Business Process Analysis – Lecture 1 Comprehensive Notes

Course Structure

• Weeks 1: Introduction
• Weeks 2–3: Process Identification
• Weeks 5–6: Process Discovery (Note: Weeks 4 not explicitly listed)
• Weeks 7–9: Process Analysis, Redesign, Monitoring & Controlling, Implementation (labelled “EXCLUDED” on slide—possible schedule change)
• Weeks 10–12: Assignment & Revision

Lecture Objectives

• Clarify a robust Business Process definition
• Introduce Process Analysis basics & documentation techniques
• Explore Process Types & their Hierarchy
• Present the notion of a Process Architecture
• Provide a concise summary / Q&A checkpoint

What Is a Business Process?

• Pragmatic view: Describes how something is done in an organisation
• “Business” = organisational entity deploying resources to deliver products/services
• Merriam-Webster “Process” definitions:
  • Gradual natural phenomenon leading to a result
  • Continuing activity/function
  • Series of actions and operations leading to an end

Traditional Operations-Management (OM) Definition

• A process transforms inputs into outputs
• Four classic transformation categories
  • Physical – e.g. raw material → finished product
  • Locational – e.g. flying from Denver to L.A.
  • Transactional – e.g. depositing money at a bank
  • Informational – e.g. accounting data → financial statements
• Generic transformation model: Inputs → Process → Outputs

Process View of Organisations

• Any organisation can be seen as a single process or a network of processes
• Rooted in manufacturing & quality management paradigms

Comprehensive Definition

• “A business process is a network of connected activities with well-defined boundaries & precedence relationships
• Utilises resources to transform inputs into outputs
• Purpose: satisfy specific customer requirements
• Conceptual diagram: Customers ⟵[outputs] Process [activities, resources] ⟶[inputs] Suppliers

What Is “Process Analysis”?

• Systematic review of existing functions, activities and tasks that enable a department’s operations
• Identifies key inputs, outputs, dependencies and hand-offs
• Supports continuous improvement
• NOT limited to simple mapping; frequently confused with “procedures” and often omitted in practice

Why Analyse?

• Detect inefficient tasks
• Spot effectiveness-improvement opportunities
• Highlight value-adding vs. non-value-adding steps

How to Analyse?

• Map the process – visualise the “black box” in detail
• Measure performance (capacity, bottleneck, throughput, etc.)

Process ≠ Procedure

• Process: Underlying set of functions/activities/tasks required to fulfil organisational mission (i.e. What we do)
• Procedure: Documented instructions enabling personnel to carry out process tasks (i.e. How we do it)

Core Performance Measures

• Capacity
  • Maximum units per unit time a task or entire process can handle
• Cycle Time (CT)
  • Average time for completing one unit at a step, excluding waiting, measured $\text{time/unit}$
• Throughput Rate (TR)
  • Average units processed per time interval, measured $\text{units/time}$
• Fundamental link: $\text{Throughput Rate} = \frac{1}{\text{Cycle Time}}$
• Bottleneck
  • Stage with the smallest throughput rate (longest cycle time); limits overall capacity
• Throughput Time (TPT)
  • Time a unit spends in the entire system, incl. waiting
• Work-in-Process (WIP)
  • Average number of units present in the system at any time
• Little’s Law: $\text{Throughput Time} = \frac{\text{WIP}}{\text{Throughput Rate}}$

Computing Cycle Times

• General formula for producing a fixed batch:
  $\text{Cycle Time}_{\text{avg}} = \frac{\text{Set-up Time} + (\text{Batch Size} \times \text{Time per Unit})}{\text{Batch Size}}$
  or, total time for batch = $\text{Set-up Time} + \text{Batch Size} \times \text{Time per Unit}$

Example 1 – Cars

• Batch size = $100$ cars
• Time per unit = $5\ \text{h/unit}$
• Setup time = $50\ \text{h}$
• Total time = $50 + 100 \times 5 = 550\ \text{h}$
• Average CT = $\frac{550}{100} = 5.5\ \text{h/car}$

Example 2 – Points A→B

• Setup time = $15\ \text{min}$
• Production time = $25\ \text{min/unit}$
• Batch size = $10$
• Average CT $= \frac{15 + 10 \times 25}{10} = \frac{15 + 250}{10} = 26.5\ \text{min/unit}$

Capacity & Bottlenecks – Illustrative Case

• Three serial tasks with rates 3, 5, 2 units/hr respectively
• Bottleneck = stage with 2 units/hr (longest CT)
• Process capacity = minimum stage throughput = $2\ \text{units/hr}$

Business Process Breakdown Levels

• (Adapted from Business Process Management Institute)
  • Process (end-to-end flow)
  • Sub-process / Activity
  • Task / Step
  • Levels may be collapsed or expanded depending on complexity; documentation focuses on the lower (actionable) tiers

Why Document Functions, Activities & Tasks?

• Reduces ambiguity; ensures continuity & aids training
• Satisfies auditors / compliance verification
• Clarifies measurable results & performance targets
• Aligns with unit mission and broader university/organisation goals
• Enables identification of
  • Value-adding vs. non-value-adding work
  • Design inefficiencies, gaps & internal controls
  • Automation opportunities & risk reduction

Pre-Analysis Reflection Questions

• What outputs do customers (internal/external) require?
• What inputs are needed from suppliers?
• Known gaps in expectation/performance?
• What current data exist? What currently happens?

Typical Analysis / Documentation Workflow

• Plan → Analyse → Research → Pre-write → Draft → Format → Review/Test → Edit → Approval

Recommended Process Document Structure

• Title
• Goal & Objective
• Frequency of activity
• Ownership (department / office / responsible person)
• Effective & revision dates
• Step-by-step tasks (include links to laws, policies, forms, etc.)
• “How-to” procedural detail
• Definitions & acronyms list

Process Types & Hierarchies

1. Individual process – executed by one person
2. Vertical / Functional process – confined to a single department
3. Horizontal / Cross-Functional process – spans multiple departments or organisations

Illustrative example (slide graphic):

• Order Request → Fulfilment path crosses Marketing, Operations & Accounting (horizontal)
• Production Planning stays in Operations (vertical)
• Buying a TV commercial done by a single marketing employee (individual)

Improvement Potential of Cross-Functional Processes

• They often possess the highest scope for improvement because:
  • Harder to coordinate; prone to hand-off delays
  • Historically lag behind manufacturing advances
  • Waste & inefficiency less visible; as little as 5 % of time might add customer value
  • Customers abandon businesses more for “poor service” than “poor products”

Process Architecture

• Defined as the network of activities / sub-processes plus supporting components

Key Building Blocks

1. Inputs & Outputs
   • Establish process boundaries & environment interaction
   • May be tangible (e.g., raw material, cash, customers) or intangible (information, time, energy)
2. Flow Units
   • Transient entities (materials, orders, files, customers, cash…)
   • Identity often changes as they progress
   • Flow rate = jobs per time unit
3. Network of Activities & Buffers
   • Ordered sequence of work steps; buffers are queues/storage points
   • Different job types may follow different paths
   • Trade-off: high‐level simplicity vs. detailed activity complexity
4. Resources
   • Capital assets – real estate, machines, IT systems
   • Labour – people, skills, knowledge
   • Resources are utilised; inputs are consumed
5. Information Structure
   • Specifies information needed for decisions & activity execution
   • Limited information access is a common root of inefficiency; information enables coordination

Summary Highlights

• A business process transforms inputs to outputs to satisfy customers; organisations can be modelled as interlinked processes
• Process analysis uncovers inefficiencies, quantifies performance, and guides improvement
• Critical measures: Cycle Time, Throughput Rate, Capacity, Bottleneck, Throughput Time, WIP
• Documenting processes is vital for clarity, control, training, compliance, and improvement
• Processes can be individual, vertical, or cross-functional; cross-functional core processes often hide the most waste
• Process architecture covers inputs/outputs, flow units, activity network, resources, and information, providing a holistic analytical framework

End of detailed Lecture 1 notes.