Business Process Improvement


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Business Process Improvement

  1. 1. Business Process Improvement Management Tools & Techniques Anand Subramaniam
  2. 2. <ul><li>“What gets measured, gets done.&quot; </li></ul><ul><ul><li>- Tom Peters </li></ul></ul>
  3. 3. Highlights <ul><li>Process & System </li></ul><ul><li>Business Process Improvement (BPI) </li></ul><ul><li>Tools & Techniques </li></ul><ul><li>Measures & Metrics </li></ul><ul><li>Process Maturity </li></ul>
  4. 4. Process & System
  5. 5. What is a Process? <ul><li>A series of activities or steps to obtain a desired outcome </li></ul><ul><li>It involves </li></ul><ul><ul><li>Manpower, Machine, Material, Method, Measurement and Environment </li></ul></ul><ul><li>Every process has </li></ul><ul><ul><li>Inputs, Process (Sequence of steps), Outputs and Cycle Times </li></ul></ul>
  6. 6. System <ul><li>Data </li></ul><ul><li>Money </li></ul><ul><li>People </li></ul><ul><li>Knowledge </li></ul><ul><li>Policies </li></ul><ul><li>Mandates </li></ul><ul><li>Standards </li></ul><ul><li>Time </li></ul><ul><li>Regulations </li></ul><ul><li>Procedures </li></ul><ul><li>Technology </li></ul><ul><li>Methodology </li></ul><ul><li>Facilities </li></ul><ul><li>Tacit Knowledge </li></ul><ul><li>Test Scores </li></ul><ul><li>Data System </li></ul><ul><li>Lower Costs </li></ul><ul><li>Deliverables </li></ul>
  7. 7. Continuous Flow Process One person’s or one’s function’s output is another’s input
  8. 8. Process Hierarchy Order Process Inventory Process Shipping Process Answer Phone Take Order Take Order Send paper work to Warehouse Send details- Warehouse Procedures Order Management Process Process WORKDAILY.R PT Operator  Print out report  Place in interoffice memo – attn: Warehouse - Inventory  Place in outgoing box 3 Send paper work to Warehouse Operator 2 Take order Operator 1 Answer phone Forms/Reports Responsibility Description Procedure Step Effective Date: 10/06/2009 Version 1.0 SOP: Order Process Activities Sub Process
  9. 9. Strategy Map designed Learning & Growth Perspective : role for intangible assets – people, systems, climate and culture Improve Shareholder Value Productivity Strategy Revenue Growth Strategy Improve Cost Structure Increase Asset Utilisation Enhance Customer Value Create Value from New Products & Services Human, Information, and Organisational Capital Shareholder Value ROCE <ul><li>Cost per Unit </li></ul><ul><li>Asset Turnover </li></ul><ul><li>Customer Profitability </li></ul><ul><li>New Revenue Sources </li></ul>Price Financial Perspective: drivers of shareholder value Product/Service Attributes Strategic Competencies Strategic Technologies Climate for Action (Processes that Produce and Deliver Products & Services) (Processes that Enhance Customer Value) Operations Theme Customer Management Theme Innovation Theme Regulatory and Society Theme Customer Value Proposition Quality Low Total Cost Customer Solutions Product Leader <ul><li>Customer Satisfaction </li></ul><ul><li>Customer Acquisition </li></ul><ul><li>Customer Retention </li></ul>Time Function Service Relations Brand Relationship Image <ul><li>Market and Account Share </li></ul>Customer Perspective : differentiating value proposition Internal Perspective : how value is created and sustained (Processes that Create New Products & Services) (Processes that Improve the Environment and Communities)
  10. 10. Example - Measures & Targets Vision & Mission What activities are we doing to reach our targets? Employee Process Financial Customer Strategic Goals Measures Targets Initiative What do we have to do to get there? How do we know if we are achieving our goals? What will we measure our progress against?
  11. 11. Process & Outcomes Outcomes How much to improve? Process How to improve?
  12. 12. Business Process Improvement (BPI)
  13. 13. What is BPI? <ul><li>It encompasses methods, techniques, and tools </li></ul><ul><li>It is used to design, control, and analyse business processes </li></ul><ul><li>It involve people and integrates process and systems </li></ul>
  14. 14. Link – Business Process to Strategy
  15. 15. Benefits of BPI.. <ul><li>Cost Management </li></ul><ul><li>Improved Efficiency </li></ul><ul><li>Quality Management </li></ul><ul><li>Cycle Time Reduction </li></ul><ul><li>Regulatory Compliance </li></ul><ul><li>Effective Management of Resources </li></ul><ul><li>Improved Visibility of Process Performance </li></ul>
  16. 16. Business Process Design Business Strategy Core Process Prepare Management Commitment Sponsorship Align with Strategic Goals Team Organisation Current Process – As~Is Review Current Process Review Key Performance Data Identify Process Customers & their Needs Future Process To~Be Vision, Scope Targets for Future Process Benchmark Best practice Identify value & non value add activities Technical Change Assess Technical Implication of Process Improvement Change Requirements Design, build, test, re-test, train, approve & deploy Human Change Assess Competency / Capabilities Human Implication of Change Requirements Design, build, test, re-test, train, approve & deploy Implement Overall To~Be Process rollout plan Risk / Issue Resolution Evaluation / Integration of People, Process & Systems Track & Evaluate Review Process ownership Stakeholder feedback Monitor & Adjust Process Conduct Continuous Training & Support Programs – SLA / OLA
  17. 17. As~Is – Improvement Opportunities <ul><li>Reduce non-value add steps </li></ul><ul><li>Define Standards / Checklists / Criteria at decision points </li></ul><ul><li>Reduce time - decision point / rework, # of iterations </li></ul><ul><li>Analyse process inputs and desired performance </li></ul><ul><li>Evaluate if current inputs (e.g. applications) meet the needs established by the standards </li></ul><ul><li>Discussion to improve quality of the inputs </li></ul><ul><li>Analyse points where handoffs between departments or individuals occur </li></ul><ul><li>Automate repetitive steps </li></ul><ul><li>Analyse and reduce cycle time by doing things in parallel </li></ul><ul><li>Remove the middle man - eg. multiple approvals </li></ul><ul><li>Redesign form eg. combine multiple forms into one with user friendly, easy-to-understand forms </li></ul>
  18. 18. To~Be – Improvement Opportunities <ul><li>Time savings </li></ul><ul><li>Cycle-time improvements </li></ul><ul><li>Time to implement the improvements </li></ul><ul><li>Organisational readiness for change </li></ul><ul><li>Costs associated with the implementation </li></ul><ul><li>Impacts to other process / initiatives </li></ul><ul><li>Improvements to the deliverable and the associated quality </li></ul>
  19. 19. Tools & Techniques
  20. 20. Interviews <ul><li>To gather information verbally </li></ul><ul><li>Why use it? </li></ul><ul><ul><li>To collect information from internal / external customers, via interviewing either in person or on the telephone </li></ul></ul><ul><ul><li>Can be a very efficient means of data collection </li></ul></ul><ul><ul><li>It’s often the best way to learn about your customers’ needs and expectations </li></ul></ul>
  21. 21. Surveys <ul><li>Gather information on paper </li></ul><ul><li>Why use it? </li></ul><ul><ul><li>You can get a great deal of information from a lot of people very economically </li></ul></ul><ul><li>What to watch out for? </li></ul><ul><ul><li>People may interpret the questions somewhat differently than intended </li></ul></ul><ul><ul><li>Their answers may be ambiguous and /or there is no opportunity to test understanding </li></ul></ul>
  22. 22. Brainstorming <ul><li>Creating bigger and better ideas </li></ul><ul><li>Why use it? </li></ul><ul><ul><li>To establish a common method for a team to creatively and efficiently generate a high volume of ideas on any topic by creating a process that is free of criticism and judgment. </li></ul></ul><ul><li>What does it do? </li></ul><ul><ul><li>Encourages open thinking when a team is stuck in “same old way” thinking </li></ul></ul><ul><ul><li>Allows team members to build on each other’s creativity while staying focused on their joint mission </li></ul></ul><ul><li>How do I do it? </li></ul><ul><ul><li>Free-wheeling - group members call out their ideas simultaneously </li></ul></ul><ul><ul><li>Round-robin - every one takes turn and keeps going until everyone says “pass” </li></ul></ul><ul><ul><li>Slip method - each member writes down their ideas on small slips of paper. Used for controversial issue </li></ul></ul>
  23. 23. Nominal Group Technique <ul><li>Ranking for consensus </li></ul><ul><li>Why use it? </li></ul><ul><ul><li>To quickly come to a consensus on the relative importance of issues, problems, or solutions by completing individual important rankings into a team’s final priorities. </li></ul></ul><ul><li>What does it do? </li></ul><ul><ul><li>Builds commitment to the team’s choice through equal participation in the process </li></ul></ul><ul><ul><li>Allows every team member to rank issues without being pressured by others </li></ul></ul><ul><ul><li>Make a team’s consensus (or lack of it) visible; the major cause of disagreement can be discussed. </li></ul></ul><ul><li>How do I do it? </li></ul><ul><ul><li>Generate the list of issues, problems, or solutions to be prioritised </li></ul></ul><ul><ul><li>Write statements on a flipchart or board </li></ul></ul><ul><ul><li>Eliminate duplicates and/or clarify meanings of any of the statements </li></ul></ul><ul><ul><li>Record the final list of statements on a flipchart or board. Use letters rather than numbers to identify each statement </li></ul></ul><ul><ul><li>Each team member records the corresponding letters on a piece of paper and ranks the top item in order of importance (decide on number of votes for each team member) </li></ul></ul><ul><ul><li>Combine rankings for all team members </li></ul></ul>
  24. 24. Check Sheet <ul><li>Counting & accumulating data </li></ul><ul><li>Why use it? </li></ul><ul><ul><li>To allow a team to systematically record and compile data from historical sources, or observations as they happen </li></ul></ul><ul><ul><li>To detect patterns and trends </li></ul></ul><ul><li>What does it do? </li></ul><ul><ul><li>Creates easy-to-understand data </li></ul></ul><ul><ul><li>Builds, with each observation, a clearer picture of “the facts” as opposed to the opinions of each team member </li></ul></ul><ul><ul><li>Forces agreement on the definition of each condition or event </li></ul></ul><ul><ul><li>Assess data patterns quickly </li></ul></ul>
  25. 25. Check Sheet (Contd.) <ul><li>How do I do it? </li></ul><ul><ul><li>Agree on the definition of the events or conditions being observed. </li></ul></ul><ul><ul><li>Decide who will collect data; over what period; and from what sources </li></ul></ul><ul><ul><li>Design a Check Sheet form that is clear, complete, and easy to use. </li></ul></ul><ul><ul><li>Determine categories of information you wish to gather by asking questions such as: </li></ul></ul><ul><ul><ul><li>What happens? </li></ul></ul></ul><ul><ul><ul><li>Who does it? </li></ul></ul></ul><ul><ul><ul><li>What location? </li></ul></ul></ul><ul><ul><ul><li>When does it happen (day, month, hour)? </li></ul></ul></ul><ul><ul><ul><li>How does it happen and how much? </li></ul></ul></ul><ul><ul><ul><li>Collect the data consistently and accurately </li></ul></ul></ul>
  26. 26. Example - Check Sheet Reasons for late work orders Name: (if applicable) Location: North County Dates: 3 ~ 7 June, 2009 3/06 4/06 5/06 6/06 7/06 Total Rainy weather II I 3 Forgot to schedule I IIII IIII III IIII III 20 Crews on higher priority work IIII I IIII IIII III IIII IIII III 30 Materials not available I I I 3 Customer facility not ready I I II 4 Total 9 11 13 11 16 60
  27. 27. Process Model <ul><li>Picturing the process </li></ul><ul><li>Why use it? </li></ul><ul><ul><li>To allow a team to identify the actual flow or sequence of events in a process that any product or service follows. </li></ul></ul><ul><li>What does it do? </li></ul><ul><ul><li>Shows unexpected complexity, problem areas, redundancy, unnecessary loops, and where simplification and standardisation may be possible </li></ul></ul><ul><ul><li>Compares and contrasts the actual versus the ideal flow of a process to identify improvement opportunities </li></ul></ul><ul><ul><li>Allows a team to come to agreement on the steps of the process and to examine which activities may impact the process performance </li></ul></ul><ul><ul><li>Identifies locations where additional data can be collected and investigated </li></ul></ul><ul><ul><li>Serves as a training aid to understand the complete process </li></ul></ul>
  28. 28. Process Model (Contd.) <ul><li>How do I do it? </li></ul><ul><ul><li>Determine the boundaries of the process </li></ul></ul><ul><ul><li>Clearly define where the process under study starts (input) and ends (final output) </li></ul></ul><ul><ul><li>Team members should agree to the level of detail they must show on the flowchart to clearly understand the process and identify problem areas </li></ul></ul><ul><ul><li>It can be a simple flowchart showing only sufficient information to understand the general process flow or it might be detailed to show every finite action and decision point. </li></ul></ul><ul><ul><li>Determine the steps in the process </li></ul></ul><ul><ul><li>Brainstorm the main activities and decisions in the process using post-it notes for ease of moving around. </li></ul></ul><ul><ul><li>Arrange the activities and decisions in the order in which they occur </li></ul></ul><ul><ul><li>Draw the flowchart using a Software or pen & pencil. </li></ul></ul>
  29. 29. Example - Process Model Application Receives application, plans, fees and date stamps Enters application in database & routes plan to reviewer Reviews plans Application complete? Contacts customer for additional information Complete information submitted? Contacts customer for information No Enters comments in database. Notifies customer Yes End Coordinator Reviewer Entity Resource Activity No Yes Entity – The item being processed Activity – Step in a process Resource – Agent who performs an activity
  30. 30. Cause & Effect <ul><li>Find & cure causes, not symptoms </li></ul><ul><li>Why use it ? </li></ul><ul><ul><li>To identify, explore, and graphically display, in increasing detail, all of the possible causes related to a problem or condition to discover its root cause(s). </li></ul></ul><ul><li>What does it do ? </li></ul><ul><ul><li>Gets the team focused on causes, not symptoms </li></ul></ul><ul><ul><li>Allows the team to identify major categories of causes and possible root causes for each category. </li></ul></ul><ul><ul><li>Major categories viz. Manpower, Machine, Method, Measurement and Environment. </li></ul></ul><ul><ul><li>Or use any other categories that fits your situation. </li></ul></ul>
  31. 31. Cause & Effect (Contd.) <ul><li>How do I do it? </li></ul><ul><ul><li>Decide on the effect (problem) to be analysed. </li></ul></ul><ul><ul><li>Write it in the box on the right side of the diagram </li></ul></ul><ul><ul><li>Draw a horizontal line from the head across the paper with several “major bones” drawn on the slant. At the end of each, write one of major categories that contribute to the effect. </li></ul></ul><ul><ul><li>Brainstorm specific causes. </li></ul></ul><ul><ul><li>Attach each specific cause to an appropriate major category. </li></ul></ul><ul><ul><li>Whenever possible, break down the specific cause into sub-causes by using the “Why” technique. </li></ul></ul><ul><ul><li>Keep asking “Why is this occurring?” </li></ul></ul>
  32. 32. Example - Cause & Effect Wait times at Intake are long Machines Method Manpower Environment Computer slow No writing pens Too many at once Lunch morning Form not filled in Did not bring Not prepared No signs Only one station No chairs Slow Not enough staff Lack of training Poor motivation All DL services begin at intake line
  33. 33. Run Charts <ul><li>Track Trends </li></ul><ul><li>Why use it? </li></ul><ul><ul><li>To study observed data (a performance measure of a process) for trends or patterns over a specified period of time. </li></ul></ul><ul><li>What does it do? </li></ul><ul><ul><li>To compare a performance measure (e.g. delays, errors, reworks) before and after implementation of a solution to measure its impact </li></ul></ul><ul><ul><li>Focuses attention on truly vital changes in the process </li></ul></ul><ul><li>How do I do it? </li></ul><ul><ul><li>Decide on the process performance measure </li></ul></ul><ul><ul><li>Gather data - say collect 20-25 data points to detect meaningful patterns. </li></ul></ul><ul><ul><li>Use Excel software to create chart by selecting Line Chart Type </li></ul></ul>
  34. 34. Example - Run Charts 10 15 20 25 30 35 40 45 50 55 60 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec # of Work Orders
  35. 35. Pareto Chart <ul><li>Focus on key problems - 80% of your problems come from 20% of the causes </li></ul><ul><li>Why use it? </li></ul><ul><ul><li>To focus efforts on the problems that offer the greatest potential for improvement by showing their relative frequency in a descending bar graph. </li></ul></ul><ul><li>What does it do? </li></ul><ul><ul><li>Helps a team to focus on those causes that will have the greatest impact if solved </li></ul></ul><ul><li>How do I do it? </li></ul><ul><ul><li>Decide which problem you want to know more about </li></ul></ul><ul><ul><li>Choose the causes or problems that will be monitored, compared, and rank ordered by brainstorming or with existing data </li></ul></ul><ul><ul><li>Choose the most meaningful unit of measurement such as frequency or cost </li></ul></ul><ul><ul><li>Choose the time period for the study and gather data </li></ul></ul><ul><ul><li>Draw horizontal line for problems categories and vertical line for frequency or any measurement values </li></ul></ul><ul><ul><li>Order the bars, going from left to right in order of decreasing frequency or whatever is measured on the vertical axis </li></ul></ul><ul><ul><li>(Optional) Draw the cumulative percentage line showing the portion of the total that each problem category represents. Once all problems have been represented, total distribution should be 100 percent. </li></ul></ul>
  36. 36. Example - Pareto Chart 0 40 45 35 30 25 20 15 5 10 50 60 55 100 % 50 % Frequency Reasons Crew on high priority Forgot to Schedule Facility not ready Rainy Weather Materials not found
  37. 37. Measures & Metrics
  38. 38. Definition <ul><li>Measures are the yardstick or standard by which you gauge performance, e.g. </li></ul><ul><ul><li>Test scores, IT response time </li></ul></ul><ul><ul><li>Reject rate, Cost to hire a machine </li></ul></ul><ul><li>Metrics are the numbers by which you gauge the performance of the measure </li></ul><ul><ul><li>70% passed test; Reject rate: 30% </li></ul></ul><ul><ul><li>Cost to hire a machine: $5,500 </li></ul></ul>
  39. 39. Note – About Measures… <ul><li>What is done with measures is as important as what your measures are </li></ul><ul><li>Any process, job, group, department, organisation can be measured </li></ul><ul><li>You change what you measure </li></ul><ul><li>Measure trends , not just snapshots </li></ul><ul><li>Get the customer in your measures </li></ul><ul><li>KISS - keep it simple </li></ul><ul><li>Focus on the vital few – measure only what matters and what you can do something as a result of having the measure in place </li></ul><ul><li>Use measures as a tool, not just for analysis, but for effective management </li></ul><ul><li>Weight measures to reflect degree of influence </li></ul><ul><li>Link measurements to performance evaluation of teams, individuals and entities </li></ul>
  40. 40. Metrics – Efficiency & Effectiveness <ul><li>Metrics to use - to measure and improve process “efficiency” and “effectiveness” </li></ul><ul><ul><li>Cost Effectiveness </li></ul></ul><ul><ul><li>Staff Productivity </li></ul></ul><ul><ul><li>Process Efficiency </li></ul></ul><ul><ul><li>Cycle Time </li></ul></ul>
  41. 41. Just Metrics – Shouldn’t be the Goal <ul><li>Don’t collect data so you know batting averages… </li></ul><ul><li>… but don’t know how to hit the ball better . </li></ul>
  42. 42. Process Maturity
  43. 43. Checklist <ul><li>Process identified </li></ul><ul><li>Owner assigned to continuously improve process </li></ul><ul><li>Process is documented to the work instruction level </li></ul><ul><li>Process is standardised and has certified trainers. </li></ul><ul><li>Process is under control and is measured and analysed using data </li></ul><ul><li>Improvement trends over time are evident </li></ul>
  44. 44. Example – Process Maturity
  45. 45. <ul><li>“All work is a process” </li></ul><ul><ul><li>- W. Edwards Deming </li></ul></ul>
  46. 46. <ul><li>Good Luck </li></ul><ul><li> </li></ul>