cricos provider 00109j | 1 process improvement business process excellence strategy craig lehman...

CRICOS Provider 00109J | www.newcastle.edu.au

1

Process Improvement

Business Process Excellence Strategy

Craig Lehman

Associate Director, Commercial Services

University of Newcastle

National University Finance and Procurement Conference

26-28 July 2010

Karla Stewart

Commercial Relationship Manager

University of Newcastle


2IntroductionCraig LehmanAssociate Director, Commercial ServicesUniversity of Newcastle

Karla StewartSenior Commercial Relationship ManagerCommercial Services, University of Newcastle


3Procurement Reform

Procurement organisations must

balance the desire to leverage

purchasing power through complete

ownership with the need to maintain

the flexibility of the individual

business units, functions, and regions.


4If Procurement was reformed, why do we need a Process

Improvement Strategy?


5Process Enablers


6Business Process Excellence StrategyWhy does Procurement need a Process Improvement Strategy?

Decision SupportEvolving

TransactionalNeglected

Strategic Procurement

Tactical ProcurementSupport/Purchasing

GAPProcess Variance


7

• Contribution and Influence• Process & Controls• External and Internal Relationships• Supplier Relationship Management• Effective Use of Available Technology• Staff Capability and Development

• Structured Approach to Effective Sourcing (DMAIC)

• Sustainable Procurement

EnablingFoundation

Strategic Procurement

Commercial Services Procurement Excellence Profile


8Business Process Excellence Strategy

Process Improvement Strategy

System Modernisation Strategy

Continued & SustainableEvolution of

Procurement


9What are our Objectives?• Organise and develop our operations to suit our internal

customers and stakeholders

• Provide increased value and benefits by improving services and offerings available to staff and students.

• Be recognised as a business excellence centre for continuous improvement

How?By aligning the 3 levels of process enablers to meet changing

requirements.


10

Commercial Services Business Process Excellence Strategy

Customer Focus

Robust Methodolog

y

Pulse Points


11

Improvement Strategy Framework

Results

Personallyactively

Involved in improvement

Encouraging & enabling people

To participate inImprovement

Recognizing Individual &Team effort

Identifying & designing

processes to deliverstrategy

Developing Team skills

Aligning Individual &Organisation

Goals

Recognizing People

Establishing Process

managementSystem to be

used

ImplementingProcess Measures

Improving processes

to satisfy andGenerate valueFor customers

Delivery, Value,

reliability

Repurchasesatisfaction

Response Time to

customers

Time to Market

SatisfactionInvolvement Recognition

CompetencyProductivity

DefectsErrors

Improved Control

Process cycle timeProcess costsProductivity

UtilisationReduced work in Progress

StabilitySustainability

Leadership Policy & Strategy

People

Processes

PeopleResults

Key PerfResults

Customer Results

Enablers


12Business Process

Business process can be defined as a chain of logical connected,

repetitive activities that utilises the organisation's resources to refine

an object for the purpose of achieving specified and measurable

results for internal or external customers.


13

10/80/10 Rule

• 10% Incidentals• 80% Value• 10% Waste

New or Aligned Process


14

10/80/10 Rule

• 10% Value• 80% Incidentals• 10% Waste

Aged or Misaligned Process


15Process Improvement Methodology

• Six Sigma• Lean Thinking • Theory of Constraints (TOC) • ISO 9000 Quality Standards• Total Quality Management (TQM) • Toyota Production System (TPS) • Deming (PDCA)• Juran• Becker PI


16Process Improvement Framework

• DMAIC- Define, Measure, Analyse, Implement,

Control

• DMADV- Define, Measure, Analyse, Design,

Verify

• 3i- Innovate, Improve, Implement


17Process Improvement Framework Continued

DDefine

improvement goals

Tools used-Pareto charts-Bar Graphs-Pie Charts

MMeasure current

performance

Tools Used-MSA-Box Plots-Dot Plots-Histograms

A Analyze the system to determine ways to

improve it

Tools Used-Regression-Correlation-Hypothesis testing

IImprove

the system –remove

variation and non value

added criteria

Tools Used--DoE-ANOVA-Surface Response Testing

C Control

the system so problems don’t

recur

Tools used-Poka Yoka-Flagging-Control Charts

DMAIC provides structure and rigor to problem solving DMAIC provides structure and rigor to problem solving and improving existing processand improving existing process


18

18

Process Improvement Framework Continued

DMADV drives customer needs into service or process designDMADV drives customer needs into service or process design

DDefine

improvement goals

Tools used-Pareto charts-Bar Graphs-Pie Charts

MMeasure current

performance

Tools Used-MSA-Box Plots-Dot Plots-Histograms

A Analyze the system to determine ways to

improve it

Tools Used-Regression-Correlation-Hypothesis testing

DDesign new services or processes

Tools Used-Predictive Models-Simulation-Prototypes-Pilot runs

-

V Verify design

effectiveness in the real world

Tools used-Poka Yoka-Flagging-Control Charts


19

Innovate Improve Implement

Define

Does MET

exist?

Control

Implement

Develop

Explore

Measure

Control

Implement

Improve

Analyse

Measure

MET Sufficient

?

NOYES

NO YES

NO

3i Model

3i is for a team charged to develop the underlying technology and processes that can meet customer expectations for quality and reliability

2

1

Process Improvement Framework Continued


20DMAIC Process StoryboardTEAM FORMATION DEFINE MEASURE

ANALYSE IMPROVE - I : Generate Potential Solutions

CONTROL - Standardise FUTURE PLANS

Define, Measure, Analyse, Improve, Control

Objective: Identify and implement the measures required to establish baseline performance and quantify the opportunity.

Output: Team Project Charter, Work Plan, Measurable Customer Requirements, Process Map/Process Analysis

Objective: Identify and verify the root cause(s) of the problem.

Output: Root cause(s) identified.

Cause and Effect Diagram(Fishbone)

Pareto Chart

Checksheet

Objective: Determine possible solutions that will address the identified root cause(s) of the problem.

Action Plan

Step 1Step 2Step 3Step 4Step 5Step 6

Output: Preferred solution or countermeasures

Key Steps:-

•Generate potential solutions•Assess potential solutions•Select preferred solution•Test/Pilot preferred solution•Develop implementation plan

Objective: Implement the preferred solution. Confirm that the problem and its root cause(s) have been reduced or eliminated.

Before

After

Output: Confirmation that the best solution to eliminate the problem & its root cause(s) has been implemented.

Key steps:-•Implement preferred solution•Verify effectiveness•Apply comparative methods if necessary.

Objective: Prevent the problem and its root cause from recurring.

Flowchart Standard procedure

Output: Solution embedded and “routinised” in relevant process, procedures and standards.

Key steps:-•Standardise the solution (standards & procedures)•Document project•Implement scorecard•Implement controls

Objectives: Review team effectiveness, plan to address remaining issues and institutionalise the learning.

Output: Recommendations for future projects and improvements to team processes. Project documentation and learnings “pack”

Potential Solutions

D

MA

C

I

IMPROVE - II: Implement and Check

Objective: Define the Problem/Opportunity, Customers, Customer Requirements, and Process.

Output: A quantified picture of the current process performance, problem impact. The process sigma rating.

Objective: Select problem/ opportunity theme, select team members

Output: Problem/Opportunity selected, Team members selected.

•Develop business case•Develop project team charter•Understand Customer Requirements•Understand the Process.

•Determine what to measure•Understand the measures•Understand Variation•Assess measurement system•Assess process performance

Problem Solving Team

Key Steps:-Key Steps:-

FlowchartTeam charter Cause and Effect Diagram Run chart or

control chart

•Analyse data•Analyse process•Determine potential root causes•Hypothesis Testing•Verify root causes

Key Steps:-

Key Steps:-•Review remaining project opportunities•Review other applications•Review learnings


21

21

• Objectives of the initiatives not clear

• Value of the Implementation not recognized

• Perception that process improvement is time consuming

• Lack of understanding improvement strategies

• Lack of understanding benefits of process improvement

• Not confident during the early stages

• Lack of management support

• Expectation of instant results

• Lack of adequate coaching

• Unwillingness to invest unless results seen

Barriers to Process Improvement Initiative


22

Improvement Example

Fleet Management


23Fleet Management

• Problem Statement or the Case for Change– Growing CAPEX Fleet Budget– Growing Fleet size and operational costs– Under utilised third party fleet management

system.– No decision support data for management of

fleet and sourcing.– Tactical sourcing of Fleet requirements


24Fleet Management

Innovate Improve Implement

Define

Does MET

exist?

Control

Implement

Develop

Explore

Measure

Control

Implement

Improve

Analyse

Measure

MET Sufficient

?

NOYES

NO YES

NO

3i Model

1


25

Outcomes

• All transactional fleet processes outsourced

• All decision support processes in-sourced

• Surplus resources redirected to commercial systems support


26Benefits

• Increased support for procurement function through decision support data and systems.

• Reduced Fleet CAPEX budget by 84% from 2008 to 2010

• Sustained fleet size with requirements increasing 2.9%.


27

THANK YOU

DISCUSSION

cricos provider 00109j | 1 process improvement business process excellence strategy craig lehman...

Documents

cricos provider

misaligned process slide

process measures

process management system

levels of process enablers

continuous improvement

procurement conference

improvement goals tools