This document discusses process management and why many companies struggle with it. It provides data showing that most companies document few of their processes, and of those documented processes, most are not current. Additionally, few processes have clearly defined metrics or an identified owner. The document advocates for three criteria of proper process management: 1) defined and documented processes, 2) 2-5 relevant metrics that are visually displayed, consistently measured and improved, and 3) sole ownership and oversight of each process. It discusses how having process owners, rather than functional managers, leads to better process performance and continuous improvement.

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
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