Improving Business Processes - Essay Example

? of the of the of the Improving Business Processes. INTRODUCTION Business processes are a combination of a series of steps that are interconnected such that they result in the formation and execution of a complete business process or goal within organizational environment. The traditional business systems have been running on into organizations for centuries on their cumbersome manual strata. The advent of information and communications technology and its embedding into organizational environments in the form of inevitable business systems has revolutionized business processes. The resultant is the re-designing of business processes into much more concise and comprehensive steps that are simpler and require very little or almost none manual inclusion. The current scenario discusses the business processes relative to the purchase arena of a Hypermarket. A Hypermarket is a complex unification of a number of business processes. A series of business processes come together to achieve a single goal of running the hypermarket and selling goods to its consumers. BUSINESS PROCESSES The current task at hand is to focus on the business processes that make up the purchasing tasks relative to the Hypermarket. There are a number of business processes that are concerned with the purchasing arena. Three of them are narrated mentioned as follows: 1. Order New Stock Process 2. Up-to-date Stock Items and Monitoring 3. Reporting. The above mentioned business processes would be illustrated and explained in both parts 1 and 2 with respect to conventional and online methods respectively as follows: PART 1 BUSINESS PROCESS 1: Order New Stock Process. CONVENTIONAL MANUAL METHOD (With reference to Figure 1) DESCRIPTION OF BUSINESS PROCESS In the conventional business processes, the requests for stocks update is made by the stock control department. Once the stock generation request has been put forth, a list of potential stocks that need to be updated shortly is generated. The subsequent step is to mark out the potential suppliers that can be contacted for providing the required goods. Once the suppliers have been chalked out the need for the availability of the stuff is assessed by the time of its requirement. A decision is supposed to be made here. It the supply of goods is required by the purchase department urgently then the purchase order is sent manually to each supplier. However if there is no urgency in the requirements of the proposed goods then they are further assessed for the best deals available for purchase. It also assesses the availability of the most cost effective and quality conscious suppliers. Once the choice of the preferred supplier has been made, the purchase order is now made by sending purchase order to each supplier. The order is now received at the purchase department. If the received order contains the goods then preparations are being made to deliver them. On the other hand if the processed order does not contain the required goods then arrangements need to be made to obtain the requested supplies of goods from elsewhere. Once the supplies have been achieved, their delivery is aimed at. A last check is performed before the supplier supplies the goods. This is to check if there are any outstanding payments to be made by the purchase department. If there response is a yes then those outstanding payments are added to the current bill otherwise the bill for the current transaction only is made and dispatched with the required goods to the purchase department. LIST OF BUSINESS RULES 1. Multiple suppliers may supply similar products. Therefore, it is necessary to figure out the best deals in order to minimize the cost. 2. The supplier data and related details must be updated continuously in order to keep up with the updated purchase deals and discount they offer. 3. In case of urgently needed products the order can be placed to the supplier who can provide the product at earliest. The price would not be an issue here. ISSUES IN THE CURRENT BUSINESS PROCESS Following are the issues with the AS-IS Order New Stock Process, 1. The purchase department cannot plan purchases until and unless the stock control department updates it with the current stock standings and deficiencies as a report. 2. This dependency hinders the purchase department to act timely and independently. 3. The paper-based data is very cumbersome to handle. The data is needed to figure the best deals from suppliers. 4. The update process regarding supplier details is also hectic due to the paper-based manual data repositories. 5. Time delays are involved in sending purchase orders manually to the supplier. 6. Chances of errors in reporting billing amounts to finance department are high. 7. The process of placing purchase orders is also error prone due to manual processing. THE FIGURE 1: Figure 1 illustrates the AS- IS business process of placing purchase order for new stock (manually) BUSINESS PROCESS 2: Monitor Deliveries & Update Stock/Supplier Details Processes THE AS-IS/ CONVENTIONAL MANUAL METHOD. (With Reference To Figure 3) DESCRIPTION OF BUSINESS PROCESS This Business process involves the manual execution of the “Monitor Delivery Process” and the “Update Stock/Supplier Details Process”. This business process involves the updating of information regarding stocks which is done every time the delivery of a stock is made. This also involves the updating of stocks list which is done every time a supplier provides the hypermarket with new or changed information. The business process initiates when the purchase department receives the delivery of monitors from the supplier. The purchase department checks if the delivery is in line with the requirements made. A decision has to be made here which may lead to two possible outcomes. Outcome 1: If the response is positive then it is checked whether the rates of the supplied products have changed or they are the same as before. If the rates are the same then it is checked whether any further orders need to be added into the system or not. If the rates are not the same then the suppliers rates and details are updated into the system. It is checked whether the orders of the day have completed or there are any more that need to be added. If no more orders need to be entered into the system then the systems waits for any further deliveries to be made so that their data can be updated. On the other hand, if the orders of the day have completed then the purchase bills are forwarded to the finance department. The delivery reports are updated and forwarded to the stock control department. Outcome 2: If the response of the ‘expected delivery made’ is negative then a list of overdue items is made. It is further checked whether the overdue items are needed urgently or they be sent after taking due processing time. If the supplies are urgently required then another supplier is located and the new supplier now receives the order. However if the requirements of the supplies is not urgent then a revised purchase order is sent to the same supplier. The supplier then checks whether the required goods are available or not. If they are not available then they are arranged for. However, if they are available, preparations are made to deliver them. The ‘Outstanding Payment’ check is now performed. If there are any outstanding payments then they are included in the current bill. It is after this updating in the bill that the supply is delivered. If there are no outstanding payments then the net bill is prepared and delivery is made. The purchase department eventually receives the supplies. LIST OF BUSINESS RULES 1. Each delivery must be scanned for errors and missing products as per the given purchase order. This needs to be done for each delivery and daily. 2. The overdue items that are needed urgently must immediately be acquired via other suitable supplier. 3. Same supplier must be issued a revised purchase order in case of non-urgent products. 4. Change in rates as compared to the previous rates of same products must be figured out and recorded for future use. 5. The updated record of current deals must be maintained on daily basis. 6. Purchase Summary Reports and Delivery Reports must be forwarded to Finance Department and Stock Control Department respectively. ISSUES IN THE CURRENT BUSINESS PROCESS Following are the issues with the “Monitor Delivery Process” and “Update Stock/Supplier Details Process”, 1. The chances of failures in delivery exist at a high extent. 2. Daily checking of deliveries for failures is a hectic manual process. 3. Chances of errors in producing revised purchase orders are high. 4. Delay in delivery can be disastrous sometimes despite having the provision of revised order placement. 5. Billing process becomes cumbersome due to partial deliveries. 6. Partial bills for same orders increase complexity. 7. Timely bill clearance is an issue that may cause suspension in supplies from supplier. THE FIGURE 3: Figure 3 illustrates the manual execution of the “Monitor Delivery Process” and “Update Stock/Supplier Details Process” BUSINESS PROCESS 3: THE REPORTING PROCESS THE AS-IS/CONVENTIONAL WORKING (AS SHOWN IN FIGURE 5). DESCRIPTION OF BUSINESS PROCESS The data about the daily purchases made is collected from the Daily Purchase Orders. The delivery reports generated every day after each delivery order successfully completed are used to provide data for reports. The reports for stock control department are compiled. All the collected data is used to compile a summary of daily purchases for the records of the finance department. The purchase department then checks for the current date of the month. It checks whether it is the 15th day of the month or the end of the month. If the response is in affirmative then the fortnightly billing reports and summaries are generated. These reports are then sent to the management. If the decision box returns a no, i.e. it is not the 15th or the end of the month then the delivery report is sent to the stocks control department. The daily report summary and billing report is then sent to the finance department. LIST OF BUSINESS RULES 1. Reports for Stock control department must be generated daily against each delivery. 2. Billing Reports for Finance department must be generated daily against each purchase order and respective delivery along with the details of partial deliveries. 3. Purchase Summary Reports and Billing Summary Reports must be generated for the management fort nightly. ISSUES IN THE CURRENT BUSINESS PROCESS Following are the issues with the “Monitor Delivery Process” and “Update Stock/Supplier Details Process”, 1. The chances of errors in reporting are very high due to manual processing. 2. Daily reporting for each purchase order and delivery is extremely hectic when done manually. 3. Chances of errors in consolidated fortnightly reports are very high. 4. Timely report generation is an issue. THE FIGURE 5: Figure 5 illustrates the AS – IS working of “Reporting Process” PART 2 BUSINESS PROCESS 1: ONLINE METHOD for PLACING PURCHASE ORDER FOR NEW STOCK (with reference to figure 2) DESCRIPTION OF BUSINESS PROCESS As illustrated in Figure 2, the manual PURCHASE ORDER FOR NEW STOCK is replaced with an online system, the details of which are narrated as follows: The requirement for an updating in stock and purchase of new stocks is generated by the stock control department and received at the purchase department end. The subsequent purchase list, chalking out the required stocks to be purchased is then forwarded. The catalog of suppliers, maintained online, is then accessed in order to explore which suppliers are most likely to provide the best possible deals for the required goods. Once the supplier has been selected it is checked that whether goods are available with it as per the supplier’s online stock. If yes, then another subsequent check is performed. If the selected supplier did not contain the goods proposed by him online then the supplier is hunted for again in the online catalog. Once the supplier posing to have possessed the required goods has eventually been found it is checked that whether the deal offered by him is the best deal or not. ­­If the best deal has not been achieved then the process is reverted back to the point where the online catalog of suppliers is explored for the selection of the best supplier selection. Once the best goods supplier deal has been accessed, the order and the payment data are entered online. The delivery of the required goods is then achieved at the purchase department end. BUSINESS RULES FOR REDESIGNED BUSINESS PROCESSES: 1. The availability of stock for purchase at suppliers’ database must be figured out in prior, in order to avoid any failure in delivery. 2. Best deals need to be figured out in order to optimize the purchase costs. 3. In case of urgently needed products the order can be placed to the supplier who can provide the product at earliest. The price would not be an issue here. 4. Suppliers’ online databases must thoroughly be searched for best purchases. 5. The online payment process details must be incorporated with the purchase order at the time of order issuance. BUSINESS RULES FOR REDESIGNED BUSINESS PROCESSES: 1. It is comparatively much easier to figure out best deals through searching online supplier databases. 2. The chances of errors in placing purchase orders are minimized. 3. The chances of failure in delivery by supplier are curbed fully. 4. Online payment method eases the payment process. 5. The billing issues are not that hectic to handle. THE FIGURE 2: Figure 2 illustrates the REDESIGNED business process of placing purchase order for new stock (online) BUSINESS PROCESS 2: REDESIGNED “MONITOR DELIVERY PROCESS” AND “UPDATE STOCK/SUPPLIER DETAILS PROCESS”: (With respect to Figure 4) DESCRIPTION OF BUSINESS PROCESS The processed are greatly reduced once the supply delivery updating process and stock updating processes are made online. This subsequent step is a continuation of the online purchase order system as shown in figure 2. For the sake of redundancy all the repeating process models are executed here. It is understood that since the updating of stocks after delivery of goods is all done online therefore the process of physically monitoring the delivery process is omitted. All the checks of supplier availability and the availability of goods within the supplier (that were being followed in the manual process [figure 3] have been omitted naturally.) The online process thus shows how the receiving of delivery leads to the automatic updating of stocks in the online database. The database generates reports on a daily basis updating the Finance department with the stocks’ finances updates. BUSINESS RULES FOR REDESIGNED BUSINESS PROCESSES: 1. Upon receiving deliveries the data entry must be done accordingly and immediately in order to keep the online centralized databases updated. 2. It is compulsory to generate daily reports using central repository daily. BENEFITS OF REDESIGNED PROCESS. 1. The new online purchase order placement process already verifies the stock availability using the suppliers’ database. Due to this the chances of failure in delivery are minimized to 99%. 2. There is no chance of partial delivery so no need to check or authenticate deliveries. 3. No need to place revised purchase orders. 4. Due to Online payment method the billing is done instantly and there is no need to send billing reports to finance for payments. Payments would be fluent by just maintaining the online reserves of finances. 5. Automated promissory notes based payments are possible through online system that may assure the purchase security of the department. 6. Due to centralized repository the generation of billing is much easier. THE FIGURE 4: Figure 4 illustrates REDESIGNED “Monitor Delivery Process” and “Update Stock/Supplier Details Process”. BUSINESS PROCESS 3: REDESIGNING OF “REPORTING PROCESS” IN AN ONLINE PROCESSING SCENARIO. DESCRIPTION OF BUSINESS PROCESS The reporting process is the most comprehensive and concise in the online reporting system. All the checks performed upon completion of earlier business processes, updating of stocks, delivery of supplies and purchase of goods are automatically made when each of the earlier mentioned business processes are automated. Thus the already available data from all the online business processes within the systems needs only to be aggregated into one platform. The online reports for respective departments are then generated automatically. BUSINESS RULES FOR REDESIGNED BUSINESS PROCESSES: 1. Purchase and billing data must be fed in daily, accordingly and immediately in order to keep the online centralized databases updated. 2. It is compulsory to generate daily reports using central repository daily and fortnightly. BUSINESS RULES FOR REDESIGNED BUSINESS PROCESSES: 1. The centralized repository enables all the departments including stock control, finance and management to acquire reports at any time easily and accurately. 2. The reports generated through online repository will always be current and updated. 3. Report generation has just become a formality for purchase department due to the 24/7 availability of reports to the respective departments. 4. Decision making is easier and more accurate due to instant reporting. 5. Chances of errors in making decisions are minimized to the least extent. 6. Less human resource involvement may reduce the salary expenses and allow the same human resource to get used in other business dimensions. THE FIGURE 6: Figure 6 indicates the simplicity after redesigning of “Reporting Process” in an online processing scenario. REFERENCES: Laudon, Jane P, and Kenneth C. Laudon. Management Information Systems: Managing the Digital Firm. Harlow: Prentice Hall, 2007. Print. Bocij, Paul, Andrew Greasley, and Simon Hickie. Business Information Systems: Technology, Development and Management. Harlow, England: FT Prentice Hall, 2008. Print. Techtarget. Business Process. Search CIO. 2012. Web. June 6, 2012. < http://searchcio.techtarget.com/definition/business-process> Barros, Carlos Pestana. 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