Systems of Management

1. Theory and Systems of Management The High Performance Enterprise Presented by: Walter Kruz Module 2: Business Process Improvement Momari

3. Business Process Improvement Overview Segment 1 Momari

4. Forces driving business change Momari Business Change Economy Social/Political Customers Technology Industry/Competition Work Force Environment

8. Incremental Improvement versus Extreme Business Reengineering Momari Source: Davenport Cultural/Structural Cultural Type of Change Information Technology Statistical Control Primary Enabler High Moderate Risk Broad, Cross-Functional Narrow, Functional Typical Scope Top-Down Bottom-Up Participation Short Long Time Required One-time One-time /Continuous Frequency Clean Slate Existing Process Starting Point Radical Incremental Level of Change Extreme Continuous

9. Few Companies Adjust Processes Before Implementation Momari 27% 29% 44% Implement and change process simultaneously Implement first, adjust process if necessary Assess & adjust process before implementation

10. BPI Methodology Momari Ensure Performance Continuous Improvement Control Validate Benefits Process Implementation Improve Evaluate Options Process Analysis Analyze Quantification of Issue Process Documentation Measure Prioritize Critical Issues Process Identification Define Goal BPI Six Sigma

15. A report from industry The Prosci 2002 BPR Report Segment 2 Momari

18. Basic Business Process concepts Segment 3 Momari

26. Relationship between IT capabilities and BPR Momari BPR IT capabilities How can business processes be transformed by IT? How can IT support business processes?

27. Value-adding capabilities of IT Momari SUPPLIER VALUE CHAIN COMPANY VALUE CHAIN END-USER VALUE CHAINS CHANNEL VALUE CHAINS UPSTREAM COMPANY DOWNSTREAM COMPETITIVE ADVANTAGE ARISES BY OPTIMIZINGVALUE CHAIN LINKAGES; INFORMATION TECHNOLOGY ACTS AS ADDED VALUE

31. The visioning process Momari Initial vision statement Key process characteristics Performance measures and objectives Critical success factors Potential implementation barrier How can we do things different ? How will it work ? How well will it work? What things have to go right ? Why might not go right ?

36. Process Mapping Segment 4 Momari

38. The process environment Momari Input/ supplier Output/ customer Feedback system Process characteristics (Measurements) Requirements Requirements

40. Preparing a monthly financial report Momari Info Systems: Volumes Inventory cost Labor cost Financial Planning: Overhead rates Practices Management: Review schedule Special requirements Process Characteristics/Measurements Accuracy (# redo’s) Customer satisfaction (# complaints) Timeliness (Complete on time) Efficiency (Hrs paid overtime) Supplier input Financial mgmt: Reports Explanations Concerns Site mgmt: Reports Reviews Tax accounting: Cost info Deductions Customer output

43. Insurance claim process Momari Client Claims processing Insurance agent Car repair shop 1. Notify agent 2. Instructions 3. Request quote 4. Provide quote 9. Fix and pay 5. File claim 6. File claim 7. Request additional info 8. Pay

44. Momari Role Responsibilities Source Team Roles

45. Process mapping methodology Momari Bounding the process & setting objectives Developing the data gathering plan Interviewing the process participants Generating the process map Analyzing and using the map

51. Momari

52. Developing the data gathering plan Momari What data is needed to create a process map? Who do we need to talk to? What should we ask? Bounding the process & objectives Developing the data gathering plan Interviewing the participants Generating process map Analyzing and using the map

55. Concept flowchart-Insurance Co. Momari client agent claims center shop 1. Notify agent 2. instructions 3. Quote request 4. Provide quote … and so on

56. Interviewing the process participants Momari Setting up and conducting info gathering interviews Creating sub-process maps during the interview Bounding the process & objectives Developing the data gathering plan Interviewing the participants Generating process map Analyzing and using the map

58. Momari Interview Process Flow Is this the last step Opinions Facts 1. What is the first (next) next step you perform 3. What support do you need? Who supplies 2. What are the outputs? Customers? 3. What are the inputs? Suppliers? 4. What are the characteristics values? Task time, cost? No YES Review input with participant 1. Is customer satisfied with inputs 2. How do you measure your progress? 3.What are road blocks to quality, productivity? 4. How would you change the process?

59. Generating the process map Momari The conventions and symbols used in process mapping The details of process mapping Variations and when they are used Bounding the process & objectives Developing the data gathering plan Interviewing the participants Generating process map Analyzing and using the map

60. Process mapping symbols Momari Basic Ops: Process, activity Decision:Triage, classification Terminal: Start and end process Ops: Process, activity Inspection: Approval Delay: Waiting Manufacturing Storage: controlled Assemble Accept/reject? Start batch Finished goods to warehouse Quality control In process inventory Raw materials, Finished goods Services Sales call. Med exam Audit? Make or buy? Cust orders lunch Fax order to vendor Sign-off P.O. Computer install waiting for S/W Records Vault

61. A simple process map Momari Start Step 1 Step 2 Step 3 Step 4 ? End No Yes Organization x Org y Org z Time scale

63. Analyzing and using the map Momari Analysis: Concepts of value added activity Basic tools of process analysis Process analysis check list Bounding the process & objectives Developing the data gathering plan Interviewing the participants Generating process map Analyzing and using the map

64. Value added assessment Momari Process step Necessary to produce output? Customer value added Business value added No value added Contribute to customer requirement? Contribute to business function? Yes No No No Yes Yes Record order Type policy Research data Record claim Record date received Order forms Update personnel records Prepare financial report Pay taxes Review & approve Rework Movement Storage

65. Analyzing and using the map (cont) Momari Using the map: Process improvement programs Target setting Bounding the process & objectives Developing the data gathering plan Interviewing the participants Generating process map Analyzing and using the map

66. The basis for improvement Momari Reengineering Benchmarking Cycle time reduction Continuous improvement Six Sigma Activity based mgmt Improvement Process mapping Process Analysis tools