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209 Pages·2001·3.97 MB·English
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SL2945/fm Page iii Friday, December 1, 2000 3:25 PM BUSINESS PROCESS ORIENTATION: GAINING THE E-BUSINESS COMPETITIVE ADVANTAGE Kevin McCormack, D.B.A. and William C. Johnson, Ph.D. SL2945/fm Page iii Friday, December 1, 2000 3:25 PM BUSINESS PROCESS ORIENTATION: GAINING THE E-BUSINESS COMPETITIVE ADVANTAGE Kevin McCormack, D.B.A. and William C. Johnson, Ph.D. SL2945/fm Page iv Thursday, December 7, 2000 4:22 PM Library of Congress Cataloging-in-Publication Data McCormack, Kevin P. Business process orientation: gaining the e-business competitive advantage / by Kevin P. McCormack and William C. Johnson. p. cm. ISBN 1-57444-294-5 1. Industrial management—Data procesing. 2. Management information systems. 3. Business enterprises— Automation. 4. Manufacturing processes— Automation. 5. Marketing—Management—Data processing. I. Johnson, William C. II. Title. HD30.2 .M39 2000 658.4 — dc21 00-011197 This book contains information obtained from authentic and highly regarded sources. Reprinted material is quoted with permission, and sources are indicated. A wide variety of references are listed. Reasonable efforts have been made to publish reliable data and information, but the author and the publisher cannot assume responsibility for the validity of all materials or for the consequences of their use. Neither this book nor any part may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, microfilming, and recording, or by any information storage or retrieval system, without prior permission in writing from the publisher. The consent of CRC Press LLC does not extend to copying for general distribution, for promotion, for creating new works, or for resale. Specific permission must be obtained in writing from CRC Press LLC for such copying. Direct all inquiries to CRC Press LLC, 2000 N.W. Corporate Blvd., Boca Raton, Florida 33431, or visit our Web site at www.crcpress.com Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation, without intent to infringe. © 2001 by CRC Press LLC St. Lucie Press is an imprint of CRC Press LLC No claim to original U.S. Government works International Standard Book Number 1-57444-294-5 Library of Congress Card Number 00-011197 Printed in the United States of America 1 2 3 4 5 6 7 8 9 0 Printed on acid-free paper SL2945/fm Page v Friday, December 1, 2000 3:25 PM DEDICATION This book is dedicated to Susan. Her insights and perspectives have been invaluable both for this book and for my life. Her innate process orientation and system thinking has been my inspiration. She is the key competitive advantage in my life. —Kevin McCormack To my mother, whose selfless and sacrificial love over the years has been a constant source of encouragement and support. —Bill Johnson v SL2945/fm Page vi Friday, December 1, 2000 3:25 PM SL2945/fm Page vii Friday, December 1, 2000 3:25 PM PREFACE The old ways of conducting business are out: pushing costs and compen- sating quality in order to achieve the lowest possible price. A new paradigm is emerging with the integration of business partners and the focus on the core processes, according to Bernard Teiling, assistant vice president of Business Process Integration at Nestlé S.A. The hallmarks of a great business model include high customer rele- vance, internally consistent decisions about scope and value chain activ- ities performed, value capture mechanism, a source of differentiation and strategic control and a sound operational system and processes that are carefully designed to support the company’s business model.1 George Day, the Geoffrey T. Boisi Professor of Marketing at the Wharton School, suggests that key processes must be internally integrated and externally aligned with the corresponding processes of the firm’s customers.2 Beginning with the outcomes of processes, reconfiguring internal pro- cesses based on changing customer requirements can help managers identify a different value chain, leading to a competitive advantage. To succeed in the future, corporations will have to weave their key business processes into hard-to-imitate strategic capabilities that distinguish them from their competitors in the eyes of customers. This is the very premise of our book. We believe that corporate survival in the Internet economy will depend both on the effectiveness of internal processes and their integration with supply chain customers. Supply chain management will serve as the coordinating mechanism for process integration among supply chain partners. Competitors can match individual processes or activities but cannot match the integration or “fit” of these activities. Companies today are integrating their processes across the supply chain using networks, shared databases, the Internet, and extranets in order to quickly share information about customer requirements, production, deliv- ery schedules, etc. Utilizing these connective technologies means that vii SL2945/fm Page viii Friday, December 1, 2000 3:25 PM viii (cid:2) Business Process Orientation information is now available to the entire supply chain almost simulta- neously. Processes, as like never before, are now considered strategic assets. Witness how some dot-com firms like Amazon.com are protecting their business processes through patents, such as their one-click ordering and their Internet customer-based referral system (what Amazon calls “affili- ates”). In fact, Amazon recently brought a court injunction against Barnes & Noble for that company to drop its own one-click feature. Business Process Orientation: Gaining the E-Business Competitive Advantage was written to help business practitioners and academics understand the impact well-defined and carefully integrated processes have on organizational performance. The bulk of our insights and conclusions are drawn from actual research conducted among consumer, business-to-business, and services-based companies. Our research has demonstrated that adopting a business process orientation (BPO) has a positive impact on both the organizational culture and business perfor- mance. Our book is organized into three sections. The first part of the book consists of nine chapters, beginning with an introduction and history of processes and process orientation (Chapters 1 and 2). Next, we present our research model and explain how the various measures of BPO were developed and tested (Chapter 3). Chapter 4 discusses our research model and presents the results of our field research. Chapters 5 through 7 administer the BPO measures in order to “benchmark” organizations’ process orientation. Chapter 5 presents the BPO Maturity Model and explains the various stages of the model. Chapters 6 and 7 report research data collected using the BPO measure on two large manufacturing and service businesses and benchmark their progress based on the BPO Maturity Model. Chapter 8 discusses how a business process orientation affects supply chain management, utilizing a cross-industry study. Finally, based on the stage in the BPO Maturity Model, Chapter 9 provides a “prescription” of how to implement process initiatives to create superior value for the organization. The second section of Business Process Orientation: Gaining the E- Business Competitive Advantage offers four current cases that provide hands-on examples of how process design and improvement create supe- rior value and a sustained competitive advantage. Time Insurance and ABIG are primarily services-based organizations that have adapted their processes based on changing customer requirements. New South is a large, private lumber manufacturer whose story illustrates how changing manufacturing processes also involves changing the corporate culture. Finally, the Boston Market case shows how a change in business strategy can affect process effectiveness and, in this case, process flow. SL2945/fm Page ix Wednesday, December 6, 2000 2:51 PM Preface (cid:2) ix The last section of the book contains the Appendices, which include the BPO measurements used both for individual companies’ BPO and supply chain practices. We also included the statistical findings to supply more detail to the research results presented in Chapter 4. Finally, you will note that our book cover has a Yin and Yang symbol. Incorporated within this is a hierarchical symbol to represent the vertical or functional orientation and a picture of people running toward the customer to represent the horizontal or business process orientation. These two conditions, as with the Yin and Yang symbol within which they are incorporated, are opposite and complementary and both must be present in healthy organizations. By balancing an organization’s functional and horizontal orientation and maintaining that balance, leaders can tap into an energy reservoir that has been unavailable until now. We believe the higher levels of BPO will provide the balance needed between the vertical (functional hierarchy) and the horizontal (process). This balance is critical to the short- and long-term health of an organization. The illustration used on the cover of this book was designed to communicate this idea. We hope you enjoy reading the book and we welcome your comments. Feel free to contact either Kevin McCormack at 1-205-733-2096 or [email protected] or Bill Johnson at 1-800-672-7223 (ext. 5109) or [email protected]. You may also try our Website at www.bporientation.com. Notes 1 Slywotzky, A., Morrison, D., Moser, T., Mundt, K., and Quella, J., Profit Patterns, New York, Times Business Random House, 1999. 2 Day, G., Managing market relationships, Acad. of Mark. Sci. J., Winter 2000.

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Business Process Orientation: Gaining the E-Business Competitive Advantage provides the "why" and the "how" for building the "horizontal" organization - an essential component of the "e" in e-commerce and business. This book shows you how to weave your business processes into hard-to-imitate strateg
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