How the Concept of a Value Chain Can Be Adapted for Service Industries - Essay Example

?Q Develop a service industry example (e.g. financial services; legal practice; consulting engineering, etc) to demonstrate how the concept of a value chain can be adapted for service industries? The very purpose of value chain in business operations is to add value to the product in every step of the process. The business will reap more profit, if the value chain attached to the production process of the product attaches more value to the final product. The Porter’s frame work for value chain depicts the Value chain of an organization. The framework elaborates the importance of the support activities and primary activities in building up the final value of the product. The Support activities in an organization that increases the added value of the product are; Organizational Infrastructure, Human Resource management, Technology development and Procurement. The primary activities of the value chain are inbound logistics, Operations, Outbound logistics, Marketing and sales and Services. Theses nine operations of the value chain play an important role in making the product more valuable in terms of utility and the profit. The Primary Activities – Inbound logistics: This process consists of receiving, storing of raw materials, and distribution of the raw materials to the various operations of production. This involves the inventory maintenance, transportation scheduling and return of the defective parts back to the suppliers. Operations: This process includes the various activities that transform the raw materials or unfinished products into final products. This area involves processing the raw materials through machines, equipment maintenance, testing of machines and other methods to optimize the production. Outbound logistics: This process involves the distribution of the finished products to dealers, distributors and to the warehouses. The entire process of delivering the finished goods to the end customers is handled under this operation. Warehousing, material handling, delivery operation, processing of the order and scheduling the delivery transportation is taken care of under this operation. Marketing and Sales: This process deals with the sales and marketing of the finished product. Functional areas like advertisement, promotion, stationing of the sales force, channel selection and pricing. Services: These operations include the after sales services like repair and maintenance. Functions like installation, repair, training, part supply and production adjustments. These services play an essential role in increasing the value of the product. The Support Activities- Firm Infrastructure: The infrastructure of the organization adds immense value to the product. The kind of facility available at the organization increases the value of the product. A general firm infrastructure is represented by the general management, planning and finance department, the legal department. These departments ensure smooth functioning of the entire production process. Human Resources Management: this operation regulates the recruiting and training of the employees. Human resource is the backbone of any organization. Managing the issues related to the employees such as benefits and compensation. Cost of hiring and training the employees and most importantly assigning the right job to the right person add a lot value to the product. Technology Development: An organization’s most important initiative in being effective and innovative is the stress given on technology development. Having the most efficient technology ensures fast and cost effective production. The quality of the product also increases with incorporation of latest technology. Procurement: Procurement deals with the function of purchasing materials for further processing. A cost effective and quality effective procurement ensure the cost and quality effectiveness of the finished product. When these nine basic yet essential operations are run efficiently by the organization the Value is added to the product. The end product ends up being cost effective yet high on quality scale. Q Identify potential stakeholders in a BPM initiative and describe their role? In most cases BPM generally start with an approach which is holistic by nature. The holistic approach is aimed at accomplishing operational excellence. The BPM introduces a tool to document the processes. BPM must be planned properly to avoid any kind of disappointment. Organisation often wants to avoid documenting their process as they find it not as much productive. The main reason for such resistance is because the goals of BPM are not very clear from the start. Documentation becomes the main focus in BPM whereas it is the end of the process. Right from the initiation of instillation of BPM the objectives should be clear. The approach should be very pragmatic and short term result oriented to convince the internal stakeholders. Instead of focusing in the hefty design the aim should be at the end results of BPM. BPM is not a project it is a process incorporated and demands corporation from all the stakeholders involved. In most cases the internal stake holders are not considered and this causes a lot of in-convenience. Stake holders include the customers who will be affected by implementation of BPM. The suppliers who will also have to change their procedures with respect to the BPM installed in the organisation. The employees, who will have to change their work pattern, update themselves in order to implement the BPM. The other stakeholders will be the Managers at upper management level, who will have to regularly assess the BPM implementation in order to analyse the utility of BPM. Q Why is it important to define the scope a BPM project? The Scope of the BPM implementation in an organisation initially is an important criterion to assess the success. Creating a project scoping diagram is often very helpful in carrying out the project. The principles of iterative delivery Vs waterfall approach are applicable to BPM. This model helps in defining small yet relevant measures that BPM leads to in an organisation. The scope should be realistic and not overtly ambitious. The scope can be later expanded once the initial values have been achieved. The project scope diagram is also preferred because it provides more space to record and perform the project. It also provides clarity and provisions for further changes. In experience, the cause – effect diagram works better for smaller and larger problems which require more space for changes and adaptability. It is important to define the scope and the objectives of the project. The time scale also should be included. It is imperative to establish clearly what the organisation desires to accomplish by employing BPM software. . These objectives and concerns need to be set and communicated evidently and often repeated. As the project evolves the accomplishment against the objective must be measured. Objectives and concerns can change, but it must be achieved in a controlled way .The focus should be on ensuring that projects are tackled in the right manner and that they are aligned to defined the business objectives. They are scoped and resourced appropriately; and they make effective use of available BPM technology. The BPM Project Delivery Framework should originally focus on targeting a relatively simple yet very much achievable project with an obvious business advantage. Concentrating on a short, firmly scoped project allows the team to prove the feasibility of the BPM approach while building skills and knowledge Q Describe how you would construct a project scoping diagram and explain its contents When new recruits join the firm, the “On Boarding” process addresses the needs of the Human Resources department. It allows them to guarantee improved traceability and clarity in their directives to others in the business as they ensure that a desk is available. A PC is allocated, and that correct personnel records are created. These features of the BPM Project Delivery Framework are significant as they allow the BPM program to display achievement and establish credibility inside the organization prior to moving on to further demanding initiatives. In order to comprehend the BPM Project Delivery Framework. It is important to take a closer look at each step of the framework. To ensure proper governance ideology, a high-level, cross-functional “Steering Group” supervises the framework and the individual projects are commenced. The advantage of the Steering Group is that it ascertains a valued business-centric body that is capable of taking an objective view and set up the priorities suitably. It also assures business ownership and an effective partnership with the IT, while generating change for the organizational functioning. The scope of the project is once approved, it is essential to develop a practical business case with supporting procedures and benchmarks. A business case is essential to gain managerial sponsorship and to establish the significance of the approach. The expected benefits must be highlighted. Managerial sponsorship is a complete necessity as there will be constant political obstacles to beat. Thus, making it very important to include the Managerial level in the project approach. Before going ahead with the implementation, the process must be properly understood to have provisions for improvisation. This is significant since some are eager to computerize the existing approach, with the inefficiency intact to the procedures. After understanding the process. A prototype the application for the chosen BPM Suite has to be built. User feedback must be taken to ensure the solution is delivering what people really desire. Close attention to the related organizational change must be given. Failure in assessing the feedback will affect acceptance of the solution. Having applied the BPM, the results must be measured continuously and the culture of iteration should be encouraged. Finally the success generated by BPM must be promoted to highlight the importance of BPM. The essential description of the difficulty process that is represented as either as one process that needs to changed or as a specific process having 4-5 sub process that need to be improved. They are ready to process their understanding of the procedure, the scope of the problem, and precise nature of the problems that must be addressed. At this early phase we often discover it is helpful to create a project scoping diagram. Later on when we comprehend the problem better and they start to process their scrutiny of the problem. Initially, they start with a simple description of a set of activities linked to form a process. Next, moving to process scoping diagram to help us assess and scope a specific process or activity. Afterwards, they start to do more thorough analysis and then move to a process flow diagram that focuses on the particulars of the flow, the associations between the process and clientele and on managerial responsibilities. The basic concept following the project scoping diagram originated with the structured software analysis modeling technique called IDEF (Integrated Definition Language), which was initially developed by the U. S Air Force and proved well accepted with the CASE system (Computer Assisted Software Engineering) tool vendors at around 1930’s. Most of component in IDEF too is technical to the interest of business modelers; however it is still used by software engineers. Q How does a process perspective of organisations differ from a functional perspective? The process viewpoint contributes to the tactical impact of a business in four ways: Cost control – keeping costs of running the organization under control by ensuring efficacy. Revenue – Increasing the business’s capacity to generate revenue via the quality of the products and services it offers. Investment – maximizing the return on investments by guarantying they operate as they are planned to. Capabilities – implanting the capabilities that will create the basis of the business’s continuing future competitiveness. Process-oriented organizations also crack down the obstacles of structural departments and to avoid functional ‘silos’ (each section concentrating only on its own purpose rather than understanding how it contributes to overall value creation in an organization). However, the strategic value of a procedure viewpoint comes from not only assessing current processes, but also identifying sectors where they can be enhanced. Business process improvement – supporting processes in order to realize organizational objectives and goals should be at the heart of the project view point. As we have by now recognized, business processes should be designed to add value and so should not comprise unnecessary activities. The result of a well-designed business process is improved effectiveness (value for the customer) and increased efficiency (lower costs for the business). Process development is often seen as being identical with automation and reason for job losses. However, this is not mandatory in all cases. Although it is one of the outcomes of process improvement, they should not ultimately be the reasons for it. Definition process perspective: consistent sequential set of performance and tasks that turn effort into production. Focus cross-functional, optimize value on organizational goals “The ultimate picture”. It is instils value by three steps; Identifying the customers of the process , Identifying the requirements of the customers and Clarifying the value that each process creates to the overall goals and objectives of the organization. The process oriented manager develop into change agents, serving others to think about how IS and organizational strategies support overall business strategy of an organisation. Work duplication is avoided and cross functional communication barriers become less; organizational effectiveness is increased in the process. The two popular approaches for transforming business are: 1. Business process reengineering (BPR) also known as radical business processes improvement 2. Incremental process improvement. This is done in conjunction with total quality management (TQM) Both sight business as a set of process rather than an operational hierarchy. Managing from a business process perspective, Functional organization often tend to result in inferior performance, managers should contemplate taking business process perspective on value creation. Each business processes must include the following: -A well defined beginning and an end. - Specific Inputs and outputs. -Sub -processes that convert inputs into outputs. - A set of metrics for measuring the efficacy What’s important? - The Processes should create value for customers. -Efficient processes should integrate sub-process across functional boundaries. -Non-value adding tasks should be eliminated. -Need to assemble large scale processes in order to customise the service or product. Q How are organisations using capability maturity models to effect change? The SEI model is also acknowledged as the Capability Maturity Model (CMM). The guideline for improving the software process was published in 1995. The (CMM) team define five phases that organizations go through when they start their journey from immature business strategies to mature business strategies. These phases can be defined by citing examples from software organization; however they are equally applicable to any large organization. Although the (CMM) model is more applicable to large organizations, the model can also serve the purpose of an excellent reference model for SMEs (Small and Medium size enterprises). The main assumption deduced by the (CMM) team is that immature organizations do not have consistency in their performance. However, mature organization produces quality products or services consistently. Q Describe a capability maturity model with which you are familiar. In literature the CMM model is described as the process where the managers of a mature organisation monitor the quality of the software products and the procedures applied during the production. There is a well defined objective and quantative basis for evaluating the product quality and analysing the problems related to the production procedures. The Schedules and budgets are based on past performances and are realistic in the approach towards the end result. The approach regarding expected results for costs incurred, process schedules, operations and quality of the product are usually kept realistic to achieve the set goals. A mature organisation follows a disciplined methodology, which is consistent in all levels. The main reason behind the consistency is the involvement of all the participants. Involvement of all the participants ensure efficacy and quality production. There are five levels that ascertain the evolving phases of an organisation depicting their journey from an immature organisation to a mature organisation. The (CMM) model defines the evolution of a company’s maturity as follow: Level 1: Initial, The phase is characterised by a certain set of irregular activities. The process followed is not at all well defined and the organisation is completely dependent on individual efforts and heroics. Level 2: Repeatable. At this level, the basic project management procedure is set up. The process can be tracked to assess the cost incurred and the schedules of each operation. The discipline is apparent and can be repeated to claim earlier success. Level 3: Defined. The procedure is documented for the convenience of the management as well as the operations leads. The standards are well defined and have clarity. All the projects use an approved methodology to bring consistency and quality in the products and services. Level 4: Managed. The information regarding the detail process is collected. The information regarding the procedure followed and quality are collected on a regular basis. The software process and quality is understood quantitatively and controlled. Level 5: Optimising. The process is evaluated continuously for improvisation in the process. Quantative feedback from the process furnish the data regarding improving the current process. To increase the current process innovative ideas are applied. Pilot run for assessing the feasibility of new process are conducted. Read More