Enterprise Process Management Systems

Engineering Process-Centric Enterprise Systems using BPMN 2.0

Vivek Kale

• Publisher: CRC Press
• Year: 2018
• ISBN:
  9780429842337
• Edition: 1
• Topic: Business
• Subtopic: Operations
• Index: Business

Enterprise Process Management Systems: Engineering Process-Centric Enterprise Systems using BPMN 2.0 proposes a process-centric paradigm to replace the traditional data-centric paradigm for Enterprise Systems (ES)--ES should be reengineered from the present data-centric enterprise architecture to process-centric process architecture to be called as Enterprise Process Management Systems (EPMS).

The real significance of business processes can be understood in the context of current heightened priority on digital transformation or digitalization of enterprises. Conceiving the roadmap to realize a digitalized enterprise via the business model innovation becomes amenable only from the process-centric view of the enterprise.

This pragmatic book:

• Introduces Enterprise Process Management Systems (EPMS) solutions that enable an agile enterprise.

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• Describes distributed systems and Service Oriented Architecture (SOA) that paved the road to EPMS. Leverages SOA to explain the cloud-based realization of business processes in terms of Web Services.

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• Describes how BPMN 2.0 addresses the requirements for agility by ensuring a seamless methodological path from process requirements modeling to execution and back (to enable process improvements).

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• Presents the spreadsheet-driven Spreadsheeter Application Development (SAD) methodology for the design and development of process-centric application systems.

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• Describes process improvement programs ranging right from disruptive programs like BPR to continuous improvement programs like lean, six sigma and TOC.

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Enterprise Process Management Systems: Engineering Process-Centric Enterprise Systems using BPMN 2.0 describes how BPMN 2.0 can not only capture business requirements but it can also provide the backbone of the actual solution implementation. Thus, the same diagram prepared by the business analyst to describe the business's desired To-Be process can also be used to automate the execution of that process on a modern process engine.

1

Enterprise Systems

Enterprise systems (ES) are an information system that integrates business processes with the aim of creating value and reducing costs by making the right information available to the right people at the right time to help them make good decisions in managing resources proactively and productively. Enterprise resource planning (ERP) is comprised of multimodule application software packages that serve and support multiple business functions. These large, automated cross-functional systems were designed to bring about improved operational efficiency and effectiveness through integrating, streamlining, and improving fundamental back-office business processes.

Traditional ES (like ERP systems) were called back-office systems because they involved activities and processes in which the customer and general public were not typically involved, at least not directly. Functions supported by ES typically include accounting; manufacturing; human resource management; purchasing; inventory management; inbound and outbound logistics; marketing; finance; and, to some extent, engineering. The objectives of traditional ES in general were greater efficiency and, to a lesser extent, effectiveness. Contemporary ES have been designed to streamline and integrate operation processes and information flows within a company to promote synergy and greater organizational effectiveness as well as innovation. These newer ES have moved beyond the back-office to support front-office processes and activities like those that are fundamental to customer relationship management.

1.1 Evolution of Enterprise Systems

ES have evolved from simple materials requirement planning (MRP) to ERP, extended enterprise systems (EES), and beyond. Table 1.1 gives a snapshot of the various stages of ES.

1.1.1 Materials Requirement Planning

The first practical efforts in the ES field occurred at the beginning of the 1970s, when computerized applications based on MRP methods were developed to support purchasing and production scheduling activities. MRP is a heuristic based on three main inputs: the Master Production Schedule, which specifies how many products are going to be produced during a period of time; the Bill of Materials, which describes how those products are going to be built and what materials are going to be required; and the Inventory Record File, which reports how many products, components, and materials are held in-house. The method can easily be programmed in any basic computerized application, as it follows deterministic assumptions and a well-defined algorithm.

TABLE 1.1
Evolution of Enterprise Systems (ES)

System	Primary Business Need(s)	Scope	Enabling Technology
MRP	Efficiency	Inventory management and production planning and control	Mainframe computers, batch processing, traditional file systems
MRP II	Efficiency effectiveness, and integration of manufacturing systems	Extending to the entire manufacturing firm (becoming cross-functional)	Mainframes and minicomputers, real-time (time-sharing) processing, database management systems (relational)
ERP	Efficiency (primarily back-office), effectiveness, and integration of all organizational systems	Entire organization (increasingly cross-functional), both manufacturing and nonmanufacturing operations	Mainframes, mini- and microcomputers, client/ server networks with distributed processing and distributed databases, data warehousing, mining, knowledge management
ERP II	Efficiency effectiveness and integration within and among enterprises	Entire organization extending to other organizations (cross-functional and cross-enterprise partners, suppliers, customers, etc.)	Mainframes, client/server systems, distributed computing, knowledge management, Internet technology (includes intranets, extranets, portals)
Interenterprise resource planning, enterprise systems, supply chain management, or whatever label gains common acceptance	Efficiency effectiveness, coordination, and integration within and among all relevant supply chain members as well as other partners or stakeholders on a global scale	Entire organization and its constituents (increasingly global and cross-cultural) composing the global supply chain from beginning to end as well as other industry and government constituents	Internet, service-oriented architecture, application service providers, wireless networking, mobile wireless, knowledge management, grid computing, artificial intelligence

MRP employs a type of backward scheduling wherein lead times are used to work backwards from a due date to an order release date. While the primary objective of MRP was to compute material requirements, the MRP system proved also to be a useful scheduling tool. Order placement and order delivery were planned by the MRP system. Not only were orders for materials and components generated by an MRP system, production orders for manufacturing operations that used those materials and components to make higher level items like subassemblies and finished products were also created.

As MRP systems became popular and more and more companies started using them, practitioners, vendors, and researchers started to realize that the data and information produced by the MRP system in the course of material requirements planning and production scheduling could be augmented with additional data and used for other purposes. One of the earliest add-ons was the Capacity Requirements Planning module, which could be used in developing capacity plans to produce the master production schedule. Manpower planning and support for human resources management were also incorporated into MRP. Distribution management capabilities were added. The enhanced MRP and its many modules provided data useful in the financial planning of manufacturing operations; thus, financial planning capabilities were added. Business needs, primarily for operational efficiency and to a lesser extent for greater effectiveness, and advancements in computer processing and storage technology brought about MRP and influenced its evolution. What started as an efficiency-oriented tool for production and inventory management was becoming increasingly a cross-functional system.

1.1.2 Closed-Loop Materials Requirement Planning

A very important capability that evolved in MRP systems was the ability to close the loop (control loop). This was largely because of the development of real-time (closed loop) MRP systems to replace regenerative MRP systems in response to changing business needs and improved computer technology—that is, time-sharing replaced batch processing as the dominant computer processing mode. With time-sharing mainframe systems, the MRP system could run 24/7 and update continuously. Use of the corporate mainframe that performed other important computing tasks for the enterprise was not practical for some companies, because MRP consumed too many system resources; subsequently, some companies opted to use mainframes (now growing smaller and cheaper, but increasing in processing speed and storage capability) or mini-computers (which could do more, were faster than old mainframes) that could be dedicated to MRP. MRP could now respond (update relevant records) to timely data fed into the system and produced by the system. This closed the control loop with timely feedback for decision-making by incorporating current data from the factory floor, warehouse, vendors, transportation companies, and other internal and external sources, thus giving the MRP system the capability to provide current (almost real-time) information for better planning and control. These closed-loop systems better reflected the realities of the production floor, logistics, inventory, and more. It was this transformation of MRP into a planning and control tool for manufacturing by closing the loop, along with all the additional modules that did more than plan materials—they both planned and controlled various manufacturer resources—that led to MRP II. Here, too, improved computer technology and the evolving business needs for more accurate and timely information to support decision-making and greater organizational effectiveness contributed to the evolution from MRP to MRP II.

1.1.3 Manufacturing Requirement Planning II

The MRP in MRP II stands for “manufacturing resource planning,” rather than “materials requirements planning.” At this point, the MRP system had evolved from a material requirements planning system into a planning and control system for resources in manufacturing operations—an enterprise information system for manufacturing. As time passed, MRP II systems became more widespread and more sophisticated, particularly when used in manufacturing to support and complement computer-integrated manufacturing. Databases started replacing traditional file systems, allowing for better systems integration and greater query capabilities to support decision-makers, and the telecommunications network became an integral part of these systems in order to support communications between and coordination among system components that were sometimes geographically distributed but still present within the company.

1.1.4 Enterprise Resource Planning

During the late 1970s and early 1980s, new advances in information technology (IT), such as local area networks, personal computers, and object-orientated programming as well as more accurate operations management heuristics allowed some of MRPs deterministic assumptions to be relaxed, particularly the assumption of infinite capacity. MRP II was developed based on MRP principles, but incorporated some important operational restrictions such as available capacity, maintenance turnaround time, and financial considerations. MRP II also introduced simulation options to enable the exploration and evaluation of different scenarios. MRP II is defined as business planning, sales and operations planning, production scheduling, MRP, capacity requirements planning, and the execution support systems for capacity and material. Output from these systems is integrated with financial reports such as the business plan, purchase commitment report, shipping budget, and inventory projections in dollars. An important contribution of the MRP II approach was the integration of financial considerations, improving management control and performance of operations and making different manufacturing approaches comparable. However, while MRP II allowed for the integration of sales, engineering, manufacturing, storage, and finance, these areas continued to be managed as isolated systems. In other words, there was no real online integration and the system did not provide integration with other critical support areas, such as accounting, human resource management, quality control, and distribution.

The need for greater efficiency and effectiveness in back-office operations was not unique to manufacturing; it was also common to nonmanufacturing operations. Companies in nonmanufacturing sectors such as health care, financial services, air transportation, and the consumer goods sector started to use MRP II-like systems to manage critical resources. Early ERP systems typically ran on mainframes like their predecessors, MRP and MRP II, but many migrated to client/server ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of Figures
• List of Tables
• Foreword
• Preface
• Acknowledgments
• Prologue
• Author
• Other Books by Vivek Kale
• 1. Enterprise Systems
• 2. Characteristics of Business Processes
• Section I Genesis of Enterprise Process Management Systems
• Section II Road to Enterprise Process Management Systems
• Section III Enterprise Process Management Systems
• Section IV Enterprise Process Management Systems Applications
• Epilogue: Digital Transformations of Enterprises
• Appendix A: Business Process Execution Language
• Appendix B: Interaction Architectures
• Bibliography
• Index