Six sigma-and-supply-chain


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The benefits of using six sigma to optimize supply chains

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Six sigma-and-supply-chain

  1. 1. Benefits of the Process Centric Organization July 2013 Steve Depoe 1
  2. 2. Agenda Business Process Re-engineering roots The Process Centric Organization The Methodology Appendix – Case Studies
  3. 3. The Beginning of the Process Centric Organization began in the early 1900’s “A business process illustration is produced. The first step in gaining control over an organization is to know and understand the basic processes. “ Pioneers like Taylor, Demining and Juran knew Processes were the key to gaining control over Operations
  4. 4. Later Michael Hammer popularized the use of Process Reengineering 4 “Reengineering means to disregard all the assumptions and traditions of the way business has always been done, and instead develop a new, process-centered business organization that achieves a quantum leap forward in performance.” Michael Hammer, 2000
  5. 5. Companies have invested in BPR since the 1990’s Since the early to mid 1990‟s thousands of companies have invested millions of man hours in Business Process Re-engineering efforts. The reviews have been mixed: Although companies have discovered who does what when. Control over these processes and the driving improvement has fallen short
  6. 6. Agenda Business Process Re-engineering roots The Process Centric Organization The Methodology Appendix – Case Studies
  7. 7. The prevailing thought behind the Process Centric Organization have matured Today, the Process Centric mindset increasingly is viewed as a source of value in its own right and as a powerful management discipline. Process Centricity can be used to create sustainable competitive advantages that are difficult to copy. This value driven mindset helps organizations to transform strategy into people and IT based execution, at pace and with certainty.
  8. 8. Some of the most well known and best run companies have embraced the Process Centric organization 8 Although the process-based organization reduces bureaucracy and eliminates non-value added work, if properly conceived and implemented, they develop new roles for current and future employees as well as new processes that provide value to the customer and help support long-term success.
  9. 9. Falling Short of the Process Centric goal! 9 Most companies that have undertaken substantial process innovation initiatives have simply imposed process management as an additional dimension of structure – on top of the existing dimensions – assigning process ownership to managers who may also have functional and/or product responsibilities. In almost none of these companies process responsibility has been accorded organizational legitimacy. Process Responsibility Organizationa l Responsibility Employee Responsibility Shareholder Responsibility Functional Responsibility Divisional Responsibility Business Leader Pressure
  10. 10. How does the Process Centric Organization differ? 10 The new process-centric organization structure, must be one that is built by using the core processes and process teams as the foundation. Staff units, centers of excellence and ultimately, to create value for customers.
  11. 11. The first steps towards becoming Process Centric 11 In order to adequately satisfy emerging business needs, the process-based organizational structure should consist of: (1) Few core business processes managed by process owners, who have direct support of process advisors. (2) Centers of excellence, where the functional knowledge is gathered, with a role of connecting employees from similar functional areas (e.g., manufacturing, R&D, marketing, etc.). (3) Staff units or functional support units, in charge of administration and corporate activities (e.g., HRM, accounting, IT, legal affairs, public relations, etc.) (4) A process council, which is responsible for lateral coordination between different processes and units. COE Sales Marketing Product Development
  12. 12. Agenda Business Process Re-engineering roots The Process Centric Organization The Methodology Appendix – Case Studies
  13. 13. How does the Process Centric Organization differ from the Traditional organization The process-based organization addresses the alignment challenge by first aligning the core business processes to enterprise goals and strategies, and then aligning the apparatus of the organization (structures, systems, and resources) to meet process needs. In another words, the organization and its proposed structure should be put in a process environment. To achieve that, many changes are required.
  14. 14. Understanding of the Process Centric Mindset 14 Organizations exist to deliver value to customers and stakeholders. That’s strategy. They do this via a series of coordinated activities across a number of functional elements of the organization. That’s a process. It makes sense to optimize these processes so that they satisfy the requirements of customers and other stakeholders. That’s process improvement. Taking a coordinated view of the performance of all of the processes by which an organization delivers value, optimizes performance. That’s process management. Process management allows organizations to focus on processes that create the market differentiation described by the strategy. That’s execution.
  15. 15. What is the overall meaning of the Process Centric Organization 15 Process-centric management encompasses all that is required to sustainably deliver value to external customers and other stakeholders Process-centric management is about improving organizational performance in meaningful ways.
  16. 16. To Create the Process Centric Environment requires a 4 phase process 16 Build Capability Operations Increasing Service Delivery Status Quo Normalize Operations How does an organization become process-centric? The roadmap for achieving process-based management is straightforward. Some parts of the journey can be difficult, but the destination provides a revitalized view of the organization and its customers, and a framework for optimizing the value that moves between them. Key waypoints on the journey are:
  17. 17. Step 1: Building Capability Foundations 17 This first phase of the project proper is about developing the first level of capability. The education curriculum delivery is begun, a Business Process Architecture is developed Education During this phase, foundational courses for BPM capability are delivered. These courses should cover the fundamentals of OPM , and methodologies for process management and process improvement. Business Process Architecture Having a Business Process Architecture (BPA) is fundamental for process- centric management. The BPA provides a view of the organization as a hierarchical set of business processes. Plan Process Improvement Projects Demonstration projects to improve the performance of particular processes will be conducted. Office of OPM Implementation of the Office of OPM can commence during this first phase.
  18. 18. Step 2: Increasing Service Delivery 18 This second phase should be about continuing to develop BPM capabilities. Office of Process Management Process Improvement Projects One or two process improvement projects should be conducted to demonstrate the power of process improvement and use of the chosen methodology. OPM Community of Practice To be process-centric, an organization needs an active culture of interest in OPM and related matters Process Execution BPM Systems technology offers the possibility for direct execution of the business process models. This means that application development can be rapid and agile. Office of Process Management The operation of the Office of Process Management should be reviewed, its internal processes updated, and its service offerings confirmed.
  19. 19. Step 3: Normalize Operations 19 Phase 3 is concerned with further refinement of the Office of Process Management to ensure its ability to be a leading force in the development of a sustainable process-centric culture and capability. The operation of the Office to date would be carefully reviewed, and its processes subject to scrutiny and improvement. Additional services can be defined, developed and rolled out. During this phase, there would be additional process improvement projects throughout the organization, further education programs delivered as required, and the Community of Practice will be active in spreading the message of process-centric management
  20. 20. Step 4: Establishing the Status Quo 20 Phase 4 brings the final establishment of a full service Office of Business Process Management, as well as significant process improvement and related activities throughout the organization. As the transformation project concludes, plans are made to implement effective ongoing operations as part of „business as usual‟ – or perhaps we should say, „business better than usual‟. The Business Process Architecture will now be quite mature and a valuable reference for all process management and improvement work, as well as for general management and IT development. Process improvement projects will deliver short-, medium- and long-term benefits across the organization. Process performance will be actively measured and managed. A OPM Community of Practice will be providing a social network for further support and development of process-centric approaches. The transformation to a process-centric organization will be well underway, and the capability to continue development and operations in this way will be firmly embedded in internal resources.
  21. 21. Agenda Business Process Re-engineering roots The Process Centric Organization The Methodology Appendix – Case Studies
  22. 22. Case Study 1: Market Leadership As industries become commoditized, the mastery of business process improvement provides a powerful route to market leadership. Consider Cemex. This highly successful Mexican-based cement company grows by acquiring less-successful businesses. Cemex uses its own OPM approach to ensure that it learns improved practices from every acquisition it makes and that every operating unit follows these practices. It uses acquisitions as a source of improvement rather than a source of complexity, as is usual in acquisitions.
  23. 23. Case Study 2: •An International Systems Networking Client wanted to radically transform its business through a transformation program that will completely empower the customers and give them superior control over their products and services. •Enabling this transformation required collapsing all legacy networks and migrating to a single IP based converged network. •The Client had : (1) More than 16 legacy networks and as many silo processes, (2) Each network supported by different systems (3) Extended product launch timelines (4) Higher operational cost. Through the use of the Process Centric Organization they were able to •Develop an Integrated Process Infrastructure to rapidly launch next generation services • These processes when fully implemented would support existing products and will bring operational cost savings of $1 Billion/ year