High Performance Enterprise

1,182 views
1,085 views

Published on

Systems of Management

Published in: Business
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,182
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
66
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • Momari
  • High Performance Enterprise

    1. 1. Theory and Systems of Management The High Performance Enterprise Presented by: Walter Kruz Module 2: Business Process Improvement Momari
    2. 2. We will learn... <ul><li>Forces driving process improvement </li></ul><ul><li>Industry report: BPI projects from around the world </li></ul><ul><li>Basic business process concepts </li></ul><ul><li>Process mapping and analysis </li></ul>Momari
    3. 3. Business Process Improvement Overview Segment 1 Momari
    4. 4. Forces driving business change Momari Business Change Economy Social/Political Customers Technology Industry/Competition Work Force Environment
    5. 5. Business Process Improvement (BPI) <ul><li>Business process improvement is the optimization of business processes and the associated systems and organizational structures to achieve significant improvement in business performance </li></ul><ul><li>Changes in business processes leading to the creation of value for the enterprise </li></ul>Momari
    6. 6. Two approaches <ul><li>Fundamental and radical change </li></ul><ul><ul><li>Fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance (M. Hammer) </li></ul></ul><ul><li>Continuous Process Improvement </li></ul><ul><ul><li>Small and measurable refinements to an organization's current processes and systems </li></ul></ul>Momari
    7. 7. Elements of Business Processes <ul><li>Organization </li></ul><ul><ul><li>Functional teams that produce product or service </li></ul></ul><ul><li>Processes </li></ul><ul><ul><li>Activities to deliver product or service </li></ul></ul><ul><li>Technology </li></ul><ul><ul><li>Technical input to create product or service </li></ul></ul><ul><li>People </li></ul><ul><ul><li>All stakeholders </li></ul></ul><ul><li>Culture </li></ul><ul><ul><li>“ Personality” of an organization </li></ul></ul>Momari
    8. 8. Incremental Improvement versus Extreme Business Reengineering Momari Source: Davenport Cultural/Structural Cultural Type of Change Information Technology Statistical Control Primary Enabler High Moderate Risk Broad, Cross-Functional Narrow, Functional Typical Scope Top-Down Bottom-Up Participation Short Long Time Required One-time One-time /Continuous Frequency Clean Slate Existing Process Starting Point Radical Incremental Level of Change Extreme Continuous
    9. 9. Few Companies Adjust Processes Before Implementation Momari 27% 29% 44% Implement and change process simultaneously Implement first, adjust process if necessary Assess & adjust process before implementation
    10. 10. BPI Methodology Momari Ensure Performance Continuous Improvement Control Validate Benefits Process Implementation Improve Evaluate Options Process Analysis Analyze Quantification of Issue Process Documentation Measure Prioritize Critical Issues Process Identification Define Goal BPI Six Sigma
    11. 11. BPI drivers <ul><li>Cost reduction </li></ul><ul><ul><li>Higher efficiencies lead to cost reductions </li></ul></ul><ul><li>Improved customer satisfaction </li></ul><ul><ul><li>Improved understanding of customer interface </li></ul></ul><ul><li>Time to market </li></ul><ul><ul><li>Faster product development cycle </li></ul></ul><ul><li>Risk reduction </li></ul><ul><ul><li>Faster prototyping improves product quality </li></ul></ul>Momari
    12. 12. BPI - Key Success factors <ul><ul><li>Top Management Sponsorship </li></ul></ul><ul><ul><ul><ul><li>strong and consistent management involvement is required. Without it chances of success are reduced </li></ul></ul></ul></ul><ul><ul><li>Strategic Alignment </li></ul></ul><ul><ul><ul><ul><li>with company strategic direction; that is, in agreement with financial performance, customer service, and the organization’s vision </li></ul></ul></ul></ul><ul><ul><li>Compelling Business Case for Change </li></ul></ul><ul><ul><ul><ul><li>Communicate clearly the benefits and importance of change </li></ul></ul></ul></ul>Momari
    13. 13. BPI - Key Success factors (cont) <ul><li>Proven Methodology </li></ul><ul><ul><ul><li>that includes a vision process, meets the needs of the project and one that the team understands and supports </li></ul></ul></ul><ul><li>Effective Change Management </li></ul><ul><ul><ul><li>deals with cultural transformation and is the discipline of managing change as a process </li></ul></ul></ul><ul><li>Line Ownership </li></ul><ul><ul><ul><li>match ownership with accountability. Front line workers do the day-to-day process execution </li></ul></ul></ul><ul><li>BPI Team Composition </li></ul><ul><ul><ul><li>must contain breadth and knowledge </li></ul></ul></ul>Momari
    14. 14. Discussion-The Pepsi Case Study <ul><li>State the problems associated with the Pepsi distribution model </li></ul><ul><li>What technology and approach was used to overcome these problems </li></ul><ul><li>How did these changes affect revenue and effectiveness of the distribution model? </li></ul>Momari
    15. 15. A report from industry The Prosci 2002 BPR Report Segment 2 Momari
    16. 16. Prosci’s 2002 BPR Report <ul><li>Third study in a series conducted over a five- year period </li></ul><ul><li>327 organizations from 53 countries participated in the study </li></ul><ul><li>Results provide a comprehensive view of business process reengineering projects from around the world </li></ul><ul><ul><ul><ul><ul><li>Source: http://www.prosci.com/bprbestpractices.htm </li></ul></ul></ul></ul></ul>Momari
    17. 17. Exercise <ul><li>Analyze the pros and cons of the Prosci report </li></ul><ul><li>How could you use this knowledge to improve your organization? </li></ul>Momari
    18. 18. Basic Business Process concepts Segment 3 Momari
    19. 19. Defining Processes <ul><li>A set of logically related tasks performed to achieve a defined business outcome </li></ul><ul><ul><ul><ul><ul><li>Davenport and Short </li></ul></ul></ul></ul></ul><ul><li>The logical organization of people, materials, energy, equipment, and procedures into work activities designed to produce a specified end result </li></ul><ul><ul><ul><ul><ul><li>Whilst Pall </li></ul></ul></ul></ul></ul>Momari
    20. 20. Typical processes in manufacturing <ul><li>OPERATIONAL </li></ul><ul><li>Product development </li></ul><ul><li>Customer acquisition </li></ul><ul><li>Logistics </li></ul><ul><li>Order management </li></ul><ul><li>Post-sales service </li></ul><ul><li>MANAGEMENT </li></ul><ul><li>Performance monitoring </li></ul><ul><li>Information management </li></ul><ul><li>Asset management </li></ul><ul><li>Human resources management </li></ul><ul><li>Planning and resource allocation </li></ul>Momari
    21. 21. 4 types of business processes <ul><li>Core processes </li></ul><ul><ul><li>Central to business functions; relate directly to external customers. Primary activities of value chain </li></ul></ul><ul><li>Support processes </li></ul><ul><ul><li>Have internal customers; back up core processes </li></ul></ul><ul><li>Business network processes </li></ul><ul><ul><li>Exist beyond boundaries of enterprise, Include suppliers, customers, partners </li></ul></ul><ul><li>Management processes </li></ul><ul><ul><li>Used to plan, organize, control resources </li></ul></ul>Momari
    22. 22. The role of IT in BPR <ul><li>IT is an essential enabler </li></ul><ul><li>Hammer and Champy say that IT can be used to break the old rules (Disruptive technology) </li></ul>Momari
    23. 23. 3 IT opportunities in BPR <ul><li>1. Computing </li></ul><ul><ul><li>Reduce cost of production </li></ul></ul><ul><ul><ul><li>Automating data dependent tasks </li></ul></ul></ul><ul><ul><ul><li>Disintermediating information processes </li></ul></ul></ul><ul><ul><ul><li>Eliminating activities </li></ul></ul></ul>Momari
    24. 24. 3 IT opportunities in BPR <ul><li>2. Communications </li></ul><ul><ul><li>Reduce costs of coordination </li></ul></ul><ul><ul><ul><li>Collapsing time and space </li></ul></ul></ul><ul><ul><ul><li>Integrating tasks and processes </li></ul></ul></ul><ul><ul><ul><li>Distributing and collecting data/information </li></ul></ul></ul>Momari
    25. 25. 3 IT opportunities in BPR <ul><li>3. Databases and systems </li></ul><ul><ul><li>Reduce cost of information </li></ul></ul><ul><ul><ul><li>Monitoring processes and tasks </li></ul></ul></ul><ul><ul><ul><li>Analyzing information and supporting decisions </li></ul></ul></ul><ul><ul><ul><li>Archiving and making sense of experience </li></ul></ul></ul>Momari
    26. 26. Relationship between IT capabilities and BPR Momari BPR IT capabilities How can business processes be transformed by IT? How can IT support business processes?
    27. 27. Value-adding capabilities of IT Momari SUPPLIER VALUE CHAIN COMPANY VALUE CHAIN END-USER VALUE CHAINS CHANNEL VALUE CHAINS UPSTREAM COMPANY DOWNSTREAM COMPETITIVE ADVANTAGE ARISES BY OPTIMIZINGVALUE CHAIN LINKAGES; INFORMATION TECHNOLOGY ACTS AS ADDED VALUE
    28. 28. People factors in BPR <ul><li>Human resources are a strategic resource; people play a vital role in the enterprise </li></ul><ul><ul><li>Empowerment </li></ul></ul><ul><ul><ul><li>Increased participation, less hierarchical organization, fewer layers of management </li></ul></ul></ul><ul><ul><li>Increased use of cross-functional teams </li></ul></ul><ul><ul><ul><li>Facilitate communications and complex activities </li></ul></ul></ul><ul><ul><ul><li>Motivational effect </li></ul></ul></ul>Momari
    29. 29. Two approaches for reengineering <ul><li>Davenport </li></ul><ul><li>Identify process </li></ul><ul><li>Identify change levers </li></ul><ul><li>Develop process vision </li></ul><ul><li>Understand existing process </li></ul><ul><li>Design and implement new processes </li></ul><ul><li>Hammer and Champy </li></ul><ul><li>Choose process </li></ul><ul><li>Understand process </li></ul><ul><li>Undertake re-design session </li></ul><ul><li>Implement new process </li></ul>Momari
    30. 30. Identifying process for redesign <ul><li>Enumerate major processes </li></ul><ul><ul><li>Identify major processes of interest </li></ul></ul><ul><li>Determine process boundaries </li></ul><ul><ul><li>Scope processes; determine boundaries </li></ul></ul><ul><li>Assess strategic relevance </li></ul><ul><ul><li>Target processes to innovate </li></ul></ul><ul><li>Render high level judgement on process health </li></ul><ul><ul><li>Identify problematic processes </li></ul></ul><ul><li>Qualify the culture and politics of processes </li></ul><ul><ul><li>Measure selected processes cultural, political climate </li></ul></ul>Momari
    31. 31. The visioning process Momari Initial vision statement Key process characteristics Performance measures and objectives Critical success factors Potential implementation barrier How can we do things different ? How will it work ? How well will it work? What things have to go right ? Why might not go right ?
    32. 32. Understanding existing processes <ul><li>Models and documentation facilitates communication among participants </li></ul><ul><li>Documentation provides the means to migrate to a new process </li></ul><ul><li>Recognizing problems in existing process helps in preventing them in new process </li></ul><ul><li>Understanding current process provides measure of value of proposed redesign </li></ul>Momari
    33. 33. Redesigning new process <ul><li>Brainstorm design alternative </li></ul><ul><ul><li>Use workshops to surface creative designs </li></ul></ul><ul><li>Assess feasibility, risk, and benefits </li></ul><ul><ul><li>Evaluate relative benefits, costs, risks of alternative </li></ul></ul><ul><li>Prototype new process design </li></ul><ul><ul><li>Develop prototype to simulate and test the operation of the new process </li></ul></ul>Momari
    34. 34. Skills needed for BPI <ul><li>Business analysis </li></ul><ul><li>Strategy analysis </li></ul><ul><li>Data modeling </li></ul><ul><li>Computer simulation </li></ul><ul><li>Industrial engineering </li></ul><ul><li>Financial analysis </li></ul><ul><li>……… .. </li></ul>Momari
    35. 35. Exercise <ul><li>Discuss the value add of a specific information technology on an industry or business. For example, wireless communications and the supply chain; or online learning and education. </li></ul>Momari
    36. 36. Process Mapping Segment 4 Momari
    37. 37. Process Concepts <ul><li>Processes </li></ul><ul><ul><li>All activities that create and deliver the product or service </li></ul></ul><ul><ul><li>An activity that </li></ul></ul><ul><ul><ul><li>Takes an input </li></ul></ul></ul><ul><ul><ul><li>Add value to it </li></ul></ul></ul><ul><ul><ul><li>Produce an output for a customer </li></ul></ul></ul>Momari
    38. 38. The process environment Momari Input/ supplier Output/ customer Feedback system Process characteristics (Measurements) Requirements Requirements
    39. 39. Characteristics of the process (Attributes we want to improve) <ul><li>External </li></ul><ul><li>Customer complaints </li></ul><ul><li>Defective rates </li></ul><ul><li>Warranty claims </li></ul><ul><li>Response time </li></ul><ul><li>Internal </li></ul><ul><li>Customer complaints </li></ul><ul><li>Cost </li></ul><ul><li>Number of steps </li></ul><ul><li>Number of sign-offs </li></ul><ul><li>Travel time </li></ul><ul><li>Inventory levels </li></ul>Momari
    40. 40. Preparing a monthly financial report Momari Info Systems: Volumes Inventory cost Labor cost Financial Planning: Overhead rates Practices Management: Review schedule Special requirements Process Characteristics/Measurements Accuracy (# redo’s) Customer satisfaction (# complaints) Timeliness (Complete on time) Efficiency (Hrs paid overtime) Supplier input Financial mgmt: Reports Explanations Concerns Site mgmt: Reports Reviews Tax accounting: Cost info Deductions Customer output
    41. 41. Exercise <ul><li>Prepare an income tax return for a customer </li></ul><ul><li>Use the model described earlier and show: </li></ul><ul><ul><li>Title </li></ul></ul><ul><ul><li>Supplier/input </li></ul></ul><ul><ul><li>Customer/output </li></ul></ul><ul><ul><li>Characteristics/measurements </li></ul></ul>Momari
    42. 42. Process mapping definition <ul><li>A graphical description of an existing or proposed process which uses symbols, connecting lines, and descriptive words to display the activities, sequence, and relationships within the process </li></ul>Momari
    43. 43. Insurance claim process Momari Client Claims processing Insurance agent Car repair shop 1. Notify agent 2. Instructions 3. Request quote 4. Provide quote 9. Fix and pay 5. File claim 6. File claim 7. Request additional info 8. Pay
    44. 44. Momari Role Responsibilities Source Team Roles
    45. 45. Process mapping methodology Momari Bounding the process & setting objectives Developing the data gathering plan Interviewing the process participants Generating the process map Analyzing and using the map
    46. 46. Bounding and target setting <ul><li>Bounding </li></ul><ul><ul><li>Put wall around area to be studied </li></ul></ul><ul><li>Setting objectives </li></ul><ul><ul><li>Understanding the customer perceptions </li></ul></ul><ul><ul><li>Setting improvement targets based on these perceptions </li></ul></ul>Momari
    47. 47. Bounding the process <ul><li>Objectives </li></ul><ul><li>Identifies what is included and what is not </li></ul><ul><li>Clearly describes what will be mapped </li></ul><ul><li>Identifies </li></ul><ul><ul><li>Inputs/suppliers </li></ul></ul><ul><ul><li>Outputs/customers </li></ul></ul><ul><li>Purpose </li></ul><ul><li>Eliminates overlaps and gaps </li></ul><ul><li>Provides basis for agreement on scope </li></ul><ul><ul><li>owner, team, mgmt </li></ul></ul><ul><li>Helps teams focus on problems </li></ul><ul><li>Helps teams focus on customer needs </li></ul>Momari
    48. 48. Setting improvement objectives <ul><li>Determine </li></ul><ul><ul><li>Which customer perceptions do you want to change? </li></ul></ul><ul><ul><li>Which process outputs will change those perceptions? </li></ul></ul><ul><ul><li>Which process characteristics must be changed? </li></ul></ul><ul><ul><li>How much must they be changed? </li></ul></ul><ul><li>Process changes are based on the expected impacts to the customer </li></ul>Momari
    49. 49. Who are the customers? <ul><li>Who are they? </li></ul><ul><ul><li>Anyone affected by a change to the outputs of the process, including: </li></ul></ul><ul><ul><ul><li>external customers, business strategies, internal customers, other processes </li></ul></ul></ul><ul><li>How do you know what they want? </li></ul><ul><ul><li>Complaints and compliments, surveys, interviews, focus groups, market research studies </li></ul></ul>Momari
    50. 50. Exercise <ul><li>Fill out Process bounding worksheet for the insurance claim process </li></ul><ul><ul><li>There is 60% variation in cost of similar claims </li></ul></ul><ul><ul><li>Customer complaints: It takes a month to get check </li></ul></ul><ul><ul><li>Set objective: timely and fair payment </li></ul></ul><ul><ul><li>Input: Policy #, car model, damage </li></ul></ul><ul><ul><li>Output: instructions, claim quotes, check </li></ul></ul>Momari
    51. 51. Momari
    52. 52. Developing the data gathering plan Momari What data is needed to create a process map? Who do we need to talk to? What should we ask? Bounding the process & objectives Developing the data gathering plan Interviewing the participants Generating process map Analyzing and using the map
    53. 53. Plan generation process Momari <ul><li>Outputs </li></ul><ul><li>Concept flowchart </li></ul><ul><li>Final process boundary </li></ul><ul><li>Information plan </li></ul><ul><ul><li>What needed </li></ul></ul><ul><ul><li>from whom </li></ul></ul><ul><ul><li>by when </li></ul></ul><ul><li>Inputs </li></ul><ul><li>Bounding worksheets </li></ul><ul><li>Owner’s expectations </li></ul><ul><li>Restrictions </li></ul><ul><li>Available data </li></ul>Team Planning meeting
    54. 54. Concept flowchart <ul><li>Objectives </li></ul><ul><ul><li>Provide enough detail to identify all activities and departments involved </li></ul></ul><ul><ul><li>Leads to agreement among team members on the major components and boundaries </li></ul></ul><ul><ul><li>Allows process mapping work to be split up logically </li></ul></ul>Momari
    55. 55. Concept flowchart-Insurance Co. Momari client agent claims center shop 1. Notify agent 2. instructions 3. Quote request 4. Provide quote … and so on
    56. 56. Interviewing the process participants Momari Setting up and conducting info gathering interviews Creating sub-process maps during the interview Bounding the process & objectives Developing the data gathering plan Interviewing the participants Generating process map Analyzing and using the map
    57. 57. Interviews <ul><li>Purpose: </li></ul><ul><ul><li>Gather enough information to create accurate process map that can used for improvement </li></ul></ul><ul><ul><li>Gather suggestions for improvement from employees directly involved in its execution </li></ul></ul><ul><ul><li>Gain buy-in by involving process participants in the process analysis </li></ul></ul><ul><li>Mechanics: </li></ul><ul><ul><li>2 team members per interview </li></ul></ul><ul><ul><li>One interviewee at a time </li></ul></ul>Momari
    58. 58. Momari Interview Process Flow Is this the last step Opinions Facts 1. What is the first (next) next step you perform 3. What support do you need? Who supplies 2. What are the outputs? Customers? 3. What are the inputs? Suppliers? 4. What are the characteristics values? Task time, cost? No YES Review input with participant 1. Is customer satisfied with inputs 2. How do you measure your progress? 3.What are road blocks to quality, productivity? 4. How would you change the process?
    59. 59. Generating the process map Momari The conventions and symbols used in process mapping The details of process mapping Variations and when they are used Bounding the process & objectives Developing the data gathering plan Interviewing the participants Generating process map Analyzing and using the map
    60. 60. Process mapping symbols Momari Basic Ops: Process, activity Decision:Triage, classification Terminal: Start and end process Ops: Process, activity Inspection: Approval Delay: Waiting Manufacturing Storage: controlled Assemble Accept/reject? Start batch Finished goods to warehouse Quality control In process inventory Raw materials, Finished goods Services Sales call. Med exam Audit? Make or buy? Cust orders lunch Fax order to vendor Sign-off P.O. Computer install waiting for S/W Records Vault
    61. 61. A simple process map Momari Start Step 1 Step 2 Step 3 Step 4 ? End No Yes Organization x Org y Org z Time scale
    62. 62. Exercise <ul><li>Construct simplified processes for: </li></ul><ul><ul><li>Semiconductor device </li></ul></ul><ul><ul><li>Financial audit </li></ul></ul><ul><ul><li>Real Estate construction project </li></ul></ul>Momari
    63. 63. Analyzing and using the map Momari Analysis: Concepts of value added activity Basic tools of process analysis Process analysis check list Bounding the process & objectives Developing the data gathering plan Interviewing the participants Generating process map Analyzing and using the map
    64. 64. Value added assessment Momari Process step Necessary to produce output? Customer value added Business value added No value added Contribute to customer requirement? Contribute to business function? Yes No No No Yes Yes Record order Type policy Research data Record claim Record date received Order forms Update personnel records Prepare financial report Pay taxes Review & approve Rework Movement Storage
    65. 65. Analyzing and using the map (cont) Momari Using the map: Process improvement programs Target setting Bounding the process & objectives Developing the data gathering plan Interviewing the participants Generating process map Analyzing and using the map
    66. 66. The basis for improvement Momari Reengineering Benchmarking Cycle time reduction Continuous improvement Six Sigma Activity based mgmt Improvement Process mapping Process Analysis tools
    67. 67. Target setting <ul><li>Targets drive methodology </li></ul>Momari Characteristic: Fast mail delivery Time Baseline (current level) 1 business day Capability 1.5 hrs Industry benchmark 35 min
    68. 68. Process improvement enablers <ul><li>E-mail </li></ul><ul><li>Voice systems </li></ul><ul><li>Imaging systems </li></ul><ul><li>Workflow tools </li></ul><ul><li>Document management </li></ul><ul><li>E-commerce </li></ul><ul><li>Wireless communication </li></ul><ul><li>Broadband </li></ul><ul><li>Simulation tools </li></ul><ul><li>Multimedia </li></ul>Momari
    69. 69. We learned <ul><li>Forces driving process improvement </li></ul><ul><li>Industry report: BPI projects from around the world </li></ul><ul><li>Basic business process concepts </li></ul><ul><li>Process mapping and analysis </li></ul>Momari

    ×