partner with suppliers to provide top of range purchasing, sales and repair services 4) Engage customers in responding to their refrigeration needs 5) Improve internal processes to increase levels of profitability and market share The firm has the following medium-term priorities; a) Streamlining its internal manufacturing processes b) Partnering with suppliers to increase quality and satisfy customers c) Providing quality repair services to residents of Wollongong d) Increasing performance of its sales processes by understanding market needs 2.0 Business Process Identification Business processes in an organization are set of activities with inputs and outputs combined sequentially and logically to produce desired outcomes or results. In order to understand the business process, it is crucial to undertake business process analysis (Brocke & Rosemann, 2014). The business processes identified in Organo Fridges case are purchasing, sales and repair services. 2.1 Purchasing Suppliers are important stakeholders in the refrigeration business as they provide components and accessories for assembling and manufacturing refrigerators (Harmon, 2003). While the firm also procures components and parts for manufacture and assembly of refrigerators, the report specifically focuses on procurement of unmarked assembled fridges for branding and sale in their outlets. In this category of purchasing, the department is able to negotiate based on price for discount, price reduction and bulk price offers. Assembled fridges are marked as Organo Fridges®, a brand which is also promoted as Organo Fridges TM in Victoria and New South Wales. 2.2 Sales Sales are a core and mandatory function in a business organization involved in product delivery to retailers or direct consumers. The choice of sales as a process for improvement is the ability of sales to increase profitability and astonishment to customers (Hyotylainen, 2014). This function exhibits an interface between purchasing department, finance and customers. 2.3 Repair Service Customers require after sale repair services if the product still falls within the warranty period. The augmented product will help the company generate a list of loyal customers (Earl, 1994). Moreover, the company has a portfolio of repair services from clients not necessarily on warranty repair services but believe in the company’s ability to re-purchase or repair old refrigerators. In this case, the repair services process improvement will help customers calling for repairs over non-augmented refrigeration products. 3.0 Relationships and Cross-Functional Maps 3.1 Relationship Maps Figure 1: Purchasing Department Relationship Map Figure 2: Sales Department Relationship Map Figure 3: Fridge Repair Relationship Map 3.2 Cross-functional Maps Figure 4: Purchasing Cross-functional Map Figure 5: Sales Management Cross-functional Map Figure 6: Repair Process Flow cross-functional map 4.0 Analysis From the relationship and cross-functional maps above, refrigeration equipment manufacturing can provide corporate profitability and growth. Organo Fridges is currently manual, inefficient, loss making and random in process planning. The relationship maps for purchasing, sales and repair service shows a relationship between sub-units depicting flow of information, management activities and culture. On the contrary, cross-functional maps show a business process that requires company adherence to process changes and documentation of work instructions (Ned, 2005). Relationship maps for purchasing shows a two-way relationship between suppliers and procurement department which in itself has more interrelationships. Purchasing recognizes the need for partnership with suppliers and helps create a mutual relationship. The cashier has a lot to learn from the sales desk which is linked to various customer fronts like customer service, inspection, delivery teams and marketing campaign teams. On repair after sales team, it is important to understand how the contact point with customers, logistics, employs time and schedule for all the information relayed from the reception desk. Cross-functional maps reflect the inter-relationships and end-to-end processes in delivering refrigeration services work (Andersen, 2007). Purchasing contribute value to product generation when the purchasing cycle is complete from purchase request to settlement stage. Sales also depict an end-to-end process right from settlement stage and receivable costs while repair after sale service also shows end-to-end process from the requisition for repair to determining the seriousness of the problem (Ould, 1995). Refrigeration works develops an inventory of sub-processes and processes while defining a process hierarchy within Organo Fridges. From the maps, it is obvious that the processes interrelate with some hierarchy providing a skeletal roadmap that defines end-to-end manufacturing and repair work. Step-by-step tasks based on the core processes are fully documented to provide the firm with a clear understanding of improvement opportunities, pain points, control points, resources and supporting applications. In each part of the business, the maps provide an overall understanding to how they contribute to service and product delivery (Rotarius, 2001). 5.0 Discussion From the analyses and maps, it can be deduced that certain issues emerge to warrant discussion. These are; end-to-end integration, automation, improved business process, better inventory control and customer service. End-to-end integration as a process highlighted such as sales, purchasing and after sales repair services of refrigerators do not need a clutch of standalone systems covering new refrigeration equipment for sale, service and spare parts as currently observed in the company. Integration is also possible through complete order-to-cash and end-to-end business process (Jacka, & Keller, 2011). Introducing integrated and combined end-to-end systems will deliver significant efficiencies to Organo Fridges®. Automation facilitates an end to manual re-keying of data into the different internal processes such as purchasing, sales and after sales repair service systems. Since Organo Fridges lacked a consistent and single view of its business, the paper-based systems, overlaps between different systems, manual workarounds and gaps brings inconsistent dimension of the business. Control and reporting point of view helps the integrated system to deliver and enhance visibility (Rotarius, 2001). Sales and purchasing can take set of figures the soonest and help make better decisions. Under Business Processes Improvement previously, two separate departments were involved in purchase of refrigeration parts, one sourcing items from Germany and another from the US. Using the end-to-end business process will provide an order-to-cash end-to-end integrated system (Ould, 1995). The business will be oriented to efficiency improvement delivery, best practice and streamlined business processes. Organo Fridges will need to create a single, rationalized and merged Bill of Materials to improve internal efficiencies and streamline operations. Poor inventory control leads to stock losses and pilferage (Harmon, 2003). Organo Fridges recognizes that end-to-end processes will be required to parts ordering, aftersales service, and machine construction and identification technologies like barcoding. Organo Fridges is not certainly enjoying inventory turns due to mismatch in actual demand to safety stock levels. The business processes will help the company to keep track of inventory and help reduce inventory to be carried (Ould, 1995). Organo Fridges has not maximized on good customer service as reflected in poor sales and customer relationships. An Enterprise Resource Planning system will be needed to capture details of every customer order and customer service (Jacka & Keller, 2011). End-to-end visibility will guarantee substantial improvements in customer service (Hyotylainen, 2014). For example, sales staff can refer to the system which has an integrated product details such as refrigeration equipment’s build date. 6.0 Conclusion The analysis and discussion of the business process improvement for the refrigeration manufacturing company points to manual, inefficient, loss making and random in process planning. Business process improvement strategies will help the firm increase its profitability, customer satisfaction and functional efficiency (Andersen, 2007). Better customer service to refrigeration clients needs documentation of core processes that uses proven toolsets and documentation methodology (Ould, 1995). End-to-end processes are fundamental to operational effectiveness and process improvement. The business will require end-to-end integration, automation, improved business process, better inventory control and customer service. 7.0 Recommendations As discussed above, the report draws on the following recommendations; 1. Process Value Targeting Momentum for change and early financial benefits come with process improvement. Largest performance impact is associated with initial efforts to improve on quality and service while reducing costs. Organo Fridges will need to develop an approach that logically and methodically targets, prioritizes and assesses process improvements based on strategic imperatives, organization priorities, and overall value. The approach begins with understanding perceived issues, needs and performance expectations which are all the ‘voice of the customer’. 2. Process Assessment Both quantitative and qualitative analytics will need to be leveraged to identify opportunities and issues and determine how performance expectations compare with the processes. Based on level of effort to address and benefit potential, process improvement opportunities will then be prioritized and quantified. 3. Six Sigma or Lean Process Improvement Organo Fridges frequently treat the process performance issue symptoms with little understanding the impact or root cause of the issue. Effective process improvement is in truly understanding and dissecting process performance root cause. Processes such as TQM, Six Sigma and Lean are proven process improvement techniques that can be used. There is no single approach that will apply to all situations. Organo Fridges will need to employ skilled practitioners who can leverage analytics and best tools from various disciplines and its environment. 4. Process Improvement Enablement Organo Fridges should not treat process improvement as periodic or one-time events but instead work on continuous improvement and process management. Though the firm can find it a challenge to adopt a business process focus, hiring such a capability when lacking expertise becomes a daunting task. The process mindset is not possible to be hired or purchased because it cannot just happen. Organo Fridges will need to employ tools and methods in order to establish a core capability around continuous improvement, management and process improvement. References Abramowicz, W. (2011). Business Information Systems: 14th International Conference, BIS 2011, Poznan, Poland, June 15-17, 2011. Proceedings, Springer. Andersen, B. (2007). Business Process Improvement Toolbox, ASQ Quality Press. Brocke, J.V. & Rosemann, M. (2014). Handbook on Business Process Management 1: Introduction, Methods, and Information Systems. Springer. Earl, M.J. (1994). The New and the Old of Business Process Redesign. The Journal of Strategic Information Systems. Vol. 3(1): 5-22. Harmon, P. (2003). Business Process Change: A Manager's Guide to Improving, Redesigning, and Automating Processes, Morgan Kaufmann. Harrington, H.J. (1997). Business Process Improvement Workbook: Documentation, Analysis, Design, and Management of Business Process Improvement, McGraw Hill Professional. Hyotylainen, T. (2014). Steps to Improved Firm Performance with Business Process Management: Adding Business Value with Business Process Management and its Systems, Springer. Jacka, J.M., & Keller, P.J. (2011). Business Process Mapping: Improving Customer Satisfaction, John Wiley and Sons. Ned, K. (2005). Business Process Improvement Through E-Collaboration: Knowledge Sharing Through the Use of Virtual Groups: Knowledge Sharing Through the Use of Virtual Groups, Idea Group Inc (IGI). Ould, M.A. (1995). Business Processes: Modeling and Analysis for Re-Engineering and Improvement, John Wiley and Sons. Rotarius, A. (2001). Identification of Internal Customer Requirements and Meeting Those Requirements through Business Process Improvement within a Quality Management System at an Australian Electrical Manufacturer. Diplom.de. Read More