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Enhancing the partner selection process in a Sustainable Partner Network
9th IFAC Conference on Manufacturing Modelling, Management and Control 9th IFAC Conference on Manufacturing Modelling, Management and Control Berlin, Germany, August 28-30, 2019 Available 9th IFAC Conference on Manufacturing Modelling, Management and online at www.sciencedirect.com Control Berlin, Germany, August 28-30, 2019 9th IFAC Conference on Manufacturing Modelling, Management and Control Berlin, Germany, August 28-30, 2019 Control Berlin, Germany, August 28-30, 2019 Berlin, Germany, August 28-30, 2019
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IFAC PapersOnLine 52-13 (2019) 2425–2430 Enhancing the partner selection process in a Sustainable Partner Network Enhancing the partner selection process Enhancing the partner selection process in in aa Sustainable Sustainable Partner Partner Network Network Enhancing the partner selection process in a Sustainable Partner Network Eduard Shevtshenko*, Kashif Mahmood**, Tatjana Karaulova*** Enhancing the partner selection process in a Tatjana Sustainable Partner Network Eduard Shevtshenko*, Kashif Mahmood**, Karaulova***
Eduard Shevtshenko*, Kashif Mahmood**, Tatjana Karaulova*** Eduard Shevtshenko*, Kashif Mahmood**, Tatjana Karaulova*** TalTech, 19086, Estonia (tel+3726203253, (e-mail:[email protected]*; [email protected]**; Eduard Shevtshenko*, Kashif Mahmood**, Tatjana Karaulova*** TalTech, 19086, Estonia (tel+3726203253, (e-mail:[email protected]*; [email protected]**; [email protected]***)} TalTech, 19086, Estonia (tel+3726203253, (e-mail:[email protected]*; [email protected]**; [email protected]***)} TalTech, 19086, Estonia (tel+3726203253, (e-mail:[email protected]*; [email protected]**; [email protected]***)} TalTech, 19086, Estonia (tel+3726203253, (e-mail:[email protected]*; [email protected]**; [email protected]***)} [email protected]***)} Abstract: Abstract: Abstract: Purpose: Abstract:The purpose of this paper is to introduce how to describe in a unified way the business models Purpose: The purpose of to introduce to aa unified business Abstract: of different companies basedis notations, and toin to thethe lean based models partner Purpose: Thesectors purpose of this this paper paper ison to VAC/EPC introduce how how to describe describe incontribute unified way way the business models of different sectors companies based on VAC/EPC notations, and to contribute to the lean based partner Purpose: The purpose of this paper is to introduce how to describe in a unified way the business models selection mechanism for sustainable partner network. Design/methodology/approach: The authors of different sectors companies basedison VAC/EPC notations, and toincontribute to thethe lean based models partner Purpose: The purpose of thissustainable paper to introduce how to describe a unified way business selection mechanism for partner network. Design/methodology/approach: The authors of different sectors companies based on VAC/EPC notations, and to contribute to the lean based partner introduce the unified business process modelling approach for collaborative companies modelling, which selection mechanism for sustainable partner network. Design/methodology/approach: The authors of different sectors companies based on VAC/EPC notations, and to contribute to the lean based partner introduce the unified business process modelling approach for collaborative companies modelling, which selection mechanism for sustainable partner network. Design/methodology/approach: The authors supports the lean based sustainable partner selection. Where lean correspond to the modelling, characteristics of introduce the unified business process modelling approach for collaborative companies which selection mechanism forsustainable sustainable partner network. Design/methodology/approach: The authors supports the lean based partner selection. Where lean correspond to the characteristics of introduce the unified business process modelling approach for collaborative companies modelling, which cheap (cost effective), better (lower risk) and fast (less time). supports the lean based sustainable partner selection. Where lean correspond to the characteristics of introduce theeffective), unified business processpartner modelling approach for collaborative companies which cheap (cost better (lower and (less supports the lean based sustainable selection. Where lean correspond to the modelling, characteristics of cheap (cost effective), better (lower risk) risk) and fast fast (less time). time). supports the lean based sustainable partner selection. Where lean correspond to the characteristics of Findings: The authors defend that appropriate partner selection is a vital success factor in any cheap (cost effective), better (lower risk) and fast (less time). Findings: The authors defend that appropriate partner selection is a vital success factor in any cheap (cost effective), better (lower risk) and fast (less time). collaboration. Existing supplier (partner selection) tools do not include the unified approach for business Findings: The authors defend that appropriate partner selection is a vital success factor in any collaboration. selection) tools not include approach for Findings: TheExisting authors defend (partner that appropriate partner selection isthe a unified vital success factor in any processes modelling of supplier partners organisations and do notdo apply the lean principles for sustainable partner collaboration. supplier selection) tools do not include approach for business business Findings: TheExisting authors defend (partner that appropriate partner selection isthe a unified vital spend success factor in any processes modelling of partners organisations and do not apply the lean principles for sustainable partner collaboration. Existing supplier (partner selection) tools do not include the unified approach for business selection. Existing collaborative networks such as conventional supply chains considerable time processes modelling of supplier partners (partner organisations and do notdo apply the lean the principles for sustainable partner collaboration. Existing selection) tools not include unified approach for business selection. Existing collaborative networks such as conventional supply chains spend considerable time processes offorpartners andasdoconventional notnumber apply the lean principles for sustainable partner and moneymodelling to search suitableorganisations partners, such decrease the of successful of a project and selection. Existing collaborative networks supply chainsinitiation spend considerable time processes modelling offorpartners organisations andasdoconventional notnumber apply the lean principles for sustainable partner and money to search suitable partners, decrease the of successful of aa project and selection. Existing collaborative networks such supply chainsinitiation spend considerable time completed collaborative projects. and money to search for suitable partners, decrease the number of successful initiation of project and selection. Existing collaborative networks such as conventional supply chainsinitiation spend considerable time completed collaborative projects. and money to search for suitable partners, decrease the number of successful of a project and completed collaborative projects. and moneylimitations/implications: to search forprojects. suitable partners, decrease numberaofunified successful initiation for of athe project and Research The authors havethe designed methodology business completed collaborative Research limitations/implications: authors have designed aa unified methodology the completed collaborative projects. The process modelling of manufacturing machinery for thefor formation of a Research limitations/implications: Theand authors have sectors designedcompanies unified applied methodology for the business business process modelling manufacturing and machinery sectors companies for the formation of Research limitations/implications: authors have the designed a unified methodology the business sustainable partner of AfterThe implementation, solution appliesapplied the lean approach process modelling ofnetwork. manufacturing and machinery sectors companies applied for based thefor formation offoraa Research limitations/implications: The authors have designed a unified methodology for the business sustainable partner network. After implementation, the solution applies the lean based approach fora process modelling of manufacturing and machinery sectors companies applied for the formation partner selection, to decrease the time and cost spend with simultaneous improvement of collaborative sustainable partner ofnetwork. After implementation, the solution appliesapplied the lean approachof process modelling manufacturing and machinery sectors companies for based the offormation offor partner selection, to decrease the time and cost spend with simultaneous improvement collaborative sustainable partner network. After implementation, the solution applies the lean based approach fora project sustainability. Nevertheless, the proposed approach is adaptable to other fields. partner selection, to network. decrease After the time and cost spendthe with simultaneous improvement of approach collaborative sustainable partner implementation, solution applies the lean based for project sustainability. Nevertheless, the approach adaptable fields. partner selection, to decrease the time and cost spend withis improvement collaborative project sustainability. Nevertheless, the proposed proposed approach is simultaneous adaptable to to other other fields. of partner selection, to decrease the time and cost spend with simultaneous improvement of collaborative Practical implications: To evaluate the achieved results the authors have performed the simulation study project sustainability. Nevertheless, the proposed approach is adaptable to other fields. Practical implications: To evaluate the results the have simulation project sustainability. the achieved proposed approach adaptable to performed other fields.the of Sustainable PartnerNevertheless, Network formation followed by partner’s selection supportsstudy lean Practical implications: To evaluate(SPN) the achieved results theisauthors authors have performed thethat simulation study of Sustainable Partner Network (SPN) formation followed by partner’s selection that supports lean Practical implications: To evaluate the achieved results the authors have performed the simulation study principles. The paper includes a feasibility case study for the approval of findings, where twenty-seven of Sustainable PartnerTo Network (SPN) formation followed by partner’s selectionthethat supportsstudy lean Practical evaluate the from achieved results thethe authors haveofperformed simulation principles. The paper includes aa feasibility case study for approval findings, where twenty-seven of Sustainable Partner Network (SPN) formation followed by selection that supports lean small andimplications: medium enterprises (SMEs) the manufacturing andpartner’s logistics fields collaborate to achieve principles. The paper includes feasibility case study for the approval of findings, where twenty-seven of Sustainable Partner Network (SPN) formation followed by partner’s selection that supports lean small and medium enterprises (SMEs) from the manufacturing and logistics fields collaborate to achieve principles. The paper includes a feasibility case study for the approval of findings, where twenty-seven a common goal. The time required for collaborative partner selection in the conventional supply is small and medium enterprises (SMEs) from case the manufacturing and logistics fields collaborate to chain achieve principles. The paper includes a feasibility study for the approval of findings, wheresupply twenty-seven aacompared common goal. The time required for collaborative partner selection in the conventional chain is small and medium enterprises (SMEs) from the manufacturing and logistics fields collaborate to achieve to the partner selection in Sustainable Partner Network was found to less. common goal. The time required for collaborative partner selection in the conventional supply chain is small and medium enterprises (SMEs) from the Partner manufacturing and logistics fields collaborate to chain achieve togoal. the selection in Sustainable Network was less. acompared common The time required collaborative partner selection in the to conventional supply is compared the partner partner selection infor Sustainable Partner Network was found found to less. acompared commonto goal. The time required for collaborative partner selection in the conventional supply chain Originality/value: The main idea is to collect information about the available resources of SMEs into isa to the partner selection in Sustainable Partner Network was found to less. Originality/value: The main is to information about the resources of compared to theentity partner selection in Partner Network was found less. new temporary to idea utilise those resources for the realisation of thetotasks of a particularly largeaa Originality/value: Theand main idea is Sustainable to collect collect information about the available available resources of SMEs SMEs into into new temporary entity and to utilise those resources for the realisation of the tasks of a particularly large Originality/value: The main idea is to collect information about the available resources of SMEs into project while meeting customer expectations. This work also suggests a methodology for faster business new temporary entity and to idea utilise those resources for the about realisation of the tasks of a particularly largeaa Originality/value: The main is to collect information the available resources offaster SMEs into project while meeting customer expectations. This work also suggests a methodology for business new temporary entity and to utilise those resources for the realisation of the tasks of a particularly large process modelling and evaluation (assessment) based on lean principles for a particular business process. project while meeting customer expectations. This work also suggests of a methodology for faster business new temporary entity and to utilise thosethe resources for realisation thearisk. tasks of asuggested particularly large process modelling evaluation (assessment) based on lean principles particular business process. project while meeting customer expectations. This work also suggests methodology for faster business Partners can use theand SPN resources with attributes ofthe fast, cheap anda for less The solution process modelling and evaluation (assessment) based on lean principles for a particular business process. project while meeting customer expectations. This work also suggests a methodology for faster business Partners can use the SPN resources with the attributes of fast, cheap and less risk. The suggested solution process modelling and evaluation (assessment) based on lean principles for a particular business process. enables to select the SPN most resources reliable partners contributes to the improvement of The collaborative networks Partners can use the with theand attributes of lean fast, cheap and for less risk. suggested solution process to modelling and evaluation (assessment) based on principles particular businessnetworks process. enables select the most reliable partners contributes to the improvement of collaborative Partners can use the SPN resources with theand attributes of fast, cheap and lessarisk. The suggested solution sustainability. enables to select the most reliable partners and contributes to the improvement of collaborative networks Partners can use the SPN resources with theand attributes of fast, cheap and less risk. The suggestednetworks solution sustainability. enables to select the most reliable partners contributes to the improvement of collaborative sustainability. © 2019, IFAC (International Federation of Automatic Control) Hosting by Elsevier Ltd. All rights reserved. enables to select the most reliable partners and contributes to the improvement of collaborative networks Keywords: Sustainable Partner Network (SPN), Supply Chain (SC), Value-Added activities (VA), sustainability. Keywords: Sustainable Partner Network (SPN), Supply Chain (SC), Value-Added activities (VA), sustainability. Enterprise Architect (EA), Virtual Enterprise (VE), KPI (Key Performance Indicators), Supply Chain Keywords: Sustainable Partner Network (SPN), Supply Chain (SC), Value-Added activities (VA), Enterprise Architect (EA), Virtual Enterprise (VE), KPI (Key Performance Indicators), Supply Chain Keywords: Sustainable Partner Network (SPN), Supply Chain (SC), Value-Added activities (VA), Operations Reference (SCOR) model , SIPOC (Suppliers, Inputs, Process, Outputs, and Customers) Virtual Enterprise (VE),Supply KPI (Key Performance Indicators),activities Supply Chain Enterprise Architect (EA), Keywords: Sustainable Partner Network (SPN), Chain (SC), Outputs, Value-Added (VA), Operations Reference (SCOR) model , SIPOC (Suppliers, Inputs, Process, and Customers) Enterprise Architect (EA), Virtual Enterprise (VE), KPI (Key Performance Indicators), Supply Chain Operations Reference(EA), (SCOR) modelEnterprise , SIPOC (Suppliers, Inputs, Process, Outputs, and Customers) Enterprise Architect Virtual (VE), KPI (Key Performance Indicators), Supply Chain Operations Reference (SCOR) model, SIPOC (Suppliers, Inputs, Process, Outputs, and Customers) become more sustainable. et al. (2014) mention that for Operations Reference (SCOR) model, SIPOC (Suppliers, Inputs, Process, Outputs,Waas and Customers) 1. INTRODUCTION become sustainable. et mention that sustainable development be a useful concept, it needs to for be become more more sustainable.toWaas Waas et al. al. (2014) (2014) mention that for 1. INTRODUCTION 1. INTRODUCTION sustainable development to be a useful concept, it needs to be become more sustainable. Waas et al. (2014) mention that for seen as a decision-making strategy. Nowadays, the structure of networked organizations evolves sustainable development to be a useful concept, it needs to be 1. INTRODUCTION become sustainable. etto al. eliminate (2014) mention that for as aamore decision-making strategy. Nowadays, the structure networked organizations evolves sustainable development toWaas be a useful concept, itwastes needs to be Lean approach is widely used from in a dynamic inof to meet both quality and seen 1. INTRODUCTION seen as decision-making strategy. Nowadays, the manner structure of order networked organizations evolves sustainable development tostrategy. be a useful concept, itwastes needs to be Lean approach is widely used to eliminate from in a dynamic manner in order to meet both quality and seen as a decision-making Nowadays, the structure of networked organizations evolves systems both in manufacturing and service areas; the lean production imposed constraints. However, to achieve approach is widelystrategy. used to eliminate wastes from in a dynamic manner inof order to meet both quality and Lean seen as a decision-making Nowadays, the structure networked organizations evolves systems both in manufacturing and service areas; the lean production imposed constraints. However, to achieve approach widely to eliminate wastes from in a dynamic manner in order meet both and Lean concept isboth well-known for itsused profound improvements, and on impressive results in cost, qualitytoand time, leanquality systems in is and service areas; the lean production imposed constraints. However, to principles achieve Lean approach ismanufacturing widely used to eliminate wastes from in a tools dynamic manner inapplied order toto meet both quality and concept is well-known for its profound improvements, and on impressive results in cost, quality and time, lean principles systems both in manufacturing and service areas; the lean production imposed constraints. However, to achieve the other hand, it is not easy to implement. By following this and need to be enhance the process concept isboth well-known for its profound improvements, andlean on impressive results in cost, quality and time, leanto principles systems init manufacturing andpartner service areas; the production imposed constraints. However, achieve other is not easy to implement. By following and tools need to be applied to enhance the process concept ishand, well-known for itson profound improvements, andthis on impressive results in other cost, qualitysustainability and time, lean principles vision, the authors focused the selection process, performance. On the hand, has become a the the other hand, it is not easy to implement. By following this and tools need to be applied to enhance the process concept is well-known for its profound improvements, and on impressive results in cost, quality and time, lean principles vision, the authors focused on the partner selection process, performance. On the other hand, sustainability has become a the other hand, it is not easy to implement. By following this and tools need to be applied to enhance the process constitutes a focused vital toolonforthefacilitating the arrangement ubiquitous word several yearssustainability now, and it ishas regarded bya which vision, thehand, authors partner selection process, performance. On for the other hand, become the other it is not easy to implement. By following this and tools need to be applied to enhance the process which constitutes a vital tool for facilitating the arrangement ubiquitous word for several years now, and it is regarded by vision, the authors focused on the partner selection process, performance. On the other hand, sustainability has become a companies in a more and competitive way. virtually everyone that human activities strive by to of which constitutes a focused vitalefficient toolonforthe facilitating the arrangement ubiquitous word yearssustainability now, and itmust ishas regarded vision, the authors partner selection process, performance. On for the several otherhuman hand, become a of companies in aa more competitive way. virtually everyone that activities strive to which constitutes a vitalefficient tool forand facilitating the arrangement ubiquitous word for several years now, and itmust is regarded by of companies in more efficient and competitive way. virtually everyone that human activities must strive to which constitutes a vital tool for facilitating the arrangement ubiquitous word for several years now, and it is regarded by virtually ©everyone Copyright 2019 IFAC that human activities must strive to2478of companies in a more efficient and competitive way. 2405-8963 2019, IFACthat (International Automatic by Elsevier Allefficient rights reserved. of companies in aLtd. more and competitive way. virtually © human Federation activities ofmust striveControl) to2478Hosting Copyright ©everyone 2019 IFAC Copyright 2019 responsibility IFAC 2478Control. Peer review©under of International Federation of Automatic Copyright © 2019 IFAC 2478 10.1016/j.ifacol.2019.11.570 Copyright © 2019 IFAC 2478
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There are only a few research papers, written about process models implementation in a way, which regular employees can use afterwards. Mention that the sustainable development is a useful concept; it needs to be seen as a decision-making strategy. Mostly they are focusing toward process analysts or quality engineers, or discuss the process maturity models. (Ahmad et al., 2007; Moradi-Moghadam et al., 2013). The considered research subject is of paramount managerial interest and the contribution of authors is the development of a new form of networked organisation for SME collaboration - Sustainable Partner Network (SPN) that is needed to increase SME resource capacity by using the partner collaboration procedure. The main idea of the research is focused on the sustainable project management elaboration, to minimise risks and to help SMEs fully satisfy their customer needs in terms of the on-time delivery of sufficient quality products at reasonable prices (Shevtshenko et.al, 2007). Basing on Total Quality Management (Kangilaski and Shevtshenko, 2014) the authors have designed a unified framework for business processes description for SPN formation, which enables to document the organisational structure considering the similar roles and processes inputs and outputs. A sequence of the steps for achieving that goal is introduced in Fig. 1. To initiate the SPN formation process authors suggest to start from business process modelling, followed by definition of target KPI and Risks assessment. In the next step authors suggested to simulate the business processes and to analyse the time spent for Value-added and Non-Value adding activities. The final step is to analyse how to select the SPN partners in the way that enables partners to achieve the target KPI-s, to minimise risks and improves the current business processes sustainability and efficiency.
with respect to a new model named TO-BE, where a significant amelioration is detected in terms of time, cost and risk reductions. Finally, the authors share practical experience on how to implement process-based models and to make them attractive for participating organisation. Authors have applied the lean based partner selection methodology, and validated them in collaboration with 27 international companies in Estonia. The SPN case study operates internationally and offers a wide selection of business services for companies based on the conceptual model of collaborative projects realisation by SMEs, which consists of four phases (Polyantchikov et al., 2017). To validate this SPN establishment process authors decided to model the value-added chains of SPN enterprises in Software AG toolset, where the simulation-based comparison of partner selection processes is performed to validate the applicability of lean principles for the suggested conceptual model. 2. LITERATURE REVIEW 2.1 Sustainability Sustainability has become a ubiquitous word for several years now, and it is regarded by virtually everyone that human activities must strive to become more sustainable. International organisations such as the United Nations, The Organisation for Economic Co-operation and Development (OECD), and the World bank have all released goals and tools for countries to do more in this regard, and governments implementing policies to achieve a better performance in terms of environmental, social and economic activities. Sustainability assessments need to be performed because they provide “an evaluation of global to local integrated nature– society systems in short and long-term perspectives in order to assist [decision-makers] to determine which actions should or should not be taken in an attempt to make society sustainable” (Ness et al., 2007). Indices are one of the types of sustainable assessment tools; these are nothing more than a measure of observed facts, but they are powerful because they simplify reality, make it comparable, easier to analyse and communicate how a phenomenon changes over time. 2.2 Enterprise Architecture and Business Process Management
Fig. 1. A conceptual approach for SPN formation In current research authors asume that companies are interested in SPN approach due to the several motivations: the companies have a slight mismatch between processes and staff job description, after several document revisions, the process inputs and outputs have not fit together. The validation of developed approach is limited by data, collected during the one-year research project, conducted in collaboration with international SMEs from Estonia. documents. Conditions of the current research are that the SPN companies identified the previously described problems and decided to implement ISO quality standards. The elaboration of such methodology is consolidated with a lean based comparison of the AS-IS model simulation results
Enterprise Architecture (EA) frameworks propose different approaches to describe the enterprise operation model. For process description and mapping, different tools and techniques have been used, for example SIPOC (Suppliers, Inputs, Process, Outputs, and Customers) which is used today in Six Sigma, Lean manufacturing, and business process management (Pyzdek, 2014; Juran, 2010), but it is also a way, how to document and manage the processes . “Only 4% of an organisation’s front line problems are known by top management, 9% are known by middle management, 74% by supervisors and 100% by employees” (Bornemann, 2015). Depending on the enterprise maturity level, the enterprises could handle their process documentation in the electronic or paper-based document. Nevertheless, a synchronize way to grasp the whole enterprise processes is still a challenge and under the study based on cloud computing concept.
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2.3 Target KPIs Process excellence is a comprehensive package of improving and sustaining business performance in which quality management is embedded. It is a similar term as Business Excellence and also includes Manufacturing Excellence and Supply Chain Excellence and it can be achieved through the selected KPIs (Cachon et al., 2013). Before the establishment of collaboration and Virtual Enterprise (VE) formation partners’ enterprises describe the future strategical objectives of the common business process directly in the To-Be catalogue. It enables to define the KPIs for process monitoring and to evaluate the efficiency of VE by member companies. For this purpose, authors have applied the SCOR (Supply Chain Operations Reference model) standard, (Supply Chain Council, 2012) as shown in the Fig. 2. SCOR model provides a complete package of KPI metrics with reliability, responsiveness, agility, cost and assets attributes.
Performance Attributes
Performance KPIs
Level 1 Reliability RL
Responsiveness RS
Agility AG
Cost CO
Asset Efficiency AE
Order Fulfillment (RL1)
Order Fulfillment Cycle Time (RS1)
Flexibility (AG1.1) Overall Risk Value (AG1.2)
companies to become SPN participant is to improve the overall performance of their company from time and cost perspective and to define & evaluate the company risks. 2.5 Lean Principles and Value Added Activities Lean approach together with other concepts such as Agile, Resilient and Green are essential to stay competitive in the modern business environments and for the performance and efficiency of Supply Chain (SC) (Mahmood and Shevtshenko, 2015; Cabral et al., 2012). The implementation of lean requires certain principles to follow and some tools and practices to adopt. The lean principles with corresponding practices are indicated in table 1 (Langrand et al., 2012) and the SPN concept follow the lean principles and practices as the concept is focused on value added activities. Table 1. Lean principles with corresponding practices Principles Specify value from the end customer view Map value to expose and eliminate waste Establish flow
Evaluation
Level 2
Level 3
Level 4
RL 2.1
RL 3.1
RL 4.1
RL 2.2
RL 3.2
RL 4.2
RS 2.1
RS 3.1
RS 2.2
RS 3.2
Let the customer pull the products Strive for perfection
CO 2.2
Return on investment (AE1)
AE 2.1
AE 3.1
AE 4.1
AE 2.2
AE 3.2
AE 4.2
Practices - Source information on customer need - Value analysis and customer focus - Value chain analysis - Waste reduction - System organization - Strong and effective relationship - Do exact customer needs when needed - Strong and effective relationship - Problem search - Problem solving
In short, a lean concept in process management provides a way to do more with less human effort, less equipment, less time and less space – while coming closer to value-added activities or processes (Womack and Jones, 2003). To conclude the authors used the previously existing knowledge to develop the Sustainalbe Partner Network (SPN) approach, which architecture enables to define the enterprise Stategy an to measure its filfillments. The SPN approach can be adopted to the needs of SMEs.
CO 2.1
Cost to serve (CO1)
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3. CASE STUDY OF SPN APPROACH USING 3.1. Enterprise Modelling
Fig. 2. SCOR model for KPIs [SCOR 11, 2012] 2.4 Risk assessment for SPN A risk assessment tool (Mahmood and Shevtshenko, 2015) was applied in this study for risk evaluation.
Fig. 3. SPN risks evaluation matrix [ISO 31000:2009: Risk management]. The tool was easy to adapt and comprehend by the target companies. A relatively simple risk matrix to evaluate the risk is depicted in Fig. 3. The main motivation for the
To validate this SPN establishment process authors decided to model the value-added chains of SPN enterprises in Software AG toolset ARIS environment by using three-step business processes description procedure, see Fig.4.
Fig. 4. Business processes model development and adaptation for SPN
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SPN member company business processes description steps: 1.
As-Is business models preparation and definition of processes for outsourcing to SPN;
2.
Publishing of enterprise business process to SPN;
3.
Preparation and analysis of To-Be models.
business processes were described based on four process modelling levels (L) suggested by (Kangilaski et al., 2013) as introduced in Fig. 5. In step 2 the SPN enterprises were introduced the business services provided and participated in SPN audit. During the audit, the companies verified the business process rules.
The case study data is collected during the one-year research project. The 31 SMEs from Estonia were invited to join the SPN, and responses from 27 were received, see table 2. Table 2. Example of Business Services through SPN SPN Business Services Product or Service Development Sales Purchase Planning Manufacturing Logistics Export Logistics Import Logistics Finance Delivery Accounting Warehousing Distribution Others Total Respondents
Number of respondents 1 3 5 2 6 12 3 3 1 1 2 7 4 4 27
Fig. 6 SPN member company business processes described in four levels (L) based on common template and SPN catalogue described in ARIS environment.
The authors have gathered the information for this research through questioner followed by process modelling. Process Model Corporate policies
Corporation / Group level prcess
Enterprise level process
Enterprise process map
Process phase
Process content
Activity
Process phase content
Task
Activity content
After successfully passing the business process audit all enterprises analysed the today company business process by using the business process simulation feature of ARIS modelling software. Based on received results companies decided which value-added chain processes they are willing to import/export from/to SPN. The final business process catalogue for each SPN member consists of three sub-folders, with four levels (L), as it was defined in Fig. 6. In step 3 the process owner is inviting partner companies for the joint development of a collaborative business process, which is described and analysed by companies in the TO-BE business processes folder. 3.2 Target KPIs for SPN
Fig. 5. The process model and process documentation. Moreover, the companies have explored the possibility to disseminate the described business process internally through the company and to obtain the possibility to share the described business processes with collaborative partners in a dynamic and save way. During step 1 all partner enterprises
After the common process establishment, all partner companies move towards the collaborative business process by allocating suitable business process components from appropriate AS-IS process level folders. The common strategy and related goals, diagnosis, reasons and tradition level KPI-s for the SPN partners were described in ARIS environment as shown in Fig. 7. To ensure that the collaborative partners are moving toward selected Strategy authors suggest to define the KPI for each business process level: the first level Goal KPI is connected to the Enterprise level business process, second level Diagonis KPI is connected to Process phases diagrams, third level Reason KPI is connected to process activities and the forth level Transaction KPI is connected to executed tasks. To avoid the conflict of goals of the collaborative strategy and propriated KPIs are selected and confirmed by all partners.
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Fig. 7. Example of collaborative project responsiveness strategy in ARIS environment. 3.3 Business processes risks assessment The risks that were identified by partner companies during this project are given in Table 3. After risks evaluation, authors discovered risks that should be mitigated in SPN. Table 3. Evaluation of SPN enterprises common risks Risk description Unable to define the customer sent the order Unable to validate the partner company data Not enough data to create the invoice to the customer Unable to send the invoice to the customer Unable to create invoice due to partly missing customer data Sold items different from item showed in a report Delay in the order confirmation process, due to outdated IS Missing the common IS Losses due to an unknown partner Failure during manual creation of the document Failure due to the missing description of the business process Reduced number of customer orders Wrong customer information provided The extensive time required for process fulfilment Expensive, non-profitable process Failure due to nonfulfillment of partner commitment
Risk rating LxL=L MxH=H HxM=H LxM=M LxM=M LxM=M HxM=H
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chain case), and compared it to the case of the project being realised in the lean SPN model. Thus, the AS-IS model is first described, which forms a process of the conventional supply chain with the assumption that the project manager carries out those activities during the project formation process. The BPM modelling tool allows to obtain the simulation result for the model's analysis. The supply chain formation process as described in Table 4 starts from project description, understanding, and definition of customer expectations. The result of the activity is introduced in the project plan document. The project manager is the only actor in this process. The project description is a first step (activity), and it is finished with the project plan preparation (activity: project description). The second step is resources definition. During this activity, the project manager defines and assesses the availability of resources and the possibility to include the suppliers into the new supply chain (activity: resource definition). If there are enough own resources to execute the particular operation, then the project manager assigns them to the production plan (activity: own resource reservation). In case there are not enough own resources to cover the particular operation the project manager has to select/search for a supplier (activity: supplier search). A new supplier search can take much time and even if the supplier is found it does not guarantee that a company is still acting and can execute the operation in an appropriate way (risk: does the company exist?). When the list of potential suppliers is defined, the project manager prepares and sends the quotation to suppliers defined in the supplier list (activity: quotation preparation). After this the project manager receives in due date all proposal, it collects all quotations (activity: collecting quotation from suppliers) for analysis and selection of a supplier for the particular operation (activity: supplier selection). When the project manager has made a choice, it fixes the selected supplier into the project plan and sends a final proposal to the customer (activity: proposal finalisation). Table 4. AS-IS project initiation functions
LxM=L HxM=H MxM=M MxM=M
Name Project description Own resources reservation Resources definition Supplier search Quotation preparation Collecting proposals from suppliers Suppliers selection Proposal finalisation
MxM=M MxM=M MxM=M LxM=L HxM=H
3.4 Lean principle based SPN model In the current research paper, the simulation-based comparison of partner selection processes is performed to validate the applicability of lean principles and practices for the suggested conceptual model. Conventional projects are usually fulfilled in a supply chain or through a subproducts/components sub-contracting basis. For a comparison of approaches, authors used the real project's data (supply
Process Time (h) 2 1 1 5 1,5 16 2 2
Process cost (€) 20 10 10 50 15 0 20 20
As a result of the project initiation process modelling, it is clear that the project formation process in the supply chain includes 4 risks, 8 functions, and 1 participant. Each of the functions consumes time in terms of realisation and leads to expenses for the company. The consumption of process time and costs are grouped in Table 5. The times and expenses have been inserted into a model, which has been simulated in ARIS ExtPackSim tool,oo simulate 99 random projects, the simulation model has been restricted to 99 cycles.
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automated, and the SPN repository is also plugged into the TO-BE model. The model also includes the required documents and roles of participants. The time and costs consumed in the process are shown in Table 7.
Table 5. AS-IS AS-IS process analysis
Name
Process folders received (pcs)
Processing time sum (h)
Total function costs (€)
99 40 98 58 58 58
196 40 98 290 87 924
1960 400 980 2900 870 0
57 97 99
114 194 1903
1140 1940 10190
Project description Own resources reservation Resources definition Supplier search Quotation preparation Collecting proposals from suppliers Suppliers selection Proposal finalization Supplier selection
Table 7. TO-BE process analysis
Name
Project description VAC description Own resources reservation Partner filter Quotation preparation Collecting proposals from partners Partner selection Proposal finalization VE formation process
Non-value-added “must” activity; Non-value added “optional” activity;
Process folders received (pcs)
Processing time sum (h)
Total function costs (€)
99 99 41 58 58 58
198 198 41 5,5 29 928
1980 1980 410 5,8 29 0
58 99 99
58 99 1556
580 990 5975
Value-added activity; The simulation with normal distribution shows that the formation of 99 projects in a conventional supply chain model requires 1,903 hours and €10,190. It is now necessary to compare the AS-IS model with a new model or TO-BE, as proposed in this work. The VE formation process or TO-BE model was also developed in ARIS. Similar to the previous model, this case starts with a customer quotation and finishes by providing a proposal to the customer and can be depicted in the Table 6. Table 6. TO-BE project initiation functions Name Project description VAC description Own resources reservation Partner filter Quotation preparation Collecting proposals from partners Partner selection Proposal finalisation
Time for the Process cost process (h) (€) 2 20 2 20 1 10 0,1 1 0,5 5 16 0 1 10 1 10
Based on the lean approach and value added activities concept, the AS-IS processes (Table 6) were grouped into three categories: red colour – is used for the non-value added processes that cannot be avoided, yellow colour – is used for the optional non-value added processes and the green colour is used for the value-added processes. The improved TO-BE process (table 7) is coloured similarly, followed by AS-IS. During the comparison of both models, the first important finding emerges: there is a reduction in the number of risks. There were 4 risks concerned in the AS-IS model, but only 1 risk left in the TO-BE model. Partners auditing, questionnaire filling, the building of frame contract, and repository organisation, are the actions that allow the risks to be eliminated in comparison with the supply chain model. There are similar number of functions, but most of them are
The equation (1) is used to compare the AS-IS and TO-BE models: Comparison unit=100 %-(TO-BE unit/AS-IS unit)*100% (1) The following numbers were obtained from a comparative analysis of time, cost and risks of AS-IS and TO-BE models according to equation (1): Time reduction = 100% - (1556 / 1903)*100% = 100% 0,818 * 100% ≈ 18 % Cost reduction = 100% - (5975 / 10190)*100% = 100% 0,586 * 100% ≈ 41 % Risk reduction = 100% - (1 / 4)*100% = 100% - 0,25 *100% = 75% The proposed collaborative networks approach enabled to decrease the time required for project proposal formation by up to 18%, related costs by up to 41%, and risk number by up to 75% as per simulated cases result. 4. CONCLUSIONS The achieved objectives of this research are summarised as follows: Introduction of an approach that enables the enterprises to align business rules documentation, business processes and requirements. This approach can be handled as a part of a complete set of enterprise operating model. The lean process improvement concept was applied for ASIS business processes analysis and improvement. It enabled to eliminate or decrease the duration of non-Value Added activities and to improve the efficiency of value-added activities in TO-BE business process models. A framework for virtual enterprise formation is validated and it was confirmed that framework guides the steps that an SME needs to undertake in order to become an SPN member.. After that, the SME can resort to SPN resources to increase its own resources capacity by using the partner collaboration procedure for VE formation.
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IFAC PapersOnLine 52-13 (2019) 2425–2430 Enhancing the partner selection process in a Sustainable Partner Network Enhancing the partner selection process Enhancing the partner selection process in in aa Sustainable Sustainable Partner Partner Network Network Enhancing the partner selection process in a Sustainable Partner Network Eduard Shevtshenko*, Kashif Mahmood**, Tatjana Karaulova*** Enhancing the partner selection process in a Tatjana Sustainable Partner Network Eduard Shevtshenko*, Kashif Mahmood**, Karaulova***
Eduard Shevtshenko*, Kashif Mahmood**, Tatjana Karaulova*** Eduard Shevtshenko*, Kashif Mahmood**, Tatjana Karaulova*** TalTech, 19086, Estonia (tel+3726203253, (e-mail:[email protected]*; [email protected]**; Eduard Shevtshenko*, Kashif Mahmood**, Tatjana Karaulova*** TalTech, 19086, Estonia (tel+3726203253, (e-mail:[email protected]*; [email protected]**; [email protected]***)} TalTech, 19086, Estonia (tel+3726203253, (e-mail:[email protected]*; [email protected]**; [email protected]***)} TalTech, 19086, Estonia (tel+3726203253, (e-mail:[email protected]*; [email protected]**; [email protected]***)} TalTech, 19086, Estonia (tel+3726203253, (e-mail:[email protected]*; [email protected]**; [email protected]***)} [email protected]***)} Abstract: Abstract: Abstract: Purpose: Abstract:The purpose of this paper is to introduce how to describe in a unified way the business models Purpose: The purpose of to introduce to aa unified business Abstract: of different companies basedis notations, and toin to thethe lean based models partner Purpose: Thesectors purpose of this this paper paper ison to VAC/EPC introduce how how to describe describe incontribute unified way way the business models of different sectors companies based on VAC/EPC notations, and to contribute to the lean based partner Purpose: The purpose of this paper is to introduce how to describe in a unified way the business models selection mechanism for sustainable partner network. Design/methodology/approach: The authors of different sectors companies basedison VAC/EPC notations, and toincontribute to thethe lean based models partner Purpose: The purpose of thissustainable paper to introduce how to describe a unified way business selection mechanism for partner network. Design/methodology/approach: The authors of different sectors companies based on VAC/EPC notations, and to contribute to the lean based partner introduce the unified business process modelling approach for collaborative companies modelling, which selection mechanism for sustainable partner network. Design/methodology/approach: The authors of different sectors companies based on VAC/EPC notations, and to contribute to the lean based partner introduce the unified business process modelling approach for collaborative companies modelling, which selection mechanism for sustainable partner network. Design/methodology/approach: The authors supports the lean based sustainable partner selection. Where lean correspond to the modelling, characteristics of introduce the unified business process modelling approach for collaborative companies which selection mechanism forsustainable sustainable partner network. Design/methodology/approach: The authors supports the lean based partner selection. Where lean correspond to the characteristics of introduce the unified business process modelling approach for collaborative companies modelling, which cheap (cost effective), better (lower risk) and fast (less time). supports the lean based sustainable partner selection. Where lean correspond to the characteristics of introduce theeffective), unified business processpartner modelling approach for collaborative companies which cheap (cost better (lower and (less supports the lean based sustainable selection. Where lean correspond to the modelling, characteristics of cheap (cost effective), better (lower risk) risk) and fast fast (less time). time). supports the lean based sustainable partner selection. Where lean correspond to the characteristics of Findings: The authors defend that appropriate partner selection is a vital success factor in any cheap (cost effective), better (lower risk) and fast (less time). Findings: The authors defend that appropriate partner selection is a vital success factor in any cheap (cost effective), better (lower risk) and fast (less time). collaboration. Existing supplier (partner selection) tools do not include the unified approach for business Findings: The authors defend that appropriate partner selection is a vital success factor in any collaboration. selection) tools not include approach for Findings: TheExisting authors defend (partner that appropriate partner selection isthe a unified vital success factor in any processes modelling of supplier partners organisations and do notdo apply the lean principles for sustainable partner collaboration. supplier selection) tools do not include approach for business business Findings: TheExisting authors defend (partner that appropriate partner selection isthe a unified vital spend success factor in any processes modelling of partners organisations and do not apply the lean principles for sustainable partner collaboration. Existing supplier (partner selection) tools do not include the unified approach for business selection. Existing collaborative networks such as conventional supply chains considerable time processes modelling of supplier partners (partner organisations and do notdo apply the lean the principles for sustainable partner collaboration. Existing selection) tools not include unified approach for business selection. Existing collaborative networks such as conventional supply chains spend considerable time processes offorpartners andasdoconventional notnumber apply the lean principles for sustainable partner and moneymodelling to search suitableorganisations partners, such decrease the of successful of a project and selection. Existing collaborative networks supply chainsinitiation spend considerable time processes modelling offorpartners organisations andasdoconventional notnumber apply the lean principles for sustainable partner and money to search suitable partners, decrease the of successful of aa project and selection. Existing collaborative networks such supply chainsinitiation spend considerable time completed collaborative projects. and money to search for suitable partners, decrease the number of successful initiation of project and selection. Existing collaborative networks such as conventional supply chainsinitiation spend considerable time completed collaborative projects. and money to search for suitable partners, decrease the number of successful of a project and completed collaborative projects. and moneylimitations/implications: to search forprojects. suitable partners, decrease numberaofunified successful initiation for of athe project and Research The authors havethe designed methodology business completed collaborative Research limitations/implications: authors have designed aa unified methodology the completed collaborative projects. The process modelling of manufacturing machinery for thefor formation of a Research limitations/implications: Theand authors have sectors designedcompanies unified applied methodology for the business business process modelling manufacturing and machinery sectors companies for the formation of Research limitations/implications: authors have the designed a unified methodology the business sustainable partner of AfterThe implementation, solution appliesapplied the lean approach process modelling ofnetwork. manufacturing and machinery sectors companies applied for based thefor formation offoraa Research limitations/implications: The authors have designed a unified methodology for the business sustainable partner network. After implementation, the solution applies the lean based approach fora process modelling of manufacturing and machinery sectors companies applied for the formation partner selection, to decrease the time and cost spend with simultaneous improvement of collaborative sustainable partner ofnetwork. After implementation, the solution appliesapplied the lean approachof process modelling manufacturing and machinery sectors companies for based the offormation offor partner selection, to decrease the time and cost spend with simultaneous improvement collaborative sustainable partner network. After implementation, the solution applies the lean based approach fora project sustainability. Nevertheless, the proposed approach is adaptable to other fields. partner selection, to network. decrease After the time and cost spendthe with simultaneous improvement of approach collaborative sustainable partner implementation, solution applies the lean based for project sustainability. Nevertheless, the approach adaptable fields. partner selection, to decrease the time and cost spend withis improvement collaborative project sustainability. Nevertheless, the proposed proposed approach is simultaneous adaptable to to other other fields. of partner selection, to decrease the time and cost spend with simultaneous improvement of collaborative Practical implications: To evaluate the achieved results the authors have performed the simulation study project sustainability. Nevertheless, the proposed approach is adaptable to other fields. Practical implications: To evaluate the results the have simulation project sustainability. the achieved proposed approach adaptable to performed other fields.the of Sustainable PartnerNevertheless, Network formation followed by partner’s selection supportsstudy lean Practical implications: To evaluate(SPN) the achieved results theisauthors authors have performed thethat simulation study of Sustainable Partner Network (SPN) formation followed by partner’s selection that supports lean Practical implications: To evaluate the achieved results the authors have performed the simulation study principles. The paper includes a feasibility case study for the approval of findings, where twenty-seven of Sustainable PartnerTo Network (SPN) formation followed by partner’s selectionthethat supportsstudy lean Practical evaluate the from achieved results thethe authors haveofperformed simulation principles. The paper includes aa feasibility case study for approval findings, where twenty-seven of Sustainable Partner Network (SPN) formation followed by selection that supports lean small andimplications: medium enterprises (SMEs) the manufacturing andpartner’s logistics fields collaborate to achieve principles. The paper includes feasibility case study for the approval of findings, where twenty-seven of Sustainable Partner Network (SPN) formation followed by partner’s selection that supports lean small and medium enterprises (SMEs) from the manufacturing and logistics fields collaborate to achieve principles. The paper includes a feasibility case study for the approval of findings, where twenty-seven a common goal. The time required for collaborative partner selection in the conventional supply is small and medium enterprises (SMEs) from case the manufacturing and logistics fields collaborate to chain achieve principles. The paper includes a feasibility study for the approval of findings, wheresupply twenty-seven aacompared common goal. The time required for collaborative partner selection in the conventional chain is small and medium enterprises (SMEs) from the manufacturing and logistics fields collaborate to achieve to the partner selection in Sustainable Partner Network was found to less. common goal. The time required for collaborative partner selection in the conventional supply chain is small and medium enterprises (SMEs) from the Partner manufacturing and logistics fields collaborate to chain achieve togoal. the selection in Sustainable Network was less. acompared common The time required collaborative partner selection in the to conventional supply is compared the partner partner selection infor Sustainable Partner Network was found found to less. acompared commonto goal. The time required for collaborative partner selection in the conventional supply chain Originality/value: The main idea is to collect information about the available resources of SMEs into isa to the partner selection in Sustainable Partner Network was found to less. Originality/value: The main is to information about the resources of compared to theentity partner selection in Partner Network was found less. new temporary to idea utilise those resources for the realisation of thetotasks of a particularly largeaa Originality/value: Theand main idea is Sustainable to collect collect information about the available available resources of SMEs SMEs into into new temporary entity and to utilise those resources for the realisation of the tasks of a particularly large Originality/value: The main idea is to collect information about the available resources of SMEs into project while meeting customer expectations. This work also suggests a methodology for faster business new temporary entity and to idea utilise those resources for the about realisation of the tasks of a particularly largeaa Originality/value: The main is to collect information the available resources offaster SMEs into project while meeting customer expectations. This work also suggests a methodology for business new temporary entity and to utilise those resources for the realisation of the tasks of a particularly large process modelling and evaluation (assessment) based on lean principles for a particular business process. project while meeting customer expectations. This work also suggests of a methodology for faster business new temporary entity and to utilise thosethe resources for realisation thearisk. tasks of asuggested particularly large process modelling evaluation (assessment) based on lean principles particular business process. project while meeting customer expectations. This work also suggests methodology for faster business Partners can use theand SPN resources with attributes ofthe fast, cheap anda for less The solution process modelling and evaluation (assessment) based on lean principles for a particular business process. project while meeting customer expectations. This work also suggests a methodology for faster business Partners can use the SPN resources with the attributes of fast, cheap and less risk. The suggested solution process modelling and evaluation (assessment) based on lean principles for a particular business process. enables to select the SPN most resources reliable partners contributes to the improvement of The collaborative networks Partners can use the with theand attributes of lean fast, cheap and for less risk. suggested solution process to modelling and evaluation (assessment) based on principles particular businessnetworks process. enables select the most reliable partners contributes to the improvement of collaborative Partners can use the SPN resources with theand attributes of fast, cheap and lessarisk. The suggested solution sustainability. enables to select the most reliable partners and contributes to the improvement of collaborative networks Partners can use the SPN resources with theand attributes of fast, cheap and less risk. The suggestednetworks solution sustainability. enables to select the most reliable partners contributes to the improvement of collaborative sustainability. © 2019, IFAC (International Federation of Automatic Control) Hosting by Elsevier Ltd. All rights reserved. enables to select the most reliable partners and contributes to the improvement of collaborative networks Keywords: Sustainable Partner Network (SPN), Supply Chain (SC), Value-Added activities (VA), sustainability. Keywords: Sustainable Partner Network (SPN), Supply Chain (SC), Value-Added activities (VA), sustainability. Enterprise Architect (EA), Virtual Enterprise (VE), KPI (Key Performance Indicators), Supply Chain Keywords: Sustainable Partner Network (SPN), Supply Chain (SC), Value-Added activities (VA), Enterprise Architect (EA), Virtual Enterprise (VE), KPI (Key Performance Indicators), Supply Chain Keywords: Sustainable Partner Network (SPN), Supply Chain (SC), Value-Added activities (VA), Operations Reference (SCOR) model , SIPOC (Suppliers, Inputs, Process, Outputs, and Customers) Virtual Enterprise (VE),Supply KPI (Key Performance Indicators),activities Supply Chain Enterprise Architect (EA), Keywords: Sustainable Partner Network (SPN), Chain (SC), Outputs, Value-Added (VA), Operations Reference (SCOR) model , SIPOC (Suppliers, Inputs, Process, and Customers) Enterprise Architect (EA), Virtual Enterprise (VE), KPI (Key Performance Indicators), Supply Chain Operations Reference(EA), (SCOR) modelEnterprise , SIPOC (Suppliers, Inputs, Process, Outputs, and Customers) Enterprise Architect Virtual (VE), KPI (Key Performance Indicators), Supply Chain Operations Reference (SCOR) model, SIPOC (Suppliers, Inputs, Process, Outputs, and Customers) become more sustainable. et al. (2014) mention that for Operations Reference (SCOR) model, SIPOC (Suppliers, Inputs, Process, Outputs,Waas and Customers) 1. INTRODUCTION become sustainable. et mention that sustainable development be a useful concept, it needs to for be become more more sustainable.toWaas Waas et al. al. (2014) (2014) mention that for 1. INTRODUCTION 1. INTRODUCTION sustainable development to be a useful concept, it needs to be become more sustainable. Waas et al. (2014) mention that for seen as a decision-making strategy. Nowadays, the structure of networked organizations evolves sustainable development to be a useful concept, it needs to be 1. INTRODUCTION become sustainable. etto al. eliminate (2014) mention that for as aamore decision-making strategy. Nowadays, the structure networked organizations evolves sustainable development toWaas be a useful concept, itwastes needs to be Lean approach is widely used from in a dynamic inof to meet both quality and seen 1. INTRODUCTION seen as decision-making strategy. Nowadays, the manner structure of order networked organizations evolves sustainable development tostrategy. be a useful concept, itwastes needs to be Lean approach is widely used to eliminate from in a dynamic manner in order to meet both quality and seen as a decision-making Nowadays, the structure of networked organizations evolves systems both in manufacturing and service areas; the lean production imposed constraints. However, to achieve approach is widelystrategy. used to eliminate wastes from in a dynamic manner inof order to meet both quality and Lean seen as a decision-making Nowadays, the structure networked organizations evolves systems both in manufacturing and service areas; the lean production imposed constraints. However, to achieve approach widely to eliminate wastes from in a dynamic manner in order meet both and Lean concept isboth well-known for itsused profound improvements, and on impressive results in cost, qualitytoand time, leanquality systems in is and service areas; the lean production imposed constraints. However, to principles achieve Lean approach ismanufacturing widely used to eliminate wastes from in a tools dynamic manner inapplied order toto meet both quality and concept is well-known for its profound improvements, and on impressive results in cost, quality and time, lean principles systems both in manufacturing and service areas; the lean production imposed constraints. However, to achieve the other hand, it is not easy to implement. By following this and need to be enhance the process concept isboth well-known for its profound improvements, andlean on impressive results in cost, quality and time, leanto principles systems init manufacturing andpartner service areas; the production imposed constraints. However, achieve other is not easy to implement. By following and tools need to be applied to enhance the process concept ishand, well-known for itson profound improvements, andthis on impressive results in other cost, qualitysustainability and time, lean principles vision, the authors focused the selection process, performance. On the hand, has become a the the other hand, it is not easy to implement. By following this and tools need to be applied to enhance the process concept is well-known for its profound improvements, and on impressive results in cost, quality and time, lean principles vision, the authors focused on the partner selection process, performance. On the other hand, sustainability has become a the other hand, it is not easy to implement. By following this and tools need to be applied to enhance the process constitutes a focused vital toolonforthefacilitating the arrangement ubiquitous word several yearssustainability now, and it ishas regarded bya which vision, thehand, authors partner selection process, performance. On for the other hand, become the other it is not easy to implement. By following this and tools need to be applied to enhance the process which constitutes a vital tool for facilitating the arrangement ubiquitous word for several years now, and it is regarded by vision, the authors focused on the partner selection process, performance. On the other hand, sustainability has become a companies in a more and competitive way. virtually everyone that human activities strive by to of which constitutes a focused vitalefficient toolonforthe facilitating the arrangement ubiquitous word yearssustainability now, and itmust ishas regarded vision, the authors partner selection process, performance. On for the several otherhuman hand, become a of companies in aa more competitive way. virtually everyone that activities strive to which constitutes a vitalefficient tool forand facilitating the arrangement ubiquitous word for several years now, and itmust is regarded by of companies in more efficient and competitive way. virtually everyone that human activities must strive to which constitutes a vital tool for facilitating the arrangement ubiquitous word for several years now, and it is regarded by virtually ©everyone Copyright 2019 IFAC that human activities must strive to2478of companies in a more efficient and competitive way. 2405-8963 2019, IFACthat (International Automatic by Elsevier Allefficient rights reserved. of companies in aLtd. more and competitive way. virtually © human Federation activities ofmust striveControl) to2478Hosting Copyright ©everyone 2019 IFAC Copyright 2019 responsibility IFAC 2478Control. Peer review©under of International Federation of Automatic Copyright © 2019 IFAC 2478 10.1016/j.ifacol.2019.11.570 Copyright © 2019 IFAC 2478
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There are only a few research papers, written about process models implementation in a way, which regular employees can use afterwards. Mention that the sustainable development is a useful concept; it needs to be seen as a decision-making strategy. Mostly they are focusing toward process analysts or quality engineers, or discuss the process maturity models. (Ahmad et al., 2007; Moradi-Moghadam et al., 2013). The considered research subject is of paramount managerial interest and the contribution of authors is the development of a new form of networked organisation for SME collaboration - Sustainable Partner Network (SPN) that is needed to increase SME resource capacity by using the partner collaboration procedure. The main idea of the research is focused on the sustainable project management elaboration, to minimise risks and to help SMEs fully satisfy their customer needs in terms of the on-time delivery of sufficient quality products at reasonable prices (Shevtshenko et.al, 2007). Basing on Total Quality Management (Kangilaski and Shevtshenko, 2014) the authors have designed a unified framework for business processes description for SPN formation, which enables to document the organisational structure considering the similar roles and processes inputs and outputs. A sequence of the steps for achieving that goal is introduced in Fig. 1. To initiate the SPN formation process authors suggest to start from business process modelling, followed by definition of target KPI and Risks assessment. In the next step authors suggested to simulate the business processes and to analyse the time spent for Value-added and Non-Value adding activities. The final step is to analyse how to select the SPN partners in the way that enables partners to achieve the target KPI-s, to minimise risks and improves the current business processes sustainability and efficiency.
with respect to a new model named TO-BE, where a significant amelioration is detected in terms of time, cost and risk reductions. Finally, the authors share practical experience on how to implement process-based models and to make them attractive for participating organisation. Authors have applied the lean based partner selection methodology, and validated them in collaboration with 27 international companies in Estonia. The SPN case study operates internationally and offers a wide selection of business services for companies based on the conceptual model of collaborative projects realisation by SMEs, which consists of four phases (Polyantchikov et al., 2017). To validate this SPN establishment process authors decided to model the value-added chains of SPN enterprises in Software AG toolset, where the simulation-based comparison of partner selection processes is performed to validate the applicability of lean principles for the suggested conceptual model. 2. LITERATURE REVIEW 2.1 Sustainability Sustainability has become a ubiquitous word for several years now, and it is regarded by virtually everyone that human activities must strive to become more sustainable. International organisations such as the United Nations, The Organisation for Economic Co-operation and Development (OECD), and the World bank have all released goals and tools for countries to do more in this regard, and governments implementing policies to achieve a better performance in terms of environmental, social and economic activities. Sustainability assessments need to be performed because they provide “an evaluation of global to local integrated nature– society systems in short and long-term perspectives in order to assist [decision-makers] to determine which actions should or should not be taken in an attempt to make society sustainable” (Ness et al., 2007). Indices are one of the types of sustainable assessment tools; these are nothing more than a measure of observed facts, but they are powerful because they simplify reality, make it comparable, easier to analyse and communicate how a phenomenon changes over time. 2.2 Enterprise Architecture and Business Process Management
Fig. 1. A conceptual approach for SPN formation In current research authors asume that companies are interested in SPN approach due to the several motivations: the companies have a slight mismatch between processes and staff job description, after several document revisions, the process inputs and outputs have not fit together. The validation of developed approach is limited by data, collected during the one-year research project, conducted in collaboration with international SMEs from Estonia. documents. Conditions of the current research are that the SPN companies identified the previously described problems and decided to implement ISO quality standards. The elaboration of such methodology is consolidated with a lean based comparison of the AS-IS model simulation results
Enterprise Architecture (EA) frameworks propose different approaches to describe the enterprise operation model. For process description and mapping, different tools and techniques have been used, for example SIPOC (Suppliers, Inputs, Process, Outputs, and Customers) which is used today in Six Sigma, Lean manufacturing, and business process management (Pyzdek, 2014; Juran, 2010), but it is also a way, how to document and manage the processes . “Only 4% of an organisation’s front line problems are known by top management, 9% are known by middle management, 74% by supervisors and 100% by employees” (Bornemann, 2015). Depending on the enterprise maturity level, the enterprises could handle their process documentation in the electronic or paper-based document. Nevertheless, a synchronize way to grasp the whole enterprise processes is still a challenge and under the study based on cloud computing concept.
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2.3 Target KPIs Process excellence is a comprehensive package of improving and sustaining business performance in which quality management is embedded. It is a similar term as Business Excellence and also includes Manufacturing Excellence and Supply Chain Excellence and it can be achieved through the selected KPIs (Cachon et al., 2013). Before the establishment of collaboration and Virtual Enterprise (VE) formation partners’ enterprises describe the future strategical objectives of the common business process directly in the To-Be catalogue. It enables to define the KPIs for process monitoring and to evaluate the efficiency of VE by member companies. For this purpose, authors have applied the SCOR (Supply Chain Operations Reference model) standard, (Supply Chain Council, 2012) as shown in the Fig. 2. SCOR model provides a complete package of KPI metrics with reliability, responsiveness, agility, cost and assets attributes.
Performance Attributes
Performance KPIs
Level 1 Reliability RL
Responsiveness RS
Agility AG
Cost CO
Asset Efficiency AE
Order Fulfillment (RL1)
Order Fulfillment Cycle Time (RS1)
Flexibility (AG1.1) Overall Risk Value (AG1.2)
companies to become SPN participant is to improve the overall performance of their company from time and cost perspective and to define & evaluate the company risks. 2.5 Lean Principles and Value Added Activities Lean approach together with other concepts such as Agile, Resilient and Green are essential to stay competitive in the modern business environments and for the performance and efficiency of Supply Chain (SC) (Mahmood and Shevtshenko, 2015; Cabral et al., 2012). The implementation of lean requires certain principles to follow and some tools and practices to adopt. The lean principles with corresponding practices are indicated in table 1 (Langrand et al., 2012) and the SPN concept follow the lean principles and practices as the concept is focused on value added activities. Table 1. Lean principles with corresponding practices Principles Specify value from the end customer view Map value to expose and eliminate waste Establish flow
Evaluation
Level 2
Level 3
Level 4
RL 2.1
RL 3.1
RL 4.1
RL 2.2
RL 3.2
RL 4.2
RS 2.1
RS 3.1
RS 2.2
RS 3.2
Let the customer pull the products Strive for perfection
CO 2.2
Return on investment (AE1)
AE 2.1
AE 3.1
AE 4.1
AE 2.2
AE 3.2
AE 4.2
Practices - Source information on customer need - Value analysis and customer focus - Value chain analysis - Waste reduction - System organization - Strong and effective relationship - Do exact customer needs when needed - Strong and effective relationship - Problem search - Problem solving
In short, a lean concept in process management provides a way to do more with less human effort, less equipment, less time and less space – while coming closer to value-added activities or processes (Womack and Jones, 2003). To conclude the authors used the previously existing knowledge to develop the Sustainalbe Partner Network (SPN) approach, which architecture enables to define the enterprise Stategy an to measure its filfillments. The SPN approach can be adopted to the needs of SMEs.
CO 2.1
Cost to serve (CO1)
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3. CASE STUDY OF SPN APPROACH USING 3.1. Enterprise Modelling
Fig. 2. SCOR model for KPIs [SCOR 11, 2012] 2.4 Risk assessment for SPN A risk assessment tool (Mahmood and Shevtshenko, 2015) was applied in this study for risk evaluation.
Fig. 3. SPN risks evaluation matrix [ISO 31000:2009: Risk management]. The tool was easy to adapt and comprehend by the target companies. A relatively simple risk matrix to evaluate the risk is depicted in Fig. 3. The main motivation for the
To validate this SPN establishment process authors decided to model the value-added chains of SPN enterprises in Software AG toolset ARIS environment by using three-step business processes description procedure, see Fig.4.
Fig. 4. Business processes model development and adaptation for SPN
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SPN member company business processes description steps: 1.
As-Is business models preparation and definition of processes for outsourcing to SPN;
2.
Publishing of enterprise business process to SPN;
3.
Preparation and analysis of To-Be models.
business processes were described based on four process modelling levels (L) suggested by (Kangilaski et al., 2013) as introduced in Fig. 5. In step 2 the SPN enterprises were introduced the business services provided and participated in SPN audit. During the audit, the companies verified the business process rules.
The case study data is collected during the one-year research project. The 31 SMEs from Estonia were invited to join the SPN, and responses from 27 were received, see table 2. Table 2. Example of Business Services through SPN SPN Business Services Product or Service Development Sales Purchase Planning Manufacturing Logistics Export Logistics Import Logistics Finance Delivery Accounting Warehousing Distribution Others Total Respondents
Number of respondents 1 3 5 2 6 12 3 3 1 1 2 7 4 4 27
Fig. 6 SPN member company business processes described in four levels (L) based on common template and SPN catalogue described in ARIS environment.
The authors have gathered the information for this research through questioner followed by process modelling. Process Model Corporate policies
Corporation / Group level prcess
Enterprise level process
Enterprise process map
Process phase
Process content
Activity
Process phase content
Task
Activity content
After successfully passing the business process audit all enterprises analysed the today company business process by using the business process simulation feature of ARIS modelling software. Based on received results companies decided which value-added chain processes they are willing to import/export from/to SPN. The final business process catalogue for each SPN member consists of three sub-folders, with four levels (L), as it was defined in Fig. 6. In step 3 the process owner is inviting partner companies for the joint development of a collaborative business process, which is described and analysed by companies in the TO-BE business processes folder. 3.2 Target KPIs for SPN
Fig. 5. The process model and process documentation. Moreover, the companies have explored the possibility to disseminate the described business process internally through the company and to obtain the possibility to share the described business processes with collaborative partners in a dynamic and save way. During step 1 all partner enterprises
After the common process establishment, all partner companies move towards the collaborative business process by allocating suitable business process components from appropriate AS-IS process level folders. The common strategy and related goals, diagnosis, reasons and tradition level KPI-s for the SPN partners were described in ARIS environment as shown in Fig. 7. To ensure that the collaborative partners are moving toward selected Strategy authors suggest to define the KPI for each business process level: the first level Goal KPI is connected to the Enterprise level business process, second level Diagonis KPI is connected to Process phases diagrams, third level Reason KPI is connected to process activities and the forth level Transaction KPI is connected to executed tasks. To avoid the conflict of goals of the collaborative strategy and propriated KPIs are selected and confirmed by all partners.
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Fig. 7. Example of collaborative project responsiveness strategy in ARIS environment. 3.3 Business processes risks assessment The risks that were identified by partner companies during this project are given in Table 3. After risks evaluation, authors discovered risks that should be mitigated in SPN. Table 3. Evaluation of SPN enterprises common risks Risk description Unable to define the customer sent the order Unable to validate the partner company data Not enough data to create the invoice to the customer Unable to send the invoice to the customer Unable to create invoice due to partly missing customer data Sold items different from item showed in a report Delay in the order confirmation process, due to outdated IS Missing the common IS Losses due to an unknown partner Failure during manual creation of the document Failure due to the missing description of the business process Reduced number of customer orders Wrong customer information provided The extensive time required for process fulfilment Expensive, non-profitable process Failure due to nonfulfillment of partner commitment
Risk rating LxL=L MxH=H HxM=H LxM=M LxM=M LxM=M HxM=H
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chain case), and compared it to the case of the project being realised in the lean SPN model. Thus, the AS-IS model is first described, which forms a process of the conventional supply chain with the assumption that the project manager carries out those activities during the project formation process. The BPM modelling tool allows to obtain the simulation result for the model's analysis. The supply chain formation process as described in Table 4 starts from project description, understanding, and definition of customer expectations. The result of the activity is introduced in the project plan document. The project manager is the only actor in this process. The project description is a first step (activity), and it is finished with the project plan preparation (activity: project description). The second step is resources definition. During this activity, the project manager defines and assesses the availability of resources and the possibility to include the suppliers into the new supply chain (activity: resource definition). If there are enough own resources to execute the particular operation, then the project manager assigns them to the production plan (activity: own resource reservation). In case there are not enough own resources to cover the particular operation the project manager has to select/search for a supplier (activity: supplier search). A new supplier search can take much time and even if the supplier is found it does not guarantee that a company is still acting and can execute the operation in an appropriate way (risk: does the company exist?). When the list of potential suppliers is defined, the project manager prepares and sends the quotation to suppliers defined in the supplier list (activity: quotation preparation). After this the project manager receives in due date all proposal, it collects all quotations (activity: collecting quotation from suppliers) for analysis and selection of a supplier for the particular operation (activity: supplier selection). When the project manager has made a choice, it fixes the selected supplier into the project plan and sends a final proposal to the customer (activity: proposal finalisation). Table 4. AS-IS project initiation functions
LxM=L HxM=H MxM=M MxM=M
Name Project description Own resources reservation Resources definition Supplier search Quotation preparation Collecting proposals from suppliers Suppliers selection Proposal finalisation
MxM=M MxM=M MxM=M LxM=L HxM=H
3.4 Lean principle based SPN model In the current research paper, the simulation-based comparison of partner selection processes is performed to validate the applicability of lean principles and practices for the suggested conceptual model. Conventional projects are usually fulfilled in a supply chain or through a subproducts/components sub-contracting basis. For a comparison of approaches, authors used the real project's data (supply
Process Time (h) 2 1 1 5 1,5 16 2 2
Process cost (€) 20 10 10 50 15 0 20 20
As a result of the project initiation process modelling, it is clear that the project formation process in the supply chain includes 4 risks, 8 functions, and 1 participant. Each of the functions consumes time in terms of realisation and leads to expenses for the company. The consumption of process time and costs are grouped in Table 5. The times and expenses have been inserted into a model, which has been simulated in ARIS ExtPackSim tool,oo simulate 99 random projects, the simulation model has been restricted to 99 cycles.
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automated, and the SPN repository is also plugged into the TO-BE model. The model also includes the required documents and roles of participants. The time and costs consumed in the process are shown in Table 7.
Table 5. AS-IS AS-IS process analysis
Name
Process folders received (pcs)
Processing time sum (h)
Total function costs (€)
99 40 98 58 58 58
196 40 98 290 87 924
1960 400 980 2900 870 0
57 97 99
114 194 1903
1140 1940 10190
Project description Own resources reservation Resources definition Supplier search Quotation preparation Collecting proposals from suppliers Suppliers selection Proposal finalization Supplier selection
Table 7. TO-BE process analysis
Name
Project description VAC description Own resources reservation Partner filter Quotation preparation Collecting proposals from partners Partner selection Proposal finalization VE formation process
Non-value-added “must” activity; Non-value added “optional” activity;
Process folders received (pcs)
Processing time sum (h)
Total function costs (€)
99 99 41 58 58 58
198 198 41 5,5 29 928
1980 1980 410 5,8 29 0
58 99 99
58 99 1556
580 990 5975
Value-added activity; The simulation with normal distribution shows that the formation of 99 projects in a conventional supply chain model requires 1,903 hours and €10,190. It is now necessary to compare the AS-IS model with a new model or TO-BE, as proposed in this work. The VE formation process or TO-BE model was also developed in ARIS. Similar to the previous model, this case starts with a customer quotation and finishes by providing a proposal to the customer and can be depicted in the Table 6. Table 6. TO-BE project initiation functions Name Project description VAC description Own resources reservation Partner filter Quotation preparation Collecting proposals from partners Partner selection Proposal finalisation
Time for the Process cost process (h) (€) 2 20 2 20 1 10 0,1 1 0,5 5 16 0 1 10 1 10
Based on the lean approach and value added activities concept, the AS-IS processes (Table 6) were grouped into three categories: red colour – is used for the non-value added processes that cannot be avoided, yellow colour – is used for the optional non-value added processes and the green colour is used for the value-added processes. The improved TO-BE process (table 7) is coloured similarly, followed by AS-IS. During the comparison of both models, the first important finding emerges: there is a reduction in the number of risks. There were 4 risks concerned in the AS-IS model, but only 1 risk left in the TO-BE model. Partners auditing, questionnaire filling, the building of frame contract, and repository organisation, are the actions that allow the risks to be eliminated in comparison with the supply chain model. There are similar number of functions, but most of them are
The equation (1) is used to compare the AS-IS and TO-BE models: Comparison unit=100 %-(TO-BE unit/AS-IS unit)*100% (1) The following numbers were obtained from a comparative analysis of time, cost and risks of AS-IS and TO-BE models according to equation (1): Time reduction = 100% - (1556 / 1903)*100% = 100% 0,818 * 100% ≈ 18 % Cost reduction = 100% - (5975 / 10190)*100% = 100% 0,586 * 100% ≈ 41 % Risk reduction = 100% - (1 / 4)*100% = 100% - 0,25 *100% = 75% The proposed collaborative networks approach enabled to decrease the time required for project proposal formation by up to 18%, related costs by up to 41%, and risk number by up to 75% as per simulated cases result. 4. CONCLUSIONS The achieved objectives of this research are summarised as follows: Introduction of an approach that enables the enterprises to align business rules documentation, business processes and requirements. This approach can be handled as a part of a complete set of enterprise operating model. The lean process improvement concept was applied for ASIS business processes analysis and improvement. It enabled to eliminate or decrease the duration of non-Value Added activities and to improve the efficiency of value-added activities in TO-BE business process models. A framework for virtual enterprise formation is validated and it was confirmed that framework guides the steps that an SME needs to undertake in order to become an SPN member.. After that, the SME can resort to SPN resources to increase its own resources capacity by using the partner collaboration procedure for VE formation.
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