Chapter 1:
Introduction to Process Management
Process Management: Creating Value Along the Supply Chain (1st
edition)
Wisner and Stanley
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Chapter Outline
 Introduction
 Processes and Process Management
Defined
 Process Management and Supply Chain
Management
 The Eight Supply Chain Processes
 Inventory and Process Management
 Lean Thinking and Process Management
 Summary
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Chapter Outline (cont.)
 Quality and Process Management
 Business Process Management—
Formalizing Process Improvement
 Measuring Process Performance
 Trends in Process Management
 Summary
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Learning Objectives
After completing this chapter, you should be
able to:
 Define and discuss process management,
using examples.
 Understand the business value of process
management.
 Describe the eight processes linking
organizations along the supply chain.
 Discuss the importance of process
management in services.
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Learning Objectives (cont.)
After completing this chapter, you should be
able to:
 Describe why quality management and JIT
are important process management activities.
 Describe how processes are modeled and
improved, and how firms measure process
performance.
 Discuss the use of information technologies
to integrate supply chain processes, and
discuss other trends in process management.
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Introduction
 Processes
What is a process?
 Can you provide examples?

 Process management
Importance of process management, for
both manufacturing and services
 Impact of effective process management
on costs, profits and productivity
 How world-class businesses are managing
their processes

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Processes and Process Management
Defined
Process improvement
Business value of process management /
improvement
 Importance of process improvement:
continuous process evaluation.

 Business process management (BPM):
design, analysis, and improvement of
business processes.
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Generic Process Elements
Internal &
external
suppliers
Inputs
- labor
- materials
- training
- equipment
- time
- capital
- facilities
- information
Transformation
Sequenced steps of:
- machine operations
- physical/mental
activities
Outputs
Internal/External:
- physical goods
- services
- decisions and
information
Internal &
external
customers
Process Management
Figure 1.1
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Process Management and Supply
Chain Management
 Shift in focus: internal silos  external sharing and


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
coordination of key processes
Traditional organization structures drive functional
thinking-managers begin to see the world from a
narrow, functional perspective.
Process thinking –aligning decisions with corporate
strategy and coordinating activities across functions.
Business process integration
 Vertical integration  outsourcing
 Business process re-engineering (BPR)
Supply chain management
 Collaborative process management
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Eight Key Supply Chain Processes
 Identified by the Global Supply Chain
Forum
 These processes link organizations across
the supply chain
 Each process includes a set of functional
activities, which should be integrated with
other applicable functions
 Each process should be integrated with
other applicable processes
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Eight Key Supply Chain Processes
(cont.)
 Customer Relationship Management: creating and
maintaining successful relationships with customers.
 Customer Service Management: designing,
implementing and improving customer service activities.
 A perfect order
 Seven R’s rule: having the right product, in the right
quantity, in the right condition, at the right place, at
the right time, for the right customer, at the right cost.
 Demand Management: balancing customer demand
with the firm’s capacity.
 Collaborative planning, forecasting, and
replenishment (CPFR): a tool for reducing forecast
error.
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Eight Key Supply Chain Processes
(cont.)
 Order Fulfillment: delivery of products and services to
customers.
 Third-party transportation services
 Flow Management: making the product or service
and managing inventories, customers, and
information.
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Eight Key Supply Chain Processes
(cont.)
 Supplier Relationship Management: selecting the
right supply partners and managing relationships.
 Product Development and Commercialization:
designing and producing new products that
customers want
 Concurrent engineering
 Returns Management: managing product returns
effectively.
 Reverse supply chains
 A source for customer satisfaction and product
improvement ideas
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Inventory and Process Management
 Inventory management : critical activity of
supply chain.
Having too much vs. too little inventory
 Bullwhip effect
Independent demand

 Dependent demand
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Lean Thinking and Process
Management
 Just-In-Time (JIT)
 Pull
system
 An important process management
activity
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Quality and Process Management
 Total Quality Management (TQM)
 TQM
processes
 An important process management
activity
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Business Process Management –
Formalizing Process Improvement
Structured approach to process
assessment and organizational
improvement.
 BPM tools: benchmarking, reengineering,
six sigma
 Business process re-engineering (BPR)
 Difference between BPM and BPR

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Measuring Business Performance
 Continuously monitoring process performance is

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
important.
Important points to consider when designing
performance measurements:
Link measures to the firms’ vision and goals
Measure what customer care about
Should monitor the quality, cost and timing of outputs
along with the volume
Effectiveness trumps efficiency
More measurements are better
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