Business process improvement (special report) presentation

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This is an overview presentation of Business Process Improvement.

- Michael T. Ligayo (+0639178010366)

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Business process improvement (special report) presentation

  1. 1. BUSINESS PROCESS IMPROVEMENT (Process Innovation) MICHAEL T. LIGAYOENTREP, S63, TUE, 6:00PM-9:00PM
  2. 2. What is a Business Process?• The complete and dynamically coordinated (logically-related) set of collaborative and transactional activities that deliver value to customers focusing on particular products or services (Smith and Fingar, 2003) Input PROCESS Output
  3. 3. What is a Business Process?• Specific ordering of work activities across time and place, with a beginning and an end, and with clearly identified inputs and outputs – a structure for action (Davenport, 1998)• Examples of business processes are: purchasing, manufacturing, warehousing, trai ning, recruitment and many others
  4. 4. What is a Business Process Improvement?• A systematic approach to help organizations optimize its underlying processes to achieve more efficient results• Focuses is on achieving customer satisfaction (end goal) as signified by: – Reduction in costs (90%) – Reduction in queue or waiting time (90%) – Reject and complaint elimination (60%) – Increased turn around time
  5. 5. What is a Business Process Improvement?• Works by: – Defining the organization’s strategic goals and purposes – Determining the organization’s customers – Aligning the business processes to realize the organization’s goals• Usually project-based so implementation is through project management
  6. 6. What is a Business Process Improvement? The And-Then-A-Miracle-Occurs Effect
  7. 7. What is a Business Process Improvement? FIRST WAVE SECOND WAVE KAIZEN SOURCE OF INNOVATION- Used continuous - Saw business processes as a improvement techniques to source of innovation empower people to solve - Started the thinking that problems business processes are- Pre-1990’s inhibited by organizational- Example of this thinking Six and cultural boundaries Sigma - 1990’s and beyond - Example of this thinking is Business Process Re- engineering
  8. 8. Levels of Business Process Improvement
  9. 9. Levels of Business Process Improvement LEVEL EXAMPLE5 – Redesign of Industry Value 1. Customer self-service such asChain booking of airline tickets online (resulting to customers having more control, optimal process ensuring higher level of data integrity) 2. Customer-to-customer interaction such as buying and selling goods through ebay or sulit
  10. 10. Levels of Business Process Improvement LEVEL EXAMPLE4 – Redesign of Business 1. Processes developed around customer wishes such as car insurance company representative who visits the customers at the location for assessment and immediate payment 2. Flexibility is the process rather than the exception such as what Dell did giving customers the highest flexibility they can get
  11. 11. Levels of Business Process Improvement LEVEL EXAMPLE3 – Redesign of Processes 1. Use of real-time and geographical information in the logistics industry helping customers track their package using the internet 2. Workflow management and document management resulting to reduced processing times
  12. 12. Levels of Business Process Improvement LEVEL EXAMPLE2 – Improvement of Sub-Processes 1. Avoiding one standard process for a variety of situations such separating different mortgage situations giving different processing and commitments to those cases that will require substantial checking 2. Mobile communication for employees resulting to faster correction of errors
  13. 13. Levels of Business Process Improvement• In order to be successful, no organization should depend solely on the innovation occurring at one level. It has to happen on all levels of the organization.• Much like any other process improvements, the “plan-do- check-act” cycle is followed.
  14. 14. The Change Process Consider the linkage of this diagram to the “The And- Then-A-Miracle-Occurs Effect” diagram.
  15. 15. Factors Affecting Business Process Improvement INTERNAL EXTERNALAttractive for Investments Industry Maturity Intensity of Competition Customer Needs Company Size Customer Expectations Origin of Ownership Demand Export Orientation Technological Opportunity
  16. 16. Examples of Business Process Improvement Patterns A single process can be added or eliminated in the entire business processAn involvement of aresource instance can beadded or cut in thebusiness process
  17. 17. Examples of Business Process Improvement Patterns An IT system can be added or eliminated in the business process (automation is not the key all the time)An instance of an objectcan be added oreliminated in the input aswell as in the output
  18. 18. Implementing Business Process Improvements• The most difficult part of business process improvements is the implementation.• Some keys to successful implementation are: – Main the step-by-step approach and do not skip steps – Set clear timelines – Do not spread resources thinly and focus on the short term payoff – Management and primary stakeholders should be involved – Maintain customer focus – Establish process owners, business leaders, operational manager, process operator
  19. 19. Measuring Effectiveness of Business Process Improvements The same performance indicators of measuring business activities are used to measure the effectiveness of business process improvements. This is since companies compete in the marketplace by virtue of one or more of these these competitive priorities.
  20. 20. Blockers to Business Process Improvements• “Around the Edges” syndrome where the processes and associated people are treated like sacred objects (untouchables)• “Black Box” syndrome where executives don’t know the details but somehow the processes produce outcomes• Many initiatives are not aligned with the organization’s strategy• Many organizations take ad-hoc and isolated initiatives for process improvements• Failing to obtain the benefits of the initiatives
  21. 21. Some Tools to Conduct Business Process Improvements (Strategies)Six Sigma• A business management strategy seeking to improve the quality of process outputs by identifying and removing causes of defects (errors) and minimizing variability• Uses a set of quality management methods, including statistical methods• D-M-A-I-C
  22. 22. Some Tools to Conduct Business Process Improvements Define Improve• Define CTQ• Determine Current State • Verify Effects of Key Analyze inputs with DOE’s • Determine Optimum Measure • Evaluate Existing Control Plan Settings• Determine Key Input / • Using statistical methods to Output Variables determine potential key inputs• Perform MSA • Prioritize key input variables Control• Calculate initial process • Update Control Plan capabilities • Verify Improvements N
  23. 23. Some Tools to Conduct Business Process Improvements (Strategies)Lean Manufacturing / Operations / Enterprise• A production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination• Derived from the Toyota Production System• Aimed at removing the 7 wastes: transportation, inventory, motion, waiting, over- processing, over-production and defects
  24. 24. Some Tools to Conduct Business Process Improvements (Strategies) SEVEN TYPES OF WASTE Waste Definition Examples of Effects and Cost-ImpactsOVERPRODUCTION Producing too much, too 1. Large storage space soon (production did not requirement stop when they should 2. Excess capacity have) 3. Overstaffing and Idle timeCONVEYANCE Too movement and transfer 1. Large production areas of purchased parts, end- 2. Overstaffing and Idle items (usually due to poor time layout)
  25. 25. Some Tools to Conduct Business Process Improvements (Strategies) SEVEN TYPES OF WASTE Cause Definition Examples of Effects and Cost-ImpactsOVERPROCESSING Processing beyond 1. Overstaffing requirement (maybe due to 2. Higher Overhead and insufficient standards and Direct Materials mistakes in processing) ConsumptionINVENTORY Ordering and storing 1. Obsolescence and anything more than the Spoilage minimum to get the job 2. Large Warehouse Space done 3. Acceptance of Overproduction
  26. 26. Some Tools to Conduct Business Process Improvements (Strategies) SEVEN TYPES OF WASTE Cause Definition Examples of Effects and Cost-ImpactsMOTION Bodily movements caused 1. Lost Time (Cost and by disorganized work plan, Safety) standards and layout 2. In-Process RejectsDEFECTS Any scrap or rework 1. Customer issues 2. Overtimes 3. Excess use of materials
  27. 27. Some Tools to Conduct Business Process Improvements (Strategies) SEVEN TYPES OF WASTE Cause Definition Examples of Effects and Cost-ImpactsWAITING Waiting for arrival of input 1. Overstaffing and Idle into the process Time 2. Poor on-time performance on customer requests
  28. 28. Some Tools to Conduct BusinessProcess Improvements (Strategies)
  29. 29. Some Tools to Conduct Business Process Improvements (Strategies)Total Quality Management• An integrative philosophy of management for continuously improving the quality of products and processes• Functions on the premise that the quality of products and processes is the responsibility of everyone who is involved in the creation or consumption of the products or services offered by an organization
  30. 30. Some Tools to Conduct Business Process Improvements (Strategies)Total Quality Management• 9 Common TQM practices are: – Cross functional product design – Process management – Supplier quality management – Customer involvement – Information and feedback – Committed leadership – Strategic planning – Cross functional training – Employee involvement
  31. 31. Some Tools to Conduct Business Process Improvements (Strategies)Business Process Re-Engineering• The fundamental rethinking and radical redesign of the business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality and speed Redesign Retool Reorchestrate Simplify Networks Sychronize Processes, IT Standardize Intranets and Human Resources Empowering Extranets Employeeship Workflow Groupware Measurements
  32. 32. Some Tools to Conduct Business Process Improvements (Strategies)Business Process Re-Engineering• Characteristics of Outcome – Several jobs combined into one – Decision making becomes part of he job of the employees – Steps in the processes are performed in natural order, some simultaneuosly – Processes have multiple versions – Work is performed when it makes the most sense – Controls and checks and other non-value adding work is minimized – A single point of contact is provided to customers – A hybrid centralized / decentralized operation is used
  33. 33. Some Tools to Conduct Business Process Improvements (Strategies)Business Process Re-Engineering• Key Actions for Implementation – Selection of the strategic (added-value) processes for redesign – Simplify new processes, minimize steps, optimize efficiency – Organize team of employees for each process and assign a role for process coordinator – Organize the workflow – document transfer and control – Assign responsibilities and roles of each process – Automate – Train the process team to efficiently manage and operate the new process – Introduce the redesigned process
  34. 34. Some Tools to Conduct Business Process Improvements (Strategies) OTHER SETS OF TOOLS• Quality Control Circles (QC Stories)• Total Productive / Preventive Maintenance (TPM)• Kaizen (Continuous Improvement)• Quality Deployment (House of Quality)• Quality Tools (Pareto, Cause-and-Effect, Checksheet, Control Chart, Histogram, ScatterDiagram, Stratification)• Many others…
  35. 35. References• Building and Maintaining Competitive Advantage Through Collaborative Business Process Innovation. www.boardwalktech.com• Forster, Florian. The Idea Behind Business Process Improvement: Toward a Business Process Improvement Pattern Framework. www.bptrends.com• Graham, Ben. Business Process Improvement: The Devil’s in the Detail. The Ben Graham Corporation.• Jeston, John and Johan Neils. Down Under: Process Innovation. www.bptrends.com• McElheran, Kristina. Do Market Leaders Lead in Business Process Innovation? The Case of E-Business Adoption. Harvard Business School.
  36. 36. References• Moller, Charles. The Conceptual Framework for Business Process Innovation – Towards A Research Program on Global Supply Chain Intelligence. Informatics Research Group.• Zakic, Nebojsa, Jovanovic, Ana and Milan Stamatovic. External and Internal Factors Affecting The Product and Business Process Innovation. Facta Universitatis.• Zigiaris, Sotiris. Business Process Re-Engineering. BPR Hellas SA.• http://en.wikipedia.org/wiki/Business_process_improvement• http://en.wikipedia.org/wiki/Lean_manufacturing• http://asq.org/learn-about-quality/seven-basic-quality- tools/overview/overview.html

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