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Unit 1 Lecture Summary, Lecture notes of Business Systems

New Jersey Institute of Technology (NJIT)Business Systems
Prof. David Ullman

Summary of Unit1 Part 1 and Part 2 from class

Typology: Lecture notes

2022/2023

Uploaded on 06/14/2023

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Unit #1 - Part 1: Summary
1. Systems thinking
The first concept I talk about is adopting a systems view of business process
management. You should see and appreciate this as we go forward. The need for
“process improvement” is often driven by internal and/or external factor changes, or just
by the desire to better optimize what you are currently doing – all other things remaining
equal. This is the essence of systems thinking. Please appreciate the systems concepts
illustrated in sides 11-13 and why we will use frameworksand models to understand new
concepts.
2. Generic Processes
The three generic processes of any producing firm are “BUY”, MAKE” and SELL”. You
should appreciate the role of these processes and the larger model of the KeyProcesses
ofanOrganization (slide 31). The laboratory portion of the course focuses on “BUY
(procurement) MAKE (production) and SELL (fulfillment) processes as implemented in
SAP S4/HANA.
3. Functional and Cross-functional Views of organization.
Functional organizational structures are the most common and have a historical
grounding in organizational efficiency – get specialists to perform specific tasks.
However, the structure reinforces “siloed thinking” which can be harmful to an
organization. A process-oriented view of the organization is more valuable when looking
at how work is done. Slides 52 and 53, with the quote by Andrew Spanyi, summarize the
focus and thinking of a great deal of this course. Here is a good discussion from
the Harvard Business Review that talks of the importance of developing cross-functional
capabilities.
4. Value chain and supply chain
Organizations exist to provide value for their stakeholders. Therefore, it is important to
understand the concept of value and a value chain– how an organization goes about
delivering value. The value chain is often confused with a related, but different concept
– thesupplychain. Please be sure you understand each and their differences.
5. Describing a Process
In terms of understanding a process, you should understand its characteristics. The
POETIC and IGOE models are different versions of the same. You should appreciate the
characteristics of a process and especially the differences between outputs and
outcomes. The Lecture Resources have a good link to What is IGOE? As we will see, this
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Unit #1 - Part 1: Summary

  1. Systems thinking The first concept I talk about is adopting a systems view of business process management. You should see and appreciate this as we go forward. The need for “process improvement” is often driven by internal and/or external factor changes, or just by the desire to better optimize what you are currently doing – all other things remaining equal. This is the essence of systems thinking. Please appreciate the systems concepts illustrated in sides 11-13 and why we will use frameworks and models to understand new concepts.
  2. Generic Processes The three generic processes of any producing firm are “BUY”, MAKE” and SELL”. You should appreciate the role of these processes and the larger model of the Key Processes of an Organization (slide 31). The laboratory portion of the course focuses on “BUY (procurement) MAKE (production) and SELL (fulfillment) processes as implemented in SAP S4/HANA.
  3. Functional and Cross-functional Views of organization. Functional organizational structures are the most common and have a historical grounding in organizational efficiency – get specialists to perform specific tasks. However, the structure reinforces “siloed thinking” which can be harmful to an organization. A process-oriented view of the organization is more valuable when looking at how work is done. Slides 52 and 53, with the quote by Andrew Spanyi , summarize the focus and thinking of a great deal of this course. Here is a good discussion from the Harvard Business Review that talks of the importance of developing cross-functional capabilities.
  4. Value chain and supply chain Organizations exist to provide value for their stakeholders. Therefore, it is important to understand the concept of value and a value chain– how an organization goes about delivering value. The value chain is often confused with a related, but different concept
  • the supply chain. Please be sure you understand each and their differences.
  1. Describing a Process In terms of understanding a process, you should understand its characteristics. The POETIC and IGOE models are different versions of the same. You should appreciate the characteristics of a process and especially the differences between outputs and outcomes. The Lecture Resources have a good link to What is IGOE? As we will see, this

is what Harmon calls a Scope Diagram. There is a Discussion Assignment next week on this model.

  1. Levels of Concern Many process practitioners advocate that process improvement can generally be considered at three different levels of concern: (i) enterprise – or organization-wide, (ii) process level – with a specific business process, and (iii) implementation – concerns with resources that support a process (the people, the technology, etc.). Harmon’s book looks at each. The levels of concern are illustrated in Harmon’s Business process pyramid (slide 92) shown here and discussed in Harmon, Introduction, Figure I.1: Unit #1 - Part 2: Summary
  2. Business Process Change from a System Perspective Our adoption of a systems thinking approach helps us understand the nature of business process change as illustrated in the POETIC and IGOE process models and Alter’s Work System Framework, all shown here. You should already understand each model and their components. Note that the POETIC and IGOE models are largely the same thing (along with what Harmon calls a Scope DiagramLinks to an external site.). The POETIC Process Model

the nature of products/services today. A product/service offering should be looked at as a combination of three components, which may or may not be present: (i) Goods – which may be physical or digital , (ii) A ccess to resources , and (iii) Service actions. The music retailers are no longer with us because most music is not consumed as a physical good, but a digital good. The same might be said of bookstores. However, many have re- invented themselves. One of the attractions to e-commerce is the service action component of the output of the work being done. In addition to receiving your physical bundle of toilet paper rolls, you receive the convenience of having it delivered to you. Many customers of e-commerce work systems find value is this service action component. By understanding these three components of a product/service offering, we can find ways to deliver more value to customers. Discussion question #2 talks a lot about the differences between products and services and the nature of pure information products. Review this discussion and slide #20 that talks about the three components:

  1. Value chain analysis The John Oliver video motivates a good discussion of value chain analysis. Focusing on steps within the outbound logistics steps of the value chain, Walmart saved millions by reducing the costs at this step by better cubing trailers. As a sidebar we also saw how

changes at the infrastructure steps in the value chain saved more money (generated more value) as well.

  1. The Gap Model The John Oliver video, along with the Amazon produced video on their use of robotics with AI and ML in fulfillment centers is a good application of the Gap Model, illustrated below:

 Metrics of truck capacity indicated the waste in cubing trailers and the tools to help process participants more fully cube trailers was embraced to eliminate the waste.  Picking metrics (e.g. picking accuracy) motivated the use of imaging when pickers stowed and retrieved items to/from bins in order to reduce errors and improve the picking accuracy metric.

  1. Amazon's Business Model The Amazon video described their business model as based on:  Speed - in this context, the cycle time of its processes  Innovation - a constant stream of new and creative ideas for creating new processes and improving existing ones. Note how technology is used for innovation. We will talk more about this later.  Customer obsession - Although John Oliver makes fun of the term, it's an important concept in marketing today. Review this Indeed.com post to appreciate how customer obsession is far more than just customer satisfaction.