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Session 2

Process Improvement

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A system that supports business functions Business Functions Accounting, Finance, Marketing, HR, manufacturing.

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Focus on Functions rather than Processes Applications developed over time. Inconsistent, redundant Data Time lag in information delivery
Managerial Control Difficult Process Productivity Monitoring Difficult

Reaction to change slow

In contemporary digital firms, different types of systems are closely linked to one another. This is the ideal. In traditional firms these systems tend to be isolated from one another, and information does not flow seamlessly from one end of the organization to the other. Efficiency and business value tend to suffer greatly in these traditional firms.

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Cross-functional systems were designed to integrate the activities of the entire business process, and are called so because they 'cross' departmental boundaries.

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Therefore, focus is on Processes.

What are some of the problems of Functional Systems?

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Making processes effective have the right quality output, at the right time at the right place. Making processes efficient Minimizing resources needed and eliminating waste (non-value activities) Making processes adaptable being able to adapt to changing customer and business needs.

Eliminate errors Minimize delays Maximize use of assets Promote understanding Are easy to use Are customer-focused and adaptive to changing needs Provide the organization with competitive advantage

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To identify inefficient tasks To spot possible effectiveness improvement tasks To understand where value can be added How can we analyze a process? Map it!

State 1 is the unknown state. In this state, the process performance has not been measured. There is no target. State 2 shows the process out of control. There is a target, but the performance cannot be predicted. In this state, the process performance is an element of chance.

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State 3 displays a process in control, but the process is not capable. Performance can be predicted/measured, but it will not always hit the target. In this state, the process is not within limits. State 4 is a process in control and capable. Process performance is within the target.

State

5 is process improvement. In this state, the process is improved to reduce variability to the target value. The aim is to consistently hit the bulls-eye or center of the target. 6 is continuous improvement. In this state, the process is constantly improved to its best possible performance. The target keeps getting smaller and smaller while still continuously hitting the bulls-eye.

State

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Total - made up of the whole Quality - degree of excellence a product or service provides Management - act, art or manner of planning, controlling, directing,. Therefore, TQM is the art of managing the whole to achieve excellence. excellence

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Total Quality Management means that the organization's culture is defined by and supports the constant attainment of customer satisfaction through an integrated system of tools, techniques, and training. This involves the continuous improvement of organizational processes, resulting in high quality products and services.

A Customers impression of quality begins with the initial contact with the company and continues through the life of the product.
Customers look to the total package - sales, service during the sale, packaging, deliver, and service after the sale. Quality extends to how the receptionist answers the phone, how managers treat subordinates, how courteous sales and repair people are, and how the product is serviced after the sale.

All departments of the company must strive to improve the quality of their operations.

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TQM is the management process used to make continuous improvements to all functions. TQM represents an ongoing, continuous commitment to improvement. The foundation of total quality is a management philosophy that supports meeting customer requirements through continuous improvement.

At its simplest, TQM is all managers leading and facilitating all contributors in everyones two main objectives: (1) total client satisfaction through quality products and services; and (2) continuous improvements to processes,

systems, people, suppliers, partners, products, and services.

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Objective

Continuous Improvement

Principles

Customer Focus

Process Improvement

Total Involvement

Elements

Leadership Education and Training Supportive structure Communications Reward and recognition Measurement

For many companies, the term TQM is associated with corporate programs (mid 1980s ~ early 1990s) aimed at implementing employee teams and statistical process control. Unfortunately, many companies were dissatisfied with the perceived results of these programs, concluding TQM does not work.

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Kaizen: The Key to Japans Competitive Success

Masaaki Imai

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All we are doing is looking at the time line; from the moment the customer gives us an order, to the point when we collect cash. We are reducing that time line by removing the non-value-added wastes. Taiichi Ohno

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In 1999, at one of the US plants of Toyota employees submitted 75000 suggestions, of which 99% were implemented.

Effect - Long term, Undramatic Pace Small steps, Slow Time frame Continuous, Incremental Change Gradual, Consistent Involvement Everybody Approach Collectivism, group efforts

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Defects Overproduction of things not demanded by actual customers Inventories awaiting further processing or consumption Unnecessary overover-processing (for example, relying on inspections rather than designing the process to eliminate problems) Unnecessary motion of employees Unnecessary transport and handling of goods Waiting for an upstream process to deliver, or for a machine to finish processing, or for a supporting function to be completed, or for an interrupted worker to get back to work...

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Throwing aside old systems and starting over Not tinkering with what already exists Not a patchwork fix Means asking if I were re-creating this process today, given what I know and given the current technology, what would it look like? Going back to the beginning and inventing a better way of doing work

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

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Incremental process improvement: (continuous improvement)

Change that brings a process closer to its normal operating standards Does not question the fundamental assumptions and rules that define the current process design

Business Process Reengineering

Creative in its nature Questions existing assumptions and rules Requires new perspectives to generate innovative solutions with potential for breakthrough improvements

Automation Restructuring Downsizing Reorganizing De-layering or flattening an organization

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Design by Computer: Computer One of the most time consuming and expensive phase in product development Design phase Catia by Dassault Systems CAD/CAM Used by almost every aircraft manufacturer. Boeing DaimlerChrysler saved $800 million.

Cycle time reduction Cost reduction Quality improvement Customer satisfaction

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This is in contrast to incremental change or continuous improvement of an existing process. If I were recreating this company today, given what I know and given current technology, what would it look like?

Does the reengineering consultant see the glass as half full or half empty?

Neither. Neither.
Its the wrong size of glass! Or, Is it? Should it be a glass? or a liquid?

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According to Hammer & Champy, 50-70 percent of the organizations attempting BPR do not achieve the results they expected. Why?

Trying to fix a process instead of changing it Not focusing on business processes Focusing only on the process redesign Neglecting peoples values & beliefs Settling for minor results Quitting too early Constraining the scope of the problem & effort Letting corporate culture & mgmt attitudes get in the way

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Assigning a leader who doesnt understand BPR Not making BPR a top corporate priority Trying to do too much at once Concentrating only on design & not implementation. Trying to keep everyone happy. Pulling back if people resist. Dragging out the effort & taking too long.
Source: Hammer & Champy, Reengineering the Corporation, chapter 14.

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BPR Who leads? Usually consultants, Top Management, Cross functional project team

Kaizen People who do the work (with strong guidance initially from top mgmt)

Duration

Is a Project with a Never-ending. Every sub-process defined beginning and an should be kaizened repeatedly forever. end An entire value stream process Radical Most kaizen events focus on onespecific sub-process Could be incremental or radical but affects only a limited sub-process at a time Each kaizen event produces immediately noticeable and measurable changes. Since the people doing the work are making the changes, acceptance is very high. Mostly inexpensive, and possibly even free

Scope Changes

Speed

Implemented in a bigbang changeover High risk of things reverting back to way the way they were soon after the consultant leaves. Often involves expensive technologies, computers and other systems

Acceptance

Cost

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Capability of IT Transactional Geographical

Organizational Impact IT can transform business process into standardized transactions. IT can transfer information with rapidity and ease across large distances, making business process independent of locations. IT can reduce human labour in certain process IT can bring vast volumes of detailed information into a business process. IT can bring complex analytical methods to bear on a process. IT enables changes in the sequence of tasks in a process often allowing multiple tasks to be worked on simultaneously. IT allows the capture and dissemination of knowledge and expertise to improve the process. IT allows detailed tracking of status, inputs and outputs. IT can be used to connect two parties within a process that would otherwise communicate through intermediaries.

Automation Informational Analytical Sequential

Knowledge management Tracking Reduction of intermediaries

Business process reengineering has no start or endit is an evolutionary process. True or False

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________ requires a commitment from all levels of employees to continually strive to make improvements and satisfy customers.

TQM

BPR - ___________ improvement Incremental or Dramatic?

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Kaizen relates to continuous improvement. True or False

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