Business Process Development for Industrial Cluster
Taivo Kangilaski
Department of Computer Control, Tallinn University of Technology, 5, Ehitajate tee, Tallinn, Estonia
Keywords: Industrial Cluster, Partner Network, Enterprise Architecture Management, Business Process Management,
Quality Management System.
Abstract: Small production companies frequently have only limited amount of customers, especially in country sides.
To have more orders and to be more competitive, they need to cooperate and form Industrial Clusters. To
manage Industrial Cluster, there should be firm Quality Management System. The current article proposes
approach about handling that complicity, which is related to the Industrial Cluster Management.
1 INTRODUCTION
In Eastern Europe countries, there are lot of small
and middle size (SME) companies in manufacturing
domain. In most cases they have only few
customers, they have quite weak sales team if any,
thus they dependent on their own existing contacts.
As these companies have limited possibilities in
production (which mostly related with bench and
personnel skillsets) it’s also limits their availability
to grow. Thus, the initiatives to the join these
production companies as capability centre into the
umbrella of Industrial Cluster (IC) are very
important.
According to our research group understanding
IC is formed by some production company or
sometimes by some group of people acting as a
broker. Company or this group of people, which
creating such IC can be viewed as the IC Focal
Players (FP). The core of IC has been developed in a
way that it would be able to respond quickly to
market needs and there would be no need to invest
too much time to develop necessary network
competencies and processes for each new business
opportunity. These networks are mostly long term
strategic alliances. In addition to the strategic
alliances, there are also goal-oriented networks,
which can be considered as extensions of the
strategic alliances when needed competences /
resources are missing or are not reachable, or they
are not of a sufficiently high quality (Kangilaski,
2010a).
Current paper contributes to the IC planning
phase focusing on business services, process
management and related artefact identification.
2 PREVIOUS RESEARCH
IC research topic is also known as Virtual
Enterprise, Virtual Organization, Virtual
Organization in Breeding Environment, Virtual
Corporation, Extended Enterprise, Collaborative
Networks, Business Ecosystem etc and there are
many research projects supporting that field.
Well-known are EU level projects in the
Framework Programmes for Research and
Technological Development – ECOLEAD,
SPIKE9, GloNet, but there are lot of others
initiatives in level of universities, companies, etc.
3 ENTERPRISE ARCHITECTURE
As known, quite often small companies fail to create
an integrated vision about how business process
should work across the company and how
information, applications, and the technologies
should enhance or even perform these processes.
This means that it is a challenge also for FP forming
the IC, as it will compose from several companies
which do not have much cooperation experiences.
Thus, to develop such IC, the Enterprise
Architecture (EA) based approach is very usable.
EA serves as a ready reference that enables the
535
Kangilaski T..
Business Process Development for Industrial Cluster.
DOI: 10.5220/0004004705350538
In Proceedings of the 9th International Conference on Informatics in Control, Automation and Robotics (ICINCO-2012), pages 535-538
ISBN: 978-989-8565-22-8
Copyright
c
2012 SCITEPRESS (Science and Technology Publications, Lda.)
organization to assess the impact of the changes on
each of the EA components (Kangilaski, 2010b).
From theory point of view, there are more than
20 different EA frameworks available (Kangilaski,
2010c), which mostly are oriented to the single
organization. Thus, when there is a need to create IC
then there are only few frameworks which support it,
including SCOR, ARCON, VERAM, GLOBEMEN
etc. Those frameworks will cover different aspects
of IC lifecycle management. The main problematic
related with these frameworks lies on the too high-
level abstraction, which makes them implementation
quite challenging.
4 FORMING INDUSTRIAL
CLUSTERS
To be more attractive for companies, which
potentially will join to IC, the FP has to provide
surplus value for them. Thus FP must work out most
critical services to be provided to the IC. According
to our experiences, these services have to be as
minimum of following:
Communication as a service – FP is a former of
IC, which means that it has to perform actions to
identify IC members impacts and needed
competences, which have to be represented. In
addition, it has to improve communications among
companies belonging into IC. Having a cluster
newsletter seems to be one option.
Purchasing as a service – this is one of the most
frequently used services. Companies, merging their
material purchase orders over IC, will get most
probably lower price from market than purchasing
independently. In addition, such cooperation will
also strengthen buyer-supplier linkages.
Marketing as a service – to have better business
opportunities, FP could collect IC companies’
capabilities and promote the IC products or services
domestically and even abroad.
Research and development as a service – FP
having overview about IC companies’ capabilities
may conduct the research and development activities
inside IC to develop new products and services that
IC could provide.
Learning as a service – from FP’s point of view,
it is important that IC companies’ employees are
well educated (e.g. having needed certificates,
modern skillsets). Thus, FP should analyse
companies’ needs and should prepare needed
educational activity and training. To motivate
companies to belong into IC, it is reasonable that
these programs are sponsored by FP.
IT as a service – the small production companies
have only limited possibilities to invest into the ICT.
In most cases we have seen that the production
planning is supported by MS Excel, and production
processes are supported only by paper documents if
any. The quite powerful approach is if FP could
provide for IC companies in light weight mode
production planning functionalities, inventory
management functionality and work order
management functionality. The functionality should
be simplified, to minimize the implementation costs
and time for IC members. Using such IT solution
with analytical functionality will most likely extend
company production effectiveness.
In addition, the FP provides an IT environment,
where IC members could communicate.
Quality management as a service – to be more
competitive, the companies, especially in production
domain, should have to implement Quality
Management System (QMS) and Environmental
Management System (EMS). This is the reason why
the companies have to meet the prerequisite
demanded by FP to implement QMS and EMS to
belong into the IC (ISO 9001, ISO 14001). In some
cases also OHSAS 18001 is demanded.
4.1 Business Process Management
To manage IC, the FP has to establish policies for
process management. As already described, FP
proposes Quality Management as a service, thus it is
reasonable to have an IT environment for process
modelling. Process modelling environment gives
major effect for QMS and EMS management.
Mostly, the companies have process models for
three proposes:
1. to have an overview for an external observer
who wants to understand how business
processes are performed and to determine the
improvement points
2. to define the desired processes and how
company should/could/may perform its
activities
3. to provide explanations about the rationale of
processes, establishing link between business
requirements and process models
Our research group has from previous projects
good Software AG tool ARIS usage experience,
together with its modelling methodology. This is the
reason why we also implemented this approach in
our current analyses.
4.1.1 ARIS House Approach
Commercial ARIS toolset supports several standards
ICINCO2012-9thInternationalConferenceonInformaticsinControl,AutomationandRobotics
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such as Business Process Execution Language
(BPEL), Business Process Modelling Notation
(BPMN) 2.0, Event-driven Process Chains (EPCs),
Unified Modelling Language (UML), ArchiMate etc
(Business Process Trends, 2007).
In addition to the notations, the ARIS framework
not only describes processes but also includes other
important information related to the process flow,
such as Organisation and organisational structures,
Business objectives and strategies, IT-systems and
software applications, Data and data structures,
Resources (e.g. people and materials), Information
flow, Costs, Products and services related to the
process, Skills and knowledge.
To handle such complicacy, the ARIS
methodology provides an ARIS House structure to
organize the different model types, objects and to
define their relation to each other. This structure
helps to organize all of the data and reduces
complexity by offering five views – Organization
View, Data View, Function View, Product/Service
View and Process (Control) View.
By itself, the ARIS framework does not provide
a detailed method for way how to perform business
re-engineering or designing the IT systems
necessary to support a business. The major focus
areas should be products and services that IC plans
to market, business processes, roles, documents and
data in critical value chains.
4.1.2 Processes for Industrial Cluster
To put IC in operation, the FP with its strategic
alliance partners should develop process architecture
for IC (Fig. 1). The process architecture is a
structure that describes the way the business will
operate by determining clear responsibilities.
Process
archiecture
management
ProcessDesign
Process
implemen‐
tation
Process
Controlling
Process
optimization
Figure 1: Process lifecycle.
After the process architecture has been
established, the determined processes should be
carefully designed. The first priority should be to
have processes that are related to IC management.
When there is an agreement in these processes, the
companies may start to model their own processes to
adapt additional demands accrue from IC
management processes. The biggest change for IC
companies is that they need the Broker role. This
role should identify new collaboration opportunities
both inside and outside the IC.
During the process design, the ARIS toolset as
well as methodology was quite valuable, as it gives
us systematic way to communicate the agreed
processes and principles via FP web environment
which is opened for IC members.
When processes are designed, the process
implementation phase is started. According to our
approach, during this phase the FP’s production
planning environment, work order management and
inventory management functionality should be
implemented. As the IT solution is rather light-
weight, the implementation process is quite short.
After process implementation, the process
controlling activities should be started. Information
for controlling can be collected by FP and provided
by IC members. Basing on analyses, the IC FP may
initiate with strategic partners process changes to be
more effective or to adapt to changing market
demands.
According to our experiences, the main processes
that should be focused in level of IC are: Develop
and manage Industrial Cluster; Design and manage
products provided by Industrial Cluster; Purchasing;
Marketing and selling products; Delivering products
(incl. logistics); Managing customer services;
Manage IT; Manage knowledge, improvement and
change.
In level of IC companies, the main focus should
be on the following processes: Information exchange
within IC; Manufacturing process and Manage
environment safety.
What is not listed is Risk management process.
According to our understanding, it is important to
emphasize it separately as it minimizes risk to be
unsuccessful. It is not listed, because we have seen
that small companies will do risk management quite
casually during project preparation phase.
4.1.3 Information Management
Having modelled all needed business processes, it is
possible to determine most critical artefacts that
companies need to exchange in IC. Based on that
information, the FP can consider extending its IT
environment, to offer wider functionality to the IC
members.
Our research group has access to the IC that
covers more than 20 SME-s, which are also mostly
small companies operating in Estonia as well as in
neighbour countries.
Based on performed analyses, we have
determined the major artefacts describing IC,
BusinessProcessDevelopmentforIndustrialCluster
537
presented in Fig. 2. To make an architectural
description, these artefacts are also interconnected
via many-to-many connections. Amount of
interconnections should be minimized to keep the
documentation as simple as possible. One option is
proposed in Fig. 2, where most critical artefacts are
emphasized.
These emphasized elements should be also
modelled in processes, because then it forms
analysable set of information for FPs and gives the
possibility to propose processes reengineering if
needed.
Figure 2: Key artefacts modelling IC.
The degree of simplification and abstraction of
process model depends on the interest of the target
audience and business uncertainty levels.
4.2 Major Risks for Focal Player
Forming Industrial Cluster
To start to form IC, risk management is a significant
topic. According to our team experiences, the
following risk categories should be taken into
account – luck of trust; companies’ economic
stability; quality management; companies’
production capacity management; and lacking of
technology and product development innovation.
In Eastern Europe, the major risk category is luck of
trust. Companies are developing in the first phase of
IC lifecycle. When their economic situation has been
strengthened, they may start to extend their market
share by their own, excluding the IC and overtaking
the customers. This will influence IC microclimate
and minimize the trust inside the IC.
Weak whole set capacity is the bottleneck and has
resulted in difficulty in improving the overall size,
economic effects and competitive power.
5 CONCLUSIONS
There are numerous small production companies in
production field in Eastern Europe.
Our team is convinced that the key approach to
establish working IC is to start from business
modelling and have to process based approach for
quality management as well as for controlling the
cooperation inside IC. Thus the FP should form
Process Office for IC (Kangilaski, 2010b), and based
on this unit contribution to concentrate to develop IT
solutions for critical processes support. Our team has
successfully managed the pilot projects using ARIS
toolset as working environment for that.
The current research is supported from Estonian
Ministry of Education and Research for targeted
financing scheme T113A and Grant ETF9460.
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Kangilaski, T., 2010a. Challenges for SMEs Entering into
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Industrial Engineering: 7th International Conference
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Kangilaski, T., 2010b. Communication as a Crucial
Element for Enterprise Architecture Management in
Virtual Organization. In EAI2N, IFIP TC 5
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Integration and Interoperability, Held as Part of
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Kangilaski, T., 2010c. Enterprise Architecture
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