Business Process Improvement and Lean Sigma

William LaFollette

21 July 2015

This article describes how to combine Lean and Six Sigma methodologies with the capabilities of Business Process Management (BPM) to enhance your process excellence program. It provides an introduction to the key principles and benefits of lean process improvement and how BPM compliments to provide key business value. Lean methodology focuses on increasing flow through the process, reducing cycle time and eliminating wastes in the process. Six Sigma focuses on identifying and removing the causes of defects and minimizing variation in the process. Business Process Management focuses on process and the workflow within organization units that together make up processes. So the three methods each have different focus, but their overall purpose is the same; improve work processes using data, customer insight, workflow understanding, and removal of wastes.

Section 1: Lean - What is it and how it works Lean has a long and significant history, the first person to truly integrate an entire production process was Henry Ford. 1

The core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources. Eliminating waste in our processes, or value streams, creates workflows that have a higher level performance due to decreased human effort, reduced investments, higher ROIs, and faster response to customer demands.

Key Principles of lean are to: 1. Drive Value: Identify your customers and specify value. Clearly define Value for product, service and people. 2. Map the Value Stream: Identify all steps in a process (value added and non-value added).2 3. Create the Flow: Steps should tie together in a logical sequence that accurately describes the process. 4. Establish Pull: Work (flow) should be driven by pulling work as it is needed downstream. 5. Pursue Perfection: Create a culture of excellence through reviewing and continually analyzing value and flow.

The eight wastes of Lean, Acronym(ed) TIMWOODS, are the common thread in business process. Lean methodologies incorporate may tools to identify and eliminate waste.

Challenges

Lean Sigma is a superior methodology for organizational improvement, however, it is often

lacking the ability provide visibility deep enough into and across processes to fully quantify the

extent of the improvement.

“Specific Problem, Specific Solution” mindset

Section 2: What is Six Sigma? “Six Sigma is a quality program that, when all is said and done, improves your customer’s experience, lowers your costs, and builds better leaders. — Jack Welch

Six Sigma is a methodology used to improve business processes by utilizing statistical analysis

rather than guesswork. This proven approach has been implemented within a myriad of

industries to achieve hard and soft money savings, while increasing customer satisfaction.

The Six Sigma methodology is defined by 5 DMAIC steps. DMAIC is the acronym for Define –

Measure – Analyze – Improve – Control. In addition to the 5 DMAIC steps, there is also a step

zero that occurs first. It is known as six sigma leadership.

Key Concepts of Six Sigma

At its core, Six Sigma revolves around a few key concepts.

Critical to Quality: Attributes most important to the customer

Defect: Failing to deliver what the customer wants

Process Capability: What your process can deliver

Variation: What the customer sees and feels

Stable Operations:

Ensuring consistent, predictable processes to improve what the customer sees and feels

Design for Six Sigma: Designing to meet customer needs and process capability

To achieve Six Sigma Quality, a process must produce no more than 3.4 defects per million

opportunities. An "opportunity" is defined as a chance for nonconformance, or not meeting the

required specifications, agreement, SLA, or compliance need.

Section 3: What is BPM?

BPM is defined by Gartner as “a management practice that provides for governance of a business’s process environment toward the goal of improving agility and operational performance. “3

“BPM scope covers the whole process life-cycle: process discovery, design, documentation, rollout, execution, measurement, monitoring, analysis and improvement”4

This practice or discipline provides an operational framework involving modeling, automation, execution, control and measurement of a business activity. This is in support of enterprise goals. Additionally BPM has both operational and technology improvements often requiring additional tools not in the standard Lean tool set. I.e. Process modeling software, Change management, and data integration across platforms. An enterprise BPM suite allows the foundation for a change environment, business managers working with data analysts will be able to generate the applications that manage their workflows and the overall processes, track work, and monitor performance. This provides the context for Lean use and through simulation an immediate evaluation of the benefits of any proposed change.

BPM is best thought of as a business practice, involving techniques and structured methods.

BPM is not a onetime exercise. It requires continuous evaluation of processes.

The steps in BPM:

Design/Analyze

o This phase looks at possible process solutions. Valid accurate data and process definitions would be required to successfully analyze potential process improvements.

Model/Re-design o Capture the business processes at a high level.

Gather enough detail to understand conceptually how the process flows Concentrate on ensuring the high level detail is correct without being distracted by the detail of how it’s going to be implemented – Do Not “ Solutionize”.

Execution o The processes are launched and user interaction begins

Monitor o Key performance indicators are tracked, SLAs compliance measured

Optimization and Automation o Improve the process further through ‘What-If’ simulations o Fine Tune process through automation and addition benefit analysis

Successfully employing BPM usually involves the following:

Organizing around outcomes not tasks to ensure the proper focus is maintained Correcting and improving processes before (potentially) automating them; otherwise all

you’ve done is make the mess run faster Establishing processes and assigning ownership lest the work and improvements simply

drift away – and they will, as human nature takes over and the momentum peters out Standardizing processes across the enterprise so they can be more readily understood

and managed, errors reduced, and risks mitigated

Enabling continuous change so the improvements can be extended and propagated over time

Improving existing processes, rather than building radically new ones. Building completely new processes and systems can take significant time that can negate any gains achieved

Benefits of BPM

The benefits of BPM are often defined through:

Efficiency

Effectiveness

Agility

E.g Support implementation of new business models, faster regulatory compliance

Section 3: Complementary approaches

Organizations improve their processes with a multitude of approaches. BPM success (es) lie(s)

in the cooperation of business and IT. BPM acts as the glue between the two. We often see

drivers for process improvement coming from both directions.

Bottom-Up is an IT-driven initiative to automate processes or replace older BPM technologies,

or both.

While ‘Top-Down’ is the preferred approach to achieve process improvement through

initiatives such as Lean or Six Sigma it needs to be understood that the ongoing management of

Lean and Six Sigma activities are driven by those closest to the work and therefore their input,

contribution and value must be recognized and leverage to drive ongoing operational

successes.

Similarities in the disciplines

BPM Manage processes to improve agility and performance Phases:

Discovery

Modeling

Analysis

Design

Monitor

Lean Create highest value while consuming the fewest resources Phases:

Deming

Plan

Do

Check

Act

Six Sigma

Reduce variation and defects Phases:

Define

Measure

Analyze

Improve

Control

There are similar and complementary aspects between the three approaches in the Leadership, Project Teams, and employee elements as well, represented in the table below.

Conclusion

Lean (or Lean Sigma) and BPM complement each other by providing high value with low effort. BPM solves key challenges for Lean or Six Sigma initiatives that make these initiatives even more effective, without impacting timelines or creating high costs. BPM is not only technology, but a framework that brings process improvements to the next level.

We see the most value of Lean and BPM in the relationship of BPM leading the way for Lean applications.

I propose we embrace ‘Lean BPM’ as an emerging alternative to independent Lean, Six Sigma, BPM approaches. An alternative that reduces complexity and costs associated with traditional approaches.

1. Lean Enterprise Institute - www.lean.org/WhatsLean/History.cfm 2. Definition: The Value Stream is the entire set of activities across all parts of the

organization involved in jointly delivering the product or service. This represents the end-to-end process that delivers the value to the customer. Once you understand what your customer wants the next step is to identify how you are delivering (or not) that to them.

3. I4 Process – I4process.com 4. http://bpmjourney.com/2013/07/what-is-bpm/, 2014-03-01