Midterm 1 Flashcards
Weeks 1-6
What is a business process?
Ongoing collection of related activities or tasks that in a specific sequence create a product or service of value to the organization
Inputs
Materials, services, and information that flow through and are transported as a result of a process
Resources
People and equipment that perform processes
Outputs
Product or service created by the process
Effectiveness
Focuses on creating outputs of value to the process customer
Procurement Process
All tasks involved in acquiring needed materials externally from a vendor
Efficiency
Focuses on doing things without wasting resource
Firm areas involved with procurement
- Warehouse
- Purchasing
- Accounting
Procurement step 3
Vendor ships the material to the warehouse
Procurement step 1
Warehouse sends a purchase requisition form to purchasing
Procurement step 2
Purchasing department creates a purchase order based upon the requisition
Procurement step 4
Vendor sends an invoice to the accounting department
Procurement step 5
Accounting sends payment to vendor
Fulfillment step 1
Purchase order sent to the sales department
Fulfillment process
Concerned with processing customer orders
Fulfillment step 2
Sales creates a sales order
Sales order
Communicates data related to the order to other functional areas in the organization
Fulfillment step 3
Warehouse prepares and sends shipment
Fulfillment step 4
Accounting creates an invoice once it is notified of shipment
Fulfillment step 5
Customer pays the invoice which is recorded by accounting
When does a business process create a competitive advantage?
When the company innovates or is more effective and efficient than competitors
When does a business process create a liability
If they make the company less responsive
Customer satisfaction
The result of optimizing operations and supplier processes
Cost reduction
The result of optimizing operations and supplier processes
Cycle and fulfillment time reduction
The result of optimizing the manufacturing and logistics processes
Quality
The result of optimizing the marketing and innovation processes
Differentiation
The result of optimizing the marketing and innovation processes
Productivity
The result of optimizing each individual work process
Business process re-engineering (BPR)
A radical redesign of a business process that improves its efficiency and effectiveness. Begins from scratch
Business process improvement
Focuses on reducing variation in the process outputs by finding the root cause of the variation
Phases of the BPI Project
DMAIC
Define phase (BPI)
BPI team documents the existing “as is” process activities, process resources, and process inputs and outputs
Measure phase (BPI)
BPI team identifies relevant process metrics and collects data to understand how the metrics evolve over time
Analysis phase (BPI)
BPI examines the process map and the collected data to identify problems with the process and the root cause
Improve phase (BPI)
BPI team identifies possible solutions for addressing the root causes and maps the “to be” alternatives
Control phase (BPI)
The team establishes process metrics and monitors the improved process after the solution
Business Process Management (BPM)
Management system that includes methods and tools to support the continuous health of core business processes
Process modelling
Graphical depiction of all steps in a process. Important component of BPM
Business Activity Monitoring (BAM)
Real-time approach for measuring and managing business processes
True or false: BAM tracks operations and indicates their success
True
Business process management suites
Set of applications that includes process maps, business rules, and tools for process modelling
Social BPM
Technology that enables employees to collaborate, using social media tools on wired and mobile platforms
Make-to-order
Producing customized products
Mass production
Producing a large quantity of identical items
Mass customization
A company produces a large quantity of items, but customizes them to meet the needs of individual customers
Competitive strategy
Statement that identifies a business’s approach to compete, its goals, and the plans and policies that will be required to carry out
Strategic Information Systems (SISs)
Provide a competitive advantage by helping an organization to implement its strategic goals and improve its performance and productivity
Force 1 (Porters Five Forces)
The threat of entry of new competitors
Entry barrier
A product or service feature that customers have learned to expect from organizations
Force 2 (Porters Five Forces)
The bargaining power of suppliers
Force 3 (Porters Five Forces)
The bargaining power of customers
Force 4 (Porters Five Forces)
The threat of substitute products or services
Force 5 (Porters Five Forces)
The rivalry among existing firms in the industry
Value Chain
Sequence of activities through which the organizations inputs are transformed into valuable outputs
Value Chain Model
Identifies points for which an organization can use information technology to achieve a competitive advantage
Primary Activities
Relate to the production and distribution of the firm’s products and services
Support activities
Do not add value to the firm’s products or services. Contribute to the firm’s competitive advantage by supporting primary activities
Sequence of primary activities
- Inbound logistics (inputs)
- Operations (manufacturing and testing)
- Outbound logistics (Storage and distribution)
- Marketing and Sales
- Services
How value is added to products?
- Materials are processed
- Raw materials are turned into products
- Products are prepared for delivery
- Marketing and sales sell the products
- Company performs after-sales service
Support activity examples
- The firm’s infrastructure (accounting, finance, and management)
- Human resource management
- Product and technology development (R&D)
- Procurement
Value system
AKA industry value chain. Includes the suppliers that provide inputs necessary to the firm along with their value chains
Cost leadership strategy
Produce products and services at the lowest cost in the industry
Differentiation strategy
Offer different products, services, or product features than competition
Innovation strategy
Introduce new products and services, add new features, or develop new ways to produce them
Operational effectiveness strategy
Improve the manner in which a firm executres its internal business processes
Customer orientation strategy
Concentrate on making customers happy
Business information technology alignment
Tight integration of the IT function with the organization’s strategy, mission, and goals
Characteristics of excellent Business-IT Alignment
- Organizations view IT as an engine of innovation
- Organizations view their internal and external customers and customer service functions as important
- Organizations rotate business and IT professionals across departments
- Organizations provide overarching goals that are clear to IT and business employees
- Organization ensure that IT employees understand how the company makes money
- Organizations have a vibrant company culture
Data Governance
Formal set of processes and policies that are designed to ensure that data are handled in a well-defined fasion
Master data management
Process that spans all of an organization’s processes and applications
Master data
Includes:
- Customer
- Product
-Employee
- Vendor
- Location
Transactional data
Describes the businesses activities
Data file
collection of logically related records
Problems solved by databases
- Data redundancy
- Data isolation
- Data inconsistency
Data redundancy
The same data stored in multiple locations
Data isolation
Applications cannot access data associated with other applications
Data inconsistency
Various copies of the data do not agree
Advantages of databases
Maximized data security, integrity, and independence
Data security
Databases must have a very high security to minimizes a lot of data being lost
Data integrity
Data meets certain constraints
Data independence
Applications and data are not linked so all applications are able to access the same data
Database management system (DBMS)
Set of programs that provide tools to create and manage a database
Relational database model
Based on the concept of two-dimensional tables. Each table contains records and attributes
Data model
Diagram that represents entities in the database and their relationships
Entity
Person, place, thing, or an event about which an organization maintains information
Instance
Each row in a relational table which is a specific representation of the entity
Attribute
Each characteristic or quality of a particular entity
Primary key
A field or attribute of a record that uniquely identifies the record so it can be retrieved, updated, and sorted
Secondary key
A field with some identifying information but does not identify the record with complete accuracy
Foreign key
A field in one table that uniquely identifies a row of another table
Structured data
Highly organized data in fixed fields in a data repository. Must be defined in terms of field name and type
Unstructured data
Data that does not reside in traditional relational databases. Includes: emails, word documents, PowerPoints, web pages.
Big data
Collection of data that is so large and complex it is difficult to manage using traditional systems
Big data characteristics
- Volume
- Velocity
- Variety
Dirty Data
Inaccurate, incomplete, incorrect, duplicate, or erroneous data
Massively parallel processing
Coordinated processing of an application by multiple processors that work on different parts of the application
Data warehouse
Repository of historical data that are organized by subject to support decision makers within the organization
Data mart
Low-cost, scaled-down version of a data warehouse that is designed for end-user needs
Characteristics of data warehouses and marts
- Organized by business dimension or subject
- Use online analytical processing
- Integrated
- Time variant
- Non-volatile
- Multidimensional
Meta Data
Data that describes and gives information about other data
Data lake
Central repository that stores all of an organization’s data, regardless of source or format
Knowledge management
Process that helps organizations manipulate important knowledge that makes up part of the organization’s memory
Knowledge
Information that is contextual, relevant, and useful
Explicit knowledge
Objective, rational, and technical knowledge
Tacit knowledge
Cumulative store of subjective or experiential learning. Imprecise and costly to transfer