Business Optimization: Reengineering, Benchmarking, OLAP, Kaizen, ERP

Posted on Dec 15, 2024 in Other subjects

Reengineering

Reengineering is a process of restructuring and improving a company’s operations. It focuses on cost, quality, service, and speed.

Four keywords:

  • Fundamental: Examining the reasons behind current practices.
  • Radical: Implementing significant, root-level changes.
  • Dramatic: Aiming for substantial improvements, not just incremental ones.

Reengineering is necessary when:

  • Performance lags behind the competition.
  • The organization is in crisis.
  • There are significant market changes.
  • The goal is to achieve a better market position.
  • Competition is aggressive.
  • Maintaining leadership is crucial.

Benchmarking

Benchmarking is a comparative process that evaluates products, services, and processes.

Categories:

  • Internal Benchmarking: Used in large companies with multiple divisions.
  • Competitive Benchmarking: Comparing products with direct competitors.
  • Functional Benchmarking: Focusing on similar functions, not necessarily competitors.
  • Generic Benchmarking: Comparing similar business functions across different industries.

Benchmarking Process:

  • Planning Phase:
    1. Identify the product of the business role.
    2. Identify comparable companies.
    3. Determine data collection methods, utilizing information from previous studies.
  • Analysis Phase:
    1. Determine the current performance gap:
      • Negative Gap: External practices are superior.
      • Parity: No significant difference in practices.
      • Positive Gap: Internal practices are superior.
    2. Project future performance levels.

OLAP (Online Analytical Processing)

Used in business intelligence, OLAP aims to speed up queries on large amounts of data.

  • Uses multidimensional structures containing summarized data from large databases.
  • Streamlines the consultation process.
  • Used in sales, marketing, and other areas for reporting.
  • Utilizes relational databases.

Dimensions: Parameters used to analyze data.

Indexing: Ordering the database based on predefined parameters.

OLTP (Online Transaction Processing)

OLTP is the first phase of a large data warehouse. It handles routine transactions to provide sufficient data for storage.

OLTP Systems:

  • Accept simultaneous access.
  • Represent the current state.
  • Contain large amounts of data.
  • Have complex structures.
  • Provide the necessary technological infrastructure.

OLTP Challenges:

  • Lack of technical expertise for ad hoc queries.
  • Queries that summarize large amounts of data.
  • Data changes frequently.
  • Security is complicated due to the online nature of transactions.

Kaizen

Kaizen is a humanist approach that emphasizes the involvement of all employees.

  • The approach is to learn from past experiences, both positive and negative.
  • The design approach is to build a better future with predetermined goals.

“Today better than yesterday, tomorrow better than today!” This is the foundation of the Kaizen philosophy, meaning continuous improvement is always possible.

ERP (Enterprise Resource Planning)

ERP systems are information management systems that integrate and manage many business processes associated with production and distribution in a company.

ERP is derived from Manufacturing Resource Planning (MRPII) and Material Requirements Planning (MRP).

ERP systems typically handle manufacturing, logistics, distribution, inventory, shipments, invoices, and company accounts.

Pareto Law (80/20 Rule)

The Pareto Principle, also known as the 80/20 rule, states that a small percentage of causes often produce a large percentage of effects.

Examples:

  • Software Engineering: 80% of software failures are caused by 20% of the code.
  • Business: 20% of customers generate 80% of total revenue.
  • Quality Control: 80% of defects are found in 20% of processes.

Six Sigma

Six Sigma is a management method and tool to improve performance, increase profitability, and enhance customer satisfaction. It is based on statistics and aims to produce no more than 3.4 defects per million operations.

Concepts:

  1. Define: Identify potential projects.
  2. Measure: Characterize the process and identify key customer requirements.
  3. Analyze: Evaluate current and historical performance data.
  4. Improve: Optimize process performance.
  5. Control: Design and document controls to ensure proper operation.

Total Quality

Total Quality emphasizes that quality is the most important factor in customer decisions and a key driver of organizational success.

Advantages of Total Quality:

  • Achievable with high-level commitment.
  • Improves human resource management.
  • Reduces costs by increasing productivity.
  • Customer-centric strategy.
  • Should be the driving force within an organization.
  • Leads to higher levels of competitiveness.

Data Warehouse

A Data Warehouse is a collection of integrated, nonvolatile, and time-variant data that supports decision-making within an organization.

It is a comprehensive record of an organization, beyond transactional and operational information, stored in a database designed for efficient analysis and data dissemination (especially OLAP).

Key Aspects of Data Warehousing:

  • Integration: Data from various distributed databases across the organization is integrated, often with different structures.
  • Separation: Data used for daily operations is separated from data used for analysis and decision-making to avoid interference.