Presentation on theme: "Business Process Excellence Strategy"— Presentation transcript:
1 Business Process Excellence Strategy Process ImprovementBusiness Process Excellence StrategyNational University Finance and Procurement Conference26-28 July 2010Craig LehmanAssociate Director, Commercial ServicesUniversity of NewcastleKarla StewartCommercial Relationship ManagerUniversity of Newcastle
2 IntroductionCraig 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 leveragepurchasing power through completeownership with the need to maintainthe flexibility of the individualbusiness units, functions, and regions.Faculty’s/DivisionsRequirementsInputsTimingProcurementMechanical ProcessFaculty’s/DivisionsRequirementsInputsTimingProcurementPlanningBenefits & RiskOutcomesOver 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 EnablersPolicyStrategy/GuidelinesTechnologyProcessThere 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 ImprovementMarch 2000Business Process Excellence StrategyWhy does Procurement need a Process Improvement Strategy?Tactical ProcurementSupport/PurchasingStrategic ProcurementTransactionalNeglectedDecision SupportEvolvingGAPProcess VarianceCommercial 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 ProfileContribution and InfluenceProcess & ControlsExternal and Internal RelationshipsSupplier Relationship ManagementEffective Use of Available TechnologyStaff Capability and DevelopmentStructured Approach to Effective Sourcing (DMAIC)Sustainable ProcurementEnablingFoundationStrategic ProcurementA 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 StrategySystem Modernisation StrategyContinued & SustainableEvolution of ProcurementThe 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 stakeholdersProvide increased value and benefits by improving services and offerings available to staff and students.Be recognised as a business excellence centre for continuous improvementHow?By aligning the 3 levels of process enablers to meet changing requirements.PolicyStrategy/GuidelinesTechnologyProcess
10 Commercial Services Business Process Excellence Strategy April 1, 2017Pulse PointsCommercial Services Business Process Excellence StrategyCustomer FocusInformation DrivenRobust MethodologyThe 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 EnablersResultsPersonallyactivelyInvolved inimprovementEstablishingProcessmanagementSystem to beusedPeoplePeopleResultsCompetencyProductivityKey PerfResultsRecognizingPeopleSatisfactionInvolvementStabilitySustainabilityRecognitionAligningIndividual &OrganisationGoalsImplementingProcessMeasuresEncouraging& enabling peopleTo participate inImprovementResponseTime tocustomersProcess cycle timeProcess costsProductivityDevelopingTeam skillsDelivery,Value,reliabilityUtilisationReduced workin ProgressImprovingprocessesto satisfy andGenerate valueFor customersTime toMarketRecognizingIndividual &Team effortIdentifying &designingprocesses to deliverstrategyThis ensures that key enablers and pulse points of process as well as outcomes and results are considered and identified.RepurchasesatisfactionDefectsErrorsImprovedControlLeadershipPolicy & StrategyProcessesCustomer Results
12 Business ProcessBusiness 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 IncidentalsWasteValue10/80/10 Rule10% Value80% Incidentals10% WasteAged 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 SigmaLean ThinkingTheory of Constraints (TOC)ISO 9000 Quality StandardsTotal Quality Management (TQM)Toyota Production System (TPS)Deming (PDCA)JuranBecker PITo 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, ControlDMADV- Define, Measure, Analyse, Design, Verify3i- Innovate, Improve, ImplementOur 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, 2017DMAIC provides structure and rigor to problem solving and improving existing processDDefine improvement goalsTools usedPareto chartsBar GraphsPie ChartsMMeasure current performanceTools UsedMSABox PlotsDot PlotsHistogramsAAnalyze the system to determine ways to improve itTools UsedRegressionCorrelationHypothesis testingIImprovethe system –remove variation and non value added criteriaTools Used-DoEANOVASurface Response TestingCControlthe system so problems don’t recurTools usedPoka YokaFlaggingControl ChartsDMAIC 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, 2017Process Improvement Framework ContinuedDDefine improvement goalsTools usedPareto chartsBar GraphsPie ChartsMMeasure current performanceTools UsedMSABox PlotsDot PlotsHistogramsAAnalyze the system to determine ways to improve itTools UsedRegressionCorrelationHypothesis testingDDesign new services or processesTools UsedPredictive ModelsSimulationPrototypesPilot runsVVerify design effectiveness in the real worldTools usedPoka YokaFlaggingControl ChartsDMADV 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 ModelDefineInnovateImproveImplementDoes MET exist?NOYESMeasureMeasureExploreAnalyse2DevelopMET Sufficient?NOYESImplementImplement1NOThe 3i concept is better known to Commercial Services as Implement MET or “Most EffectiveTechnology.” 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-3For 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.”ControlImproveControl3i 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 FORMATIONDEFINEMEASUREObjective: Select problem/ opportunity theme, select team membersObjective: 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 charterKey Steps:-Key Steps:-Cause and Effect DiagramRun chart or control chartFlowchartDetermine what to measureUnderstand the measuresUnderstand VariationAssess measurement systemAssess process performanceDevelop business caseDevelop project team charterUnderstand Customer RequirementsUnderstand the Process.Output: Problem/Opportunity selected, Team members selected.Output: Team Project Charter, Work Plan, Measurable Customer Requirements, Process Map/Process AnalysisOutput: A quantified picture of the current process performance, problem impact. The process sigma rating.ANALYSEIMPROVE - I : Generate Potential SolutionsObjective: 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 ChartChecksheetKey Steps:-Analyse dataAnalyse processDetermine potential root causesHypothesis TestingVerify root causesPotential SolutionsAction PlanGenerate potential solutionsAssess potential solutionsSelect preferred solutionTest/Pilot preferred solutionDevelop implementation planStep 1Step 2Step 3Step 4Step 6Step 5Output: Root cause(s) identified.Output: Preferred solution or countermeasuresIMPROVE - II: Implement and CheckCONTROL - StandardiseFUTURE PLANSObjective: 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:-FlowchartStandardprocedureDMACIBeforeAfterKey Steps:-Implement preferred solutionVerify effectivenessApply comparative methods if necessary.Standardise the solution (standards & procedures)Document projectImplement scorecardImplement controlsDefine, Measure, Analyse, Improve, ControlReview remaining project opportunitiesReview other applicationsReview learningsOutput: 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, 2017Barriers to Process Improvement InitiativeObjectives of the initiatives not clearValue of the Implementation not recognizedPerception that process improvement is time consumingLack of understanding improvement strategiesLack of understanding benefits of process improvementNot confident during the early stagesLack of management supportExpectation of instant resultsLack of adequate coachingUnwillingness to invest unless results seen
23 Fleet Management Problem Statement or the Case for Change Growing CAPEX Fleet BudgetGrowing Fleet size and operational costsUnder utilised third party fleet management system.No decision support data for management of fleet and sourcing.Tactical sourcing of Fleet requirementsThe 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 InnovateDoes MET exist?ImproveImplementNOYESMeasureMeasureExploreAnalyseDevelopMET Sufficient?NOYESImplementImplementThe 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.1NOControlImproveControl
25 Outcomes All transactional fleet processes outsourced Process ImprovementMarch 2000OutcomesAll transactional fleet processes outsourcedAll decision support processes in-sourcedSurplus resources redirected to commercial systems support
26 Process ImprovementMarch 2000BenefitsIncreased support for procurement function through decision support data and systems.Reduced Fleet CAPEX budget by 84% from 2008 to 2010Sustained fleet size with requirements increasing 2.9%.