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Process Management: Why So Few Companies Get It Right

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Process Management: 
Why So Few Companies Get It Right
Webinar
May 9, 2013

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 Founder: The Karen Martin Group, Inc.
 Consultant / Coach: Lead Lean transformations, 
facilitate improvement & develop...

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% Of Processes That Are Documented
17% 17% 17%
22%
27%
0%
5%
10%
15%
20%
25%
30%
0 - 10 11 - 25 25 - 50 51 - 75 76 - 100
3

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Process Management: Why So Few Companies Get It Right

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

Subscribe: http://www.ksmartin.com/subscribe

Karen’s Books: http://ksmartin.com/books

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.

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

Subscribe: http://www.ksmartin.com/subscribe

Karen’s Books: http://ksmartin.com/books

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.

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Process Management: Why So Few Companies Get It Right

  1. Process Management:  Why So Few Companies Get It Right Webinar May 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,  President www.ksmartin.com 1 Fall 2013
  3. % Of Processes That Are Documented 17% 17% 17% 22% 27% 0% 5% 10% 15% 20% 25% 30% 0 - 10 11 - 25 25 - 50 51 - 75 76 - 100 3
  4. Of those documented, % that are current 25% 15% 8% 42% 10% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 4
  5. % Of Processes With 2-5 Clearly Defined KPIs 49% 15% 20% 10% 6% 0% 10% 20% 30% 40% 50% 60% 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 5
  6. % of processes with KPIs that are measured regularly 0 5 10 15 20 25 30 35 40 45 50 0 - 10 11 - 25 25 - 50 51 - 75 76 - 100 12% 10% 18% 6 44% 16%
  7. % Of Processes With Clearly Identified Owner 40% 10% 13% 21% 16% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 7
  8. Process Owners – Level in Organization 37% 53% 6% 2% 2% 0% 10% 20% 30% 40% 50% 60% Supervisor Manager Director Vice President C-Level 8
  9. 3 Criteria for Proper  Process Management 9 1. Defined and documented processes 2. 2‐5 relevant KPIs for each process a. Visually displayed b. Consistently measured c. Consistently improved 3. Sole ownership / oversight
  10. 3 Criteria for Proper  Process Management 10 1. Defined and documented processes 2. 2‐5 relevant KPIs for each process, visually  displayed 3. Consistently measured 4. Consistently improved 5. Sole ownership / oversight
  11. Granularity of Work – From Value Stream  to Specific Work Tasks Value  Stream Process Process Process Step StepStep Micro  Perspective Process Maps Macro  Perspective  Value stream maps 11
  12. Source Refrigeration & HVAC, Inc. Current State Value Stream Map Service Delivery Created February 11, 2009 CONFIDENTIAL Customer Receive customer call Call Center PT = 2 mins. %C&A = 60% Review & Post Invoices Posting Admin PT = 3 mins. %C&A = 98% Batch: 1x/day 0.0833 hours 2 minutes 2 hours 5 minutes 1.5 hours 90 minutes 1.25 hours 75 minutes 2 hours 120 minutes 4 hours 5 minutes 10.7 hours 10 minutes 48 hours 25 minutes 4 hours 3 minutes 10.7 hours 10 minutes 2 hours 4 minutes 480 hours Lead Time = 572 hours Process Time = 349 minutes Select & Dispatch Tech Dispatcher & Service Manager PT = 5 mins. %C&A = 60% Make Repair; Call to raise the NTE Tech PT = 120 mins. %C&A = 40% Complete Call in GP Dispatcher PT = 5 mins. %C&A = 80% Review Service Call Data Service Manager PT = 10 mins. %C&A = 50% Batch: 2x/day Review Open Ticket Report Billing Admin PT = 25 mins. %C&A = 75% Upload time card Tech PT = 0 mins. %C&A = 70% Batch: 1x/day Close call in Verisae Account Manager (West) PT = 1 mins. %C&A = 90% Batch: 1x/day Process Time Cards Payroll Admin PT = 10 mins. %C&A = 90% Batch: 1x/day Process A/P A/P Admin PT = 15 mins. %C&A = 85% Batch: 1x/day Tech Assess Problem PT = 90 mins. %C&A = 90% Tech Special Order Part Tech Pickup Part at Parts Store PT = 75 mins. %C&A = 95% Tech Get Part from Truck PT = 0 mins. 120 m. Great Plains Verisae (Customer) Review Invoices; Close in Verisae (Pac) Account Manager PT = 10 mins. %C&A = 85% Batch: 3-5xper wk Enter Invoices into Verisae & Excel; Mail Invoices Billing Admin PT = 4 mins. %C&A = 95% Batch: 1x/week Excel Spreadsheet (Customer) 40% Receive Cash; Post Payment Collections 75 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 Accurate AR Activity Ratio FTE Full Time Equivalent LT Lead Time PT Process Time RFPY Rolled First Pass Yield Acronym Key Lead Time to invoice = 86.2 hrs Process Time =5.9 hrs. NOTE: Business hours ActivityRatio = 6.8% RFPY = 1.1% Lead time to cash = ? days Value Stream Maps
  13. 0 1 0 15 6 -1 0 Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A 1 Fax PO to Sales Rep 0 0 45% 2 Review PO; clarify with customer as needed 20 2 90% Fax PO to warehouse 10 4 90% 5 6 Check inventory levels; notify Sales Rep re: status 5 4 95% Fax PO to Sales Rep 5 0.33 90% 0 20 10 5 5 0 2 4 4 0.33 45% 90% 90% 95% 90% 0 20 10 5 5 Rolled %C&A Critical Path LT Total PT Critical Path PT 5431 2 Mary Townsend Hours Worked per Day Sally Dampier Occurrences per Year Sam Parks Current State Metrics-Based Process Map Dave Morgan25-Jun-08 8 Facilitator Process Details Michael Prichard Order FulfillmentProcess Name Specific Conditions Domestic orders through sales force 37,500 Date Mapped Sean Michaels Sales Rep Ryan AustinDiane O'Shea Mapping Team LT Units Function / Department PT Units Step # ► Customer Finance Warehouse / Shipping Seconds Minutes Hours Days Seconds Minutes Hours Days Metrics-Based Process Maps
  14. Process Flow Charts 14
  15. Standard Work Combination Sheet 15www.velation.com
  16. 3 Criteria for Proper  Process Management 16 1. Defined and documented processes 2. 2‐5 relevant KPIs for each process a. Visually displayed b. Consistently measured c. Consistently improved 3. Sole ownership / oversight
  17. Key Performance Indicators 17 • 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 Accuracy Gray – Highest industry quality scores Purple – Median industry quality scores Blue – Our quality scores
  19. 19 Balanced, Visual, Clear Ownership Metric Description Owner FY12 Target Apr Total May Total Status Production Output Output in Units VS Mgr 75,000 81500 110300 Batch Deviations % Batches are Right the First time VS Mgr 80.0% 81.8% 80.5% Quoting Leadtime Days from receipt of RFQ until sent to customer Dave 5.4 6.6 6.9 Promise Date Accuracy % On time for Promise Date Dave 96.0% 85.0% 89.0% Engineering Release Time Days - receipt of PO until documentation released Vicky 4.7 5.6 4.7 Problem Resolution Number of calls to resolve customer issues Dave 2.1 2.4 2.3 Quality Quality Release Backlog # of lots waiting for release by quality engineers VS Mgr 80 99 77 ProductionCustomerService
  20. Administrative Metrics Engineering Change Releases 36% 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-06 On-TimeRelease 48 39 32 39 33 36 29 19 16 11 17 0 10 20 30 40 50 60 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 J Avg.DaystoRel.
  21. 3 Criteria for Proper  Process Management 21 1. Defined and documented processes 2. 2‐5 relevant KPIs for each process a. Visually displayed b. Consistently measured c. Consistently improved 3. Sole ownership / oversight
  22. Who’s Minding the Store?
  23. Value Stream Value Stream  Value Stream Function Typical Vertical Structure vs.  Horizontal Reality – Value Stream  Level FunctionFunctionFunction Value  Stream  Manager 
  24. Process Process  Process Function Typical Vertical Structure vs.  Horizontal Reality – Process Level FunctionFunctionFunction Process  Owner
  25. 25 Process 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 progressively raise the bar • Granted authority to cross org chart “boundaries” – And widely recognized to possess this authority 26
  27. Value Stream & Process Oversight 27 Value Stream Value Stream Manager Process Process Owner Outpatient Imaging Sally V Scheduling & Registration Bill G Exam & Clinical Reporting Jose C Reports to physician Maria J Inpatient surgery Tonianne S Admission Tom M Clinical stay Kathleen T Discharge Mike M Billing Sylvia S Revenue Cycle Management Bruce T N/A N/A Value Stream & Process Ownership ABC Medical Center
  28. 28 Karen Martin, President 7770 Regents Road #635 San Diego, CA 92122 858.677.6799 ksm@ksmartin.com For Further Questions Blog & newsletter:  www.ksmartin.com/subscribe

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