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MIST Sep 4 Unit 1 Exam Enterprise Information Systems, BPMN, and Organizational Structure — Vocabulary

Organizational Silos vs Process View

  • People often think in terms of their own role and task, not how their tasks fit in the bigger process.
  • Silo and functionally organized structures (siloed departments) clash with process-oriented, end-to-end thinking.
  • Two conflicting beliefs observed in organizations:
    • I just do my job; I don’t care about other functions.
    • I should consider how my task fits into the larger, overall process.
  • The reality: there is a need for communication and collaboration between functions to achieve efficient end-to-end processes.

Consequences of Poor Organizational Formation

  • Consequences of silos include delays and inefficiencies across the value chain.
  • Key metrics impacted:
    • Delays and increased lead times for customers.
    • Increased cycle times for production.
    • Excess/inappropriate inventory levels.
    • Lack of visibility across the process: unclear status of work-in-progress.
  • Common anti-patterns:
    • Functional systems operating in isolation (sales → accounting → manufacturing) without integration or data sharing.
    • Preference for emails or paper forms instead of integrated information systems.

Causes and Real-World Examples of Silos

  • Commonality: isolated units that do not communicate with each other create “stove-pipe” organizations.
  • In today’s fast-paced environment, silos are inefficient and risky.

Real-World Case Studies (illustrative, from transcript)

  • Nike (February):
    • Problem: production systems and forecasting groups did not communicate with sales systems.
    • Consequence: misaligned production led to a large loss.
    • Quantified impact: 100{,}000{,}000 dollars in losses and a 20\% increase in stock (excess inventory).
  • Nintendo Wii (February 2007):
    • Problem: demand outpaced supply because internal systems were not connected to supplier systems.
    • Consequence: inability to meet demand due to lack of component supply.
    • Quantified impact: about 1{,}000{,}000{,}000 dollars in losses.
  • Common thread: independent, non-communicating units caused missed opportunities and large losses.

What Is the Common Solution?

  • Enterprise information systems (e.g., ERP systems) and centralized repositories.
  • Benefits:
    • End-to-end visibility of orders and processes.
    • Digitization of processes reduces reliance on paper and manual handoffs.
    • Easier tracing of where a specific order is in the process.

What Is a Business Process?

  • A business process is a sequence of tasks or activities that take a set of inputs and convert them into a desired set of outputs.
  • Characteristics:
    • Sequential orientation: steps occur in a defined order.
    • Input-to-output transformation.
  • Simple examples:
    • Buy skateboard parts → Make skateboards → Sell skateboards.
    • Order fulfillment as a process: receive order → prepare shipment → ship the goods → send an invoice → receive payment.

BPMN (Business Process Model and Notation) Overview

  • Note: BPMN (often mentioned as PPN in lecture contexts) is the emerging standard for specifying business processes in a process model, maintained by the Object Management Group (OMG).
  • Purpose: provide a standard notation that is readily understandable by business users to describe a process.
  • Basic elements:
    • Event: represents something that happens instantly (depicted as a circle). Example: an invoice has been received.
    • Task: a unit of work with a defined duration or effort (depicted as a rounded rectangle).
    • Flow: the sequence arrow that connects events, tasks, and gateways.
    • Gateway: diamond-shaped decision point that controls the divergence and convergence of sequence flows.
  • Order management example (BPMN-ish):
    • Event: receive an order.
    • Tasks: check stock availability; process order; ship goods; invoice customer.
    • Parallel paths: shipping and invoicing can occur in parallel once the order is approved.
    • Gateways: used to decide stock availability and order validity.

Gateways and Flow Types

  • Exclusive Gateway (X-shaped):
    • Purpose: provides one and only one path to take from a set of alternatives.
    • Notation: Diamond with an X inside.
    • Example: check policy (valid or not valid); if not valid, reject the claim; if valid, proceed.
  • Parallel Gateway (Plus symbol):
    • Purpose: enables parallel processing where multiple paths can occur concurrently.
    • Notation: Diamond with a + inside.
    • Example: when stock is available, you may both ship the goods and issue the invoice in parallel.
  • Reminder: In BPMN, flows connect events, tasks, and gateways to depict the process path.

Swim Lanes and Pools

  • Pools: represent independent organizational entities within a BPMN diagram (e.g., Customer, Supplier, Company).
  • Lanes: subdivisions within a pool that represent resource classes or departments (e.g., Sales, Marketing, Accounting).
  • Interactions across pools can be shown with message flows (dotted lines) to indicate communications between entities.
  • Example: Domino’s Pizza order process as a multi-pool example with customer and internal processes; shows how orders trigger stock checks, invoicing, and shipping in a coordinated way.
  • Practical point: you can add more lanes to increase specificity; the display can be adapted to context.

Example Process: Order Placement (Illustrative)

  • Customer places an order (start event).
  • Internal steps may include: check stock, allocate inventory, confirm order, process payment, prepare shipment.
  • End-to-end flow culminates with the customer receiving a confirmation and the shipment/invoice (end event).
  • The diagram may show parallel and sequential steps; use gateways to manage alternatives (e.g., out-of-stock vs backorder).

Diagramming Your Own Organization’s Process (Assignment Tips)

  • Define a clear goal that your process aims to achieve (start event).
  • List activities between the start event and the goal (avoid vague verbs; use noun-verb naming like “Process Payment,” “Verify Stock”).
  • Model activities with boxes (tasks) and arrows (flows).
  • Use end events to mark the completion of the process path.
  • Label pathways around exclusive gateways to indicate the possible routes.
  • Assign tools or systems to activities where appropriate (e.g., ERP, CRM, etc.).
  • Tools for diagramming: draw.io or similar diagramming tools.
  • Deliverables and submission tips:
    • Export diagrams as JPEG images for submission.
    • Use BPMN symbols: Diamond with an X for exclusive gateways; Diamond with a + for parallel gateways.
  • Contextual note: The example mentions preparing diagrams to submit in about two weeks and to align with a given course (ELC).

Additional Practical and Ethical Considerations

  • Practical implications:
    • Cross-functional collaboration improves visibility, reduces delays, and mitigates risk of misaligned incentives.
    • Standardized processes enable faster onboarding and better change management.
    • Data quality and governance become critical when multiple functions share data.
  • Ethical/philosophical considerations:
    • Culture: breaking down silos requires trust and organizational change.
    • Transparency and accountability across functions can improve ethical decision-making.
    • Balancing standardization with contextual flexibility: processes should be adaptable, not rigid.

Quick References to Numerics from Transcript

  • Nike losses due to misalignment: 100{,}000{,}000 dollars.
  • Nike excess stock impact: 20\% increase in stock.
  • Nintendo losses due to supplier integration gaps: 1{,}000{,}000{,}000 dollars.
  • General point: poor integration between internal systems and supplier networks leads to missed opportunities and financial losses.

Summary Takeaways

  • Siloed, function-centric organizations risk delays, high inventory, and lack of process visibility.
  • Cross-functional collaboration and integrated ERP/BPMN-enabled processes are essential for modern, responsive operations.
  • BPMN provides a common, business-user-friendly notation for modeling and communicating end-to-end processes.
  • Swim lanes and pools help map responsibilities and interactions across organizations, suppliers, and customers.
  • A disciplined diagramming approach (start event, end event, nouns for activities, gateways for decisions) supports consistent process design and continuous improvement.