Understanding what a business does and how it does it requires documenting the inputs, processes, outputs, and resources. This is called process mapping. Process mapping combines the simplicity of flowcharting with the documentation features of word processing.
Typically, executives and managers of industrial and service enterprises have managed their businesses by executive summaries and organizational charts without understanding the processes and their performance. However, executives and managers who are successful now are the ones that understand their business processes in detail. Process mapping includes several missing pieces from the organizational chart: the customers, the products, and the workflow. Process mapping shows how work actually gets done, which is through processes that cut across functional boundaries. The definition of boundaries provides managers with ability to define customer-supplier relationships through which products and services are produced.
Process simulation is the technique that allows representation of processes, people, and technology in a dynamic computer model. There are essentially four steps in doing business process simulation. They are: 1) building a model, 2) running a model, 3) analyzing the performance measures, and 4) evaluating alternative scenarios. A model, when simulated, mimics the operations of the business. This is accomplished by stepping through the events in compressed time while displaying an animated picture of the flow. Because simulation software keeps track of statistics about model elements, performance metrics can be evaluated by analyzing the model output data.
Re-engineering gurus, Michael Hammer and James Champy, note in their book that only about 30 percent of the re-engineering projects they have seen were successful. One of the primary reasons for this low success rate is that often the analyses behind performance estimates of re-engineered processes have been prepared with flowcharts and spreadsheets. Business processes are much too complex and dynamic to be understood and analyzed by flowcharting and spreadsheet techniques. Although flowcharts and spreadsheets are adequate in answering “what” questions, they are inadequate for answering “how,” “when,” or “where” questions. This has resulted in overly optimistic performance benefits such as cost savings, throughput and service level increases that were promised by BPR (Business Process Reengineering).
Typically, a BPR project begins with the end in mind where the end goal is to achieve one or all of the following objectives:
These principles clearly offer answers to the question of “What needs to be done?” to achieve the desired BPR objectives. But, re-engineering business processes involves changes in people, processes and technology over time. The key phrase here is “over time.” The interactions of people with processes and technology over time result in a large number of scenarios and outcomes that are impossible to comprehend and evaluate without the help of a computer simulation model. This is where simulation provides the greatest value for achieving BPR objectives. By tweaking decision variables in a model without the cost and risk of disrupting existing operations, or building a new system, one can accurately predict, compare, or optimize the performance of the re-engineered process.
For example, the BPR professionals, who are designing the customer service process for a call center, must understand the random nature of calls arriving at the center, the random nature of processing times, the interdependencies between customer representatives, and the alternative routing schemes. They must take into account the dynamic nature of these behaviors in a model. If the performance goal is to achieve 100 percent service level or eliminate customer waiting times, a simulation of the process is absolutely necessary to accurately determine staffing requirements, telecommunications technology requirements, and how services are provided to the callers.