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Process Management: Why So Few Companies Get It Right

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Recorded webinar: http://slidesha.re/1mRKSQw

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In the 20+ years I've been working with companies of all types and sizes to improve their performance, proper process management is hands-down the weakest organizational capability I've seen.

Poor process management is the root cause for excessive organizational chaos, interpersonal and interdepartmental tension, dissatisfied customers, and excess costs.

Join me on a frank journey of what organizations need to do in terms of process management to greatly improve their performance on all fronts.

It doesn't matter how sexy your product is, nor how hard well-meaning people are working. If you don't properly manage your processes, your organization will never excel.

Published in: Business, Technology

Process Management: Why So Few Companies Get It Right

  1. Process Management: Why So Few Companies Get It RightWebinarMay 9, 2013
  2.  Founder: The Karen Martin Group, Inc. Consultant / Coach: Lead Lean transformations, facilitate improvement & develop workforce. Teacher: University of California, San Diego’s Lean Enterprise program. Author:Karen Martin, Presidentwww.ksmartin.com1Fall 2013
  3. % Of Processes That Are Documented17% 17% 17%22%27%0%5%10%15%20%25%30%0 - 10 11 - 25 25 - 50 51 - 75 76 - 1003
  4. Of those documented, % that are current25%15%8%42%10%0%5%10%15%20%25%30%35%40%45%0 - 10 11 - 25 26 - 50 51 - 75 76 - 1004
  5. % Of Processes With 2-5 ClearlyDefined KPIs49%15%20%10%6%0%10%20%30%40%50%60%0 - 10 11 - 25 26 - 50 51 - 75 76 - 1005
  6. % of processes with KPIs that aremeasured regularly051015202530354045500 - 10 11 - 25 25 - 50 51 - 75 76 - 10012%10%18%644%16%
  7. % Of Processes With ClearlyIdentified Owner40%10%13%21%16%0%5%10%15%20%25%30%35%40%45%0 - 10 11 - 25 26 - 50 51 - 75 76 - 1007
  8. Process Owners –Level in Organization37%53%6%2% 2%0%10%20%30%40%50%60%Supervisor Manager Director Vice President C-Level8
  9. 3 Criteria for Proper Process Management91. Defined and documented processes2. 2‐5 relevant KPIs for each processa. Visually displayedb. Consistently measuredc. Consistently improved3. Sole ownership / oversight
  10. 3 Criteria for Proper Process Management101. Defined and documented processes2. 2‐5 relevant KPIs for each process, visually displayed3. Consistently measured4. Consistently improved5. Sole ownership / oversight
  11. Granularity of Work – From Value Stream to Specific Work TasksValue StreamProcess Process ProcessStep StepStepMicro PerspectiveProcess MapsMacro Perspective Value stream maps11
  12. Source Refrigeration & HVAC, Inc.Current State Value Stream MapService DeliveryCreated February 11, 2009CONFIDENTIALCustomerReceivecustomer callCall CenterPT = 2 mins.%C&A = 60%Review &Post InvoicesPosting AdminPT = 3 mins.%C&A = 98%Batch: 1x/day0.0833hours2 minutes2 hours5 minutes1.5hours90 minutes1.25 hours75 minutes2 hours120 minutes4 hours5 minutes10.7hours10 minutes48hours25 minutes4 hours3 minutes10.7hours10 minutes2 hours4 minutes480hours Lead Time = 572 hoursProcess Time = 349 minutesSelect &Dispatch TechDispatcher &ServiceManagerPT = 5 mins.%C&A = 60%Make Repair;Call to raisethe NTETechPT = 120 mins.%C&A = 40%Complete Callin GPDispatcherPT = 5 mins.%C&A = 80%ReviewService CallDataServiceManagerPT = 10 mins.%C&A = 50%Batch: 2x/dayReview OpenTicket ReportBilling AdminPT = 25 mins.%C&A = 75%Upload timecardTechPT = 0 mins.%C&A = 70%Batch: 1x/dayClose call inVerisaeAccountManager(West)PT = 1 mins.%C&A = 90%Batch: 1x/dayProcess TimeCardsPayroll AdminPT = 10 mins.%C&A = 90%Batch: 1x/dayProcess A/PA/P AdminPT = 15 mins.%C&A = 85%Batch: 1x/dayTechAssessProblemPT = 90 mins.%C&A = 90%TechSpecial OrderPartTechPickup Partat Parts StorePT = 75 mins.%C&A = 95%TechGet Part fromTruckPT = 0 mins.120 m.GreatPlainsVerisae(Customer)ReviewInvoices;Close inVerisae (Pac)AccountManagerPT = 10 mins.%C&A = 85%Batch: 3-5xper wkEnter Invoicesinto Verisae &Excel; MailInvoicesBilling AdminPT = 4 mins.%C&A = 95%Batch: 1x/weekExcelSpreadsheet(Customer)40%ReceiveCash; PostPaymentCollections75 m. 120 m. 240 m. 640 m. 6 days 240 mins. 640 m. 120 m. 60 days90 m.5 m.?%?%Supplier%C&A %Complete and AccurateAR Activity RatioFTE Full Time EquivalentLT Lead TimePT Process TimeRFPY Rolled First Pass YieldAcronym KeyLead Time to invoice = 86.2 hrsProcess Time =5.9 hrs.NOTE: Business hoursActivityRatio = 6.8%RFPY = 1.1%Lead time to cash = ? daysValue Stream Maps
  13. 010156-10Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A1Fax PO to SalesRep0 0 45%2Review PO;clarify withcustomer asneeded20 2 90%Fax PO towarehouse10 4 90%56Check inventorylevels; notifySales Rep re:status5 4 95%Fax PO to SalesRep5 0.33 90%0 20 10 5 50 2 4 4 0.3345% 90% 90% 95% 90%0 20 10 5 5Rolled %C&ACritical Path LTTotal PTCritical Path PT5431 2Mary TownsendHours Worked per Day Sally DampierOccurrences per Year Sam ParksCurrent State Metrics-Based Process MapDave Morgan25-Jun-088 FacilitatorProcess DetailsMichael PrichardOrder FulfillmentProcess NameSpecific Conditions Domestic orders through sales force37,500Date MappedSean MichaelsSales RepRyan AustinDiane OSheaMapping TeamLT UnitsFunction /DepartmentPT UnitsStep # ►CustomerFinanceWarehouse /ShippingSecondsMinutesHoursDaysSecondsMinutesHoursDaysMetrics-Based Process Maps
  14. Process Flow Charts14
  15. Standard Work Combination Sheet15www.velation.com
  16. 3 Criteria for Proper Process Management161. Defined and documented processes2. 2‐5 relevant KPIs for each processa. Visually displayedb. Consistently measuredc. Consistently improved3. Sole ownership / oversight
  17. Key Performance Indicators17• Lean metrics (based on relevance)– Lead time (LT)– Process Time (PT)– % Complete & Accurate (%C&A)• Other ‐ based on what problem you’re solving, customer expectations, etc:– % billed charges received w/in 30 days of service– Telephone hold times– Infection rates– % difference between estimate and actual cost– # errors (or % work with errors)
  18. Correspondence AccuracyGray – Highest industry quality scoresPurple – Median industry quality scoresBlue – Our quality scores
  19. 19Balanced, Visual, Clear OwnershipMetric Description OwnerFY12TargetAprTotalMayTotalStatusProductionOutputOutput in Units VS Mgr 75,000 81500 110300BatchDeviations% Batches are Rightthe First timeVS Mgr 80.0% 81.8% 80.5%QuotingLeadtimeDays from receipt ofRFQ until sent tocustomerDave 5.4 6.6 6.9Promise DateAccuracy% On time for PromiseDateDave 96.0% 85.0% 89.0%EngineeringRelease TimeDays - receipt of POuntil documentationreleasedVicky 4.7 5.6 4.7ProblemResolutionNumber of calls toresolve customerissuesDave 2.1 2.4 2.3QualityQualityReleaseBacklog# of lots waiting forrelease by qualityengineersVS Mgr 80 99 77ProductionCustomerService
  20. Administrative MetricsEngineering Change Releases36% 31%51% 48%37% 30%45%58%76% 77%61%0%20%40%60%80%100%Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06On-TimeRelease4839323933362919 1611170102030405060Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 JAvg.DaystoRel.
  21. 3 Criteria for Proper Process Management211. Defined and documented processes2. 2‐5 relevant KPIs for each processa. Visually displayedb. Consistently measuredc. Consistently improved3. Sole ownership / oversight
  22. Who’s Minding the Store?
  23. Value StreamValue Stream Value StreamFunctionTypical Vertical Structure vs. Horizontal Reality – Value Stream  LevelFunctionFunctionFunctionValue Stream Manager 
  24. ProcessProcess ProcessFunctionTypical Vertical Structure vs. Horizontal Reality – Process LevelFunctionFunctionFunctionProcess Owner
  25. 25Process Owner ≈ Process Doctor
  26. Process Owner Role• Manager or below• NOT a third party (C.I. staff or external consultants)• Responsible for overall process performance– Tracks performance against targets– Leads corrective action when negative trends appear– Leads continuous improvement to progressivelyraise the bar• Granted authority to cross org chart “boundaries”– And widely recognized to possess this authority26
  27. Value Stream & Process Oversight27Value Stream Value Stream Manager Process Process OwnerOutpatient Imaging Sally V Scheduling & Registration Bill GExam & Clinical Reporting Jose CReports to physician Maria JInpatient surgery Tonianne S Admission Tom MClinical stay Kathleen TDischarge Mike MBilling Sylvia SRevenue Cycle Management Bruce T N/A N/AValue Stream & Process OwnershipABC Medical Center
  28. 28Karen Martin, President7770 Regents Road #635San Diego, CA 92122858.677.6799ksm@ksmartin.comFor Further QuestionsBlog & newsletter:  www.ksmartin.com/subscribe

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