Knowledge Management Strategies

Term project – Group 3

Analysis, Conceptualization, Application of technological

infrastructure with context based Interrogative Analogies for Index

based Measurement of a Productive Process in an Organization

Michel Franchetto – N1107279H

Guo Yi – G1102509D

Muthu Kumaar Thangavelu – G1101765E

Index

1. Abstract

2. Three Pillars: Capability, Productivity and Innovation

2.1 Introduction

2.2 Capability

2.3 Productivity

2.4 Innovation

2.5 The importance of three pillars for sustainable growth and competitiveness

3. Knowledge Process Productivity Indexing Schema

3.1 Background of the problem

3.1.1 Organizational Processes Today

3.1.2 Definition

3.1.3 Complexity of a process

3.2 Process productivity schema

3.2.1 Entities or Actors in process productivity

3.2.2 Entity relationships for productivity

3.2.3 Mapping the process productivity relationships with 5C’s - layers

affecting productivity

3.2.4 Boston Box View of 5C’s

3.3 Strategic Solutions derived for enhancing process productivity

3.3.1 Information synchronization

3.3.1.1 Problem: Information Distortion

3.3.1.2 Bullwhip Effect

3.3.1.3 Solving the Bullwhip effect in the process chains

3.3.2 Technology and Service based routing

3.3.2.1 ERP Technology

3.3.2.2 CRM Technology

3.3.2.3 Outsourcing

3.3.2.4 Sustainable sourcing and logistics

3.3.3 Software Driven Process Management

3.3.4 Customer Intelligence - Market Research

3.3.5 Setting Standards in organizational Processes

3.4 Index Derivation and hence Strategy Formulation for a Productive Process

3.4.1 Questionnaire to measure the relative weights of 5C’s:

3.4.2 Index for maximum productivity

4. Conclusion

5. References

1. Abstract

Organizations today face ever increasing challenges brought on by the competition in the market, the

nature of work place and the expectations of the customers. The key organizational business

implementations now need a strategic focus on their processes that contribute to their pillars of

success - Capability, Productivity and Innovation. This paper describes the indexing schema for an

organizational process to be productive by analysing the challenges in their production and

consumption space. The analysis started with creating a generic Meta model for a process in the

organizational interaction space and the varying relationship intensities between the components

resulted in the formulation of 5Cs process productivity decision parameters – Communication,

Coordination, Control, Competitiveness and Cognition. We have prescribed models to describe how

can lack of any of these parameters impact productivity as well as how technological infrastructure

can be applied to overcome this effect. The parameters were then plotted in the Boston Box’s four

quadrants to realize the complete coverage of Organizational Process Knowledge Capital in terms of

these productivity influencing parameters. The previous analysis, analogies and realization resulted in

the definition of a new K-Process productivity Index which predicts different knowledge strategies for

technology consumption in production-consumption space and sourcing/services based on the type of

process and the relative weights of the influencing 5C parameters.

2. Three Pillars: Capability, Productivity and Innovation

2.1 Introduction

Increasing global competition is changing the business environment and most companies thought

process today. Organizations primarily formulate their business strategies based on the nature of that

refined thought process or cognition and its significance on the end deliverable and the target market.

The investment on a business process is often subjected to a rigorous evaluation in terms of the

organizational outcome. Such investigation will result in the derivation of three pillars that greatly

influence the ways to respond in this intense competitive environment, to push boundaries to enhance

performance in terms of capability, productivity and innovation.

2.2 Capability

Even though we are talking about a basic and well known peculiarity it is hard and quite challenging

to give an explanation of it. Anyway, capability could be considered as the measure of the ability of

an organization or individual to achieve his objectives, especially in alignment to its overall mission.

More specifically to the organization extent, it can be broken down and defined as the ability and

capacity of a corporation expressed in term of its:

Human resources such as numbers, quality, skills, and experience of the employees

Physical and material resources such as machines, land, buildings, infrastructures and

technologies

Financial resources such as money, credit and every fruitful propriety owned

Information and technology resources such as pool of knowledge, databases

Intellectual resources: copyrights, patent, designs and licenses.

Market and Customer resources: New product opportunities, risks, market segments,

trends, customer profiling [1]

We can summarize these resources into two distinct capabilities with regards to the organization as a

whole:

External Information/Material Acquisition: encapsulating the operations involved with

external customers for Market research, customer service and sales which primarily performs

information sourcing and also technology sourcing from third party vendors.

Internal Information/ Resource Capitalization: involving the other wide range of

operations with internal customers primarily human resources and suppliers for supply chain

management, managing and exploiting the financial and Intellectual Assets for a successful

business[1]

Fig 1. Internal and external capabilities [1]

2.3 Productivity

Productivity, in organizational terms means efficiency with demand forecasting, production pipeline,

process restructuring with support of information and technology through a streamlined interaction of

activities. [2]

The productivity condition for these processes can be described broadly as a model in the

organizational space with two major buckets.

First bucket – to describe the nature of the processes

Horizontals: Commonality functions like supply chain management, technology

acquisition which runs through all departments or directly influences organization

as a whole

Verticals: Specificity functions like market/trend analysis, process restructuring

across specific domains or departments

Second bucket – to describe the nature of the stake holders (Employees and Suppliers) driving the

processes:

Collectivist (aiming at Co-operative success)

Individualist (aiming at Competitive success)

The challenge of productivity can be solved when the interaction matrices of these two combinatorial

buckets are aligned to each other constructively and work towards organizational success[2].

Fig 2. Productivity model (People and business domain context) [2]

2.4 Innovation

Innovation is defined as “the process by which an idea or invention is translated into a good service

for which people will pay, or something that results from this process”.

In order to be called an innovation, an idea must be replicable at an economical cost and must satisfy

a specific need.

In business field, “innovation often results from the application of a scientific or technical idea in

decreasing the gap between the needs or expectations of the customers and the performance of a

company's products”.

Innovations fall into two broad categories:

1. Evolutionary innovations are amenable to numerous incremental advances in technology or

processes and are of two types :

a. Continuous evolutionary innovations are based on the alteration of product

characteristics instead of in a new product, and do not require any user-learning or

changes in his or her routine.

b. Dynamic continuous evolutionary innovations require some user-learning but do not

disrupt his or her routine.

2. Revolutionary innovations (discontinuous innovations) require quite big degree of user-

learning; often they disrupt the routine, and may even require new behaviour patterns.

Innovation is associated with risk-taking and organizations that introduce new products or

services are taking a huge risk because they have to build a new market. Anyway there is a

less risky innovation strategy is that of the imitator who starts with a new product (usually

created by a revolutionary-innovator) having a large and growing demand. The imitator then

proceeds to satisfy that demand better with a more effective approach

The road map for innovation in an organization [3] can be visualized in three layers with

corresponding change in the process as stated below:

Fig 3.Innovation road map with process layers and the change [3]

2.5 The importance of three pillars for sustainable growth and competitiveness

We have now defined and analyzed the three pillars in the organizations perceptive as above and here

we signify the strengths of these pillars to realize organizational success.

Capability

Organizational capabilities improve business and differentiate the company from its counterparts.

Enhancing the organizational capabilities can help to gain competitive advantage in this fierce

environment. They make a company competitive in the marketplace. When a company create some

new external capabilities and develops its internal capabilities, it will get one leap over of other

competitors, by offering an innovative product, licensing and exploiting value.

Human resource is the primary capability owned by a company. A strong human resource can help

the company to respond quickly to the changes in the business environment, meet customer’s need

and offer flexibility. Knowledgeable workforce can facilitate the company to achieve its business

vision. Excellent recruitment, effective training, community of practices are organizational

capabilities to ensure a talent workforce who can gain a competitive advantage for the company in the

marketplace.

Customer relationships are organizational capabilities to ensure the sustainable growth and

competitiveness in the market. A good relationship with customer can definitely impact positively on

company’s sales, reputation and the future. Both consolidating relationships with existing customers

and gaining new customers can ensure the company thrive in the future.

Productivity

Productivity is to get maximum output and be efficient by aligning and applying your skill,

technology and innovative actionable thoughts. It is a critical determinant to bring more and more

profit for the company.

It can facilitate or lay a road map for effective workflow in the process and produce enough products

to meet the customer’s needs and solve the conflicts between demands and offerings.

Productivity can be a scale to measure the work input per business unit with a low cost and also the

results in a lower price for its customers, which offers competitive edge in the market. People can buy

more products at an attractive price, which can bring reputation for the company and in turns to create

more profit.

Productivity not only means to improve quantity of sales with low price processing and offering but

also to offer a quality product, which can meet specific requirements of customers in order to satisfy

them as well as inspire them to recommend the product during or after usage in their circle.

Innovation

Innovation is a blended theory where the change instituted can meet organizational capability and

productivity and sustain competition in the market and delight the customers there by enhancing the

profitability of the organization. Innovation not just refers to inventing a new product, but also

includes new processes and new ways of solving the old problems.

It can bring about a more comfortable life to the customers by meeting their demands and needs in the

best possible way.

Rapid development of technology requires the company’s products to be more complicated with more

considerations in layouts, interfacing, communicating and transacting. Innovation on products,

processes, and services can make the company realize its potential and gain competitive advantage

thereby consolidating organization’s position in the global market, increasing its market share,

rewarding the stake holders with utmost pride and investment returns, there by promoting the growth

of the company as a whole.

Companies failing to innovate will definitely stand a chance for collapse sooner or later. Customers

tend to change their orders to a competitor who always strives to innovate and change the existing

scenario, thereby dropping of the product sales, decline in the net revenues and stock price, thereby

decreasing the shareholder returns and employee returns resulting in the movement of capable human

resources and strategic partners for potential opportunities.

To summarize, thus capability, productivity as well as innovation are the inseparable and

indispensable factors for an organization’s success, survival, growth and profitability. No wonder in

referring them to be the pillars of the organization.

3. Knowledge Process Productivity Indexing Schema

In this paper, we first analyse various business processes prevailing in today’s organizations and

implemented for productivity like the various sourcing models which includes outsourcing,

technology sourcing, information sourcing, sustainable sourcing and production consumption models

and practices which involve focus on the process value and market value. We then identified the

organizational challenges that support implementation and indirectly measure its productivity. The

challenges were crystallized to process determination factors that constitute the Knowledge Process

Productivity Index. This index helps organizations to decide their Business Strategies with the relative

weights of individual process determination factors.

3.1. Background of the problem

3.1.1 Organizational Processes Today

The shift in the focus of the organizations towards a service based economy inclined primarily

towards customers and delivery excellence has enhanced the significance of leveraging the processes

for high productivity.

3.1.2 Definition

A process is an interaction of activities that follows a blueprint and is supported by a service or

technology and leveraged by human agents

3.1.3 Complexity of a process

The complexity of organizational processes today is attributed to the following factors as described

below:

Processes run across different geographies: For eg. Call centres and Information

Technology support centres in China and India operate round the clock and

synchronize themselves remotely to serve customers from United States to

Australia.

Processes run across different organizational units or even cooperating

partners: For eg. In recent days, the output of an organization essentially includes

outputs from its outsourced partners and consultants from different organizations.

Heterogeneous work flow systems are being used: For eg: Today’s competitive

market has given us a variety of options to implement in our business and this as a

whole makes heterogeneous work systems in organizations where one can use the

ERP tool offered by SAP or IBM or ORACLE or MICROSOFT and as a result

there is a need for synchronization of such varying work flow models.[4]

3.2 Process productivity schema:

As a process and its complexity has been defined above, a model has been created to represent the

entities and their relationship focussing mainly on productivity in the organizational interaction space

[fig 4][4]

Entities: They represent the basic functional units of the process which all together bring in a

meaning action and in turn the output.

Relationship: This represents the way how entities are connected to each other during its execution

on a target action for a target output. [4] [5]

3.2.1 Entities or Actors in process productivity

The blue prints: define the array of instructions, algorithms, and procedures used to make the process

work properly.

The agents: encompass the managers and directors responsible for the implementation and

coordination of the process as well as for issuing the blue prints which are used as guidelines for the

process development.

Fig 4: Overall process productivity schema envisioning strategy

Process Meta model on the extreme left – base source [4]

The process: is the process itself from phase one to the phase x. Along the phases managers can figure

out that some process improvement could be implemented; as a consequence this will lead to a

modification of the blue prints.

The technology and services: support the process by enabling or extending its functionality which

help the management (agents), comply with the standards in the blueprints and could also lead to

some modification of the blueprints.

3.2.2 Entity relationships for productivity

Iterative nature of the basic process block

Most processes in today’s organization are iterative to manage the dynamic nature of market and the

needs of the customers and to streamline the flow of information from suppliers and customers with

the process context.

Responsibility for Action

The basic process block aims at providing a valuable insight or output to the agent, generally human

which is to trigger an action that is profitable to the organization through its working with support of

technology and service, compliance and change of process blueprint.

The agents are responsible for the overall performance of the basic process block as they tend to

leverage its value by monitoring and validating the deviations, errors and transform the output for

decisions and modifying the initial process blue print with respect to the time, context of trigger and

the nature of operation of iterative activities.

Support

The activities of the basic process block are extended support by a service which can be in the form of

sourcing from an expert third party provider or technology infrastructure and tools which can help in

coordination, visualization or simulation of activities.

Compliance and Change of process blue print

For the basic execution of a process, the work flow and function of activities, technology and services

are determined by the process blue print.

After iteration or refinement of activities, they can contribute to the change in the process blue print

which has an impact on the consequent activities and the overall output.

After the establishment of a technology or service, they can contribute to the change or manipulation

of the process blue print

Synergy

A service such as supplier sourcing or outsourcing in an organization depends on the technology

infrastructure for its effective operationalization. Eg ERP, CRM, Call centres, Customer Service and

Retail units relying on the network connectivity of the base organization [5].

In the same way, technology infrastructure and tools can make use of an organization’s service in the

form of information, to be productive. Eg BI tools relying on the reports from ERP/CRM/Call centres/

Customer Service and Retail units [6][7]

These represent the ideal relationship between the entities to be productive.

3.2.3 Mapping the process productivity relationships with 5C’s - layers affecting productivity:

Communication

Hypothesis:

Lack of grounded communication can affect an organizational process in 360°

Proof:

Communication is the action in every process for exchanging information and ideas between

different departments. Processes communicate with the agents to understand the mission better and to

produce the desired product, the outsourcing or any technology service department for support and

synergy. All the compartments of the process block should interact with each other on time to make

sure a collaborative, productive outcome.

Thus lack of proper communication causes information distortion which restricts or transforms

knowledge flow adversely in a process resulting in communication gaps and misinterpretation of

activity signals in all layers of execution related to the process.

Hence this layer can be attributed to all the process productivity relationships – responsibility,

support, change, compliance and synergy and the assumed hypothesis is proved correct.

Coordination

Coordination is the action of working together constructively with the purpose to make people,

process or departments function properly and efficiently for enhancing productivity in the

organization. Process coordination is the streamlining of work flow with the agents, services and

technology infrastructure to save time, costs and improve the outcome, thereby the profitability [6].

Lack of coordination can affect the synergy and support relationships between the process entities as

they have an inter dependence relation for their effective functioning as a whole.

Control

Control is the ability to purposefully direct, or suppress the change in the processes and procedures

aiming at achieving defined goals with established time frame and work flow. It refers to both the

basic processes that should be supported and controlled by technology infrastructure as well as the

interested third parties and the standards or requirements as expected by the organizational process

blueprint which includes the points of government, business and management bodies.

Lack of control can affect the reaction to change, support and compliance to regulate and synchronize,

and set boundaries to the flow of process entities.

Competitiveness

Competitiveness is the ability of a firm to offer products and services by designing the process that

can delight the customers and stake holders by meeting the expectations as well as offering them more

which they do not explicitly require and setting the global quality standards in the market at prices

that are competitive and responsive to the change from both outward and inward to the organization.

Lack of competitiveness can affect the way the organizational process reacts to the change in the

customer trend, market and compliance to the productivity standards and the responsibility of the

agents to gain a competitive edge with a superior process baseline.

Cognition:

Cognition is the realization of insights and better learning of the process itself or the different

elements in process interaction space to achieve higher efficiency. This psychological result tend to

fulfil the vision and mission of the organization by better understanding, perception, learning and

problem solving to make decisions, thereby managing risks and increasing productivity [7].

Lack of cognition directly corresponds to the ways how the agents react on realizing a change in the

outward or inward trend, i.e. responsibility and change that can affect productivity of a process.

3.2.4 Boston Box View of 5C’s:

In an organization point of view to understand how the 5C’s affect the knowledge capital, we used

Drew’s Boston box to fit in the various layers affecting productivity with respect to the knowledge

awareness and content. [Fig 5]

High knowledge awareness with low knowledge content can be attributed to the basic language of

process interaction shared all over the organization which is primarily communication. Eg: process

techniques, adopted standards, process inputs and outputs as codified in the blue prints of process

Low knowledge awareness with low knowledge content can be attributed to identifying the hidden

knowledge by synchronizing and controlling the existing interaction between process elements. Eg:

ERP, Software driven process management where we can coordinate and control the processes and

generate hidden knowledge which can measure organization’s productivity.

High knowledge awareness with high knowledge content can be attributed to an organization’s

ability to act on the change to gain competitive advantage. Eg: Market, Customer intelligence

operations to learn and exploit the high knowledge content and awareness to drive competitiveness.

High knowledge content with low knowledge awareness can be attributed to an organization’s

ability to learn and create new processes which is in demand in the market. Eg: process design for

environment sustainability [19]

Fig 5: The Four Quadrants of the “Boston Box”, Drew [19]

QUADRANT – 1(Communication): Establishing the process mechanism

QUADRANT – 3 (Coordination, Control): Driving the process mechanisms for output based

efficiency

QUADRANT – 2 and 4 (Competitiveness, Cognition): Driving the process mechanisms for context

based efficiency (market, competitors, technology, customers)

Thus Boston box helps us to magnify the importance of 5C’s in terms of organizational knowledge

capital individually or in relatively smaller groups.

The communication part (Quadrant one) of the box describes more of the capability of the

organization

The cognition part (Quadrant four) of the box lays more stress on intuitiveness and hence can

describe the innovativeness of the organization.

The Coordination, control and competitiveness parts (Quadrant two and three) contribute more

towards productivity (context based and output based) of the organization.

3.3 Strategic Solutions derived for enhancing process productivity:

Each of the solutions addresses the above stated possible gaps at different layers affecting

productivity relationships as below:

Information synchronization at communication and cognition layers

Technology and Service based routing at all layers

Software Driven Process Management at coordination, control and competitiveness layers

Customer Intelligence at communication, competitiveness and cognition layers

Setting Standards at control and competitiveness layers

Let us discuss each of the following in detail.

3.3.1 Information synchronization

This challenge is traditional and can be attributed to the interaction and exchange of information

between various components in a process. To overcome this challenge, there is an increasing need of

using advanced technologies for coordination and control on process either as a service or as a tool,

which enables the organization to use the most effective way to communicate or process business and

reinvest in current technology frequently to keep them competitive and maintain the proper flow of

information across departments, local branches and countries.

Therefore, the company needs to be highly responsive to meet the challenges, improve

productivity as well as efficiency by all means.

3.3.1.1 Problem: Information Distortion

In the past 10 years demand information distortion has been considered one of the biggest challenges

of researchers involved in management issues and the effort of the companies in order to overcome

this issue has been growing as well.

Companies have figured out through experiences that sometimes the inefficiency of a certain process

do not rely on the wrong implementation of the process itself but it is sometimes amenable at the

distortion of the information flow among the different rings of the supply chain. This awareness leads

to the shift of companies focus from the process itself to the flows of information running from the

upstream department to the downstream ones.

This phenomenon through which information gets distorted as it passes by different sections is also

known as bullwhip effect.

Information flows and information structure are considered to be the key elements of supply chain

management and the health of the supply chain itself can often be related to the quality of information

running across the echelons.

As it is now clearer Managing supply chains effectively is a complex and challenging task and most

of the times detecting this kind of information distortions is a tough task especially if it relies on

witful actions of the parties. [8]

3.3.1.2 Bullwhip Effect:

Information distortion increases with increase in information hand offs resulting in increase in

the magnitude of demand fluctuations in a supply chain where the orders placed to suppliers tend to

have larger variance than the buyer’s actual sales. [8][20]

Impact on Supply Chain Process:

Communication gaps in the supply chain

These are the gaps that arise due to miscommunication or lack of commonality in languages

during demand forecasting and ordering suppliers.

Time delays in information and material flow

This is the time delay arising when there is a problem because of hand over of information along

the supply chain. This can also be attributed to the faulty propagation of information which gets

looped across a certain border and fail to flow along the supply chain.

These are clearly knowledge or information gap issues. Since we are analyzing the information

distortion from a knowledge point of view we are going to consider as causes of distortion (bullwhip

effect) just the communication problem and the delay times of information flow.[9]

Problem of communication gaps

Information often gets distorted by passing through different departments: the reason why it lacks

uniformity and transparency is amenable to a two folded issue:

Witful distortion: This happens when we have a transaction of information between

two individuals and the first of them want to gain a competitive advantage over the

second one. As consequence he/she discloses wrong information towards the other

party to make sure there is an information gap.

In addition it could occur when the second individual wants to disclose a wrong information voluntary

to satisfy his personal need.

Unintentional distortion: this occurs when there is a misunderstanding between the

parties when:

a) The first party discloses wrong information because of his incompetence

b) The second party has a wrong understanding of the real information disclosed

by the first party

Time delay of information

Often the parties which are dealing for a transaction are not physically in the venue where the

transaction are going to occur due to business, personal and accidental reasons.

This feature enhances the number of hands-offs among the parties involved which increase the

probability of having time delays of any kind.

For example if the decision has taken by the person which in the same venue where the transaction

will occur, delays are less likely to occur; whereas if the decision has taken by an individual who is

abroad for several reasons and far off from the venue where the transaction in going to occur and now

the probability of having a delay increase tremendously because he may send an e-mail to the head

quarter that will be read within hours rather than being read suddenly.

3.3.1.3 Solving the Bullwhip effect in the process chains

As explained in the previous section information distortion presents a quite great issue in managing

the value chain and in managing the information flowing through the company and the value chain.

Focusing on the two knowledge and information causes of information distortion we would like to

define the solutions that could be taken in consideration while dealing with this issue. [9]

Since it is a problem that relies on communication and delay of information transmission we would

say that the solution should be able to overcome information distortion in each of its facets.

In order to overcome these problems or at least to lessen the bad consequences they can lead to, we

will provide a list of actions which should help to avoid information distortion and

miscommunication:

Frequency of communication

The more frequent the interaction between the two parties occur the less likely

miscommunication issue and information distortion will be encountered.

In fact increasing the number of contacts between the two individuals we can have increase in

the probability that errors are detected and as a consequence corrected.

Rapidity of information exchange along the chain

The more rapid the interaction between the two parties, the more frequent the two parties can

communicate, the less likely miscommunication issue and information distortion will be

encountered. Companies should invest in order to achieve a quasi instantaneous

communication system getting read of delays and lead times.

Adaptation of the same languages

The more similar the languages used, the less likely misunderstanding, miscommunication

and information distortion is.

Two parties who are interacting in a transaction should use the same language in term of:

Verbal and written language

Accountancy language

Abbreviations

Demand forecasts

The more the downstream party forecast future demand the sooner the upstream party will

know about the future order the less the probability information misunderstanding will occur.

Group procurement

When group procurement occurs, there is less likely that information distortion occurs due to

side communication among the group which lead to information adjustment among them.[9]

This feature assumes a high level of connection and communication among the different

actors involved in the transaction; without them, group procurement is not able to prevent

miscommunication and information distortion.

Information distortion measurement

In order to detect and correct this gap often companies use complex statistical model to

measure this gap and understand where it comes from. As a consequence, the greater the

effort of a certain company to monitor, compute and measure the information distortion the

more likely the company will have a prompt reaction in the correction.

Operations transparency between the two parts

The more the two counterparties operate following transparency principles the more likely

information distortion and miscommunication will be corrected.

If the downstream party has a demand of X and it orders X – 1, I (supplier) can correct the

order promptly if there is a high degree of transparency.

Shared technologies

The more two echelons have shared technologies such as databases, software tools and

information services, the more likely they can correct distortion and miscommunication.

Having as much efficient as possible communication system

A company should invest in “filling information gap technologies” proportionally at the

information gap computed

Implement a system able to get rid of the incentives (if any) in both parties to hide or

distort information to the respective counterpart

Sometimes information distortion occurs witfully because there is room to take advantage

over the other party. If we get rid of this room we get rid of the distortion

3.3.2 Technology and Service based routing

3.3.2.1 ERP Technology:

ERP stands for Enterprise Resource Planning. Software attempts to integrate all the departments

in the company onto a single computing system and meet all the needs from different divisions. It

serves the needs of people from inventory to the human resource and financial departments. Each

department has its own IT system to support their daily work and optimise the working process

absolutely. [10]

Business goals

Overcome Information Distortion (Bullwhip Effect) by facilitating the proper flow of

information between all business functions inside and outside.

If in a small business, the information such as the incoming orders of goods and requests of picking

and delivering raw materials from other departments can be transferred quickly. However, in the multi

business corporations, especially in the MNCs, the business is very complex and information from

different parts of the company is very difficult to deliver in real time. The delay of time may result in

inefficient working process.

Bridge the Knowledge gap by automate and streamline operational processes, and manage

risk in the planning stage and budgeting [10]

Different departments in the company use unique software, which brings a lot of repetitive and

redundant work. Those work waste not only time and energy but also a lot of financial investments. In

planning stage, because of the fast changes of the environment, the prediction of the demand and

budget becomes very important too.

Knowledge of transactions for increasing productivity in operations:

Maximizing the individual productivity, further to increasing the whole operation’s productivity is a

critical use of this system which thereby gives valuable insight on understanding the gaps in

Knowledge flow to optimize the manufacturing process, the R&D process and other related processes.

Tool’s Working Style:

Knowledge portal for real–time data discovery

These systems can integrate the information timely and accurately, and reflect the data to the relevant

departments to enhance the efficiency of the process.

For example, when a customer places an order, that order begins a long journey from this department

to another department around the company, often being keyed and rekeyed into different computer

systems along the way. The whole course causes delays, errors and lost orders. At the same time, no

one knows what the status of the order is, because there is no way for the finance department to get

into the warehouse’s computer system to see whether the item has been shipped.

ERP combines the old computer systems in finance, HR, manufacturing and warehouse, and replaces

them all with a unique single software program to ensure that finance, manufacturing and the

warehouse departments are all under control in a synchronized state without potential time lags.[11]

Comprehensive simulation of key processes for planning and budgeting

For the planning stage, ERP refers to the main production planning, raw materials demand, capability,

purchasing, sale, human capital planning all of which help the company to make a good preparation

for the other core processes and maximize the staff’s ability and working potential. A good financial

planning also can help the company to keep a good balance in the revenues and expenditures.

Superior Information flow and therefore Knowledge flow by automating and streamlining

operational processes

ERP is a time and money saver. With its help, you only need to input customer, vendor, and order

data once and then share it across your functional departments. All the procedure can be automated

from inventory, warehouse to billing and accounting. It can also help you respond quickly to the

market by creating reports and analyzing enterprise trends easily and accurately [11].

Best practices codification into software to improve product development and manufacturing

procedures and manage risks

ERP software can reflect the vendor's interpretation of the most effective way to perform each

business process. Those effective ways can be considered as best practices which are incorporated

into the ERP systems. Systems vary in the convenience with which the customer can modify these

practices. Companies that implemented industry best practices reduced time for configuration,

documentation, testing and training. In addition, best practices reduced risk by 71% when compared

to other software implementations. Thus these procedures can codify and replicate the best practices

of industry standards factors and government requirements which can ease compliance with the

government, thereby managing and foreseeing complicated risks.

ERP can also alter the way of product manufacturing. An updating structure can be set up to inform

the company when their product should be updated. It is quite important for a company to keep better

track of their products, keep pace with the market change, and allow the products themselves to be

produced with a higher level of quality.

3.3.2.2 CRM Technology:

Most Interestingly in today’s business activities, the recipients are the ones whose favour, preference,

lifestyle are changing rapidly. To meet this gap between customer needs and company’s product or

service pose a bigger challenge to the organization.

In addition, globalization makes the competition fierce and businesses across all industries are

faced to boost revenues and expand market share by finding new clients and enhance the existing

customer’s loyalty [12].

CRM – Working Style:

CRM is Customer Relationship Management, software that not only can support the marketing and

sales process, but also the very methodology of doing business.CRM focuses on creating new

customers as well as developing individualized customer relationships to maintain what they already

have. It includes contact management, sales force automation, and marketing campaign automation,

call centre management, help desk automation, and business intelligence operations for market

analysis.

Business Goals:

Customer Knowledge Discovery - Find, attract, and win new clients

To have continuous flow of new clients is a great challenge which needs more of investment and a

strenuous target market analysis where the client’s basic information, preferences, interests, desired

needs, promotional and related campaign activities to attract and win their trust [13].

Inspire customer loyalty with intensive knowledge engineering/discovery tools

More and more companies have realized that to maintain an old customer is much easier than to win a

new one. The reputation you got from the former customer is very important for enticing clients back

and cross-selling. That is well codified and expressed by the CRM software which predicts the

interests of the existing customers and ensures their loyalty.

Identify the knowledge gaps and manage the risks in marketing and client service.

Many companies realized that CRM grounds the best way to improve profitability and increase

shareholder value by maximizing operational efficiency and minimizing overhead costs and

stimulates competitiveness and hence manage the investment risk in marketing, sales and promotions

to attract clients and entice them to consume [12].

Solutions:

Efficient Knowledge Routing – to support the marketing and sales departments

CRM aids in understanding the preferences and potential purchasing behavior of their target

customers, plan and design personally tailored campaigns and promotion activities through various

communication channels, and analyze the results to attract and win new clients [13].

Delivering Superior Knowledge Transactions and Intuitive knowledge generation with

Customer Service Operations

One of missions of CRM is to provide a convenient experience to customers by answering their

inquiries on time and providing them with the information they need through call centres which

provide an excellent platform for interaction with customers to capture their feedback and responses

that is to be passed to subsequent layers upstream to make a decision on customer’s behavior and

hence implement changes in the processes where there is a lag in thoughts of customers and

organization.[13]

Exploiting Information technology for Cost Reduction

Moving data access online will reduce costs by pushing more customer enquiries to the web instead of

costly telephone interactions with live agents. Customer relationship management solutions can also

transform these online customer management centers into profit centers by helping staff to actively

participate in up-sell and cross-sell initiatives, and other sales and marketing promotions.

ERP Vs CRM

As discussed in the paper, the two information management tools in the computing environment to

emulate the ERP and CRM processes have brought about a significant improvement in the thinking of

the organization as a whole. These software tools aim at collectively improving productivity with

similar business goals in the upstream but different at task orientations as tabulated below after

analysis

SIMILARITY DIFFERENCE

ERP

&

CRM

Both of them enable employees of an

organization to share information to

coordinate activities in the

organization, and also allow the

executives to take decisions based

upon the reports and forecasts

generated from these tools.

1. ERP is process oriented, while CRM

is customer oriented.

2. ERP is internal system, while CRM

is external system.

3. ERP looks after supply chain

management, product management, and

accounting management, while CRM

takes care of sales activity, customer

interaction, product marketing and

customer services.

3.3.2.3 Outsourcing:

The key focus areas of any powerful global enterprise will be demand generation, financial

performance and cash flows. This brings in the need to categorize and focus on their core business

processes which require a greater attention and a unique output so as to contribute to a superior end

product. The other relatively less significant noncore processes can be invested on trusted partners in

the form of services [14].

Measuring the risk and productivity of a process to decide the service sourcing strategy:

Is the service partner Trustworthy?

Are his actions and strategies predictable? Dependable? Ethical?

Is he willing to compromise?

Does the service have realistic setup for accomplishment?

Does the service bring about significant cost benefit to the company?

Does the service provider exhibit control over their process?

Is the organizational culture of the service provider in terms of thoughts, action and

environment similar?

Are they capable of generating contingent efforts for organizational success?

Is the service provider aligned with the company’s performance management effort with internal

technology, business strategy and workforce?

Can we measure their performance in terms of productivity in terms of Key Performance Indicators –

Cost savings, service improvement, responsiveness and stake ownership?

We can also try the “Specificity of the Service” by asking these W questions – ‘Why, What, Who,

When, Where and What if ‘in the organization’s view point [14].

Solution

The results of these above interrogations can help us land in one of the models below

Full Outsourcing model, High Risk and Strategic, for example, Customer service, R&D,

Market Research processes

Managed Services model, Average Risk, for example, Production support and maintenance

processes

Co Managed Services model, Low Risk, for example, Retail and financial services Software

Applications installation and technical support

3.3.2.4 Sustainable sourcing and logistics

A definite condition of a system which is primarily aimed at design for the environment and foresees

long term stability and revenue generation by improving the workflow of a process and reflecting the

responsibility of the organization for environment enhancing its brand value and image in the

customer circle [15].

Challenges:

Predicting concrete Demand in the form of Knowledge Market Signals and responding it in

an eco friendly way

Requirement of extremely short lead times and the highest possible flexibility on the

supplier’s side

The replacement of plan-based activities by order driven activities and changing the process

architecture from a push to a pull mode.

Understanding the Complexity of the process in terms of execution time

Solutions

What is the cost of investment on sustainable assets and process restructuring?

What is the extent of risk involved in the over all process?

Is the process repeatable?

What is the predicted customer coverage after sustainable process restructuring?

How much effort do we require for synchronizing or integrating the sustainable process with

the existing one?

What is the fault tolerance of the system?

Process restructuring for sustainability factors [15]

Zero Waste

Efficient Energy Utilization

More Real Time Electronic Transactions

Information reuse

Use of stable, varying cost eco friendly materials

and techniques for process execution

Reduce Proliferation of products – minimal

warehousing

Extend Product life cycle

Decentralize distribution Systems

Extend Lead time – Process execution time by

combination or transformation for cross

production

Group procurement services

Exploiting Green Computing technologies –

Cloud based architecture and resource sharing

Relying on Internet as a medium of

communication and transaction

3.3.3 Software Driven Process Management:

In recent days, software is used mainly for storage and connectivity. Companies should realise

the extent to which software can be applied in simulating the process oriented tasks for tracking

defects and to enhance the quality and functioning of the process.

Future needs to aim at exploiting the Internet, Web 3.0 technology of augmented reality and

semantic analysis to involve on the fly decision making with more emphasis on video, audio and three

dimensional and even four dimensional (to capture emotions) content representation rather than usual

text and two dimensional image based reports and thus makes more intuitive process visualization for

easy identification and cognition. There need to sufficient caution to balance between the ease of user

interface and enhancing customer and organizational secure even on a cloud based architecture.

3.3.4 Customer Intelligence - Market Research

Market Research in business and consumer perspectives for core process restructuring:

It is a systematic process in an organization to realize the gap between what they know and what they

must know by creating focus groups and researching on the market, trend, competitors, employees

and customers and also the risks and returns on a defined time frame. The findings can be

incorporated into subsequent products with underlying restructured core process. [16]

Based on Existing Customers:

Does the process satisfy the existing customers?

Which features are important to these people and which are not?

What price would customers be willing to pay if there is an improvement in the process, and

why?

Based on Potential Customers:

Who chooses your competitor’s offering and Why?

Which features are important to these people and which are not?

What price would they be willing to pay if there is an improvement in the process, and why?

Based on Organization’s Business perspective:

What are the risks and rewards involved in the new process restructuring and

implementation?

What is the investment required on the new process assets in terms of structural and human

capital?

How generic/specific is the change in the process?

What will be the coverage of the target market after process implementation?

3.3.5 Setting Standards in organizational Processes, Policies and Procedures

These methods were developed primarily to improve the focus and productivity of processes, policies

and procedures. Competitiveness in the market and emphasis on control has brought about a

revolution in global business since 1980. The organizations realized that productivity is the key

element of a process. Unless it is standardized, they can’t be managed well. Total Quality

Management (TQM), Total productive Maintenance (TPM), Six Sigma, Business Process

Reengineering (BPR), Lean, and International Organisation for Standardization (ISO) series of

standards, Communities of Practice (COP) and best practices are the most popular initiatives

employed by the organizations today for productivity. All the techniques except BPR aim at

continuous process improvement. [17, 18]

All these approaches have been developed in different countries having different operational and

cultural orientations. Selection of one of these or combination of several of these techniques has

remained a challenge because of the diversity of organizational processes. All approaches are useful

but to be treated with caution in the appropriate organizational context.

3.4 Index Derivation and hence Strategy Formulation for a Productive Process

3.4.1 Questionnaire to measure the relative weights of 5C’s:

A Questionnaire has been carefully designed concentrating to give input weights on 5C’s based on

five key solutions to enhance productivity.

Assuming that all the solutions collectively contribute to 100% productivity, we try to categorize the

solutions based on their ability and number of means internally to achieve productivity as below:

Information Synchronization – 20 %

Technology and service based routing – 35 %

Software driven process management – 15 %

Customer intelligence – 15%

Setting standards – 15%

Based on this percentage, we decide the number of questions to evaluate each of the solutions.

Each question has a 5 point liker scale and specific evaluation parameters which can be one of them –

(Communication C1, Coordination C2, Control C3, Competitiveness C4, Control C5) with their

measuring context (+ or -) and a specific question type (awareness, implementation, conclusive)

The question type helps us to derive a logical inference based on differentiating into 3 distinct bases

Awareness- To check the basic functional awareness of the solution

Implementation – To check if that is implemented in your company

Conclusive – To determine the overall idea of its implementation

Awareness and Conclusive questions tend to carry more weights and hence we multiply the scores of

these questions with 2 and we divide the scores of implementation questions with 2

Individual solution score = (Awareness and Conclusive questions)*2 + (Implementation Questions)/2

Unifying the measuring context:

It is easy to measure if we convert the negative measuring context to positive before summing up to

find out the net weights of the 5C’s.

Suppose we have strongly agree – 5 as the answer for the negative measuring context question we

need to convert it to positive measuring context by taking it strongly disagree with score 1

Finally we need to convert the liker scale scores for each solution separately determined by (obtained

score / maximum score) * Solution contribution to productivity where maximum score for each

question will be 5.

We come up with the below linear equation by adding up the scores of all the answers in the

questionnaire:

A(C1) + B(C2) +C(C3) +D(C4) +E(C5)

C1, C2, C3 - Communication, Coordination and Control:

On close observation, they tend to reflect the basic ways for effective input interaction for output or

the ground rules of any productive organizational process and more focuses on the mechanisms of the

process which need to be in place for the working or basic functioning itself and hence attributed to

the syntax, in basic terms, like the grammar of a language. Eg: Network connectivity, ERP

Hence we group these 3C’s into a Syntactic index (SY)

C4, C5 – Competitiveness and Cognition:

On close observation, they tend to extend the mechanisms and derive meaning out of the existence or

functioning for competitive advantage, customer satisfaction and maximum profits and thus they

focus more upon the context of the process which signifies on the meaning of the process and apply

the learning or intelligence into the business processes and hence attributed to the semantics, in basic

terms, like the linguistics of a language (logical derivation or meaning). Eg: Customer intelligence,

Setting benchmarks and standards

Hence we group these 2C’s into a Semantic index (SE)

3.4.2 Index for maximum productivity:

Ideal Case:

An ideal productive process needs to be very strong in its working mechanism and functional

interaction of various blocks. Such process needs a strong communication base, coordination between

blocks and control on the desired output. This is the core need of every process to be productive. Thus

they collectively need a higher value of SY – Syntactic Index for productivity.

Considering the outcome of the process mechanism to be the magnitude of the process, we still need a

direction to attribute to the magnitude and derive a meaning with the context surrounding the

mechanism. Such process to derive the context can be attributed to competitiveness and cognition as

they act on the mechanism to improvise or add more contexts to make it holistic and customer or

market oriented. However this is not the core need of a process to be productive still is an essential

ingredient of a productive process. Thus they collectively need an average value of SE – Semantic

Index for productivity.

Productivity Index = X (SY) + Y (SE) (1)

Where X= A(C1) + B(C2) + C(C3) (2)

Y= D(C4) + E(C5) (3)

Adjusted Case by shifting relative weights of 5C’s:

If the index does not have a higher syntactic index and medium semantic index, we need to drill down

and identify the base C’s which contribute less or high to the overall index. The weights can be

shifted to target C’s by deciding and acting upon specific strategies.

Suppose, Company P has invested more on the network infrastructure and connectivity tools only for

communication which has in turn contributed to higher weights of C1, but they do not have a planning

tool or system for tracking all transactions with suppliers which has in turn contributed to lower

weights of C2 and C3 which in turn decreases the overall Syntactic index.

Thus with this index or productivity measurement, the company P can find the lag in their working

profile and act upon the lag or even surplus at times when that is not the primary focus.

The case discussed can be represented considering the equations (1), (2) and (3) as below

Xp < X where Xp is the calculated syntactic index of company P and X is the ideal syntactic index

Ap > A, Bp < B and CP < C where Ap, Bp and CP are the communication, coordination and control

weights of company P’s syntactic index respectively and A, B and C are the communication,

coordination and control weights of the ideal syntactic index .

This analysis with the obtained index can be intuitive for company P to formulate business strategies

to shift focus towards the lagging part such as ERP implementation, software driven process

simulation for quality management and defect tracking if they don’t exist presently, to improve its

syntactic index of productivity for the ideal case.

Generic nature of indices:

These indices can also be extended to measure capability and innovation by considering the human

actors, internal (Organizational) and external (market and customer) environment and culture, their

interrelationships which can be attributed again to communication, coordination, control,

competitiveness and cognition.

Fig 6. Overall flow of process productivity index derivation

4. Conclusion:

The index based approach reflected a mode to work on strategies based on the nature of process and

the business goals. All the models, hypothesis, interrogative analogies have been newly created or

sometimes optimized with a hybrid approach .We started off with analyzing and apprehending the

three pillars of today’s organization – Capability, Productivity and Innovation. Then it was a focussed

discovery on productivity oriented to a process whose Meta model has been conceptualized and the

relationships influencing the process entities interaction were analyzed to identify the base factors or

challenges for productivity. We also proposed a hypothesis on factor - communication. Now, it is with

application of technological infrastructure in terms of technology consumption, service or standard

adoption to drive the best outcome for productivity. Also, specific scenario productivity analogies

were developed with question based reasoning with the prevailing conditions in the organization and

the symptoms, purpose and solutions have been rated and prioritized. These factors, considerations,

relationships were then related to each other on a single measuring scale and two indices attributing to

syntax and semantics and reflecting a deep perspective of process and productivity have been

developed. The value of indices depends on the relative weights of individual constituents. Thus the

value of indices leads to strategies by adjusting the relative weights of index components which can

be a reflection to improve the least contributors or to shift focus from one contributor to another or to

adopt a better model or technology to overcome the deficit or surplus of contribution or maintain a

median.

5. References

Capability, Productivity and Innovation high level models

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Science Business Media, LLC 2010

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 [3] Innovation’s Org DNA by Rakesh Bordia, Eric Kronenberg, David Neely, 2005 Booz Allen

Hamilton Inc.

 Meta Model Design and Process Influencing Factors Identification

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Information Distortion and supply chain management

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Wagnera and Vijay Aggarwal , International Journal of Production Research, 2011

[9] Financial Flows & Supply Chain Efficiency By Professor Warren H. Hausman, Department of

Management Science & Engineering, Stanford University Sponsored by Visa Commercial Solutions 

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[10] ERP and workflow systems Do they work together? By Hans Wortmann & Nick Szirbik

University of Groningen, Faculty of Management and Organization, Information Systems Cluster.

[11] Best - Run Businesses Run SAP, SAP AG, 2007, SAP group

[12] CRM and customer-centric knowledge management: an empirical research, Constantinos J.

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 Index Derivation and Knowledge Gap Realization

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Bullwhip Effect

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