Abstract
The chapter intends to exemplify process innovation challenges and trends. A case is studied—stock management—at an important enterprise in Portugal. It involves the analysis and improvement of this process within a firm related with gas distribution. Stock management is critical to deliver value to other processes such as sales. This issue has led to a focus on improving the inventory process. As it involves sub-value chains, this work highlights a comparison between current process and its proposed redesign. DMAIC method (define-measure-analyze-improve-control) is systematically applied, and new data emerge from tests made in the ERP (enterprise resource planning system) of the company. The improved process tends to greatly reduce execution time, as well as the number of actors and amount of information circulating outside the system. Other aspects are studied in line with new trends in ERP platforms due to cloud computing.
TopIntroduction
This work proposes a process improvement, in the scope of stock management, by reviewing this process in a large gas company of Portugal. Inventory management is critical to the supply chain and involves three key activities: customer service, product availability and cost of inventory. Large amounts of stock are considered a waste by companies, leading managers in recent decades to focus on improving the efficiency of the stock existent in their warehouses (Shen et al., 2017).
It aims to compare the efficiency of the process in its current management and execution with its re-design in the context of the company’s ERP. Why? Because the current process uses intermediate processes in Excel and/or manual processes. So, the company’s ERP (Enterprise resource planning system, from SAP) is not used in its whole potential. How can this company still use intermediate processes outside the ERP? Several authors have studied this issue, such as Lund-Jensen et al. (2016), who refers it as a factor affecting information systems’ projects. When these do not meet the deadline or all the expected requirements, a solution is using intermediate or manual procedures. Thus, a goal of this work is raising the following issues:
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Business processes research and design
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Continuous improvement of business processes (innovation)
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Comparison between the current stock process and the new process.
Therefore, the state of process management systems in Portugal is addressed. Some of main related concepts to be invoked are: business process management (BPM), business process management notation (BPMN), and business process maturity model (BPMM). The latter has to do with the area of continuous process improvement, an important issue in the current context of increasing digitization and organizational change. Then the current process of stock management in the company is discussed, presenting its three phases, tasks performed and involved stakeholders. This is followed by the results from a comparison between the current process and the proposed process in the company’s ERP. This work then concludes the assessment made, giving some management recommendations.
TopData Integration In Portugal
An ERP is an information system, working hard to stay relevant in this new age of cloud services. In an ERP adoption, firms start to choose which modules they need to address (integrate) every organizational aspect of their business. When compared with new agile cloud-delivered apps, the issues inherent to this approach usually involve price and customization (Rist and Martinez, 2018).
Many ERP suppliers are addressing the price problem by dropping the cost of their functional modules to compete with cloud services. And customization is not easy as they rely on complex scripting languages to manage it. These suppliers are dealing with competition from new SaaS startups (Software-as-a-Service, a type of cloud computing), as well as new trends that threaten to disrupt how data are gathered and processed. Big data, together with data analytical tools, top the list of new technologies that threaten the way ERP systems are built and used. Indeed, the shift to SaaS will accelerate over the next years becoming a necessary option for many business models.
Organizations have become more dependent on digital platforms. As a result, they have accumulated an amount of data that has been underutilized. As the internet connects tools and employees across many levels, this data generation will grow exponentially. That is why is so important to review (re-design) processes and their supporting systems. Another reason is that more devices and products have become connected. This concern forms the basis for a more intelligent approach to business (Matthews, 2014).
Figure 1 shows how is Portugal, regarding awareness about cloud services and main reasons for its lower use.
Figure 1. Awareness about cloud services
Key Terms in this Chapter
ERP: System for integrating organizational processes to produce information for decision support in real time. This business management system provides an integrated and continuously updated view of core business processes.
Process Innovation: The application of a new technology/method or the redesign of a process that executes an activity. This occurs when the organization solves an existing problem or performs an existing business process in a different way that adds value to it.
BPMM: Consists of a standard to assess maturity and guide organizations to improve processes. Based on the concept of continuous improvement, it leads organizations to evolve from inconsistent low-maturity activities to structured and organized processes.
Stock Process: Shows how much stock the firm has, at any time, and how it keeps track of it. This applies to every item used to produce a product/service. Efficiently managed, it allows the right amount of stock in the right place at the right time, and serves production if problems arise.
DMAIC: An iterative tool used to improve processes. It can be used in any situation where to implement improvements. It is an acronym for five steps: Define, Measure, Analyze, Improve, Control. D-M-A-I-C cycle must be repeated until the desired improvement is achieved.
Process Design: The function of reviewing or creating a new process workflow. It may involve: process analysis; best practices; process models from industry-standards; or ideas coupled with the experience of the process design team.
BPM: Discipline or approach where various methods are used to model, analyze, measure, improve, optimize, and automate business processes. It sees processes as important assets of an organization which must be managed and developed to deliver value-added products/services.