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Value-Focused Process Engineering

Value-Focused Process Engineering. Porter & Millar [1985] – value chain Keeney [1992] – value-focused thinking Rossi et al. [2005] supply chain network a complex system SUPPLY CHAIN RISK MANAGEMENT : reducing supply chain vulnerability Identify and correct malfunctions & disruptions.

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Value-Focused Process Engineering

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  1. Value-Focused Process Engineering Porter & Millar [1985] – value chain Keeney [1992] – value-focused thinking Rossi et al. [2005] supply chain network a complex system SUPPLY CHAIN RISK MANAGEMENT: reducing supply chain vulnerability Identify and correct malfunctions & disruptions Finland 2010

  2. Supply Chain Risk Management Areas of vulnerability & risk (in supply chains) • Identification– Hallikas et al. [2002; 2004] • Recognize future uncertainties • Identify organizational exposure to uncertainty • Known, unknown, unknowable risks • Assessment • Analysis • Treatment Finland 2010

  3. Supply Chain Risk Identification Methodology • Value-Focused Process Engineering (Neiger et al. [2003; 2004, 2006]) • Neiger, D.; Churilov, L.; zur Muehlen, M.; Rosemann, M., Integrating risks in business process models with value focused process enginnering, Proceedings of the 2006 European Conference on Information Systems (ECIS2006), Goteborg, Sweden 12-14 June 2006 • Reduce level of uncertainty • Identify process-based risks • Holistic perspective • Supply chain a set of interconnected value-adding processes • Risk reduction expressed as business objectives • Process, Objectives, Risk Source Finland 2010

  4. Risk Identification • Use Organizational objectives to identify, assess risk • Treat risks as natural attributes of organizational value-adding mechanisms • Include risks as part of objectives structure • They claim not adequately implemented • Link risks to Supply Chain activities • Link risks to individual risk sources • Quantify risks • Fault tree analysis; Event tree analysis • Enable cross-organizational risk visibility • They claim not adequately implemented • Decompose risk by process flow Finland 2010

  5. Value-Focused Process Engineering • Systems methodology • Holistic representation of business • Value-Focused Thinking (Keeney 1992) • Link business processes, objectives • Fundamental objectives – hierarchy of business purposes • Means objectives – methods to achieve ends • Extended Event-driven Process Chain process modeling methodology (Scheer 1999) • Intuitive graphical business process description in terms of business logic • VFPE ties objectives & processes Finland 2010

  6. VFPENeiger & Churilov [2004] • Company values • Hierarchy of fundamental objectives • What do you mean by that? • DECISION MAKER VALUES • 1st Level means objectives(how can you achieve?) • What objectives, activities aim to accomplish this? • VALUE ADDED CHAIN • Means of Achieving • Network of means objectives • What objectives, activities aim to accomplish this? • HIERARCHY OF DECOMPOSED PROCESSES Finland 2010

  7. Risk Identification Process • Activity driven identification or risk objectives • Objective driven identification of risk objectives • Synchronized decomposition • E-EPC taxonomy of risk sources • Joining events structure to objectives structure Finland 2010

  8. Example Finland 2010

  9. Example • 1. Activity-based risk identification • Each high level functional objective separated into risk, performance-based objectives • Put risk in context of other performance dimensions • 2. Objectives-driven risk identification • Min risk of supplier non-conformance • Min poor supplier collaboration • Min supplier financial instability • Min nonstandard workflow • Min dependence on supplier • Min risk of supplier becoming competitor Finland 2010

  10. Tie each decomposed function to objectives in 2. • 3. Synchronized decomposition • Choose contracting out method • Choose basis for contract reimbursement • Define supplier selection criteria • Involve authorized suppliers • Involve external suppliers • Weight selection criteria • Send Request for Proposal • Provide quote • Evaluate offers Finland 2010

  11. 4. Apply e-EPC taxonomy of risk sources Finland 2010

  12. 5. Join Events to Objectives • Paper emphasized identification aspect • Another methodology of thinking of all possible things that can go wrong • Good • Systems view • Consideration of organizational objectives • Supply chain view (interorganizational) Finland 2010

  13. Value Hierarchy for Supply Chain Risk Finland 2010

  14. MAUT Plant Siting – group 1 Finland 2010

  15. MAUT Plant Siting – group 2 Finland 2010

  16. Value Scores – group 1 Finland 2010

  17. Value Scores – group 2 Finland 2010

  18. Weight Development1- rank order Finland 2010

  19. Value Ranking Finland 2010

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