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Chapter 7 Conversion Business Process

Conversion Business Process

Learning Objectives

  • LO 7-1: Describe the business activities that comprise the conversion process.

  • LO 7-2: Develop an activity model of the conversion process using BPMN (Business Process Model and Notation).

  • LO 7-3: Understand and apply different activity modeling options.

  • LO 7-4: Develop business rules to implement controls for the conversion process.

  • LO 7-5: Develop a structure model for the conversion process using UML (Unified Modeling Language) class diagrams.

  • LO 7-6: Implement a relational database from the UML Class Diagram of the conversion process.

Review of Conversion Accounting

Conversion Process Overview

  • Conversion processes are critical for transforming raw materials into finished goods within a business operation.

Sunset Graphics Conversion Process

  • The process begins when the quantity on hand of a product drops below a defined minimum level.

    • Action: The item manager authorizes production to bolster inventory levels.

    • Input: Based on the bill of materials (BOM) for that product, materials are issued into work-in-process (WIP).

    • Execution: Partners at Sunset Graphics then construct the items based on issued materials.

    • Output: Upon completion, the finished products are placed into inventory.

Basic Conversion BPMN Activity Model

  • A basic activity model showcases the essential steps in the conversion process.

    • It serves as a blueprint for implementing the conversion workflow effectively.

Refining the Model with Lanes

  • Objective: Clearly define roles and responsibilities within the process by adding lanes to the BPMN model.

    • Steps must be categorized by function, ensuring clarity in responsibilities.

    • Error Handling: Incorporate mechanisms for error handling and define a looping process until completion.

    • Process flow should loop until the batch is complete.

    • An intermediate error event interrupts the flow if an inspection fails, leading to another loop until all batches are complete.

Simplifying with Collapsed Subprocess

  • Implementing a collapsed subprocess improves the model's clarity, particularly for production batches.

  • Loop Mechanism: The loop indicates that the given subprocess must repeat until a specified condition is satisfied.

Contents of the Subprocess

  • The specifics of the collapsed subprocess must be defined separately in detail to maintain clarity.

Business Rules Examples for Conversion Process

  • Process Steps: Each step in the conversion process should align with intended outcomes to ensure quality and control.

Authorize Production

  • Intention: Ensure finished goods are available to meet expected demand.

    • Rule: A partner with the proper authority must authorize production; a supervisor must authorize production over $5,000.

    • Access Controls: The partner authorizing production cannot modify inventory records.

    • Application Controls: The system must create an authorization order number, implement default values, and perform range and limit checks while maintaining an audit trail.

Issue Raw Material

  • Process Actualization: Issues from raw material according to the BOM must be accurately recorded.

    • Access Control Rule: The partner issuing material must not be the same individual that authorized production.

    • Record Modifications: Partners recording issues of material cannot modify the BOM post-issuance.

    • System Controls: The system should restrict entries for the number of items issued based on BOM and ensure compliance through checks.

Business Rule Types

  • Obligatory Rule: An example illustrating what should occur; i.e., supervisor must authorize production greater than $5,000.

  • Prohibited Rule: An example delineating what should not occur; i.e., the partner issuing material cannot also be the authorizer of production.

Sunset’s Basic Conversion UML Class Models

  • Definition of essential class models in the conversion process:

    1. Authorization to produce.

    2. Specification of finished goods to produce.

    3. Recording of raw material issuance.

    4. Detail of the bill of materials.

    5. Documentation of labor usage.

Revised Conversion UML Class Diagram

  • The bill of materials has been promoted to a type image, which assigns employees to specific product categories.

Database Relationships

  • The UML class diagram delineates 8 tables for classes along with 2 linking tables indicated by arrows.

Integrated Model

  • Internal resources and agents are shared across processes, leading to efficiency.

  • Events and external agents, however, are specific to their respective processes, optimizing operations within conversion, purchases, and sales.