Business Process Modelling Using IDEF0 and IDEF3 Diagrams

Originally developed and research funded by the US Air Force, Integration Definition, or IDEF, refers to a family of modelling languages that are used in the fields of system and software engineering. The key aim of IDEF was to devise a method for modelling data subsystems in a generic fashion; a way of sharing information and defining business processes between associated agencies and suppliers. The first language of this form, IDEF1, was initially concerned with data storage systems, and the ability to represent data regardless of how it is physically stored and used. Other IDEF languages were soon developed - 0, 1X, 2, 3 and 4 are considered developed in full (a further 10 exist no more than beyond initial definition), and focus on applying the same methodology to all aspects of business process modelling (BPM), such as business operations, functional modelling, and process flow descriptions.

Since the late 1960's, Douglas T. Ross had been developing a systems engineering and software engineering methodology called the Structured Analysis and Design Technique (SADT), with its intention being to describe a system as a hierarchy of functions. With backing from the US Air Force, this would eventually be formalized as IDEF0, a function modelling language capable of analyzing and communicating the functional perspective of system.

The methodology identifies the prime function, and displays it on the 'Top Level Context Diagram' using a standardized set of symbols. From this diagram, diagrams for lower level processes can be produced. The language is now established enough to be used by a wide variety of businesses and organisations to show data-flow and business process using precise and strictly defined diagrams and graphical notations.

These are several communicative concepts to be followed when creating an IDEF0 diagram:

• Diagrams based on simple box and arrow graphics. • English text labels to describe boxes and arrows and glossary and text to define the precise meanings of diagram elements. • The gradual exposition of detail featuring a hierarchical structure, with the major functions at the top and with successive levels of sub functions revealing well-bounded detail breakout. • A "node chart" that provides a quick index for locating details within the hierarchic structure of diagrams. • The limitation of detail to no more than six sub functions on each successive function.

Acting as a complement to IDEF0, the IDEF3 process description method records specific knowledge of behavioral aspects of a system or process. 

- Process Flow Descriptions, to capture the relationships between actions within the context of a specific scenario.

-Object State Transition, to capture the description of the allowable states and conditions.

Whereas IDEF0 describes an idealized model of a system or process, an IDEF3 diagram provides a description of actual process flow within an organization or business, or the changes that occur to an object within that system. This method of knowledge capture is recorded in two different perspectives - users are able to create both process schematics and object schematics using the IDEF3 schematic symbols.

IDEF methodology is suitable for almost any form of business, and for anyone who needs to record enterprise architecture in a process driven manner.

Using Technology to Implement Business Process Improvements From Employee Suggestions

Organizations must continuously improve their processes and increase efficiency in order to stay afloat in a globalized economy. Fortunately, American businesses can become sustainable organizations capable of competing in a global marketplace, by implementing a variety of cost reduction techniques and making business process improvements to increase operational efficiency.

Importance of Employee Suggestions in a Cost Reduction Strategy

Your employees are the driving force behind your organization and are valuable assets to the company. Utilize their knowledge and experience by asking them for suggestions or feedback as to how you can improve the business. Your employees are the first point of contact for customers and represent your company. While you may be implementing productivity and efficiency policies upstairs, they could have a negative effect on the floor.

According to recent studies, only 41 percent of employees think their managers listen to their ideas, which hinders innovation and leads to detrimental communication problems down the road. The same study indicates 37 percent of respondents felt their company's management was inaccessible to them. Suggestion programs have a bad name because corporations would implement - but never listen to - employee suggestions, which is why 60 percent of respondents indicated their company's suggestion program was inefficient.

Employees experience your business from a different perspective, offering profit building advice and feedback about company policy you - or your colleagues - developed to increase efficiency. You can only derive so much information from facts and figures, which is why employee suggestions are vital to your business's success. A research firm calculated each employee suggestion to be worth $6,000 in a cost reduction strategy, with small and large companies seeing savings of more than $300,000 annually, with only a 54 percent participation rate. Each suggestion sparks innovation and decreases operational expenses and supply costs. Each idea saves a little money, time, makes their job easier, improves customer satisfaction, or in some way makes the business more efficient.

Why Use Employee Suggestions?

Employee suggestions improve your business by building teamwork, removing barriers, saving money, boosting morale, and ensuring compliance with government regulations. Suggestion programs increase cost reduction efforts and inspire employee confidence by showing them you care about their ideas. Those employees frustrated with the current administration have an outlet to voice their concerns in a non-threatening environment. The suggestions spearhead cost reduction efforts by increasing efficiency while reducing expenses. The suggestion programs also ensure your organization is compliant with the Sarbanes-Oxley Act, which requires companies to allow employees to submit anonymous messages to the company's review committee.

Business Process Improvements

View your company as an intricate system of processes, each of which works together to create a product or service. Business process improvements and cost reduction strategies work together eliminating waste, increasing productivity, maximizing effectiveness, and reducing labor costs. Each action your organization takes to produce a product or service is a process. Use employee feedback in addition to cost reduction in order to simplify, merge, and remove wasteful processes that are not profitable.

Employees are the people executing your business processes, thus they have the knowledge and information to expedite the process. They are the experts regarding the manufacturing or production process and should be treated as such. Use their suggestions and match them with the appropriate business processes. Once the suggestions are matched appropriately, analyze the current process in comparison to the employee's suggestion. Implement the proposed change if it saves time, money, or human resources without interfering with rigid quality control standards.

Use Technology to Monitor Suggestions

Technology automates and streamlines the process of improving your business using employee feedback. The software applications enable businesses to input their current processes into the system and modify the processes using the employee suggestions. A simple What-If report analyzes the suggestions and determines whether the changes are profitable, saving the company additional capital investment on trial and error. The programs simulate the events before they occur, reducing implementation costs and improving productivity.

The suggestions can be deployed immediately and are compared to the previous implantation. Employers tweak and modify processes based on employee suggestions and policy documents. The software programs offer a low cost of implementation and high returns of investment. Depending on the solution your business chooses, BPM programs define, analyze, and document business processes, improve operational effectiveness, build innovative solutions, and provide detailed reporting and metrics.

Cost Reduction: Surviving in a Globalized Economy

Globalization and the Internet create a global marketplace that allows customers to shop from stores around the country. Globalization is a threat to American businesses and requires companies to gain the competition by offering the lowest prices possible. For cost reduction to work, companies offer lower prices on their products while lowering internal costs. Increase revenue generation by eliminating wasteful business processes, lowering labor costs, reducing supply expenses, and increasing sustainability.

Organizations can significantly reduce their supply costs via cost reduction. Raw materials and supplies are business expenses that can - and should - be minimized to increase revenue. Engage with the suppliers or vendors to create a cost effective strategy for your organization by using managed inventory programs, reducing shipping and transactional costs, decreasing lead times, and reducing the amount of inventory you carry at any given time.

Cost reduction strategies indicate monitoring the business process work flow for inefficiency which can reduce labor costs. Reevaluate your staffing needs by pairing each employee with a business process, and determining sustainable work levels by monitoring the floor. Avoid over and under staffing as each lead to decreased profitability through conflict. Consider removing or merging inefficient processes in the organization in order to streamline the process, automating as many tasks as possible.

Options For Business Process Outsourcing in the Logistics Industry

Business Process Outsourcing can be a practical and beneficial option for most companies. Organizations outsource for many reasons, with the desired outcome being reduced costs, improved operations, overcoming a lack of internal capabilities, gaining competitive advantage, and other benefits that are both tangible and intangible.

Outsourcing can be used in many parts of a business, but most often for what a company defines as non core functions; accounting, legal, human resources, information technology, manufacturing, sales, sourcing and logistics / supply chain management. Of course "non core" and "core" differ by company and industry. Non core can be important and critical to a company, but does not define the company and set it apart from competitors.

When it comes to logistics and supply chain management, there are two primary methods to take advantage of business process outsourcing - 3PL and Logistics Service Integrators (also known as 4PL or 4th Party Logistics).

3PL (3rd Party Logistics provider).

For about the last 20 years, 3PL's have led the way in logistics outsourcing. Drawing on its core business, whether it be trucking, fulfillment, warehousing, etc. - 3PL's have expanded their offering with new or additional services. It presents a way for essentially a commodity type service logistics provider to move into higher margin, bundled services and further develop and leverage their customer relationships. Customers, seeing value in the concept of the 3PL and always looking to reduce costs, have recognized value in the concept. The result is the market opportunity for outsourced logistics service providers, whether domestic or international became and remains sizable.

Unfortunately the reality has not lived up to the promise. The reasons are varied, but the bottom line is many 3PL's have failed at their own business transformation beyond adding the "Logistics" moniker to their company name. Often 3PLs have not successfully moved past their core commodity service to become true multi-service providers - the trucking company is still just providing trucking services, not providing value or improving the customer's logistics network. Others have failed to differentiate themselves against the competition. Many 3PL's have done a poor job positioning and defining themselves in the marketplace while others have commoditized their 3PL service, as a result undoing the very purpose of their 3PL.

The complicated and varied methods for how 3PL's look to be paid for services has added to the challenge. Shared savings, contingency and transaction based fee structures are among the many ways 3PL's are compensated. The very method for how a 3PL is paid can be in direct conflict with the best interests of the customer whether it be a consideration of cost or service. Customers can still find they have no understanding of their true costs and service performance with all the shipping data and information moving through a 3PL.

These setbacks have prevented the growth of some 3PLs in terms of both retention and new customers. Broad fragmentation of the sector reflects both the uncertainty of how 3PLs view themselves and the diversity of customer needs. With the involvement of multiple 3PL's customers are often forced to deal with proposals or solutions that cannot be measured against one another.

Business Process Outsourcing and the Logistics Service Integrator (LSI, or 4PL).

First, note that Business Process Outsourcing (BPO) is not traditional outsourcing. Traditional outsourcing is typically taking a set of tasks or functions and simply moving them to an outside service provider. A BPO provider, or in the case of the supply chain/ logistics industry, a Logistics Service Integrator (LSI), brings an expert perspective, specific knowledge and experience as well as technology to an organization. The LSI works with the company to develop a solution to improve an existing or new process through independent and unbiased analysis and recommendations.

From the service vacuum created by 3PLs, the LSI has emerged. Using a Logistics Service Integrator is much different than the traditional 3PL. The LSI is a BPO provider, is neutral, and will manage the logistics process correctly, regardless of what resources need to be used. This includes carriers, fulfillment vendors, freight payment providers, 3PL's, or any other logistics service providers that are part of the company's network.

The goal of the LSI is to represent the interests of the customer by bringing their specific expertise into the qualification and management of the logistics service providers. An LSI wants to position itself as an extension of and as part of its customer.

Conclusion. Although born out of good intentions, in general 3PL's have not fully served the purpose for which they were conceived. The reality is 3PL's have remained too focused on managing tasks and transactions in a very short sited way, and not on the important broad focus and processes of their customers. The results are missed opportunities to present real value to the organization being serviced. Logistics Services Integrators have become a good alternative for business process outsourcing. The value lies in the LSI being positioned as an extension of the organization itself. Processes are analyzed and vendors qualified independently based on the unique needs of the business, with no preconceived ideas or over-riding commitment to a 3PL's own interests. LSI's are compensated based on the value they add, with complete transparency of costs for the business they have partnered with.

Business Process Services (BPS) in South Africa, a Brave New World

To some Business Process Services may sound like yet another convoluted and ostentatious label applied by self-important people who may not otherwise be defined due to lack of substance, product or identity. Quite the contrary.

Business Process Services or Outsourcing, when it delivers, has the potential to genuinely lower administrative and operating costs, more quickly provide new services, improve customer satisfaction, and enhance focus on core business activities. Very simply, these are the people that allow business people to focus on their core business whilst the likes of human resources, finance, accounting, contact centres. Document Management Services, Healthcare are taken care of by outsourcing to a third party

Without getting bogged down in detail, it's sufficient to say that there are many divisions of BPS: there's the back-office, like human resources; front-office, like call centres, there's offshore and onshore BPS and even further breakdowns including IT based ITES-BPO (Information Technology Enabled Service) and LPO - legal process outsourcing.

Looking at the big picture: the global industry is said to be growing by 40% per annum. India is the world's biggest player in the industry with revenue of US$10.9 billion from offshore BPS. It has a 6% share of the BPS industry in general but a 63% share of offshore BPS. On the other hand the South African call centre industry has grown by approximately 8% per year since 2003 and it directly employs about 54 000 people, contributing 0.92% to South Africa's gross domestic product. Dwarf size compared to India but the potential is huge.

The South African Government's upscaled Industrial Policy Action Plan (IPAP 2) has identified Business Process Services (BPS) as a key sector for investment attraction and job creation. The South African Government implemented a BPS or Business Process Outsourcing and Offshoring (BPO&O) incentive programme from July 2007. It is claimed that during the period July 2007 to March 2010, the incentive resulted in the creation of at least 6 000 new jobs and attracted R303 million in direct investment.

Since then, after negotiation with the private sector a further proposition has been made with the Monyetla Work-Readiness Programme, a dedicated investor friendly set-up process, and a programme to improve industry service standards, in order to position South Africa as a preferred location for BPS operations.

Monyetla, which means 'opportunities', was launched in 2008 by the Business Trust, the Department of Trade and Industry (dti) and BPeSA as a pilot project to provide the unemployed youth of South Africa with employment through the BPO industry. The pilot project was a success story, over 1,000 learners registered. Due to its success the second phase was launched in July 2010, with 3,400 learners joining. Further phases continue to date. To become a certified employer of choice on the project there are two criteria: Take on a minimum of 60 learners; and offer employment to 70% of them upon their successful completion of the programme. For every six learners employed, one team leader must be trained. So there's a very specific outcome pursued here.

BPS leaders BPeSA, Western Cape CEO Gareth Pritchard is reported to have said "With South Africa rapidly growing as a BPO provider both locally and abroad, it is imperative that we build our employee base, allowing South Africa to move from a reactive talent development strategy to a proactive one," In the last decade, SA has built up a reputation as a world-class customer service destination that is able to deliver results for a number of the UK's biggest brands, including ASDA, Virgin Mobile and TalkTalk.

South Africa has also attracted many top international call-centre outsourcers, including Aegis BPO, Fusion, Genpact, Stream, Sykes and Teleperformance, as well as IBM and Deloitte, which provide a variety of services in English, Dutch and Flemish for customers worldwide. Most recently, the Economics spokesman at the SA High Commission in London, Yusuf Timol, forecasted that there would be huge opportunities looming for capturing India-based BPO work in 2012 and beyond.

To emphasise whether South Africa has a future in this industry Frost & Sullivan's business unit leader, ICT Africa, Birgitta Cederstrom says "Africa is increasingly popular as a preferred destination of contact centres; South Africa specifically has been a natural choice for contact centres due to its large and articulate English-speaking population and service-oriented business culture. Another strength is its expanding broadband connectivity, thus ensuring that the latest unified communications and collaboration tools will run efficiently."

During Trade and Industry Minister Rob Davies's Budget Vote in the National Council of Provinces (NCOP) in Parliament he said "To date, 23 applications for the BPS incentive scheme have been approved, potentially leveraging R4.1 billion worth of investment and 15 149 jobs over three years,"

"Close to 3 400 young trainees were trained under the second phase of the Monyetla Work-Readiness Programme, 70 per cent of whom were placed directly into employment." said Davies

This brings us to 'where'. A couple of years ago South Africa's Call Centre Nucleus group was fully acquired by Aegis, India's business process outsourcing arm of the diversified Essar group. The company purchased CCN as part of its strategy to invest R500 million in the next three years and create 5000 jobs in South Africa. Currently they are situated in two locations: Woodmead and Sunninghill, both in Johannesburg. The total seating capacity of over 1,300 seats.

Interactive Intelligence Group Inc. (Nasdaq: ININ) is a global provider of contact centre automation, unified communications, and business process automation software and services. Interactive Intelligence has more than 4,000 customers worldwide. In other words, a major player in the BPS world. Interactive Intelligence is about to occupy one of ATIO's buildings in down town Johannesburg, which will now function as its regional headquarters serving all of Africa.

Amazon, America's largest online retailer, has expanded its customer service operations into Cape Town, claiming to have created 600 jobs in its first two years of operation and an additional 400 seasonal jobs during holiday season.

A R125-million, 1 500-seat call centre integrating, training, office and recreational space has been constructed to enhance the global competitiveness of the Coega Industrial Development Zone outside Port Elizabeth. The Business Process Outsourcing (BPO) Park, covers five hectares and includes training facilities, lounges, a cafeteria and a restaurant, is the first of its kind in South Africa. The BPO Park is situated in Coega's business service precinct, next to workers' residential areas, and replaces a 200-seater call centre already in existence.

Then came Fusion, another world player in the BPS industry. Fusion Outsourcing's headquarters, Fusion House at Century City, Cape Town; and the new Gauteng premises in the Johannesburg CBD are modern, state-of-the art contact centre facilities, from where almost 1500 agents and support staff deliver customer services. In 2011 Fusion won the national industry awards for the 3rd consecutive time for both the Best Offshore BPO Centre of the Year, and the Best Offshore Customer Service Centre of the Year.

The market for such centres seems unpredictable. Anticipating the market for contact centres a while back, construction giant Grid, built a luxurious and state of the art built-for-purpose call centre in Mount Edgecombe next door to Umhlanga Rocks. It's fully occupied. On the other hand a cursory glance through the free on-line classifieds Gumtree, revealed an advertisement for "Call centre property to let or for sale in Kent Avenue, Randburg. Total GLA 6500m², 350 - 500 work stations, and 185 parking bays. Asking rental R60/m² net or for sale at R49 mil excl VAT if applicable. Available immediately." So there are some surprises out there from a real estate point of view.

Not that long ago A 27,000sqm call centre in the Jo'burg CBD was sold, through a negotiated deal, for R97,5m. The seven-storey facility situated at Laub Street was sold on behalf of a major retailer and was snapped up by City Properties. The property was sold with a ten year triple-nett Edcon lease in place and in effect is a sale and leaseback transaction.

So it would be incorrect to say that BPS is not having an effect on property since they are definitely players in the market. But the extent that there is any ripple may call for some speculation.

BPS certainly is an industry worth monitoring from a commercial real estate perspective, currently as a growing number of international firms choose to set up shop locally and large numbers of staff will be required in specialised or converted to spec facilities.

Should Your Small Business Utilize Business Process Outsourcing

Business process outsourcing is a growing trend among businesses looking to reduce costs, and focus on their core business practices. More companies are turning to business process outsourcing firms to handle non-essential day-to-day business functions. These functions can include IT, hr, and payroll to name a few.

Unless you are an human resources firm, your company isn't designed primarily to handle hr. That's why most businesses include an hr department to handle hiring, and firing, of employees, as well as training, benefits, and other hr related tasks. But what if your business is small, and doesn't have the necessary financing to handle a fully staffed hr department?

Most businesses that function in the 21st century use servers, computers, printers, copiers, fax machines, and other technology. Technology, no matter how advanced, tends to break down, or crash, or even become obsolete. Larger businesses include an in-house IT department to handle the technology aspect of the business. The IT department is responsible for keeping the high tech equipment repaired, and up-to-date. But what if your business is too small to implement an IT team?

I can keep listing other necessary functions that most modern businesses need in order to run at optimal levels. However seemingly indispensable these functions are, are they truly essential to the core business of the respective companies? Perhaps not.

Business process outsourcing is the contracting of specific business tasks to third-party service providers. This means that a small business has at its disposal a human resources department, a fully staffed 24-hour IT department, a fully functional payroll department, a 24-hour call center, and much more. Through the use of business process outsourcing, a small business with limited resources can function like a large business.

Business process outsourcing and all its derivatives can transform your small business and free up your resources to pursue what it was truly meant to do. You can focus a greater portion of your resources on the core elements that can take your business to the next level. By utilizing business process outsourcing, your small business will look a lot like a large business but without the associated costs.

Business Process Improvement Estimating the Cost of a Business Process

To measure any accomplishment, you need to know where you started. Whether you want to lose weight or run a marathon, you need to establish a baseline to know how much you have improved. How much do you weigh today, or how quickly do you run a marathon today? In BPI work, to establish an improvement target, you first need to know how long a process takes and what it costs.

After you draw a process map, you understand the activities involved and you can estimate how much time is required to complete each step, known as the process time. You often hear two types of time related to BPI:

• Process time is the time required to complete a single activity.
• Cycle time is the time required to complete an entire process, from its first to its last step. You may also hear this referred to as elapsed time.

Identifying the process time will help you to summarize the labor required to deliver the business results. When you include the employee and overhead expenses in your BPI projects, you start bringing a financial dimension to your work.

Once you estimate how long each activity takes, you need to identify the annual volume, decide the FTE (Full-time Equivalent) calculation to use, and apply the employee salary and benefit rates to the time estimates. Since many employees are not dedicated to a single business process, the FTE calculation allows you to account for portions of an employee's time. At the end of this analysis, you will know if a business process consumes 2.5 FTEs, for example, and costs $450K per year.

Once you have drawn the process map and estimated the associated time for each activity, validate this information with any interested parties (e.g., stakeholders, employees who do the work, sponsor, etc.). Performing this review validates the baseline for your improvement target and eliminates the possibility of any future challenges. You want to be sure that everyone involved agrees with the labor used today so that improvements gained are not placed in question. Validating this information provides you with a solid foundation to start the next step, the actual improvement phase.

Estimating process and cycle time and their associated cost is the fourth step to improving the effectiveness, efficiency, and adaptability of your business processes, and validating the information (both the map and estimated times) is the fifth step.

Understanding How Applying Kaizen in the Business Process Can Provide Permanent Improvement

Kaizen is for improvement and most businesses need such. Because you have to be competitive enough to beat your rivals in the industry, you always have to continue improving. Improvement is not about haste and this is one of the mistakes that people do. In this case, kaizen is the perfect tool that you can utilize in order for you to secure your business' future through good changes. When it comes to applying kaizen in business process, you will have to think about large and small scale improvement. What most individuals choose here is the large scale improvement because we cannot deny how attractive this can be especially when done right. However, in order for you to really be successful in targeting a big change throughout the organization, you will have to think about different areas including your people and the processes that you execute.

Applying kaizen in business process means that you need to think about small first. This is because improvement here is easier and faster. One of the benefits here is that the risks are quite low compared to large scale changes. Risks come in smaller proportions because they have limited effect on the company. The disadvantage however is that if there is an accumulation of the negative effects, it can be detrimental to your firm as compared to a single large change. Today, kaizen is called kaizen blitz or kaizen events especially in the United States. Both of the terms are synonymous to each other and they pertain to a project that is focused, forceful yet concentrated short term project. The main aim here is to improve a certain local process. Two of the main resources here are engineering maintenance and cell operators.

The kaizen events have trainings and analyses which are designed to rearrange the products that are being manufactured. There is usually a consultant who will be leading the entire activity and typically the event will take up to five days.

Applying kaizen in business process after the training will give you results that are dramatic yet immediate and satisfying. In order for you to correctly execute kaizen into your business, you will have to consider the process of slow accumulation of small developments that happen within the organization. Over the years, there are top companies that experienced great effects once they have started applying kaizen in business process.

Kaizen blitz will help your firm in obtaining permanent changes particularly on the methods that are being processed. Aside from that, there is a guarantee of continuous workflow especially on the flow of small ideas. Local implementation is immediate and easy plus the entire process is quick with big effects. Your employees are usually the ones who are involved in applying kaizen in business process. They will have to identify the problem and they will have to develop an idea that is aimed at improving or eliminating the wastes that he was able to keep track of. The supervisor will of course have to participate as well by means of reviewing the action. After that, when the idea is approved, it will be implemented.