Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

4.1 Elements of Business Process Management

Intended learning outcomes: Produce an overview on terms in business process engineering. Describe order management and graphical representation of logistics processes.


Effective and efficient business processes are a key factor with regard to a company’s performance. See the discussion in [Dave93] and [HaCh06], for example. The following Sections 4.1 and 4.2 examine the elements and design of business processes.


4.1.1 Terms in Business Process Engineering: State and Event, Core Competeny and Core Process

Figure 4.1.1.1 shows terms used in business process engineering. Cf. Section 1.1.1.

Term Word origin, definition Related terms
state, statusmode or condition of beingquality; the way things stand
eventsomething that happens; archaic: outcomeoccurence
core competencysignificant or crucial ability, capability, or skill
core processa process for which a company has competitive competencies
logistics systemcomprises logistics tasks, functions and methods, processes, states, flow, and its trigger event. Has its order and process management

Fig. 4.1.1.1         Concepts in business process engineering and management

Looking at the pair of terms state and event, we see that each task or subprocess describes an action state within the whole process, in which the goods being processed (material or information) exist. Between two tasks or subprocesses, there is a transition. If processing does not continue immediately, the transition ends in a waiting state. An example would be a buffer or an in-box in an office. The event is then a special process through which a person or a sensor registers the waiting state and then triggers the next process or task.

It is generally easier to identify the core competencies of a company than to derive core processes from them. A core competency may consist in a function that occurs in various business processes that themselves do not have to constitute core processes. Also, other functions of the business processes do not have to be core competencies. Indeed, it is not always easy to distinguish between important and less important business processes.

A logistics system is like an independent supplier, responsible for fulfilling the order itself.


The following animation shows terms used in the engineering of business processes. It also refers to definitons given in Fig. 1.1.1.2.
To get more information roll over the terms.


4.1.2 Order Management and Graphical Representation of Logistics Processes

The order is the main instrument of logistics, and its processing is the control flow of logistics, both within and among companies. The form of the contract is unimportant: it may be a detailed written contract, or a simple card in a pull system (a Kanban).

Order processing can be compared to a freight train. The cars are coupled together, and the train moves along a certain route. As it goes, goods or information are added to the train. Stopping at certain stations, it signals to other trains to start out and supply goods or informa­tion. Before finally ending its journey, our freight train also delivers goods and information to trains traveling farther on. An observer could sit in the locomotive of the order train and observe the happenings. MEDILS (Method for Description of Integrated Logistics Systems) was designed from this observation point. MEDILS goes beyond the classical flowchart, which was introduced to better understand processes, showing flows, tasks, waiting states, storages, and so on. Figure 4.1.2.1 introduces the symbols used in MEDILS.

Fig. 4.1.2.1        MEDILS symbols.

  • A double arrow represents the flow of goods. In the industrial sector, goods are usually tangible, but they can be information that go with the product from the start, such as drawings or specifications. In the service sector, goods are often intangible. In banks or insurance firms, for example, goods are often composed of information.
  • A single arrow denotes the flow of data for planning & control. This is the flow of information required for administrative and planning purposes. Data describe the characteristics of goods in an appropriate way. Every goods flow is a self-description and thus is also data flow, although it is not drawn separately as such.
  • A broken arrow represents the control flow. This is made up of information that deals with control of the flow of goods and data. Every goods flow and every data flow are also control flow, although they are not drawn separately as such.
  • A hexagon stands for a goods store. Depending on the kind of goods, this may be a warehouse, information store, and so on. An object in this store stands for certain goods and thus represents a waiting state in the flow of goods. In principle, it may stay in this state for an indefinite length of time in the store.
  • A rectangle with a double line on the left represents a data store. An object in this store stands for a certain quantity of data (for example, an order), and it is a waiting state in the flow of data. It may remain in store in this state for an indefinite period of time. The object can be described in more detail by the symbol.
  • A circle stands for a process store, a kind of intermediate store in the logistics process. We can think of a process store in the flow of data or nonmaterial goods (information) as a mailbox. An object is the envelope addressed with control information, while the data are found inside the envelope. A process store in the flow of material goods can be seen as a buffer or transit camp. An object is a crate inscribed with control information, while the goods are found inside the crate.
    A process store stores tasks waiting in line to be processed. The impetus for processing an object is given by an event: a sensor, such as the human eye, registers a state and finds an envelope in the mailbox. Thus, the event is an implicit part of process storage.
  • A rectangle represents a logistics task that may be described in detail within the rec­­tangle. If the effect of a task is the important aspect, the rectangle stands for a function. If procedure according to plan is the focus, the rectangle stands for a me­thod. If the focus is the way of implementation, the well-known value-adding ar­row, which stands for a process, is used in­stead of the rectangle. A task or process can be “nuclear” or com­prise subtasks or subprocesses, which are connected via flows.
  • The rectangle in the shape of an arrow represents a logistics system (LS) in the direction of the temporal axis. The logistics system includes logistics tasks, states, flows, and sublogistics. It has its own order and process management, which is indicated by the doubled top line. As compared to the simple value-adding arrow, a logistics system includes not only the process itself, but also the process store containing the trigger event(s), that is, the impetus to start the process.

Logistics systems are represented in graphic form by using and connecting the symbols. Figure 4.1.2.2 shows the connections used conventionally in MEDILS.

Fig. 4.1.2.2        MEDILS: connecting the symbols.

  • Goods or data along with control information or control informa­tion alone flow from storage into a task or function, or process. Execution of the task, function, or process transforms the goods or data, and they are then moved to new storage points. Multiple flows to a task must be coordinated at the start of the task. Depen­ding upon the context, related flows may be combined in the sense of “and” connections. Flows that need to be separated in the sense of an “or” or “exclusive or” connection are handled separately. Flows leading out from the task are handled analogously.
  • Goods, data, or control flow originate in a task outside the logis­tics system LS into a process store in the LS or from a task within the LS to a process store outside the LS. We can think of this as follows: goods or information in the order processing “train” are transferred to a transport “train” and delivered to another logistics systems “train.” This takes place, for example, when production turns over a completed customer order to distribution.
  • Special brackets stand for sequential or overlapping repetition of (sub)logistics, for as many times as demanded by the situation (even zero times). The flows leading into the brackets must be of the same type as those leading out of the brackets. The contents within the brackets can also be executed selectively, i.e., under conditions.

Small exercise: Logistics systems are represented in graphic form by using and connecting the symbols. The animation shows the connections used conventionally in MEDILS.
Roll over the various elements and see what they signify. By clicking the forward button you can change between three different figures.



Course sections and their intended learning outcomes

  • 4.4 Characteristic Features Relevant to Planning & Control in Supply Chains

    Intended learning outcomes: Produce an overview on principle and validity of characteristics in planning & control. Explain six features in reference to customer, and item or product or product family, five features in reference to logistics and production resources, as well as seven features in reference to the production or procurement order. Describe important relationships between characteristic features and features of transcorporate logistics in supply chains.

  • 4.5 Branches, Production Types, and Concepts for Planning & Control

    Intended learning outcomes: Describe branches of industry in dependency upon characteristic features. Explain in detail production types and concepts for planning & control. Disclose selecting an appropriate branch model, production type, and concept for planning & control.

  • 4.6 Summary

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  • 4.7 Keywords

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  • 4.8 Scenarios and Exercises

    Intended learning outcomes: Differentiate between various concepts for planning & control within the company. Using process charts for synchronization between use and manufacturing with inventory control processes. Elaborate a basic process analysis as well as manufacturing processes in the company-internal layout.

  • 4.9 References

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