Unit 5 Modern Concepts 4SPP

7/28/2019 Unit 5 Modern Concepts 4SPP

1/31

1

Unit5

ModernConce

pts

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UNIVERSITY

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Objective

Thestudentswillbeabletounderstandand

applythe

followingconcepts:

Manaementb

ObectivesMBO

Managementby

Exception(MBE)

StrategicManagement-PlanningforFutured

irection

Evolvingdevelo

pmentstrategies,information

technologyin

management

ecsons

upp

or

ysem

ManagementGames

BusinessProce

ssRe-engineering(BPR)

EnterprisesResourcePlanning(ERP)

SupplyChainM

anagement(SCM)

2

Objective[contd.]

Activity

BasedManagement(ABM)

GlobalP

erspective:

PrinciplesandSteps

Advantagesanddisadvantages

3

4

Unit5.1

Ma

nagementByObjectives

(MBO)

--

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A.Sriraman MG_9362_Unit_05 Pg.1


2/31

Introductio

n

Definition

:

ManagementbyObjectives(MBO)isa

processofdefining

objectiveswithinanorganizationsoth

atmanagementand

employe

esagreetotheobjectivesandunderstandwhattheyare

intheor

ganization

Aim:

istoincreaseorganizationalperforma

ncebyaligninggoalsand

subordinateobjectivesthroughoutthe

organization.

,

,

timeline

sforcompletion,

etc

Proposed

by:

eer

rucer

e

racceo

anag

emen,

.

5

FeaturesofAdva

ntage

Motivation

BettercommunicationandCo-ordination

Subordinatestendtohaveahighercommitmenttoobjectives

theysetforthem

selvesthanthoseimposed

onthemby

anotherperson.

Managerscanensurethatobjectivesofthe

subordinatesare

linkedtotheoranization'sobectives.

6

SettingOb

jectivesinMBO

ForeffectiveMBO,

individualmanagersmustunderstandthe

specifico

bjectivesoftheirjobandh

owthoseobjectivesfitin

withtheo

verallcompanyobjectivessetbytheboardof

directors.

Themana

gersofthevariousunitsor

sub-units,orsectionsof

unitbutshouldalsoactivelyparticipateinsettingthese

objectivesandmakeresponsibilityfo

rthem.

7

SettingObjective

sinMBO[contd.]

Thereviewmechanismenablesleaderstom

easurethe

performanceof

theirmanagers,

especially

inthekeyresult

areas:

marketing

innovation

financialresour

ces

physicalresources

Productivity

socialresponsibilityand

rofitreuirements.

8A.Sriraman MG_9362_Unit_05 Pg.2


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StagesofMBO

Defineco

rporateobjectivesatboard

level

Analyzem

anagementtasksanddeviseformaljob

secificationswhichallocateresonsibilitiesanddecisions

toindividualmanagers

Setperformancestandards

Agreeandsetspecificobjectives

Alignindividualtargetswithcorporateobjectives

achievem

entsagainstobjectives

9

Limitations

Itover-emphasiz

esthesettingofgoalsovertheworkingofa

planasadriverofoutcomes.

Itunderem

hasizestheim

ortanceofthee

nvironmentor

contextinwhich

thegoalsareset.

Companiesevaluatedtheiremployeesbyc

omparingthem

"

"

.

employeesshou

ldbe,

notatwhattheyshou

lddo.

Thedevelopmen

tofobjectivescanbetime

consuming,

leavingbothmanagersandemployeesless

timeinwhichto

dotheiractualw

ork.

10

Limitations

[contd.]

Theelabo

ratewrittengoals,

carefulcommunicationofgoals,

anddetailedperformanceevaluation

requiredinanMBO

programincreasethevolumeofpaperworkinan

organizat

ion.

11

CaseinPoint

MBOinActionatIntel

AManager'sGu

ideatIntelprovidesthefollowingdirections.

-

.

Setyoursubord

inatesobjectivesthatfitinwithyouroverriding

objectives.

themtomeetth

eirobjectives.



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13

Unit5.2

ManagementByException

--

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Introduction

Definition:Mana

gementbyexception

isamanagementstylethatwheremanagerso

nlyintervenewhen

employeesfailt

omeettheirstandardsofperformancestandards

orwhenplanso

rbudgetsgoawry.

Objective

'

strategictasks.

tomakethedec

isionthatcannotbemadeatonelevelof

.

tofreemanage

rsofordinaryorinsignificant

mattersthatcanbog

themdown.

.

14

Manageme

ntByException

CharacteristicsOfMBE

Managersdoaslittleaspossible,

insteadtheydelegateitto

peopleb

elowthem

Rathert

hanmonitoringeverymoveof

theiremployees,a

managershouldencourage,

andseta

path,

thenonlystepinif

thereis

abigdeviationfromthepath.

ExpertsView:

Frederic

kTaylor

.

His"exceptionprinciple'statedthatrou

tinedecisionmakingshouldbe

handle

dbylower-levelmanagerswhoreportonlyexceptionalcasesto

hiher

manaement.

15

ManagementByException

PhyllisG.

Holland,

PhD,

ProfessorandHead,Departmentof

Management,LangdaleCollegeofBusiness,ValdostaState

University,Vald

osta,

GA

Allorganizationscanusemanagementbyexcep

tion.

Whenroutinew

orkresultsinacceptableperform

ance,

no

managementa

ttentionisrequired.

Managerswho

haveproperlytrainedtheirsubordinatesshouldhave

noproblemsdelegatingauthorityandallowingp

eopletomanagetheir

ownwork.

-

routineproblems.

Somemanage

rshavetroubleallowingtheirsub

ordinatestomake

decisionsbeca

useofcontrolissuesbutthiss

choloicalbarrierwill

hindertheirca

reers.



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Implement

ation

Combine

MBEwithMBWA(managem

entbywalkingaround).

Managementbyexceptiondoesnotmeansittinginanoffice

waitingforbigproblemstowalkin.

WithMB

Einplace,

itismoreimperativ

ethanevertobewherethe

actionis

,toknowwhat'sgoingon.

responsib

ility.

LevelAmightbe,

"Doit.

Youdon'thavetotellanyone.'

eve,

o

.

eneme

nowaou

.

eve

,

o

ony

aftercheckingwithme.'

Remember,though,

thatthelevelofauthoritymayhavetochange

omee

newcrcumsances.

17

Implementation[

contd.]

Forexample,fis

calconstraintscouldaffecthowmuchlatitude

supervisorshav

eingrantingovertime.

Makesurelower

-levelmanaersarecomfortablewiththeir

expandedauthority.

Reviewpolicies,

practices,andprocedures.

.

Enlargethedefinitionof"exceptions'

toincludefavorablevariancesthatshouldbe

reportedtohigher

managemen.

Showinterestinbehaviorandresultsthatexc

eedexpectations.

18

Disadvantages

DespiteM

BE,

someinsecureindividualsmaypersistin

seekingd

ecision-makingassistance

andbecomeoverly

stressediftheassistanceisdenied.

Managersmaygetinhot

wateriftheirsubordinatesmakepoo

rdecisionsorfailto

solveproblems.

'

attention

beforetheybloomintobigtrouble.

Confusionresultswhenmanagersco

ntinuetomakedecisions

asuppose

y

ave

een

eegae

,orw

eno

ers

ave

notbeenadequatelytrainedandbrie

fedtotakeoverdecision

making.

19

Advantages

Itisamajortimesaverforthemanagerwhoshiftsauthority

fordecisionmak

ingandproblemsolvingdo

wnward.

Itsavestimefor

thereciientsofthisauthorit.

The

no

longerhavetodelayactionwhileawaitinginputfromabove.

MBEservesasacareerdeveloperandmotivator.Italsogives

abilityoftheirassistants.

Conclusion:

Managementby

exceptionwillworkonlywhenemployeesare

well-trainedand

havetheircareerinthatpart

icularsection.

Otherwiseitwo

uldresultinfailureofachievin

gtask.



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21

Unit5.3

StrategicManagement

annngoruure

recon

--

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Introduction

Definition:Strategy

Facingrisksanduncertainty

Seizin

theo

ortunities

resentedb

enviro

nment

Usingdistinctiv

ecompetencesofresourcesoforganization

DefinitionofStrategicManagement:

Isanongoingpracticeofestablishingabroad

programof

organizationalg

oalsandthemeanstoachievethem.

Itisthedeterminationofthebasiclong-termgoalsandobjectives

ofanenterprise,

andtheadoptionofcourses

ofactionandthe

allocationofresourcesnecessaryforcarryin

goutthesegoals.

22

StrategicP

lan&Management

Strategyplanvs.Operationalplan

Timehorizons

Scoe

Degreeofdetail

Whentom

anagestrategically?

Increasingrateofchanges.

Complexityofmanagersjobs.

Increasingimportanceoffittingtheorganizationintoitsexternal

environment.

Increasinglagbetweenthepreparatio

nofplansandtheir

impleme

ntationinthefuture.

23

ComponentsofS

trategicManagement

Goalsoforganiz

ations

wherearewegoing?

whatarewedoing?

Strategyoforga

nizations

inwhatdirectionareweheaded

andwhatrouteshaveweselected?

Policiesoforanizations

providesguides

forgettingthere.



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Type&Lev

elofStrategicManagem

ent

Typesofstrategicmanagement

Employe

es

Customers

Suppliers

Stockho

lders

ommuny

Corporate-levelstrategy

morethanonelineofbusiness.

Business-unitstrategy

lineofb

usiness.

uncona

-evesraegy

tocarry

outthetoplevels.

25

StrategicManagementProcess

Strategic

planning

oase

ng

Strategy

formu

lation

Adm

inis

tration

imp

lementat

ion

26

Guidelines

togoodstrategy

Opportun

itiesavailableinmarket?

Distinctiv

ecompetencesheldbyfirm

?

regulations,technologicaldevelopments,

changesin

consumerlifestyles,andcyclicaleconomicconsiderations?

Societys

ethical,political,andculturalframework?

Personalaspirationsandinterestsofowners?

27

28

Unit5.4

SWOTAnalysis

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8/31

Introductio

n

SWOT:Strength

Weakness

OpportunityThreatAnalysis.

Awidely

usedframeworkfororganizin

gandusingdataand

informationgainedfromsituationanalysis

Encomp

assesbothinternalandexternalenvironments

Oneoft

hemosteffectivetoolsintheanalysisofenvironmental

dataand

information.

ASWOT

analysisgeneratesinformatio

nthatishelpfulinmatching

anorganizationsoragroupsgoals,p

rograms,andcapacitiesto

thesocialenvironmentinwhichtheo

erate

Itisaninstrumentwithinstrategicplanning

Whencombinedwithadialogue,

itisaparticipatoryprocess.

29

FactorsofSWOT

Factorsaffectinganorganizationcanusuallybeclassifiedas:

Internalfactors

Weaknesses(W

)

Externalfactors

Opportunities(O)

Threats(T)

Strengths

Weaknesses

Opportunities

Threats

30

Strength(Internal)Factor

Strengths

Positive

tangibleandintangibleattributes,internaltoan

organization.

Theyarewithintheorganizationscontrol

Yourspecialistmarketingexpertise.

Anew,innovativeproductorservice.

.

Qualityprocessesandprocedures.

Anyotheraspectofyourbusinesstha

taddsvaluetoyourproduct

orservce.

31

Weakness(Internal)Factor

Weaknesses

Factorsthatare

withinanorganizationscontrolthatdetractfrom

itsabilitytoatta

inthecoregoal.Inwhichareasmightthe

organizationimprove?

Damagedreputation.

Lackofmarketin

exertise.

Undifferentiatedproductsorservices(i.e.in

relationtoyour

competitors).

.

Poorqualitygoodsorservices.



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Opportunity(External)Factors

Opportun

ities

Externalattractivefactorsthatrepresentthereasonforan

organizationtoexistanddevelop.

Whatopportunitiesexistinthe

environmentwhichwillpropeltheorganization?

Identify

thembytheirtimeframes

Adevelo

in

marketsuchastheInter

net.

Mergers

,jointventuresorstrategicalliances.

Movingintonewmarketsegmentsthatofferimprovedprofits.

newn

ernaonamare.

Amarke

tvacatedbyanineffectivecompetitor.

33

Threat(External)Factor

Threats

Externalfactors

,beyondanorganizationscontrol,whichcould

placetheorgan

izationsmissionoroperation

atrisk.

The

organizationma

ybenefitbyhavingcontingen

cyplanstoaddress

themshouldthe

yoccur

Classifythembytheirseriousnessandpro

babilityof

occurrence

Anewcompetitorinyourhomemarket.

Pricewarswithcompetitors.

Acompetitorh

asanew,

innovativeproductorservice.

Competitorshavesuperioraccesstochannelsofdistribution.

Taxationisintroducedon

ourroductorservic

e.

34

ActionPlanforSWOTAnalysis

ForaneffectiveactionplaninSWOT

analysis,

thefollowing

stepsmustbetakenintoconsideration:

Caitalizeon

ourstrenths

Overcom

eorminimizeyourweakness

es

Takeadvantageofsomenewopportunities

Setgoals

andobjectives,likewithan

yotherplan.

35

ForaProductive

SWOTAnalysis

Stayfocused.

Bespecificand

avoidgreyareas.

Kee

ourswot

shortandsim

le.

Avoidcomplexityandoveranalysis.

ItcanbeamistaketocompletejustonegenericSWOTanalysis

WhenwesaySWOTanalysis,

wemeanSWOT

analyses

Collaboratewith

otherfunctionalareas.

Informationgen

eratedfromtheSWOTanalysiscanbeshared

acrossfunction

alareas

SWOTanalysiscangeneratecommunicationbetweenmanagers

thatordinarilyw

ouldnotcommunicate

Createsanden

vironmentforcreativityandinnovation.



10/31

ForaProductiveSWOTAnalysis[co

ntd.]

Examineissuesfromthecustomers

/stakeholders

perspective.

Whatdo

stakeholdersandnon-stakeholdersbelieveaboutusas

anorganization?

Whatdo

stakeholders(andnon-stakeholders)thinkofourproduct

ualit,

service

ualit,

customerserv

ice,

rice,

overallvalue,

convenience,

andpromotionalmessagesincomparisontoour

competitors?

Whatistherelativeim

ortanceoftheseissuesasstakeholders

seethem

?

Takingthestakeholdersperspectiveisthecornerstoneofawell

doneSW

OTanalsis

37

ForaProductive

SWOTAnalysis[contd.]

Lookforcauses,

notcharacteristics

CausesforeachissueinaSWOTanalysiscan

oftenbefoundin

theorganizationsandcompetitorsresources

Majortypesofresources:

Financial

Oranizational

Intellectual

Informational

Relational

Human

38

ForaProductiveSWOTAnalysis[co

ntd.]

Separate

internalissuesfromexternalissues

Failuret

ounderstandthedifferenceb

etweeninternaland

externalissuesisoneofthemajorrea

sonsforapoorly

conductedSWOTanalysis

Knowyourself

Knowyourcustomer/stakeholder

Knowyourcompetitors

Knowyourenvironment

39

SWOT-Drivenpla

nning

Theassessment

ofstrengthsandweaknessesshouldlook

beyondproducts,servicesandresourcestoexamine

processesthatm

eetcustomersorstakeho

ldersneeds

Achievinggoals

andobjectivesdependson

transforming

strengthsintocapabilitiesbymatchingthem

with

Weaknessescanbeconvertedintostrengthswithstrategic

investment.Threatscanbeconvertedinto

opportunitieswith

erg

resourc

es

Weaknessestha

tcannotbeconvertedbeco

melimitations

whichmustbem

inimizedifobviousormeaningfulto

customersorstakeholders



11/31

SWOTMatrix

41

Merits&DemeritsofSWOT

Merits:

Simplicity

Flexibilit

Integrationand

synthesis

Collaboration

owercoss

Demerits&Wartning:

SWOTanalysiscanbeverysubjective.

Donotrelytoomuchonit.

Twopeoplerarelycomeupwiththesamefina

lversionofaSWOT

Useitasaguideandnotasaprescription.

42

43

Unit5.5

EvolvingDevelopmentS

trategiesinIT

Managemen

t

--

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EvolvingDevelopmentStrategies

Introduction:

Companiesmustbeflexibleenoughtorespon

drapidlyto

competitionandmarketchanges.

Thequestforproductivity,

qualityandspeedhasimmensely

increased.

This

uesthassawnedawholelotofmana

ementstrateies

like:

Businessplan

T

M

SixSim

aLeanManufacturin

Benchmarking

BusinessProcessReengineering

Globalization

Outsourcing.



12/31

ITManag

ement

Introduction

Informationinavaluablecorporateresource.

InformationTechnolo

helsbusines

satfourlevels

Atthe

operatinggrouplevel,IThelpsin

developingandsupporting

system

sandprocedures

Atthe

deartmentallevel,ITensuressm

oothflowofinformation

across

departments.

Atthe

interfacelevel,ITensuresflowofinformationacrossthe

operatinggroupsanddevelopsandmaintainsanenterprisewide

databa

se.

Atthe

strategiclevel,ITprovidescritica

lstrategicadvantagetothe

organisation.

45

ManagementInfo

rmationSystem

MISisaformalm

ethodofmakingavailable

tomanagement

theaccurateandtimelyinformationnecess

arytofacilitatethe

decision-making

process.

Thevariousstep

sinvolvedindesigningam

anagement

informationsystemare

Stateexplicitlytheobjectivesforthenewsystem

Constructacon

ceptualdesign

Specifyindetailhowthesystemwillwork

Developthesys

tem

Testandim

lem

ent

46

Guidelines

ForMISDesign

Thedesig

nofaMISshouldbedeterminedbytheusers-

managersandnotdelegatedtoafun

ctionalcomputer

specialist.

Allusersoftheinformationsystemshouldparticipateinthe

developm

entofthenewsystem..

basis.

TheMISs

houldnotonlyincreasethe

quantityofinformation

butshouldalsoselect,condenseandinterpretinformation.

Adequate

trainingtoallusersshould

beprovided.

47

TypesofInforma

tionSystems

TransactionProcessingSystem(TIS)

ATISisaninfor

mationsystemwhichrecords

transactionsthat

takeplacebetw

eentwoormorebusinessent

ities.

ManagementInformationSystem(MIS)

MISisageneralpurposesystemthatprovide

managerswithvital

.

DecisionSupportSystem(DSS)

DSSprovidema

nagerswithdataandtoolsformakingdecisions

onspec

csem

-srucure

an

unsrucure

pro

ems



13/31

TypesofIn

formationSystems[Contd.]

Executive

SupportSystem(ESS)

AnESSisaspecializeddecisionsupp

ortsystem,

primarily

designedtousedbytopexecutivesof

acompany.

ExpertSy

stem(ES)

Theyare

informationsystemsinwhich

computerprogramsstore

experts

inspecializedfields.

Ithas3maincomponents,

Inferenceengine

UserInterface

49

TypesofInforma

tionSystems[Contd.]

OfficeAutomationSystem

Theyservetheneedsofthosewhoareprimarilyinvolvedin

processingofd

atasuchas

Wordprocessin

g

Desktoppublishing

-

Videoconferencing

Facsimiletransmission.

50

51

Unit5.6

DecisionSupportSystems

(DSS)

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DefinitionofDSS

ADSSisaninteractive,

flexible,

andadapta

blesystem,

speciallydevelopedforsupportingthesolu

tionofanon-

structuredmana

gementproblemforimprov

eddecision

making.

Itutilizesdata.

.

Itallowsforthedecisionmakersowninsights.

Itma

utilizemodelsbuiltb

aninteractive

rocess

(frequentlybyend-users).

Itsupportsallth

ephasesofthedecisionmaking.

mayncuea

nowegecomponen.



14/31

Characteristics&CapabilitiesofDSS

Providesupportinsemi-structureda

ndunstructured

situations

,includeshumanjudgmentandcomputerized

information

Supportforvariousmanageriallevels

Supporttoindividualsandgroups.

Supporttointerdependentand/orse

quentialdecisions.

Supporta

llphasesofthedecision-m

akingprocess.

-

.

Areadaptive.

Haveuserfriendlyinterfaces.

53

Characteristics&CapabilitiesofDSS[contd.]

End-userscanb

uildsimplesystems

Utilizesmodelsforanalysis

,

,

types.

Decisionmakers

canmakebetter,morecon

sistentdecisions

inatimelymann

er.

54

DSSComp

onents

DataMan

agementSubsystem

ModelMa

nagementSubsystem

-

UserInterfaceSubsystem

User

55

DataManagementSubsystem

DSSdatabase

Databasemanag

ementsystem

Queryfacility



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ModelMan

agementSubsystem

Analogofthedatabasemanagementsubsystem

Modelbase

Modeling

language

Modeldirectory

Modelexecution,

integration,

andcommandprocessor

57

KnowledgeBase

d(Management)Subsyst

em

Providesexpertiseinsolvingcomplexunstr

ucturedandsemi-

structuredproblems

Exertise

rovid

edb

anexertsstemorotherintellient

system

AdvancedDSSh

aveaknowledgebased(m

anagement)

LeadstointelligentDSS

Exam

le:Datam

inin.

58

UserInterface(Dialog)Subsystem

Includesallcommunicationbetween

auserandtheMSS

Graphicaluserinterfaces(GUI)

Tomostu

sers,

theuserinterfaceisthesystem.

59

User

Differentusagepatternsfortheuser,themanager,orthe

decisionmaker

Manaers

Staffspecialists

Intermediaries

Staffassistant

Experttooluser

Businesssste

ma

nalst

GSSFacilitator



16/31

DSSHardw

are

Evolvedw

ithcomputerhardwareand

softwaretechnologies

Mainframe

Workstation

Personalcomputer

Webserversystem

nerne

Intranets

Extranets.

61

DSSClassificatio

ns

HolsappleandW

hinstonsClassification

Text-orientedDSS

Database-orientedDSS

Spreadsheet-or

ientedDSS

Solver-oriented

DSS

ue-orene

CompoundDSS

.

IntelligentDSSC

lassification:

Descriptive

Procedural

Linguistic

62

DSSClassifications[contd.]

Presentation

Assimila

tive

Alternate

CateoriesofIntellientDSS

Symbiotic

Expert-s

ystembased

apve

Holistic

OtherCla

ssifications

InstitutionalDSS

Dealswithdecisionsofarecurringnatu

re

Dealswithspecificproblemsthatareusuallyneitheranticipatednor

recurring(usually,

one-timeonly).

63

IngredientsforD

SSSuccessorFailure

ForDSSSuccess

ManagementSu

pport

UsersInvolvedinDesin&Develoment

EarlyBenefitsS

hown

ForDSSFailure

LackofManage

mentSupport

UsersIgnoredinDesign&Development

NoEarlyBenefitsShown



17/31

65

Unit5.7

ManagementGames --

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Introduction

Managementgames:

Itisagameproblemwhichactsasathinking

tool,giventotrain

managerstosolverealtimeprobleminorder

toimprovedecision

makingandana

lyticalskills.

EdwarddeBono

,

,

,

lateralthinking.

HeauthoredthebestsellingbookSixThinkingHatsandisa

schools.

66

LateralThinking

Itinvolvesthinkingoutsidethebox.

Lateralth

inkingissolvingproblemsthroughanindirectand

creativea

roachusin

reasonin

thatisnotimmediatel

obviousa

ndinvolvingideasthatmay

notbeobtainableby

usingonlytraditionalstep-by-steplogicinbothproblem

.

Lateralth

inkingusesvariousactsof

provocationtorouse

ideasthatarefreefrompreviouslylo

ckedassumptions.

67

LateralThinking[Cont...

]

Thethinkingtoolscanbe:

RandomEntryIdeaGeneratingTool

Chooseanobectatrandom

ProvocationIde

aGeneratingTool

Choosetouse

anyoftheprovocationtechnique

swishfulthinking,

exa

eration

ChallengeIdea

GeneratingTool

Why?

.



18/31


19/31

SixValueM

edals

Ithelpspeoplequicklybutthoroughlyscanforvalues,

prioritize

whichvaluesarethemostimportanttopursue,

and

thenensu

rethattopvaluesareaddressedandmaximized

everystepoftheway.

Ithelpsto

noticeandresolveconflictsinvalueswhichhave

.

GoldMe

dal:IncludesHumanValues.

SilverMedal:Whatmatterstotheorga

nization.

ass

ea:tcoverscange,

nnovaton,

smpctyan

creativity.

WoodMedal:Positiveornegativeimpacttotheenvironment.

BrassM

edal:Howwillthisactionbein

terpreted.

73

74

Unit5.8

Busines

sProcessReengineering(BPR)

--

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Introductio

n

Whatisa

Process?

Aspecificorderingofworkactivitiesacrosstimeandspace,

with

abeginn

ing,

anend,

andclearlyidentifiedinputsandoutputs:a

structur

eforaction.

Whatisa

BusinessProcess?

'

provide

customer-orientedresultsins

upportoftheorganization's

objectives.

Reengin

eeringisthefundamentalreth

inkingandredesignof

businessprocessestoachievedramaticimprovementsincritical,

,

,

,

serviceandspeed.

75

BusinessProces

sReengineering

BusinessProcessReengineeringistheana

lysisanddesignof

workflowsandp

rocesseswithinanorganization

BPRVersusProcessSim

lification

ProcessReengineering

ProcessSim

plification

Ra

dical

Trans

formation

Increment

alChange

-

Change

Attitu

des

&Be

hav

iors

Director-

Le

d

Limite

dNu

mbero

fInitiatives

-

Assume

Att

itud

es

&Be

hav

iors

Managem

ent-

Le

d

Var

ious

Simu

lta

neous

Proects

76



20/31

ImportanceofBPR

WhyOrganizationReengineer?

Custome

rs

Deman

ding

Wh

yOrganizationsDont

Reengineer?

Complacency

Sophistication

ChangingNeeds

Competition

PoliticalResistance

NewDevelopments

FearofUnknownandFailure.

Local

Global

BP

Rseeksimprovementsof

Cost

ualit

Service

Speed.

77

SystemsPerspec

tive

Transformation

Inputs

Outputs

Env

ironment

78

KeySteps

inImplementingaBPRStrategy

Selecttheprocess&appointprocessteam

Understandthecurrentprocess

Identifyactionplan

Executeplan

79

Step1

SelecttheProcess:

ReviewBusine

ssStrategyandCustomerRequir

ements

SelectCoreProcesses

UnderstandCu

stomerNeeds

DontAssumeAnything

SelectCorrect

PathforChange

RememberAssumptionscanHideFailures

Competitionan

dChoicetoGoElsewhere

Ask-QuestionnairesMeetinsFocusGrou

AppointthePro

cessTeam:

AppointBPRC

hampion

EstablishExecutiveImprovementTeam

ProvideTrainin

gtoExecutiveTeam



21/31

Step1[contd.]

CoreSkillsRequired:

Capac

itytoviewtheorganizationasaw

hole

Ability

tofocusonend-customers

Ability

tochallengefundamentalassumptions

Couragetodeliverandventureintounk

nownareas

UseofC

onsultants:

Usedt

ogenerateinternalcapacity

Appropriatewhenaimplementationisn

eededquickly

initiativeisorganization-ledandnotcon

sultant-driven

Contro

lshouldneverbehandedoverto

theconsultant

81

Step2&3

Understandthe

CurrentProcess

DevelopaProc

essOverview

Clearlydefinetheprocess

Mission

Scope

Boundaries

Setbusinessandcustomermeasurements

Understandcu

stomersexpectationsfromtheprocess(staffincluding

processteam).

eveop

ommuncae

sono

mprove

rocess

Communicatewithallemployeessothattheyareawareofthevision

ofthefuture

waysprove

normaonon

eprogresso

e

n

ave-goo

andbad.

Demonstratea

ssurancethattheBPRinitiativeisbothnecessaryand

.

82

Step4&

5

Identify

ActionPlan:

Develo

panImprovementPlan

AppointProcessOwners

SimplifytheProcesstoReduceProcess

Time

Remov

eanyBureaucracythatmayhind

erimplementation.

Execute

Plan:

Qualify/certifytheprocess

Performperiodicqualificationreviews

Evalua

tethechangeimpactonthebusinessandoncustomers

Bench

marktheprocess

.

83

Disadvantageof

BPR

Processunderreviewtoobigortoosmall

Relianceonexis

tingprocesstoostrong

AllocationofResources

PoorTimingand

Planning

KeepingtheTea

mandOrganizationonTarg

et



22/31

85

Unit5.9

En

terpriseResourcePlanning(ERP)

--

ANNA

UNIVERSITY

ANNA

UNIVERSITY

Introduction

Enterpriseresou

rceplanning(ERP)integratesinternaland

externalmanage

mentinformationacrossanentire

organization

Itattemptstoint

egratealldepartmentsand

functionsacross

acompanyonto

asinglecomputersystemthatcanserveall

.

FunctionsofERP:

1.

EngineeringDesign

2.

Productio

nPlanning

3.

Controlling

4.

Maintenan

ce

5.

Quality

6.

Legal

7.

Finance

8.

Inventor

9.

Sales

10.H

umanResources.

86

WhycompaniesundertakeERP:

Integrate

financialinformation

Integrate

customerorderinformation

.

StandardizeHRinformation

Reducein

ventory

87

EnterpriseSystems



23/31

TraditionalViewofSystems

89

TheOrderFulfillmentProcessinERP

90

BestFeatu

resofanERPsystem

ArchitectureofERPsystemfacilitate

stransparentintegration

ofmodulesprovidingflowofinforma

tionbetweenallfunction

withinenterpriseinrealtime.

Manydifferentsoftwarearereplaced

byoneintegrated

system.

Eliminatesdataandoperationalredu

ndancies(noduplication

ofworko

rdataentriesetc.)

91

PrimeReasonsforImplementingERP

Needforcommo

nplatform

Processimprove

ment.

decisions.

Operationcostr

eductions.

Increasedcusto

merresponsiveness.

Improvedstrategicdecisionmaking

.



24/31

Businessa

ndTechnicalBenefits

Automationofbusinesstransactions

Flexibility

inchangingthesystemcateringtonewerbusiness

rocesses.

Coordinationacrossbusinessfunctions

Coordinationacrossgeographicaldistancesresultingin

betterMa

nagerialcontrol

Consisten

tinformationandinterface

thuseasierto

understandandworkin

Singlesystem.

93

ChallengesofEn

terpriseSystems

Difficulttobuild:Requirefundamentalchan

gesinthewaythe

businessoperates

Technolo

:Re

uirecom

lex

iecesofsoftwareandlare

investmentsoftime,

money,andexpertise

Centralizedorga

nizationalcoordinationand

decisionmaking:

94

95

Unit5.1

0

SupplyChainManagement

(SCM)

--

ANNA

UNIVERSITY

ANNA

UNIVERSITY

Definition

Itisdefinedasthestrategicmanagementin

volving

interconnectednetworkofbusinessactivitiesfrom

acquisitiontoco

nversionofrawmaterialsintofinishedgoods

andfinallydelive

ringtheproducts.

Theorganisation

aldecisionsandactivitiesaretriggeredby

.

Supplier

Management

Customer

Management

INFORMATION

FLOW

Schedule/

Conversion

Stock

Deliver



25/31

Basicsteps

Plan

Source

Make

Deliver

Buy

Suppliers

Manufacturers

W

arehouses&

Customers

s

ruon

eners

Mater

ialCosts

Transportation

Costs

Transportation

Costs

Transportation

97

Costs

HistoryofSupplyChainManagement

1960s-InventoryManagementFocus,CostControl

1970s-MRP&B

OM-OperationsPlanning

-

,

-

,

1990s-SCM-ERP-IntegratedPurchasin

g,

Financials,

Manufacturing,OrderEntry

2000s-OptimizedValueNetworkwithRe

al-TimeDecision

Support;Synchr

onized&CollaborativeExte

ndedNetwork.

98

ImportanceofSCM

Nemesis:

Uncerta

intyinsuppliersandconsume

rs

Traveltime

Machine

breakdowns

Naturalcatastrophe

ocousan

sres

HenceSC

Maddressesindealingwit

h

Minimisingcosts

Minimisinguncertainties

Movethecompanytowardscustomer-centric

99

SupplyChainDrivers

Thefollowingfa

ctorsnecessitatetheimple

mentationofSCM

inanorganisatio

n

Demandin

cus

tomers

Shrinkingprodu

ctlifecycles

Proliferatingproductofferings

Doctrineofcorecompetency

Emergenceofs

pecializedlogisticsproviders

Globalization

Informationtechnology



26/31

BullwhipE

ffect

Theslightvariationsindemandatthecustomerlevel

increases

theinventoryaswemoveupstream

Thiscreatesverhihburdenonthe

com

ansstockand

storagesystem

Alsothed

elaytimetoreachtheplantresultsintheoutdated

.

FactorsC

ontributingtotheBullwhip

Demand

forecastingpractices

Leadtim

e

Batchordering

Lackof

centralizedinformation.

101

IllustrationforBu

llwhipEffect

102

SCMKey

Issues

CustomerService/

urcasng

anuacurng

sr

uon

Sales

-

High

Lowpur-

overs

Stable

schedules

inventories

High

service

chaseprice

Multiple

vendors

Low

invent-

orie

s

Longrun

lengths

levels

Regional

stocks

Low

trans-

portation

SOURCE

MAKE

DE

LIVER

SELL

103

SupplyChainMa

nagementBenefits

A1997Integrate

dSupplyChainBenchmark

ingSurveyof331

firmsfoundsignificantbenefitstointegratin

gthesupplychain

DeliverPerformance

InventoryReduction

ForecastAccuracy

LowerSupply-C

hainCosts

FillRates

ImprovedCapacityRealization



27/31

SupplyChainImperativesforSucce

ss

Viewthesupplychainasastrategicassetandadifferentiator

Wal-Mar

tspartnershipwithProctor&

Gambletoautomatically

replenis

hinventory

Dellsinnovativedirect-to-consumers

alesandbuild-to-order

manufacturing

Forecas

ting

Collaboration

Integration

105

106

Unit5.1

1

ActivityBasedManagem

ent

--

ANNA

UNIVERSITY

ANNA

UNIVERSITY

Introductio

n

Activity-b

asedmanagement(ABM)

Itisamethodofidentifyingandevaluatingactivitiesthata

businessperformsusingactivity-base

dcostingtocarryouta

valuech

ainanalysisorare-engineeringinitiativetoimprove

strategicandoperationaldecisionsin

anorganization.

Activit-b

asedcostin

ABC:

Itisam

ethodologythatmeasuresthe

costandperformanceof

activities,resources,andcostobjects

.Resourcesareassignedto

activitiesthenactivitiesareassined

tocostobectsbasedon

theiruse.

Itrecognizesthecausalrelationships

ofcostdriverstoactivities.

107

TypesofABM

OperationalABM:

Itisaboutdoin

gthingsright,

usingABCinformationtoimprove

efficiency.Thos

eactivitieswhichaddvalueto

theproductcanbe

identifiedandim

proved.

Activitiesthatdontaddvaluearethe

onesthatneedtobereducedtocutcostswithoutreducing

productvalue.

StrategicABM:

Itisaboutdoingtherightthings,usingABC

informationto

decidewhich

roductstodevelo

andwhichactivitiestouse.

This

canalsobeuse

dforcustomerprofitabilityan

alysis,identifying

whichcustomersarethemostprofitableandfocusingonthem

more.



28/31

ABM:Illustration

109

StagesinABM

Analysisofactiv

ities

Identifyvalueaddedandnonvalueaddedactivities

Analsisofcrit

icalactivities

Compareactivitieswithbenchmarking.

Improvementof

activities

Reducethetimeoreffortrequiredto

performanactivity

Eliminateunnec

essaryactivities

Selectlowcost

activities

Sharingofactiv

ities

Performanceme

asurements

-

Designedtoinfluencethebehaviourofcostm

anagement.

110

Advantage

sofABM

BenefitstypicallyderivedfromABM

include:

Identifica

tionofredundantcosts

-

-

Quantific

ationofthecostofquality

byelement

Summarizingcustomerfocusedactivities

Measurin

gthecostofcomplexity

Providing

processcostsandsuppor

tingprocessanalysis

Tracking

theimpactofreengineerin

gefforts

Betterun

derstandingofcostdrivers

Activity-b

asedbudgeting.

111

Disadvantages

Implementingan

ABCsystemisamajorpro

jectthatrequires

substantialresources.Onceimplemented

anactivitybased

costingsystemiscostlytomaintain.

Dataconcerning

numerousactivitymeasuresmustbecollec

ted,

checked,

and

enteredintothe

system.

,

oddswiththenu

mbersproducedbytraditio

nalcosting

systems.Butma

nagersareaccustomedtousingtraditional

costingsystems

areoftenusedinperforma

nceevaluations.



29/31

Disadvantage[contd.]

Activitybasedcostingdatacanbeeasilymisinterpretedand

mustbeu

sedwithcarewhenusedin

makingdecisions.Costs

assigned

toproducts,

customersandothercostobjectsare

onlypotentiallyrelevant.Beforemak

inganysignificant

decisionusingactivitybasedcosting

data,

managersmust

identifw

hichcostsarereallreleva

ntforthedecisionsat

hand.

Reportsg

eneratedbythissystemsd

onotconformto

.

Consequently,anorganizationinvolv

edinactivitybased

costingshouldhavetwocostsystem

s-oneforinternaluse

.

113

114

Unit5.1

2

GlobalPerspective

--

ANNA

UNIVERSITY

ANNA

UNIVERSITY

Globalization

Definition

ofglobalization

Globaliz

ationdealswiththeintegratio

nofvariouscountry-

strategiesandthesubordinationofthesecountry-strategiesto

oneglob

alframework.

Reasonsforglobalization

Globaliz

ingtocompeteinhomogeneo

usmarkets

Globaliz

ingforaddedsynergies

Levelsof

globalization

Globaliz

ationatcustomerlevel

Globaliz

ationatmarketlevel

Globaliz

ationatindustrylevel

Globaliz

ationatcompetitorlevel

115

Globalization[Co

ntd.]

GlobalStrategie

s

Integratedglobalmarketingstrategy

Globalroduct

strate

Globalbranding

strategies

InternationalBusinessManagement

Internationalbu

sinessimpliesbeingengaged

intransactions

acrossnational

boundaries

Theinteraction

ofafirminahostcountrycan

takemanyforms,

Theexportation

ofgoodsandservices

Enteringinalic

ensingagreementforproducinggoodsinanother

country



30/31

Globalization[Contd.]

Forming

ajointventurewithafirmina

hostcountry

Multinationalsmaysetupwholly-ownedsubsidiariesorbranches

withpro

ductionfacilitiesinthehostcountry

Multinatio

nalcorporations

TheMNCscantakeadvantagesofbusinessopportunitiesinmany

differentcountries

Compan

ieswithworldwideoperations

haveaccesstonatural

resourcesandmaterialsthatmaynot

beavailabletodomestic

TheMNCscanrecruitmanagementan

dotherpersonnelfroma

worldwidelaborpool

117

Casestudy:SuccessofToyota

14Principlesof

theToyotaWay

SectionI:Long-TermPhilosophy

Baseyourmanagementdecisionsonalong-termphilosophy,

evenattheexpenseofshort-termfinancialgoals.

SectionII:TheR

ightProcessWillProducet

heRightResults

Principle2

Createacontinuous

rocessflowtobrin

ro

blemstothe

surface.

Principle3

"

"

.

118

Casestudy:SuccessofToyota[Contd.]

Principle

4

Levelou

ttheworkload(Worklikethetortoise,

notthehare).

Buildac

ultureofstoppingtheproduc

tionlinetofixproblems,to

getqualityrightthefirsttime.

rncpe

Standardizedtasksandprocessesarethefoundationfor

continuousimprovementandemploye

eempowerment.

Principle

7

Usevisu

alcontrolsonoproblemsare

hidden.

119


Principle8

Useonlyreliable,

thoroughlytestedtechnologythatservesyour

peopleandprocesses.

SectionIII:Add

ValuetotheOrganizationb

yDevelopingYour

People

Growleadersw

hothoroughlyunderstandthe

work,

livethe

philosophy,and

teachittoothers.

Principle10

Developexceptionalpeopleandteamswhofo

llowyour

company'sphilosophy.



31/31

study:SuccessofToyota[Contd.]

ciple

11

spectyourextendednetworkofpartnersandsuppliersby

alleng

ingthemandhelpingthemim

prove.

ionIV

:ContinuouslySolvingRoo

tProblemsDrives

nizationalLearning

oand

seeforyourselftothoroughly

understandthesituation

enchi

Genbutsu).

ciple

13

akedecisionsslowlybyconsensus,

thoroughlyconsideringall

tions;implementdecisionsrapidly(nemawashi).

121


Principle14

Becomealearn

ingorganizationthroughrelentlessreflection

(hansei)andcontinuousimprovement(kaizen

).

122

usion

alizationdemandsmanagement

principlestobeflexible

iffere

ntcountries.

lob

alersectivemanaemen

trincilesneedtoaim

com

mongoalofimprovingtheorganizationcontinuously

pproa

chingitthroughdistinctmethodswhichwillsuitthat

.

123

References

HeraldKoontzandHeinzWeihrich,

Essentialsof

Management,M

cGrawHillPublishingCom

pany,Singapore

InternationalEdition,

1980.

M.

Govindarajan

andS.

Natarajan,

Principle

sofManagement,

PrenticeHallofIndiaPvt.Ltd.,

NewDelhi,2

007.


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Unit 5 Modern Concepts 4SPP

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