knowledge process productivity indexing schema
DESCRIPTION
Knowledge Management strategies and metrics for process measurementTRANSCRIPT
Knowledge Management Strategies
Term project – Group 3
Analysis, Conceptualization, Application of technological
infrastructure with context based Interrogative Analogies for Index
based Measurement of a Productive Process in an Organization
Michel Franchetto – N1107279H
Guo Yi – G1102509D
Muthu Kumaar Thangavelu – G1101765E
Index
1. Abstract
2. Three Pillars: Capability, Productivity and Innovation
2.1 Introduction
2.2 Capability
2.3 Productivity
2.4 Innovation
2.5 The importance of three pillars for sustainable growth and competitiveness
3. Knowledge Process Productivity Indexing Schema
3.1 Background of the problem
3.1.1 Organizational Processes Today
3.1.2 Definition
3.1.3 Complexity of a process
3.2 Process productivity schema
3.2.1 Entities or Actors in process productivity
3.2.2 Entity relationships for productivity
3.2.3 Mapping the process productivity relationships with 5C’s - layers
affecting productivity
3.2.4 Boston Box View of 5C’s
3.3 Strategic Solutions derived for enhancing process productivity
3.3.1 Information synchronization
3.3.1.1 Problem: Information Distortion
3.3.1.2 Bullwhip Effect
3.3.1.3 Solving the Bullwhip effect in the process chains
3.3.2 Technology and Service based routing
3.3.2.1 ERP Technology
3.3.2.2 CRM Technology
3.3.2.3 Outsourcing
3.3.2.4 Sustainable sourcing and logistics
3.3.3 Software Driven Process Management
3.3.4 Customer Intelligence - Market Research
3.3.5 Setting Standards in organizational Processes
3.4 Index Derivation and hence Strategy Formulation for a Productive Process
3.4.1 Questionnaire to measure the relative weights of 5C’s:
3.4.2 Index for maximum productivity
4. Conclusion
5. References
1. Abstract
Organizations today face ever increasing challenges brought on by the competition in the market, the
nature of work place and the expectations of the customers. The key organizational business
implementations now need a strategic focus on their processes that contribute to their pillars of
success - Capability, Productivity and Innovation. This paper describes the indexing schema for an
organizational process to be productive by analysing the challenges in their production and
consumption space. The analysis started with creating a generic Meta model for a process in the
organizational interaction space and the varying relationship intensities between the components
resulted in the formulation of 5Cs process productivity decision parameters – Communication,
Coordination, Control, Competitiveness and Cognition. We have prescribed models to describe how
can lack of any of these parameters impact productivity as well as how technological infrastructure
can be applied to overcome this effect. The parameters were then plotted in the Boston Box’s four
quadrants to realize the complete coverage of Organizational Process Knowledge Capital in terms of
these productivity influencing parameters. The previous analysis, analogies and realization resulted in
the definition of a new K-Process productivity Index which predicts different knowledge strategies for
technology consumption in production-consumption space and sourcing/services based on the type of
process and the relative weights of the influencing 5C parameters.
2. Three Pillars: Capability, Productivity and Innovation
2.1 Introduction
Increasing global competition is changing the business environment and most companies thought
process today. Organizations primarily formulate their business strategies based on the nature of that
refined thought process or cognition and its significance on the end deliverable and the target market.
The investment on a business process is often subjected to a rigorous evaluation in terms of the
organizational outcome. Such investigation will result in the derivation of three pillars that greatly
influence the ways to respond in this intense competitive environment, to push boundaries to enhance
performance in terms of capability, productivity and innovation.
2.2 Capability
Even though we are talking about a basic and well known peculiarity it is hard and quite challenging
to give an explanation of it. Anyway, capability could be considered as the measure of the ability of
an organization or individual to achieve his objectives, especially in alignment to its overall mission.
More specifically to the organization extent, it can be broken down and defined as the ability and
capacity of a corporation expressed in term of its:
Human resources such as numbers, quality, skills, and experience of the employees
Physical and material resources such as machines, land, buildings, infrastructures and
technologies
Financial resources such as money, credit and every fruitful propriety owned
Information and technology resources such as pool of knowledge, databases
Intellectual resources: copyrights, patent, designs and licenses.
Market and Customer resources: New product opportunities, risks, market segments,
trends, customer profiling [1]
We can summarize these resources into two distinct capabilities with regards to the organization as a
whole:
External Information/Material Acquisition: encapsulating the operations involved with
external customers for Market research, customer service and sales which primarily performs
information sourcing and also technology sourcing from third party vendors.
Internal Information/ Resource Capitalization: involving the other wide range of
operations with internal customers primarily human resources and suppliers for supply chain
management, managing and exploiting the financial and Intellectual Assets for a successful
business[1]
Fig 1. Internal and external capabilities [1]
2.3 Productivity
Productivity, in organizational terms means efficiency with demand forecasting, production pipeline,
process restructuring with support of information and technology through a streamlined interaction of
activities. [2]
The productivity condition for these processes can be described broadly as a model in the
organizational space with two major buckets.
First bucket – to describe the nature of the processes
Horizontals: Commonality functions like supply chain management, technology
acquisition which runs through all departments or directly influences organization
as a whole
Verticals: Specificity functions like market/trend analysis, process restructuring
across specific domains or departments
Second bucket – to describe the nature of the stake holders (Employees and Suppliers) driving the
processes:
Collectivist (aiming at Co-operative success)
Individualist (aiming at Competitive success)
The challenge of productivity can be solved when the interaction matrices of these two combinatorial
buckets are aligned to each other constructively and work towards organizational success[2].
Fig 2. Productivity model (People and business domain context) [2]
2.4 Innovation
Innovation is defined as “the process by which an idea or invention is translated into a good service
for which people will pay, or something that results from this process”.
In order to be called an innovation, an idea must be replicable at an economical cost and must satisfy
a specific need.
In business field, “innovation often results from the application of a scientific or technical idea in
decreasing the gap between the needs or expectations of the customers and the performance of a
company's products”.
Innovations fall into two broad categories:
1. Evolutionary innovations are amenable to numerous incremental advances in technology or
processes and are of two types :
a. Continuous evolutionary innovations are based on the alteration of product
characteristics instead of in a new product, and do not require any user-learning or
changes in his or her routine.
b. Dynamic continuous evolutionary innovations require some user-learning but do not
disrupt his or her routine.
2. Revolutionary innovations (discontinuous innovations) require quite big degree of user-
learning; often they disrupt the routine, and may even require new behaviour patterns.
Innovation is associated with risk-taking and organizations that introduce new products or
services are taking a huge risk because they have to build a new market. Anyway there is a
less risky innovation strategy is that of the imitator who starts with a new product (usually
created by a revolutionary-innovator) having a large and growing demand. The imitator then
proceeds to satisfy that demand better with a more effective approach
The road map for innovation in an organization [3] can be visualized in three layers with
corresponding change in the process as stated below:
Fig 3.Innovation road map with process layers and the change [3]
2.5 The importance of three pillars for sustainable growth and competitiveness
We have now defined and analyzed the three pillars in the organizations perceptive as above and here
we signify the strengths of these pillars to realize organizational success.
Capability
Organizational capabilities improve business and differentiate the company from its counterparts.
Enhancing the organizational capabilities can help to gain competitive advantage in this fierce
environment. They make a company competitive in the marketplace. When a company create some
new external capabilities and develops its internal capabilities, it will get one leap over of other
competitors, by offering an innovative product, licensing and exploiting value.
Human resource is the primary capability owned by a company. A strong human resource can help
the company to respond quickly to the changes in the business environment, meet customer’s need
and offer flexibility. Knowledgeable workforce can facilitate the company to achieve its business
vision. Excellent recruitment, effective training, community of practices are organizational
capabilities to ensure a talent workforce who can gain a competitive advantage for the company in the
marketplace.
Customer relationships are organizational capabilities to ensure the sustainable growth and
competitiveness in the market. A good relationship with customer can definitely impact positively on
company’s sales, reputation and the future. Both consolidating relationships with existing customers
and gaining new customers can ensure the company thrive in the future.
Productivity
Productivity is to get maximum output and be efficient by aligning and applying your skill,
technology and innovative actionable thoughts. It is a critical determinant to bring more and more
profit for the company.
It can facilitate or lay a road map for effective workflow in the process and produce enough products
to meet the customer’s needs and solve the conflicts between demands and offerings.
Productivity can be a scale to measure the work input per business unit with a low cost and also the
results in a lower price for its customers, which offers competitive edge in the market. People can buy
more products at an attractive price, which can bring reputation for the company and in turns to create
more profit.
Productivity not only means to improve quantity of sales with low price processing and offering but
also to offer a quality product, which can meet specific requirements of customers in order to satisfy
them as well as inspire them to recommend the product during or after usage in their circle.
Innovation
Innovation is a blended theory where the change instituted can meet organizational capability and
productivity and sustain competition in the market and delight the customers there by enhancing the
profitability of the organization. Innovation not just refers to inventing a new product, but also
includes new processes and new ways of solving the old problems.
It can bring about a more comfortable life to the customers by meeting their demands and needs in the
best possible way.
Rapid development of technology requires the company’s products to be more complicated with more
considerations in layouts, interfacing, communicating and transacting. Innovation on products,
processes, and services can make the company realize its potential and gain competitive advantage
thereby consolidating organization’s position in the global market, increasing its market share,
rewarding the stake holders with utmost pride and investment returns, there by promoting the growth
of the company as a whole.
Companies failing to innovate will definitely stand a chance for collapse sooner or later. Customers
tend to change their orders to a competitor who always strives to innovate and change the existing
scenario, thereby dropping of the product sales, decline in the net revenues and stock price, thereby
decreasing the shareholder returns and employee returns resulting in the movement of capable human
resources and strategic partners for potential opportunities.
To summarize, thus capability, productivity as well as innovation are the inseparable and
indispensable factors for an organization’s success, survival, growth and profitability. No wonder in
referring them to be the pillars of the organization.
3. Knowledge Process Productivity Indexing Schema
In this paper, we first analyse various business processes prevailing in today’s organizations and
implemented for productivity like the various sourcing models which includes outsourcing,
technology sourcing, information sourcing, sustainable sourcing and production consumption models
and practices which involve focus on the process value and market value. We then identified the
organizational challenges that support implementation and indirectly measure its productivity. The
challenges were crystallized to process determination factors that constitute the Knowledge Process
Productivity Index. This index helps organizations to decide their Business Strategies with the relative
weights of individual process determination factors.
3.1. Background of the problem
3.1.1 Organizational Processes Today
The shift in the focus of the organizations towards a service based economy inclined primarily
towards customers and delivery excellence has enhanced the significance of leveraging the processes
for high productivity.
3.1.2 Definition
A process is an interaction of activities that follows a blueprint and is supported by a service or
technology and leveraged by human agents
3.1.3 Complexity of a process
The complexity of organizational processes today is attributed to the following factors as described
below:
Processes run across different geographies: For eg. Call centres and Information
Technology support centres in China and India operate round the clock and
synchronize themselves remotely to serve customers from United States to
Australia.
Processes run across different organizational units or even cooperating
partners: For eg. In recent days, the output of an organization essentially includes
outputs from its outsourced partners and consultants from different organizations.
Heterogeneous work flow systems are being used: For eg: Today’s competitive
market has given us a variety of options to implement in our business and this as a
whole makes heterogeneous work systems in organizations where one can use the
ERP tool offered by SAP or IBM or ORACLE or MICROSOFT and as a result
there is a need for synchronization of such varying work flow models.[4]
3.2 Process productivity schema:
As a process and its complexity has been defined above, a model has been created to represent the
entities and their relationship focussing mainly on productivity in the organizational interaction space
[fig 4][4]
Entities: They represent the basic functional units of the process which all together bring in a
meaning action and in turn the output.
Relationship: This represents the way how entities are connected to each other during its execution
on a target action for a target output. [4] [5]
3.2.1 Entities or Actors in process productivity
The blue prints: define the array of instructions, algorithms, and procedures used to make the process
work properly.
The agents: encompass the managers and directors responsible for the implementation and
coordination of the process as well as for issuing the blue prints which are used as guidelines for the
process development.
Fig 4: Overall process productivity schema envisioning strategy
Process Meta model on the extreme left – base source [4]
The process: is the process itself from phase one to the phase x. Along the phases managers can figure
out that some process improvement could be implemented; as a consequence this will lead to a
modification of the blue prints.
The technology and services: support the process by enabling or extending its functionality which
help the management (agents), comply with the standards in the blueprints and could also lead to
some modification of the blueprints.
3.2.2 Entity relationships for productivity
Iterative nature of the basic process block
Most processes in today’s organization are iterative to manage the dynamic nature of market and the
needs of the customers and to streamline the flow of information from suppliers and customers with
the process context.
Responsibility for Action
The basic process block aims at providing a valuable insight or output to the agent, generally human
which is to trigger an action that is profitable to the organization through its working with support of
technology and service, compliance and change of process blueprint.
The agents are responsible for the overall performance of the basic process block as they tend to
leverage its value by monitoring and validating the deviations, errors and transform the output for
decisions and modifying the initial process blue print with respect to the time, context of trigger and
the nature of operation of iterative activities.
Support
The activities of the basic process block are extended support by a service which can be in the form of
sourcing from an expert third party provider or technology infrastructure and tools which can help in
coordination, visualization or simulation of activities.
Compliance and Change of process blue print
For the basic execution of a process, the work flow and function of activities, technology and services
are determined by the process blue print.
After iteration or refinement of activities, they can contribute to the change in the process blue print
which has an impact on the consequent activities and the overall output.
After the establishment of a technology or service, they can contribute to the change or manipulation
of the process blue print
Synergy
A service such as supplier sourcing or outsourcing in an organization depends on the technology
infrastructure for its effective operationalization. Eg ERP, CRM, Call centres, Customer Service and
Retail units relying on the network connectivity of the base organization [5].
In the same way, technology infrastructure and tools can make use of an organization’s service in the
form of information, to be productive. Eg BI tools relying on the reports from ERP/CRM/Call centres/
Customer Service and Retail units [6][7]
These represent the ideal relationship between the entities to be productive.
3.2.3 Mapping the process productivity relationships with 5C’s - layers affecting productivity:
Communication
Hypothesis:
Lack of grounded communication can affect an organizational process in 360°
Proof:
Communication is the action in every process for exchanging information and ideas between
different departments. Processes communicate with the agents to understand the mission better and to
produce the desired product, the outsourcing or any technology service department for support and
synergy. All the compartments of the process block should interact with each other on time to make
sure a collaborative, productive outcome.
Thus lack of proper communication causes information distortion which restricts or transforms
knowledge flow adversely in a process resulting in communication gaps and misinterpretation of
activity signals in all layers of execution related to the process.
Hence this layer can be attributed to all the process productivity relationships – responsibility,
support, change, compliance and synergy and the assumed hypothesis is proved correct.
Coordination
Coordination is the action of working together constructively with the purpose to make people,
process or departments function properly and efficiently for enhancing productivity in the
organization. Process coordination is the streamlining of work flow with the agents, services and
technology infrastructure to save time, costs and improve the outcome, thereby the profitability [6].
Lack of coordination can affect the synergy and support relationships between the process entities as
they have an inter dependence relation for their effective functioning as a whole.
Control
Control is the ability to purposefully direct, or suppress the change in the processes and procedures
aiming at achieving defined goals with established time frame and work flow. It refers to both the
basic processes that should be supported and controlled by technology infrastructure as well as the
interested third parties and the standards or requirements as expected by the organizational process
blueprint which includes the points of government, business and management bodies.
Lack of control can affect the reaction to change, support and compliance to regulate and synchronize,
and set boundaries to the flow of process entities.
Competitiveness
Competitiveness is the ability of a firm to offer products and services by designing the process that
can delight the customers and stake holders by meeting the expectations as well as offering them more
which they do not explicitly require and setting the global quality standards in the market at prices
that are competitive and responsive to the change from both outward and inward to the organization.
Lack of competitiveness can affect the way the organizational process reacts to the change in the
customer trend, market and compliance to the productivity standards and the responsibility of the
agents to gain a competitive edge with a superior process baseline.
Cognition:
Cognition is the realization of insights and better learning of the process itself or the different
elements in process interaction space to achieve higher efficiency. This psychological result tend to
fulfil the vision and mission of the organization by better understanding, perception, learning and
problem solving to make decisions, thereby managing risks and increasing productivity [7].
Lack of cognition directly corresponds to the ways how the agents react on realizing a change in the
outward or inward trend, i.e. responsibility and change that can affect productivity of a process.
3.2.4 Boston Box View of 5C’s:
In an organization point of view to understand how the 5C’s affect the knowledge capital, we used
Drew’s Boston box to fit in the various layers affecting productivity with respect to the knowledge
awareness and content. [Fig 5]
High knowledge awareness with low knowledge content can be attributed to the basic language of
process interaction shared all over the organization which is primarily communication. Eg: process
techniques, adopted standards, process inputs and outputs as codified in the blue prints of process
Low knowledge awareness with low knowledge content can be attributed to identifying the hidden
knowledge by synchronizing and controlling the existing interaction between process elements. Eg:
ERP, Software driven process management where we can coordinate and control the processes and
generate hidden knowledge which can measure organization’s productivity.
High knowledge awareness with high knowledge content can be attributed to an organization’s
ability to act on the change to gain competitive advantage. Eg: Market, Customer intelligence
operations to learn and exploit the high knowledge content and awareness to drive competitiveness.
High knowledge content with low knowledge awareness can be attributed to an organization’s
ability to learn and create new processes which is in demand in the market. Eg: process design for
environment sustainability [19]
Fig 5: The Four Quadrants of the “Boston Box”, Drew [19]
QUADRANT – 1(Communication): Establishing the process mechanism
QUADRANT – 3 (Coordination, Control): Driving the process mechanisms for output based
efficiency
QUADRANT – 2 and 4 (Competitiveness, Cognition): Driving the process mechanisms for context
based efficiency (market, competitors, technology, customers)
Thus Boston box helps us to magnify the importance of 5C’s in terms of organizational knowledge
capital individually or in relatively smaller groups.
The communication part (Quadrant one) of the box describes more of the capability of the
organization
The cognition part (Quadrant four) of the box lays more stress on intuitiveness and hence can
describe the innovativeness of the organization.
The Coordination, control and competitiveness parts (Quadrant two and three) contribute more
towards productivity (context based and output based) of the organization.
3.3 Strategic Solutions derived for enhancing process productivity:
Each of the solutions addresses the above stated possible gaps at different layers affecting
productivity relationships as below:
Information synchronization at communication and cognition layers
Technology and Service based routing at all layers
Software Driven Process Management at coordination, control and competitiveness layers
Customer Intelligence at communication, competitiveness and cognition layers
Setting Standards at control and competitiveness layers
Let us discuss each of the following in detail.
3.3.1 Information synchronization
This challenge is traditional and can be attributed to the interaction and exchange of information
between various components in a process. To overcome this challenge, there is an increasing need of
using advanced technologies for coordination and control on process either as a service or as a tool,
which enables the organization to use the most effective way to communicate or process business and
reinvest in current technology frequently to keep them competitive and maintain the proper flow of
information across departments, local branches and countries.
Therefore, the company needs to be highly responsive to meet the challenges, improve
productivity as well as efficiency by all means.
3.3.1.1 Problem: Information Distortion
In the past 10 years demand information distortion has been considered one of the biggest challenges
of researchers involved in management issues and the effort of the companies in order to overcome
this issue has been growing as well.
Companies have figured out through experiences that sometimes the inefficiency of a certain process
do not rely on the wrong implementation of the process itself but it is sometimes amenable at the
distortion of the information flow among the different rings of the supply chain. This awareness leads
to the shift of companies focus from the process itself to the flows of information running from the
upstream department to the downstream ones.
This phenomenon through which information gets distorted as it passes by different sections is also
known as bullwhip effect.
Information flows and information structure are considered to be the key elements of supply chain
management and the health of the supply chain itself can often be related to the quality of information
running across the echelons.
As it is now clearer Managing supply chains effectively is a complex and challenging task and most
of the times detecting this kind of information distortions is a tough task especially if it relies on
witful actions of the parties. [8]
3.3.1.2 Bullwhip Effect:
Information distortion increases with increase in information hand offs resulting in increase in
the magnitude of demand fluctuations in a supply chain where the orders placed to suppliers tend to
have larger variance than the buyer’s actual sales. [8][20]
Impact on Supply Chain Process:
Communication gaps in the supply chain
These are the gaps that arise due to miscommunication or lack of commonality in languages
during demand forecasting and ordering suppliers.
Time delays in information and material flow
This is the time delay arising when there is a problem because of hand over of information along
the supply chain. This can also be attributed to the faulty propagation of information which gets
looped across a certain border and fail to flow along the supply chain.
These are clearly knowledge or information gap issues. Since we are analyzing the information
distortion from a knowledge point of view we are going to consider as causes of distortion (bullwhip
effect) just the communication problem and the delay times of information flow.[9]
Problem of communication gaps
Information often gets distorted by passing through different departments: the reason why it lacks
uniformity and transparency is amenable to a two folded issue:
Witful distortion: This happens when we have a transaction of information between
two individuals and the first of them want to gain a competitive advantage over the
second one. As consequence he/she discloses wrong information towards the other
party to make sure there is an information gap.
In addition it could occur when the second individual wants to disclose a wrong information voluntary
to satisfy his personal need.
Unintentional distortion: this occurs when there is a misunderstanding between the
parties when:
a) The first party discloses wrong information because of his incompetence
b) The second party has a wrong understanding of the real information disclosed
by the first party
Time delay of information
Often the parties which are dealing for a transaction are not physically in the venue where the
transaction are going to occur due to business, personal and accidental reasons.
This feature enhances the number of hands-offs among the parties involved which increase the
probability of having time delays of any kind.
For example if the decision has taken by the person which in the same venue where the transaction
will occur, delays are less likely to occur; whereas if the decision has taken by an individual who is
abroad for several reasons and far off from the venue where the transaction in going to occur and now
the probability of having a delay increase tremendously because he may send an e-mail to the head
quarter that will be read within hours rather than being read suddenly.
3.3.1.3 Solving the Bullwhip effect in the process chains
As explained in the previous section information distortion presents a quite great issue in managing
the value chain and in managing the information flowing through the company and the value chain.
Focusing on the two knowledge and information causes of information distortion we would like to
define the solutions that could be taken in consideration while dealing with this issue. [9]
Since it is a problem that relies on communication and delay of information transmission we would
say that the solution should be able to overcome information distortion in each of its facets.
In order to overcome these problems or at least to lessen the bad consequences they can lead to, we
will provide a list of actions which should help to avoid information distortion and
miscommunication:
Frequency of communication
The more frequent the interaction between the two parties occur the less likely
miscommunication issue and information distortion will be encountered.
In fact increasing the number of contacts between the two individuals we can have increase in
the probability that errors are detected and as a consequence corrected.
Rapidity of information exchange along the chain
The more rapid the interaction between the two parties, the more frequent the two parties can
communicate, the less likely miscommunication issue and information distortion will be
encountered. Companies should invest in order to achieve a quasi instantaneous
communication system getting read of delays and lead times.
Adaptation of the same languages
The more similar the languages used, the less likely misunderstanding, miscommunication
and information distortion is.
Two parties who are interacting in a transaction should use the same language in term of:
Verbal and written language
Accountancy language
Abbreviations
Demand forecasts
The more the downstream party forecast future demand the sooner the upstream party will
know about the future order the less the probability information misunderstanding will occur.
Group procurement
When group procurement occurs, there is less likely that information distortion occurs due to
side communication among the group which lead to information adjustment among them.[9]
This feature assumes a high level of connection and communication among the different
actors involved in the transaction; without them, group procurement is not able to prevent
miscommunication and information distortion.
Information distortion measurement
In order to detect and correct this gap often companies use complex statistical model to
measure this gap and understand where it comes from. As a consequence, the greater the
effort of a certain company to monitor, compute and measure the information distortion the
more likely the company will have a prompt reaction in the correction.
Operations transparency between the two parts
The more the two counterparties operate following transparency principles the more likely
information distortion and miscommunication will be corrected.
If the downstream party has a demand of X and it orders X – 1, I (supplier) can correct the
order promptly if there is a high degree of transparency.
Shared technologies
The more two echelons have shared technologies such as databases, software tools and
information services, the more likely they can correct distortion and miscommunication.
Having as much efficient as possible communication system
A company should invest in “filling information gap technologies” proportionally at the
information gap computed
Implement a system able to get rid of the incentives (if any) in both parties to hide or
distort information to the respective counterpart
Sometimes information distortion occurs witfully because there is room to take advantage
over the other party. If we get rid of this room we get rid of the distortion
3.3.2 Technology and Service based routing
3.3.2.1 ERP Technology:
ERP stands for Enterprise Resource Planning. Software attempts to integrate all the departments
in the company onto a single computing system and meet all the needs from different divisions. It
serves the needs of people from inventory to the human resource and financial departments. Each
department has its own IT system to support their daily work and optimise the working process
absolutely. [10]
Business goals
Overcome Information Distortion (Bullwhip Effect) by facilitating the proper flow of
information between all business functions inside and outside.
If in a small business, the information such as the incoming orders of goods and requests of picking
and delivering raw materials from other departments can be transferred quickly. However, in the multi
business corporations, especially in the MNCs, the business is very complex and information from
different parts of the company is very difficult to deliver in real time. The delay of time may result in
inefficient working process.
Bridge the Knowledge gap by automate and streamline operational processes, and manage
risk in the planning stage and budgeting [10]
Different departments in the company use unique software, which brings a lot of repetitive and
redundant work. Those work waste not only time and energy but also a lot of financial investments. In
planning stage, because of the fast changes of the environment, the prediction of the demand and
budget becomes very important too.
Knowledge of transactions for increasing productivity in operations:
Maximizing the individual productivity, further to increasing the whole operation’s productivity is a
critical use of this system which thereby gives valuable insight on understanding the gaps in
Knowledge flow to optimize the manufacturing process, the R&D process and other related processes.
Tool’s Working Style:
Knowledge portal for real–time data discovery
These systems can integrate the information timely and accurately, and reflect the data to the relevant
departments to enhance the efficiency of the process.
For example, when a customer places an order, that order begins a long journey from this department
to another department around the company, often being keyed and rekeyed into different computer
systems along the way. The whole course causes delays, errors and lost orders. At the same time, no
one knows what the status of the order is, because there is no way for the finance department to get
into the warehouse’s computer system to see whether the item has been shipped.
ERP combines the old computer systems in finance, HR, manufacturing and warehouse, and replaces
them all with a unique single software program to ensure that finance, manufacturing and the
warehouse departments are all under control in a synchronized state without potential time lags.[11]
Comprehensive simulation of key processes for planning and budgeting
For the planning stage, ERP refers to the main production planning, raw materials demand, capability,
purchasing, sale, human capital planning all of which help the company to make a good preparation
for the other core processes and maximize the staff’s ability and working potential. A good financial
planning also can help the company to keep a good balance in the revenues and expenditures.
Superior Information flow and therefore Knowledge flow by automating and streamlining
operational processes
ERP is a time and money saver. With its help, you only need to input customer, vendor, and order
data once and then share it across your functional departments. All the procedure can be automated
from inventory, warehouse to billing and accounting. It can also help you respond quickly to the
market by creating reports and analyzing enterprise trends easily and accurately [11].
Best practices codification into software to improve product development and manufacturing
procedures and manage risks
ERP software can reflect the vendor's interpretation of the most effective way to perform each
business process. Those effective ways can be considered as best practices which are incorporated
into the ERP systems. Systems vary in the convenience with which the customer can modify these
practices. Companies that implemented industry best practices reduced time for configuration,
documentation, testing and training. In addition, best practices reduced risk by 71% when compared
to other software implementations. Thus these procedures can codify and replicate the best practices
of industry standards factors and government requirements which can ease compliance with the
government, thereby managing and foreseeing complicated risks.
ERP can also alter the way of product manufacturing. An updating structure can be set up to inform
the company when their product should be updated. It is quite important for a company to keep better
track of their products, keep pace with the market change, and allow the products themselves to be
produced with a higher level of quality.
3.3.2.2 CRM Technology:
Most Interestingly in today’s business activities, the recipients are the ones whose favour, preference,
lifestyle are changing rapidly. To meet this gap between customer needs and company’s product or
service pose a bigger challenge to the organization.
In addition, globalization makes the competition fierce and businesses across all industries are
faced to boost revenues and expand market share by finding new clients and enhance the existing
customer’s loyalty [12].
CRM – Working Style:
CRM is Customer Relationship Management, software that not only can support the marketing and
sales process, but also the very methodology of doing business.CRM focuses on creating new
customers as well as developing individualized customer relationships to maintain what they already
have. It includes contact management, sales force automation, and marketing campaign automation,
call centre management, help desk automation, and business intelligence operations for market
analysis.
Business Goals:
Customer Knowledge Discovery - Find, attract, and win new clients
To have continuous flow of new clients is a great challenge which needs more of investment and a
strenuous target market analysis where the client’s basic information, preferences, interests, desired
needs, promotional and related campaign activities to attract and win their trust [13].
Inspire customer loyalty with intensive knowledge engineering/discovery tools
More and more companies have realized that to maintain an old customer is much easier than to win a
new one. The reputation you got from the former customer is very important for enticing clients back
and cross-selling. That is well codified and expressed by the CRM software which predicts the
interests of the existing customers and ensures their loyalty.
Identify the knowledge gaps and manage the risks in marketing and client service.
Many companies realized that CRM grounds the best way to improve profitability and increase
shareholder value by maximizing operational efficiency and minimizing overhead costs and
stimulates competitiveness and hence manage the investment risk in marketing, sales and promotions
to attract clients and entice them to consume [12].
Solutions:
Efficient Knowledge Routing – to support the marketing and sales departments
CRM aids in understanding the preferences and potential purchasing behavior of their target
customers, plan and design personally tailored campaigns and promotion activities through various
communication channels, and analyze the results to attract and win new clients [13].
Delivering Superior Knowledge Transactions and Intuitive knowledge generation with
Customer Service Operations
One of missions of CRM is to provide a convenient experience to customers by answering their
inquiries on time and providing them with the information they need through call centres which
provide an excellent platform for interaction with customers to capture their feedback and responses
that is to be passed to subsequent layers upstream to make a decision on customer’s behavior and
hence implement changes in the processes where there is a lag in thoughts of customers and
organization.[13]
Exploiting Information technology for Cost Reduction
Moving data access online will reduce costs by pushing more customer enquiries to the web instead of
costly telephone interactions with live agents. Customer relationship management solutions can also
transform these online customer management centers into profit centers by helping staff to actively
participate in up-sell and cross-sell initiatives, and other sales and marketing promotions.
ERP Vs CRM
As discussed in the paper, the two information management tools in the computing environment to
emulate the ERP and CRM processes have brought about a significant improvement in the thinking of
the organization as a whole. These software tools aim at collectively improving productivity with
similar business goals in the upstream but different at task orientations as tabulated below after
analysis
SIMILARITY DIFFERENCE
ERP
&
CRM
Both of them enable employees of an
organization to share information to
coordinate activities in the
organization, and also allow the
executives to take decisions based
upon the reports and forecasts
generated from these tools.
1. ERP is process oriented, while CRM
is customer oriented.
2. ERP is internal system, while CRM
is external system.
3. ERP looks after supply chain
management, product management, and
accounting management, while CRM
takes care of sales activity, customer
interaction, product marketing and
customer services.
3.3.2.3 Outsourcing:
The key focus areas of any powerful global enterprise will be demand generation, financial
performance and cash flows. This brings in the need to categorize and focus on their core business
processes which require a greater attention and a unique output so as to contribute to a superior end
product. The other relatively less significant noncore processes can be invested on trusted partners in
the form of services [14].
Measuring the risk and productivity of a process to decide the service sourcing strategy:
Is the service partner Trustworthy?
Are his actions and strategies predictable? Dependable? Ethical?
Is he willing to compromise?
Does the service have realistic setup for accomplishment?
Does the service bring about significant cost benefit to the company?
Does the service provider exhibit control over their process?
Is the organizational culture of the service provider in terms of thoughts, action and
environment similar?
Are they capable of generating contingent efforts for organizational success?
Is the service provider aligned with the company’s performance management effort with internal
technology, business strategy and workforce?
Can we measure their performance in terms of productivity in terms of Key Performance Indicators –
Cost savings, service improvement, responsiveness and stake ownership?
We can also try the “Specificity of the Service” by asking these W questions – ‘Why, What, Who,
When, Where and What if ‘in the organization’s view point [14].
Solution
The results of these above interrogations can help us land in one of the models below
Full Outsourcing model, High Risk and Strategic, for example, Customer service, R&D,
Market Research processes
Managed Services model, Average Risk, for example, Production support and maintenance
processes
Co Managed Services model, Low Risk, for example, Retail and financial services Software
Applications installation and technical support
3.3.2.4 Sustainable sourcing and logistics
A definite condition of a system which is primarily aimed at design for the environment and foresees
long term stability and revenue generation by improving the workflow of a process and reflecting the
responsibility of the organization for environment enhancing its brand value and image in the
customer circle [15].
Challenges:
Predicting concrete Demand in the form of Knowledge Market Signals and responding it in
an eco friendly way
Requirement of extremely short lead times and the highest possible flexibility on the
supplier’s side
The replacement of plan-based activities by order driven activities and changing the process
architecture from a push to a pull mode.
Understanding the Complexity of the process in terms of execution time
Solutions
What is the cost of investment on sustainable assets and process restructuring?
What is the extent of risk involved in the over all process?
Is the process repeatable?
What is the predicted customer coverage after sustainable process restructuring?
How much effort do we require for synchronizing or integrating the sustainable process with
the existing one?
What is the fault tolerance of the system?
Process restructuring for sustainability factors [15]
Zero Waste
Efficient Energy Utilization
More Real Time Electronic Transactions
Information reuse
Use of stable, varying cost eco friendly materials
and techniques for process execution
Reduce Proliferation of products – minimal
warehousing
Extend Product life cycle
Decentralize distribution Systems
Extend Lead time – Process execution time by
combination or transformation for cross
production
Group procurement services
Exploiting Green Computing technologies –
Cloud based architecture and resource sharing
Relying on Internet as a medium of
communication and transaction
3.3.3 Software Driven Process Management:
In recent days, software is used mainly for storage and connectivity. Companies should realise
the extent to which software can be applied in simulating the process oriented tasks for tracking
defects and to enhance the quality and functioning of the process.
Future needs to aim at exploiting the Internet, Web 3.0 technology of augmented reality and
semantic analysis to involve on the fly decision making with more emphasis on video, audio and three
dimensional and even four dimensional (to capture emotions) content representation rather than usual
text and two dimensional image based reports and thus makes more intuitive process visualization for
easy identification and cognition. There need to sufficient caution to balance between the ease of user
interface and enhancing customer and organizational secure even on a cloud based architecture.
3.3.4 Customer Intelligence - Market Research
Market Research in business and consumer perspectives for core process restructuring:
It is a systematic process in an organization to realize the gap between what they know and what they
must know by creating focus groups and researching on the market, trend, competitors, employees
and customers and also the risks and returns on a defined time frame. The findings can be
incorporated into subsequent products with underlying restructured core process. [16]
Based on Existing Customers:
Does the process satisfy the existing customers?
Which features are important to these people and which are not?
What price would customers be willing to pay if there is an improvement in the process, and
why?
Based on Potential Customers:
Who chooses your competitor’s offering and Why?
Which features are important to these people and which are not?
What price would they be willing to pay if there is an improvement in the process, and why?
Based on Organization’s Business perspective:
What are the risks and rewards involved in the new process restructuring and
implementation?
What is the investment required on the new process assets in terms of structural and human
capital?
How generic/specific is the change in the process?
What will be the coverage of the target market after process implementation?
3.3.5 Setting Standards in organizational Processes, Policies and Procedures
These methods were developed primarily to improve the focus and productivity of processes, policies
and procedures. Competitiveness in the market and emphasis on control has brought about a
revolution in global business since 1980. The organizations realized that productivity is the key
element of a process. Unless it is standardized, they can’t be managed well. Total Quality
Management (TQM), Total productive Maintenance (TPM), Six Sigma, Business Process
Reengineering (BPR), Lean, and International Organisation for Standardization (ISO) series of
standards, Communities of Practice (COP) and best practices are the most popular initiatives
employed by the organizations today for productivity. All the techniques except BPR aim at
continuous process improvement. [17, 18]
All these approaches have been developed in different countries having different operational and
cultural orientations. Selection of one of these or combination of several of these techniques has
remained a challenge because of the diversity of organizational processes. All approaches are useful
but to be treated with caution in the appropriate organizational context.
3.4 Index Derivation and hence Strategy Formulation for a Productive Process
3.4.1 Questionnaire to measure the relative weights of 5C’s:
A Questionnaire has been carefully designed concentrating to give input weights on 5C’s based on
five key solutions to enhance productivity.
Assuming that all the solutions collectively contribute to 100% productivity, we try to categorize the
solutions based on their ability and number of means internally to achieve productivity as below:
Information Synchronization – 20 %
Technology and service based routing – 35 %
Software driven process management – 15 %
Customer intelligence – 15%
Setting standards – 15%
Based on this percentage, we decide the number of questions to evaluate each of the solutions.
Each question has a 5 point liker scale and specific evaluation parameters which can be one of them –
(Communication C1, Coordination C2, Control C3, Competitiveness C4, Control C5) with their
measuring context (+ or -) and a specific question type (awareness, implementation, conclusive)
The question type helps us to derive a logical inference based on differentiating into 3 distinct bases
Awareness- To check the basic functional awareness of the solution
Implementation – To check if that is implemented in your company
Conclusive – To determine the overall idea of its implementation
Awareness and Conclusive questions tend to carry more weights and hence we multiply the scores of
these questions with 2 and we divide the scores of implementation questions with 2
Individual solution score = (Awareness and Conclusive questions)*2 + (Implementation Questions)/2
Unifying the measuring context:
It is easy to measure if we convert the negative measuring context to positive before summing up to
find out the net weights of the 5C’s.
Suppose we have strongly agree – 5 as the answer for the negative measuring context question we
need to convert it to positive measuring context by taking it strongly disagree with score 1
Finally we need to convert the liker scale scores for each solution separately determined by (obtained
score / maximum score) * Solution contribution to productivity where maximum score for each
question will be 5.
We come up with the below linear equation by adding up the scores of all the answers in the
questionnaire:
A(C1) + B(C2) +C(C3) +D(C4) +E(C5)
C1, C2, C3 - Communication, Coordination and Control:
On close observation, they tend to reflect the basic ways for effective input interaction for output or
the ground rules of any productive organizational process and more focuses on the mechanisms of the
process which need to be in place for the working or basic functioning itself and hence attributed to
the syntax, in basic terms, like the grammar of a language. Eg: Network connectivity, ERP
Hence we group these 3C’s into a Syntactic index (SY)
C4, C5 – Competitiveness and Cognition:
On close observation, they tend to extend the mechanisms and derive meaning out of the existence or
functioning for competitive advantage, customer satisfaction and maximum profits and thus they
focus more upon the context of the process which signifies on the meaning of the process and apply
the learning or intelligence into the business processes and hence attributed to the semantics, in basic
terms, like the linguistics of a language (logical derivation or meaning). Eg: Customer intelligence,
Setting benchmarks and standards
Hence we group these 2C’s into a Semantic index (SE)
3.4.2 Index for maximum productivity:
Ideal Case:
An ideal productive process needs to be very strong in its working mechanism and functional
interaction of various blocks. Such process needs a strong communication base, coordination between
blocks and control on the desired output. This is the core need of every process to be productive. Thus
they collectively need a higher value of SY – Syntactic Index for productivity.
Considering the outcome of the process mechanism to be the magnitude of the process, we still need a
direction to attribute to the magnitude and derive a meaning with the context surrounding the
mechanism. Such process to derive the context can be attributed to competitiveness and cognition as
they act on the mechanism to improvise or add more contexts to make it holistic and customer or
market oriented. However this is not the core need of a process to be productive still is an essential
ingredient of a productive process. Thus they collectively need an average value of SE – Semantic
Index for productivity.
Productivity Index = X (SY) + Y (SE) (1)
Where X= A(C1) + B(C2) + C(C3) (2)
Y= D(C4) + E(C5) (3)
Adjusted Case by shifting relative weights of 5C’s:
If the index does not have a higher syntactic index and medium semantic index, we need to drill down
and identify the base C’s which contribute less or high to the overall index. The weights can be
shifted to target C’s by deciding and acting upon specific strategies.
Suppose, Company P has invested more on the network infrastructure and connectivity tools only for
communication which has in turn contributed to higher weights of C1, but they do not have a planning
tool or system for tracking all transactions with suppliers which has in turn contributed to lower
weights of C2 and C3 which in turn decreases the overall Syntactic index.
Thus with this index or productivity measurement, the company P can find the lag in their working
profile and act upon the lag or even surplus at times when that is not the primary focus.
The case discussed can be represented considering the equations (1), (2) and (3) as below
Xp < X where Xp is the calculated syntactic index of company P and X is the ideal syntactic index
Ap > A, Bp < B and CP < C where Ap, Bp and CP are the communication, coordination and control
weights of company P’s syntactic index respectively and A, B and C are the communication,
coordination and control weights of the ideal syntactic index .
This analysis with the obtained index can be intuitive for company P to formulate business strategies
to shift focus towards the lagging part such as ERP implementation, software driven process
simulation for quality management and defect tracking if they don’t exist presently, to improve its
syntactic index of productivity for the ideal case.
Generic nature of indices:
These indices can also be extended to measure capability and innovation by considering the human
actors, internal (Organizational) and external (market and customer) environment and culture, their
interrelationships which can be attributed again to communication, coordination, control,
competitiveness and cognition.
Fig 6. Overall flow of process productivity index derivation
4. Conclusion:
The index based approach reflected a mode to work on strategies based on the nature of process and
the business goals. All the models, hypothesis, interrogative analogies have been newly created or
sometimes optimized with a hybrid approach .We started off with analyzing and apprehending the
three pillars of today’s organization – Capability, Productivity and Innovation. Then it was a focussed
discovery on productivity oriented to a process whose Meta model has been conceptualized and the
relationships influencing the process entities interaction were analyzed to identify the base factors or
challenges for productivity. We also proposed a hypothesis on factor - communication. Now, it is with
application of technological infrastructure in terms of technology consumption, service or standard
adoption to drive the best outcome for productivity. Also, specific scenario productivity analogies
were developed with question based reasoning with the prevailing conditions in the organization and
the symptoms, purpose and solutions have been rated and prioritized. These factors, considerations,
relationships were then related to each other on a single measuring scale and two indices attributing to
syntax and semantics and reflecting a deep perspective of process and productivity have been
developed. The value of indices depends on the relative weights of individual constituents. Thus the
value of indices leads to strategies by adjusting the relative weights of index components which can
be a reflection to improve the least contributors or to shift focus from one contributor to another or to
adopt a better model or technology to overcome the deficit or surplus of contribution or maintain a
median.
5. References
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