Business

Process
Management
ISYS90081

Module 5 Process Analysis

(Qualitative)
Winn Chow
School of Computing and Information Systems
The University of Melbourne
1
The BPM Lifecycle
Process
identification

Process architecture

Process
discovery
Conformance and As-is process model
performance insights

Process Process
monitoring analysis

Executable process Insights on

model/ change issues and
management plan their impact

Process Process
implementation redesign

To-be process model

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Process analysis techniques

Business Operations
Lean Six Sigma
Analysis Mgt.

Waste Value- Flow

added SWOT
analysis analysis Analysis

Six big Root- Stakeholder Queuing

losses cause analysis Analysis
analysis
Bottleneck
Pareto Issue
Simulation
analysis Register
analysis

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Lean and Six Sigma

• In short,
• Lean is about speed (time).
• Six Sigma is about consistency (quality).

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Categories of process analysis techniques

Qualitative analysis
• Value-Added Six Sigma & Waste Analysis Lean
• Issue Register Business Analysis
• Pareto Analysis Six Sigma
• Root-Cause Analysis Six Sigma
• SWOT Analysis
• Stakeholder Analysis
• Six big losses…
Quantitative Analysis
• Flow Analysis
• Simulation
• Bottleneck Analysis
• Queuing Analysis
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Qualitative analysis Technique:
To identify
Technique: Root causes
Six Sigma To identify
Value-Added & issues
Waste Analysis
Lean
Business Analysis
Issue
Register
Root-Cause
&
Analysis
Pareto
Chart Six Sigma
Six Sigma
Other sources
of issues Output:
Insights on
issues
+
their impact
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Value-added analysis Six Sigma

1. Decompose the activities in a process into steps

• Steps performed before a task (Prepare)
• The task itself, possibly decomposed into smaller steps (Do)
• Steps performed after a task, in preparation for the next task (Forward)

2. Classify each step

• Value-adding (VA) Steps:
• Business value-adding (BVA) 1. Open and examine request
2. Identify issues
• Non-value-adding (NVA) 3. Forward request back to clerk

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Value-adding (VA) activities

Produce value or satisfaction to the customer

Maximize

Criteria
• Is the customer willing to pay for this step?
• Would the customer agree that this step is necessary to achieve their goals?
• If the step is removed, would the customer perceive that the end product or
service is less valuable?

Examples
• Order-to-cash process: Confirm delivery date, Deliver products
• University admission process: Assess application, Notify admission outcome

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Business value-adding (BVA) activities

Necessary or useful for the business to operate Minimize

Criteria
• Is this step required in order to collect revenue, to improve or grow the
business?
• Would the business (potentially) suffer if this step was removed?
• Does it reduce risk of business losses?
• Is this step required in order to comply with regulatory requirements?

Example
• Order-to-cash process: Check purchase order, Check customer’s credit
worthiness, Issue invoice, Collect payment, Collect customer feedback
• University admission process: Verify completeness of application, Check
validity of degrees, Check validity of language test results

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Non-value-adding (NVA) activities

Everything else besides VA and BVA. Steps the customer would

be unwilling to pay for and not necessary for the business

Includes Remove
1. Handovers, context switches
2. Waiting times, delays
3. Rework or repetition to correct defects/errors

Examples
• Order-to-cash process: Forward PO to warehouse, Re-send confirmation,
Receive rejected products
• University admission process: Forward applications to committee, Receive
admission results from committee, Rectify evaluation result

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Value-added analysis Six Sigma

Maximize Minimize

VA BVA

Yes Yes Remove

No No
Is it VA? Is it BVA? NVA

For Customer? For Business? For Nothing?

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Extract of Equipment Rental Process
- Fill request (VA)
- Send request to clerk (NVA)

-- Check st
Check equipment
equipment availability
availability (VA) – 1 time
-- Record recommended equipment
Record recommended equipment (BVA)
-- Forward request to
Forward request to works
works engineer
engineer (NVA)

- Open and read request (NVA) - Produce PO

- Select suitable equipment (VA) – 1st time - Submit PO to supplier

- Open request
- Examine request
- Communicate issues
12 - Forward request back to clerk
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Equipment Rental Process – VA Analysis

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 Check your understanding
Discuss with your peer.
- Fill request (VA)
- Send request to clerk (NVA)

-- Check st
Check equipment
equipment availability
availability (VA) – 1 time
-- Record
Record recommended
recommended equipment
equipment (BVA)
-- Forward
Forward request
request to
to works
works engineer
engineer (NVA)

- Open and read request (NVA) - Produce PO

- Select suitable equipment (VA) – 1st time - Submit PO to supplier

- Open request
- Examine request
- Communicate issues
14 - Forward request back to clerk
© University of Melbourne 2020
Waste analysis Lean

“All we are doing is looking at the timeline, from the

moment the customer gives us an order to the point
when we collect the cash.
And we are reducing the timeline by reducing the
non-value-adding wastes”
Taiichi Ohno, Toyota
Value-added analysis Six Sigma

Waste

Waste analysis Lean

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Seven sources of waste

Move
1.Transportation
2.Motion
Hold
3.Inventory
4.Waiting
Over-do
5.Defects
6.Over-Processing
7.Over-Production

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Seven sources of waste: TIM WOOD

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 Check your understanding

Tell your peer:

•What does “TIM WOOD” stand for?

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20 © University of Melbourne 2020
1. Transportation
Send or receive materials or documents (incl. electronic) taken
as input or output by the process activities (often signaling a
handoff)

Example
University admission process: to apply for admission at a university,
students fill in an online form. When a student submits the online form, a
PDF document is generated. The student is requested to download it, sign
it, and send it by post together with the required documents:
1. Certified copies of degree and academic transcripts
2. Results of language test
3. CV
When the documents arrive at the admissions office, an officer checks
their completeness. If a document is missing, an e-mail is sent to the
student. The student has to send the missing documents by e-mail or post
depending on document type.
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Transportation waste
Typically, there is transportation waste wherever a sequence
flow goes from one lane to another in a pool or a message flow
goes from one pool to another.

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2. Motion
• Motion of human resources internally within the process
• Common in manufacturing processes, less common in service
processes

Examples
• Vehicle inspection process: a process worker moves with the inspection
forms from one inspection base to another; in some cases inspection
equipment also needs to be moved around (motion + transportation)
• Application-to-approval process: a process worker moves around the
organization to collect signatures

Source: https://www.ats-global.com/products/ats-inspect/
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24 © University of Melbourne 2020
3. Inventory “Just in time (JIT)”: avoid over-stocking
to reduce stocking costs
• Materials inventory (raw materials or produced
products) stocked more than required (as few as possible
– to reduce holding cost)
• In service processes, shows up in the form of Work-in-
process (WIP) – started but not yet completed so still in
the process

Examples
• Vehicle inspection process: when a vehicle does not pass the first
inspection, it is sent back for adjustments and left in a pending
status. At a given point in time, about 100 vehicles are in the
“pending” status across all inspection stations
• University admission process: About 3000 applications are handled
concurrently
“batch processing” vs “straight-through processing”
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Just in Time
Just in time (JIT)
• companies try to minimize inventory costs and receive stocks only as they are
needed
Just in case (JIC)
• is an inventory strategy in which companies keep large inventories on hand
• to minimize the probability that a product will sell out of stock

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 Batch processing vs Straight-through processing

Which way has more inventory?

Batch

Item

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4. Waiting
• Task waiting for resources (task idleness)
• Resource waiting for work (resource idleness)

Examples
• Vehicle inspection process: A technician at a base of the inspection station
waiting for the next vehicle
• Application-to-Approval process: Request waiting for approver
• University admission process: Incomplete application waiting for additional
documents; batch of applications waiting for committee to meet

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29 © University of Melbourne 2020
5. Defects Repeat a task: scrap and redo from scratch
• Repetitions or reworks to correct a defect/error
Fix/revise without repeating the task from
scratch
Examples
• Vehicle inspection process: A vehicle needs to come back to a station due to
an omission
• Travel approval process: Request sent back to requestor for revision
• University admission process: Application sent back to applicant for
modification; request needs to be re-assessed later due to incomplete
information

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6. Over-processing
• Tasks performed unnecessarily given the outcome of the process
(tasks in one instance)
• E.g. Rejected a customer (negative outcome – so no value) after
reviewing his or her request (over-processing).
• Unnecessary tasks for perfectionism (overdone)
• Customers not willing to pay for the extra.

Examples
• Vehicle inspection process: technicians take time to measure vehicle
emissions with higher accuracy than required, only to find that the vehicle
clearly does not fulfill the required emission levels
• Travel approval process: 10% of approvals are trivially rejected at the end of
the process due to lack of budget. A budget check (a relatively simple task)
can be performed instead to void wasting the time of the approver.

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 Check your understanding

Discuss with your peer:

•Is there any over-processing? Why?

University admission process:

• Officers spend time verifying the authenticity of
degrees, transcripts and language test results.
• In 1% of cases, these verifications uncover issues. Verified
applications are sent to the admissions committee.
• The admission committee accepts 20% of the applications
it receives.

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7. Over-production
• Producing more instances than required
• Unnecessary process instances (avoidable)
are performed, producing outcomes that do
not add value upon completion

Examples
• Lead-to-order process: In 50% of cases, issued quotes
do not lead to an order. The company should try not to
attract quotes (so no instances) that do not submit a
purchase order.
• Travel approval process: In 5% of cases, travel requests
are approved but the travel is cancelled by the
initiators.

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 Check your understanding

Discuss with your peer:

•Is there any over-production?
•Why not over-processing?

University admission process:

• About 3,000 applications are received, but only 600 (20%)
are considered eligible after assessment (meeting the
minimum requirements).

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 Over-production vs. Over-processing
So producing the “negative”
instances is necessary but the
processing has no value
What is the Can the negative No
outcome of the outcome be Over-processing
processing? foreseen?
Such that
Negative producing the Over-production
e.g. rejected instances can be
Positive avoided Yes So producing the
e.g. approved “negative” instances is
unnecessary
So producing the not needed
No “positive” instances should be
Over-production avoided
Does the No
customer accept So the extra
All good
it at the end? should not be
Any processing is produced
overdone?
Yes Over-processing

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Equipment rental process: wastes

Over-production

Send request to clerk

(Transportation) Defect

Forward request to
works engineer Forward request back to
(Transportation) clerk (Transportation)
Waiting for works
engineer to approve
(Waiting) Over-processing

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Equipment rental process: wastes

Transportation
• Site engineer sends request to clerk
• Clerk forwards to works engineer
• Works engineer sends back to clerk

Inventory
• Equipment is kept longer than needed

Waiting
• Waiting for availability of works engineer to approve

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Equipment rental process: wastes

Defect
• Selected equipment not available, alternative equipment sought
(rework loop)
• Incorrect equipment delivered and returned to supplier

Over-processing
• The rental request is rejected by works engineer after review

Over-production
• Rental requests being approved and then canceled by site
engineer because no longer needed

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Issue register Business Analysis

Purpose: to maintain, organize and prioritize perceived

weaknesses of the process (issues)

Sources of issues:
• Value-added/waste analysis or other process analysis techniques
• Collected during process discovery (modelling)
• Input to a BPM project, e.g.:
- Known from a previous project
- Collected as part of ongoing process improvement actions
- Collected from process participants

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Issue register structure
Can take the form of a table with:
1. Issue identifier / Short name
2. Priority
3. Description
4. Assumptions
5. Impact: Qualitative and Quantitative
6. Possible improvement actions

Larger process improvement projects may require Issue

Tracking system to maintain the issue register

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 Issue Register Example
Equipment rental process

Name Description Assumptions Qualitative Quantitative

Impact Impact

Equipment Site engineers keep 3000 pieces of equipment rented 0.1 × 3000 ×
kept longer equipment longer p.a. 2 × EUR 100
than than needed via In 10% of cases, equipment kept = EUR 60000
needed deadline extensions two days longer than needed. p.a.
Rental cost is 100 per day
Wrong Site engineers 3000 pieces of equipment rented Disrupted 3000 × 0.05
equipment reject delivered p.a. schedules × EUR 100 =
delivered equipment due to 5% of them are rejected due to an Employees’ EUR 15000
non-conformance to internal mistake stress and p.a.
their specifications For each equipment rejected due to frustration
an internal mistake, BuildIT is billed
EUR 100.
Late Late payment fees 3000 pieces of equipment rented Poor 0.1 × 3000 ×
payment incurred because p.a. Average rental time is 4 days. reputation 4 × EUR 100
fees invoices are not Rental cost is EUR 100 per day. with suppliers × 0.02 = EUR
paid by their due Each rental leads to one invoice. 2400 p.a.
date About 10% of invoices are paid late.
Penalty for late payment is 2%.

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 Pareto chart Six Sigma

• Useful to prioritize a collection of issues

Bar chart where the height of the bar Superposed curve of cumulative
denotes the impact of each issue percentage (%) impact
70000 100.00
90.00
60000
80.00
50000 70.00
40000 60.00
50.00
30000 40.00
Issues sorted by impact
20000 30.00
20.00
10000
10.00
0 -
Slow rental Wrong equipment Late payment fees
approval delivery
Which issue(s) should be looked into first?
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Root-cause analysis Six Sigma

Why-why
diagram

Factors Issue

Cause-effect
diagram

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Why-why diagram
Five levels of nesting - “Five Why’s”

Source: https://www.taproot.com/5-whys-and-a-who-do-we-fire/

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 Why-why diagram example
Equipment kept longer than
Issue needed

Site engineer fears equipment

will not be available later when
needed

Time between request and

delivery too long

Excessive time spent in finding

suitable equipment and
approving the request

Time spent by clerk contacting

Time spent waiting for works
Factors engineer to check request
possibly multiple suppliers
sequentially

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Cause-effect (Fishbone) diagram

Primary cause

Secondary cause

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Categories of causes: Six Ms

1. Machine: factors stemming from technology used

• Lack of suitable functionality in the supporting software applications
• Poor User Interface (UI) design
• Lack of integration between systems
2. Method: factors stemming from the way the process is
designed, understood or performed
• Unclear assignments of responsibilities
• Unclear instructions
• Insufficient training
• Lack of timely communication
3. Material: factors stemming from input materials or data
• Missing, incorrect or outdated material or data

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Categories of causes: Six Ms

4. Man: factors stemming from wrong assessments or

incorrect performance of steps attributable to:
• Lack of skills
• Lack of motivation
• Too high demands towards process workers
5. Measurement: factors stemming from reliance on:
• Inaccurate estimations
• Miscalculations
6. Milieu: factors outside the scope of the process
(environment)
• Delays caused because of unresponsive external resources
• Sudden increases of workload due to special circumstances

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Summary of qualitative process analysis
1. Segregate value-adding, business value-adding and non-
value-adding steps

2. Identify waste

3. Collect and systematically organize issues, assess their

impact

4. Analyze root causes of issues

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References

Reference material
M. Dumas, M. La Rosa, J. Mendling, H.A. Reijers, Fundamentals
of Business Process Management, 2nd Edition, Springer 2018
• Chapter 6

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Thank you

Winn Chow
School of Computing and Information Systems
Melbourne School of Engineering
The University of Melbourne
Copyright on artwork in this slide deck: Springer, 2013-18

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