Introduction to Process Improvement & Managing Process Improvements Introduction to Process Improvement & Managing Process Improvements BUS665 – Managing Business Processes 1 Introduction to Process...

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Introduction to Process Improvement & Managing Process Improvements Introduction to Process Improvement & Managing Process Improvements BUS665 – Managing Business Processes 1 Introduction to Process Improvement Here are the basics… 2 Process! Process! Process! “Like location to real estate, process is the key to an organization’s success. Organizations exist to serve a purpose, and process is the means by which the purpose is served.” – Paul Keller, Six Sigma Expert & Author Processes define an organization’s… Objectives Its interaction with customers Its ability to convert input to output profitably (goods, services, or both!) Processes are (almost) NEVER right the first time…so what’s required for sustainable process improvement? At it’s core… Systems perspective Measurement 3 Systems Perspective 4 Processes don’t exist in a vacuum! It is not as simple as empowering process-level employees with process management and improvement responsibilities… Processes can be related and impact a variety of stakeholders Optimization of an individual process may well degrade the overall system performance Must take a SYSTEMS PERSPECTIVE Improvement is achieved through cross-functional project teams, comprised of key stakeholder groups, and sponsored by the functional system managers System Measurement Improvement implies a change of state… Process management implies maintenance of a process at a desired state… But, how do you know if you’ve achieved either without MEASUREMENT? Measurement allows you to establish a baseline and determine if change has occurred (good or bad) Processes we want to improve, ideally we’d see our metrics get better Processes at the desired state, ideally we want our metrics to show evidence of maintenance 5 Plain and simple, that’s what this course is all about. Now, let’s go back and break down each of these elements… 6 What is a process? A series of linked tasks or activities that, at every stage, consume one or more resources (employee energy, time, infrastructure, machines, and money) to convert inputs (data, material, and parts) into outputs (products, services, or information). A collection of interacting components that transform inputs (elements that the process needs to execute) into outputs (the results of the process) toward a common aim, called a mission statement. Pause for a moment and think…which definition do you like better? Why? 7 Why should we care? Processes are EVERYWHERE! All industries All departments All people Professionally Personally Most processes can be studied, documented, defined, standardized, improved, and innovated…so any situation in your life or work that you are turning inputs into outputs involves a process. Acquiring the tools to improve processes can make your work AND life a whole lot better! 8 An example… Consider the background check process when hiring a new employee… 9 An example… Diagnosing a patient with severe pain in his head… 10 Characteristics of a Process A well-defined process contains five core components… 11 Resources: the things a process requires to routinely convert inputs to outputs Tangible: people, computer, software Inputs: the things that are transformed by the process into an end product or service Tangible: written data, parts, and forms Intangible: verbal requests Activities: actions that move the inputs through the process to become outputs Tangible: measuring, sawing, nailing, painting, and writing Intangible: reading, approving, or submitting Outputs: products, services, or information Tangible: products Intangible: advice Controls: activities involved in ensuring a process is predictable and stable Internal: organization standards External: customer specifications, legislative requirements, copyright laws Different Types of Processes 12 More distinct – easy to define More nebulous – harder to define Business processes: reflect the core value-creating activities of a company Product development Support processes: support a company’s core value-creating processes or value chains Finance and accounting Marketing and sales Installation and support services Legal and human resources Facilities Information technology Management processes: help plan and govern operations of a company Understanding market opportunities and risks Creating strategy, vision, and goals Managing resources within an enterprise Formal vs. Informal Formal: Documented Well-established steps Example: process map for receiving and submitting invoices Particularly important when there are legal, safety, regulatory, and financial implications Informal: Ones you created yourself and have a fairly narrow focus; often dictated by environment Example: your own steps for taking meeting minutes, carrying out market research, or keeping track of tasks Can become dangerous and costly when should be a formal process but isn’t 13 What is Process Improvement? The act of making any business process or procedure more effective, efficient, or transparent BENEFITS Increased accountability – everyone is aware of their responsibilities; everything gets done Improved reliability – get the outcome you expected more often; access information easily and know that it is accurate Simplified regulatory compliance - provides a system for keeping track of changing laws and their legal obligations Waste avoidance – resources and performance are tracked so wasteful processes can be corrected Enhanced safety and security – processes are designed to ensure safety of employees and security of company assets (physical resources and confidential information) Also…happy customers, streamlined operations, consistent quality, less waste, lower costs, more sales and market share, improved communication, higher employee morale! 14 What Triggers Process Improvement? Why might you begin a process improvement program? Organizational factors: reorganization that brings forth changing roles; changing corporate direction; organizational goals/objectives not being met Management factors: lack of reliable or conflicting management information; budget cuts; desire for greater return on investment Employee factors: high turnover; low employee satisfaction; growing complexity; increase in number of employees (new division or merger); desire to increase employee empowerment Customer, supplier, and partner factors: low satisfaction with service; long lead times to meet requests Product and service factors: products/services with similar processes that could be combined; lack of business agility Process factors: no documented processes or procedures; the amount of rework is substantial; processes are not standardized Technology factors: introduction of new systems; existing application systems overlap Regulatory factors: change in state/federal mandates 15 What is Waste? Any resource consumed by inefficient or nonessential activities, any unwanted material left over from a production process, or any output that has no marketable value NEW: Unsafe workplaces Lack of information or sharing of information Equipment breakdown Environmental 16 What is Standardization? Formulation and implementation of guidelines, rules, and specifications for common and repeated use, aimed at achieving optimum efficiency or uniformity in a process, organization, or system 17 What is Process Maturity? 5-level scale of an organization’s standardization of processes… 18 How Mature are Your Processes? 19 We know where we’re going We have the know-how to get there We keep the doors open We inspire our people to help us get there What are the Phases of Process Improvement? In its simplest form, there are five common steps needed to improve a business process: PLAN: Identify the process to be improved and scope the improvement effort ANALYZE: Map and analyze the process DESIGN: Redesign the process IMPLEMENT: Test and implement the process IMPROVE: Continually improve the process We’ll discuss these in more detail in the next section! 20 Where Do I Start? Define what success looks like and your preferred culture – what do we want to achieve and how do we want to achieve it? Set stretch targets – challenging but not demoralizing Connect the dots – what’s the big picture? Develop a sense of ownership – you are in charge of your role; how does that role fit into the organization? Improve transparency – where do deficiencies exist and what are our plans to correct them? How are we doing so far? Encourage participation (employee engagement) – we want your feedback! Training and education – do we need additional staff training on process improvement or to correct deficiencies? Process improvement – make changes! Quality improvement – monitor and continue to improve changes CELEBRATE successes! 21 Managing Process Improvements Here are the basics… 22 Start with a Framework! A process improvement framework is a structure intended to serve as a support or guide for the building, improvement, or delivery of something that expands operations or delivers something useful or of value to an organization. MANY process improvement methodologies exist – and we’ll discuss many in this course – but they all have a similar set of phases 23 It’s how you get from point A to point B Phases of Process Improvement Plan Analyze Design Implement Continuously Improve 24 Plan Define the vision, objectives, potential benefits, and ensure alignment with strategic drivers Identify what needs fixing Employees frequently express frustration; work seemingly overcomplicated; customer feedback that product or service subpar; projects take longer and longer to complete; underwhelming performance metrics Describe the problem Who does it affect? What is the service/product related to the problem? How big is the problem? Where/when did it occur? Identify the scope of the improvement Define what will and won’t be included in the project Conduct a readiness assessment Completed concurrently to the charter, it assesses whether key stakeholders involve in the change are on board – don’t waste time developing a project and a formal charter only to have it declined! Develop roles and responsibilities Might include: sponsor or champion (executive level), process owner, project leads, executive committee, steering committee, core and extended project teams, SMEs, coordinator, technology expert, stakeholders Gain project charter approval, gather process maps and documents, develop review schedules 25 Develop a project charter Analyze Assess the problem areas in question – gather important information about the process in question and how it operates in its current state Conduct project kickoff Provide overview to project team and relevant stakeholders of methodology, approach, timing, ground rules, and other initiation criteria Facilitate process discovery Why and for whom does the process exist? What is its purpose? Capture high-level processes – SIPOC (suppliers, inputs, process, outputs, customers) Review existing documentation Conducting interviews (what works well, what doesn’t; suggestions) Walking the process – observe the process and capture any missing pieces Document and analyze current state Create process map Review with the SMEs and other stakeholders and validate Determine where there are process problems, disconnects, or pain points (delay, frustrations, waste, quality issues) and brainstorm solutions - where can we enhance value, eliminate waste, improve flow? Conduct benchmarking – how is this process performed by competitors or other industry leaders; how have they solved similar problems in the past? 26 Design Identifying and presenting recommendations on specific trouble areas and designing a road map to support improvement implementation Document future state – what would an idea process look like? Determine the proposed future state process from the set of potential process improvements Document process controls, measurements, and other process components Conduct refinements Gauge feasibility and consider further ways to improve Test ideas Test solutions to ensure optimal results – role playing, pilots (test on a few units), modeling/simulations Identify resources Identify and obtain any resources necessary for implementing the new process – new equipment, technology, physical space, IT support, or management responsibilities? Conduct readiness assessment Determine whether process participants are ready to implement the proposed change – it can be difficult to overcome resistance; hopefully stakeholders have been involved since the start and have buy-in 27 Implement Actual changes are made to the process or a new process is put into action – deployment, go-live, rollout, installation Understand obstacles – resistance from employees, no management support, etc.