*Chapter 6Designing, Controlling, and Improving Organizational Processes

Process ManagementPlanning and administering the activities necessary to achieve a high level of performance in key business processes, and identifying opportunities for improving quality and operational performance, and ultimately, customer satisfaction.

AT&T Process Management PrinciplesProcess quality improvement focuses on the end-to-end process.The mind-set of quality is one of prevention and continuous improvement.Everyone manages a process at some level and is simultaneously a customer and a supplier.Customer needs drive process quality improvement.Corrective action focuses on removing the root cause of the problem rather than on treating its symptoms.Process simplification reduces opportunities for errors and rework.Process quality improvement results from a disciplined and structured application of the quality management principles

Process Design: Motorola ApproachIdentify the product or service: What work do I do?Identify the customer: Who is the work for?Identify the supplier: What do I need and from whom do I get it?Identify the process: What steps or tasks are performed? What are the inputs and outputs for each step?Mistake-proof the process: How can I eliminate or simplify tasks? What poka-yoke (i.e., mistake-proofing) devices (see Chapter 13) can I use?Develop measurements and controls, and improvement goals: How do I evaluate the process? How can I improve further?

Design for AgilityClose customer relationshipsEmpower employeesUse effective technologyMaintain close supplier and partner relationshipsBreakthrough improvement

Service ProcessesOutputs not as well defined as in manufacturingHigher interaction with customers

Service Process DesignThree basic design components:Physical facilities, processes and proceduresEmployee behaviorEmployee professional judgment

*Key Service Dimensions

Process ControlControl the activity of ensuring conformance to requirements and taking corrective action when necessary to correct problems and maintain stable performance

Components of Process Control SystemsAny control system has three components:a standard or goal, a means of measuring accomplishment, and comparison of actual results with the standard, along with feedback to form the basis for corrective action.

*Control vs. Improvement

KaizenKaizen a Japanese word that means gradual and orderly continuous improvementFocus on small, gradual, and frequent improvements over the long term with minimum financial investment, and participation by everyone in the organization.

Importance of Process ImprovementCustomer loyalty is driven by delivered value.Delivered value is created by business processes.Sustained success in competitive markets requires a business to continuously improve delivered value.To continuously improve value creation ability, a business must continuously improve its value creation processes.

Structured Problem SolvingRedefine and analyze problemsGenerate ideasEvaluate ideas and select a solutionImplement the solution

Eastman Chemical Improvement ProcessFocus and pinpointCommunicateTranslate and linkCreate a management action planImprove processesMeasure progress and provide feedbackReinforce behaviors and celebrate results

*The Deming Cycle

Plan (1 of 2)Define the process: its start, end, and what it does.Describe the process: list the key tasks performed and sequence of steps, people involved, equipment used, environmental conditions, work methods, and materials used.Describe the players: external and internal customers and suppliers, and process operators.Define customer expectations: what the customer wants, when, and where, for both external and internal customers.Determine what historical data are available on process performance, or what data need to be collected to better understand the process.

Plan (2 of 2)Describe the perceived problems associated with the process; for instance, failure to meet customer expectations, excessive variation, long cycle times, and so on.Identify the primary causes of the problems and their impacts on process performance.Develop potential changes or solutions to the process, and evaluate how these changes or solutions will address the primary causes.Select the most promising solution(s).

DoConduct a pilot study or experiment to test the impact of the potential solution(s).Identify measures to understand how any changes or solutions are successful in addressing the perceived problems.

StudyExamine the results of the pilot study or experiment.Determine whether process performance has improved.Identify further experimentation that may be necessary.

ActSelect the best change or solution.Develop an implementation plan: what needs to be done, who should be involved, and when the plan should be accomplished.Standardize the solution, for example, by writing new standard operating procedures.Establish a process to monitor and control process performance.

DMAIC MethodologyDefineMeasureAnalyzeImproveControl

DefineDescribe the problem in operational termsDrill down to a specific problem statement (project scoping)Identify customers and CTQs, performance metrics, and cost/revenue implications

MeasureKey data collection questionsWhat questions are we trying to answer?What type of data will we need to answer the question?Where can we find the data?Who can provide the data?How can we collect the data with minimum effort and with minimum chance of error?

AnalyzeFocus on why defects, errors, or excessive variation occurSeek the root cause5-Why techniqueExperimentation and verification

ImproveIdea generationBrainstormingEvaluation and selectionImplementation planning

ControlMaintain improvementsStandard operating proceduresTrainingChecklist or reviewsStatistical process control charts

Lean Production and Six SigmaThe 5Ss: seiri (sort), seiton (set in order), seiso (shine), seiketsu (standardize), and shitsuke (sustain). Visual controlsEfficient layout and standardized workPull productionSingle minute exchange of dies (SMED)Total productive maintenanceSource inspectionContinuous improvement

Breakthrough Improvement Discontinuous change resulting from innovative and creative thinking, motivated by stretch goals, and facilitated by benchmarking and reengineering

BenchmarkingBenchmarking the search of industry best practices that lead to superior performance.Best practices approaches that produce exceptional results, are usually innovative in terms of the use of technology or human resources, and are recognized by customers or industry experts.

Types of BenchmarkingCompetitive benchmarking - studying products, processes, or business performance of competitors in the same industry to compare pricing, technical quality, features, and other quality or performance characteristics of products and services. Process benchmarking focus on key work processesStrategic benchmarking focus on how companies compete and strategies that lead to competitive advantage

Benchmarking Process Determine what to benchmarkIdentify key performance indicators to measureIdentify the best-in-class companiesMeasure the performance of best-in-class and compare to your own performanceDefine and take actions to meet or exceed the best performance

ReengineeringReengineering the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed.

The Key Role of Process

Principles of Process RedesignReduce handoffsEliminate stepsPerform steps in parallel rather than in sequenceInvolve key people early

Organizational IssuesResistance to changeTop management supportDiversity of human resources Methodological rigorPayoffs and benefits

Case Studies Chugach School DistrictFroedtert HospitalThe Walt Disney CompanyGeneral Electric

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