1. Business Process Excellence Strategy
Process Improvement
Business Process Excellence Strategy
National University Finance and Procurement Conference
26-28 July 2010
Craig Lehman
Associate Director, Commercial Services
University of Newcastle
Karla Stewart
Commercial Relationship Manager
University of Newcastle

2. Introduction
Craig Lehman Associate Director, Commercial Services University of Newcastle Karla Stewart Senior Commercial Relationship Manager Commercial Services, University of Newcastle

3. Procurement Reform Procurement organisations must
balance the desire to leverage
purchasing power through complete
ownership with the need to maintain
the flexibility of the individual
business units, functions, and regions.
Faculty’s/Divisions
Requirements
Inputs
Timing
Procurement
Mechanical Process
Faculty’s/Divisions
Requirements
Inputs
Timing
Procurement
Planning
Benefits & Risk
Outcomes
Over the past 2 years the university’s procurement has undergone significant reform. This was to position procurement into a sustainable value add decision support operation for the organisation. The result has been a more balanced approach to procurement with capability across both tactical and strategic requests from the organisation.

4. If Procurement was reformed, why do we need a Process Improvement Strategy?

5. Process Enablers
Policy
Strategy/
Guidelines
Technology
Process
There are 3 levels of enablers for process, policy, strategy and guidance, and technology. These enablers direct the related process transactions that converts inputs to results or outputs. When variation or change occurs in any of the levels of enablers, this will create process variation or defect.

6. Business Process Excellence Strategy
Process Improvement
March 2000
Business Process Excellence Strategy
Why does Procurement need a Process Improvement Strategy?
Tactical Procurement
Support/Purchasing
Strategic Procurement
Transactional
Neglected
Decision Support
Evolving
GAP
Process Variance
Commercial Services Procurement function has evolved significantly since 2008 and continues to evolve and although the evolution has been one of a strategic nature, the focus has shifted away from tactical and supporting processes.
This has created a gap in process and system support of the procurement function which in turn creates inefficient and ineffective business and system process i.e process variance

7. Strategic Procurement
Commercial Services Procurement Excellence Profile
Contribution and Influence
Process & Controls
External and Internal Relationships
Supplier Relationship Management
Effective Use of Available Technology
Staff Capability and Development
Structured Approach to Effective Sourcing (DMAIC)
Sustainable Procurement
Enabling
Foundation
Strategic Procurement
A key to Commercial Services procurement reform was to establish a procurement excellence profile. This represents the essential building blocks necessary to underpin what we believe to be a high performing procurement operation. However, the remaining 2 enablers have generated the gap in supporting processes of the procurement function.
To assist in development of these remaining 2 enablers, CS have implemented a Business Process Excellence Strategy

8. Business Process Excellence Strategy
Process Improvement Strategy
System Modernisation Strategy
Continued & Sustainable
Evolution of Procurement
The Business Process Excellence Strategy consists of two supporting strategies, Process Improvement Strategy and a System Modernisation Strategy. This is to ensure that the continued development of the procurement function is sustainable.

9. What are our Objectives?
Organise and develop our operations to suit our internal customers and stakeholders
Provide increased value and benefits by improving services and offerings available to staff and students.
Be recognised as a business excellence centre for continuous improvement
How?
By aligning the 3 levels of process enablers to meet changing requirements.
Policy
Strategy/
Guidelines
Technology
Process

10. Commercial Services Business Process Excellence Strategy
April 1, 2017
Pulse Points
Commercial Services Business Process Excellence Strategy
Customer Focus
Information Driven
Robust Methodology
The recognised pulse points for the strategies are Customer, Information, Methodology and these ensure that our process improvement efforts are valuable to the internal and external stakeholders and customers. These pulse points feed directly into our improvement framework

11. Improvement Strategy Framework
Enablers
Results
Personally
actively
Involved in
improvement
Establishing
Process
management
System to be
used
People
People
Results
Competency
Productivity
Key Perf
Results
Recognizing
People
Satisfaction
Involvement
Stability
Sustainability
Recognition
Aligning
Individual &
Organisation
Goals
Implementing
Process
Measures
Encouraging
& enabling people
To participate in
Improvement
Response
Time to
customers
Process cycle time
Process costs
Productivity
Developing
Team skills
Delivery,
Value,
reliability
Utilisation
Reduced work
in Progress
Improving
processes
to satisfy and
Generate value
For customers
Time to
Market
Recognizing
Individual &
Team effort
Identifying &
designing
processes to deliver
strategy
This ensures that key enablers and pulse points of process as well as outcomes and results are considered and identified.
Repurchase
satisfaction
Defects
Errors
Improved
Control
Leadership
Policy & Strategy
Processes
Customer Results

12. Business Process
Business process can be defined as a chain of logical connected, repetitive activities that utilises the organisation's resources to refine an object for the purpose of achieving specified and measurable results for internal or external customers.
We define Business Process as a logical series of related transactions that converts input to results or output. Process contains a level of value, incidental and waste transactions.

13. New or Aligned Process Value 10/80/10 Rule Waste Incidentals
We view process by a 10/80/10 rule. New and aligned processes generally contain 10% Incidentals, 80% value, and 10% waste.

14. Aged or Misaligned Process
Incidentals
Waste
Value
10/80/10 Rule
10% Value
80% Incidentals
10% Waste
Aged and misligned processes generally contain 10% value, 80% incidentals, and 10% waste. In order to reduce and eliminate waste and variance in process, we had to improve or redesign by way of a process improvement methodology.

15. Process Improvement Methodology
Six Sigma
Lean Thinking
Theory of Constraints (TOC)
ISO 9000 Quality Standards
Total Quality Management (TQM)
Toyota Production System (TPS)
Deming (PDCA)
Juran
Becker PI
To implement our strategies and improvements we needed a robust methodology. There are numerous process improvement methodologies available of which we have listed just some of the well known ones. We chose Six Sigma.

16. Process Improvement Framework
DMAIC- Define, Measure, Analyse, Implement, Control
DMADV- Define, Measure, Analyse, Design, Verify
3i- Innovate, Improve, Implement
Our methododology includes Six Sigma variations and these are, DMAIC, DMADV, 3i or as we call it MET (Most Effective Technology).

17. Process Improvement Framework Continued
April 1, 2017
DMAIC provides structure and rigor to problem solving and improving existing process D
Define improvement goals
Tools used
Pareto charts
Bar Graphs
Pie Charts M
Measure current performance
Tools Used
MSA
Box Plots
Dot Plots
Histograms A
Analyze the system to determine ways to improve it
Tools Used
Regression
Correlation
Hypothesis testing I
Improve
the system –remove variation and non value added criteria
Tools Used
-DoE
ANOVA
Surface Response Testing C
Control
the system so problems don’t recur
Tools used
Poka Yoka
Flagging
Control Charts
DMAIC is a basic component of the Six Sigma methodology- it is a way to improve existing work processes by eliminating waste and aligning with desired process outcomes.

18. Process Improvement Framework Continued
April 1, 2017
Process Improvement Framework Continued D
Define improvement goals
Tools used
Pareto charts
Bar Graphs
Pie Charts M
Measure current performance
Tools Used
MSA
Box Plots
Dot Plots
Histograms A
Analyze the system to determine ways to improve it
Tools Used
Regression
Correlation
Hypothesis testing D
Design new services or processes
Tools Used
Predictive Models
Simulation
Prototypes
Pilot runs V
Verify design effectiveness in the real world
Tools used
Poka Yoka
Flagging
Control Charts
DMADV is for designing new process and services. It’s relationship to DMAIC ends after the first 3 stages, Define Measure and Analyse.
DMADV drives customer needs into service or process design

19. Process Improvement Framework Continued
3i Model
Define
Innovate
Improve
Implement
Does MET exist? NO
YES
Measure
Measure
Explore
Analyse 2
Develop
MET Sufficient? NO
YES
Implement
Implement 1 NO
The 3i concept is better known to Commercial Services as Implement MET or “Most Effective
Technology.” MET is comprised of three levels:
• Corporate leverageable technology, referred to as MET-1
• Business leverageable technology, referred to as MET-2
• And, location specific technology, referred to as MET-3
For the purposes of this model, technology encompasses both the process and the underlying technology to support the process. If modification is required, a determination is made if improvements to an existing MET will meet the requirements.
If the answer is ”yes,” (1) then improvements are made and implemented. If the answer is “no,” (2) then it is shifted over as an “innovate project.”
Control
Improve
Control
3i is for a team charged to develop the underlying technology and processes that can meet customer expectations for quality and reliability

20. DMAIC Process Storyboard
TEAM FORMATION
DEFINE
MEASURE
Objective: Select problem/ opportunity theme, select team members
Objective: Define the Problem/Opportunity, Customers, Customer Requirements, and Process.
Objective: Identify and implement the measures required to establish baseline performance and quantify the opportunity.
Team charter
Key Steps:-
Key Steps:-
Cause and Effect Diagram
Run chart or control chart
Flowchart
Determine what to measure
Understand the measures
Understand Variation
Assess measurement system
Assess process performance
Develop business case
Develop project team charter
Understand Customer Requirements
Understand the Process.
Output: Problem/Opportunity selected, Team members selected.
Output: Team Project Charter, Work Plan, Measurable Customer Requirements, Process Map/Process Analysis
Output: A quantified picture of the current process performance, problem impact. The process sigma rating.
ANALYSE
IMPROVE - I : Generate Potential Solutions
Objective: Identify and verify the root cause(s) of the problem.
Objective: Determine possible solutions that will address the identified root cause(s) of the problem.
Key Steps:-
Cause and Effect Diagram
(Fishbone)
Pareto Chart
Checksheet
Key Steps:-
Analyse data
Analyse process
Determine potential root causes
Hypothesis Testing
Verify root causes
Potential Solutions
Action Plan
Generate potential solutions
Assess potential solutions
Select preferred solution
Test/Pilot preferred solution
Develop implementation plan
Step 1
Step 2
Step 3
Step 4
Step 6
Step 5
Output: Root cause(s) identified.
Output: Preferred solution or countermeasures
IMPROVE - II: Implement and Check
CONTROL - Standardise
FUTURE PLANS
Objective: Implement the preferred solution. Confirm that the problem and its root cause(s) have been reduced or eliminated.
Objective: Prevent the problem and its root cause from recurring.
Objectives: Review team effectiveness, plan to address remaining issues and institutionalise the learning.
A Six Sigma storyboard is developed to provide a real-life example of the application of the methodology to improve the process. This document is a living document and communication tool throughout the improvement process.
Key steps:-
Key steps:-
Flowchart
Standard
procedure D M A C I
Before
After
Key Steps:-
Implement preferred solution
Verify effectiveness
Apply comparative methods if necessary.
Standardise the solution (standards & procedures)
Document project
Implement scorecard
Implement controls
Define, Measure, Analyse, Improve, Control
Review remaining project opportunities
Review other applications
Review learnings
Output: Recommendations for future projects and improvements to team processes. Project documentation and learnings “pack”
Output: Confirmation that the best solution to eliminate the problem & its root cause(s) has been implemented.
Output: Solution embedded and “routinised” in relevant process, procedures and standards.

21. Barriers to Process Improvement Initiative
April 1, 2017
Barriers to Process Improvement Initiative
Objectives of the initiatives not clear
Value of the Implementation not recognized
Perception that process improvement is time consuming
Lack of understanding improvement strategies
Lack of understanding benefits of process improvement
Not confident during the early stages
Lack of management support
Expectation of instant results
Lack of adequate coaching
Unwillingness to invest unless results seen

22. Improvement Example
Fleet Management

23. Fleet Management Problem Statement or the Case for Change
Growing CAPEX Fleet Budget
Growing Fleet size and operational costs
Under utilised third party fleet management system.
No decision support data for management of fleet and sourcing.
Tactical sourcing of Fleet requirements
The 1st step that we take is we complete a charge document. This will identify Problem/Opportunity. Creates a Problem Statement.
This then will allow for the correct improvement framework to be used for improvement or design.

24. Fleet Management 3i Model 1 Process Improvement March 2000 Define
Innovate
Does MET exist?
Improve
Implement NO
YES
Measure
Measure
Explore
Analyse
Develop
MET Sufficient? NO
YES
Implement
Implement
The 3i model was chosen as the preferred methodology for improvement. Is was chosen as a MET 2 improvement.
‘As is’ was defined and measured for both process and system capability by using process flow charts with desired transaction and decision support process identified. This included process tasks, process outcomes and process control points. The desired system output was identified, The current technology was sufficient, improvements made, UAT conducted and then implemented. 1 NO
Control
Improve
Control

25. Outcomes All transactional fleet processes outsourced
Process Improvement
March 2000
Outcomes
All transactional fleet processes outsourced
All decision support processes in-sourced
Surplus resources redirected to commercial systems support

26. Process Improvement
March 2000
Benefits
Increased support for procurement function through decision support data and systems.
Reduced Fleet CAPEX budget by 84% from 2008 to 2010
Sustained fleet size with requirements increasing 2.9%.

27. THANK YOU
DISCUSSION