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CRICOS Provider 00109J | www.newcastle.edu.au 1 Process Improvement Business Process Excellence Strategy Craig Lehman Associate Director, Commercial Services.

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Presentation on theme: "CRICOS Provider 00109J | www.newcastle.edu.au 1 Process Improvement Business Process Excellence Strategy Craig Lehman Associate Director, Commercial Services."— Presentation transcript:

1 CRICOS Provider 00109J | 1 Process Improvement Business Process Excellence Strategy Craig Lehman Associate Director, Commercial Services University of Newcastle National University Finance and Procurement Conference July 2010 Karla Stewart Commercial Relationship Manager University of Newcastle

2 CRICOS Provider 00109J | 2 Introduction Craig Lehman Associate Director, Commercial Services University of Newcastle Karla Stewart Senior Commercial Relationship Manager Commercial Services, University of Newcastle

3 CRICOS Provider 00109J | 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. Facultys/DivisionsProcurement RequirementsInputsTiming Mechanical Process Facultys/DivisionsProcurement Planning Benefits & Risk OutcomesRequirementsInputsTiming

4 CRICOS Provider 00109J | 4 If Procurement was reformed, why do we need a Process Improvement Strategy?

5 CRICOS Provider 00109J | 5 Process Enablers Policy Strategy/ Guidelines Technology Process

6 CRICOS Provider 00109J | 6 Business Process Excellence Strategy Why does Procurement need a Process Improvement Strategy? Decision Support Evolving Transactional Neglected Strategic Procurement Tactical Procurement Support/Purchasing GAP Process Variance

7 CRICOS Provider 00109J | 7 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 Commercial Services Procurement Excellence Profile

8 CRICOS Provider 00109J | 8 Business Process Excellence Strategy Process Improvement Strategy System Modernisation Strategy Continued & Sustainable Evolution of Procurement

9 CRICOS Provider 00109J | 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 CRICOS Provider 00109J | 10 Commercial Services Business Process Excellence Strategy Customer Focus Information Driven Robust Methodology Pulse Points

11 CRICOS Provider 00109J | 11 Improvement Strategy Framework Results Personally actively Involved in improvement Encouraging & enabling people To participate in Improvement Recognizing Individual & Team effort Identifying & designing processes to deliver strategy Developing Team skills Aligning Individual & Organisation Goals Recognizing People Establishing Process management System to be used Implementing Process Measures Improving processes to satisfy and Generate value For customers Delivery, Value, reliability Repurchase satisfaction Response Time to customers Time to Market Satisfaction Involvement Recognition Competency Productivity Defects Errors Improved Control Process cycle time Process costs Productivity Utilisation Reduced work in Progress Stability Sustainability Leadership Policy & Strategy People Processes People Results Key Perf Results Customer Results Enablers

12 CRICOS Provider 00109J | 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.

13 CRICOS Provider 00109J | /80/10 Rule 10% Incidentals 80% Value 10% Waste New or Aligned Process

14 CRICOS Provider 00109J | /80/10 Rule 10% Value 80% Incidentals 10% Waste Aged or Misaligned Process

15 CRICOS Provider 00109J | 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

16 CRICOS Provider 00109J | 16 Process Improvement Framework DMAIC- Define, Measure, Analyse, Implement, Control DMADV- Define, Measure, Analyse, Design, Verify 3i- Innovate, Improve, Implement

17 CRICOS Provider 00109J | 17 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 I Improve the system – remove variation and non value added criteria Tools Used --DoE -ANOVA -Surface Response Testing C Control the system so problems dont recur Tools used -Poka Yoka -Flagging -Control Charts DMAIC provides structure and rigor to problem solving and improving existing process

18 CRICOS Provider 00109J | 18 Process Improvement Framework Continued DMADV drives customer needs into service or process design 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

19 CRICOS Provider 00109J | 19 InnovateImproveImplement Define Does MET exist? Control Implement Develop Explore Measure Control Implement Improve Analyse Measure MET Sufficient ? NO YES NOYES NO 3i Model 3i is for a team charged to develop the underlying technology and processes that can meet customer expectations for quality and reliability 2 1 Process Improvement Framework Continued

20 CRICOS Provider 00109J | 20 DMAIC Process Storyboard TEAM FORMATION DEFINE MEASURE ANALYSE IMPROVE - I : Generate Potential Solutions CONTROL - Standardise FUTURE PLANS Define, Measure, Analyse, Improve, Control Objective: Identify and implement the measures required to establish baseline performance and quantify the opportunity. Output: Team Project Charter, Work Plan, Measurable Customer Requirements, Process Map/Process Analysis Objective: Identify and verify the root cause(s) of the problem. Output: Root cause(s) identified. Cause and Effect Diagram (Fishbone) Pareto Chart Checksheet Objective: Determine possible solutions that will address the identified root cause(s) of the problem. Action Plan Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Output: Preferred solution or countermeasures Key Steps:- Generate potential solutions Assess potential solutions Select preferred solution Test/Pilot preferred solution Develop implementation plan Objective: Implement the preferred solution. Confirm that the problem and its root cause(s) have been reduced or eliminated. Before After Output: Confirmation that the best solution to eliminate the problem & its root cause(s) has been implemented. Key steps:- Implement preferred solution Verify effectiveness Apply comparative methods if necessary. Objective: Prevent the problem and its root cause from recurring. Flowchart Standard procedure Output: Solution embedded and routinised in relevant process, procedures and standards. Key steps:- Standardise the solution (standards & procedures) Document project Implement scorecard Implement controls Objectives: Review team effectiveness, plan to address remaining issues and institutionalise the learning. Output: Recommendations for future projects and improvements to team processes. Project documentation and learnings pack Potential Solutions D M A C I IMPROVE - II: Implement and Check Objective: Define the Problem/Opportunity, Customers, Customer Requirements, and Process. Output: A quantified picture of the current process performance, problem impact. The process sigma rating. Objective: Select problem/ opportunity theme, select team members Output: Problem/Opportunity selected, Team members selected. Develop business case Develop project team charter Understand Customer Requirements Understand the Process. Determine what to measure Understand the measures Understand Variation Assess measurement system Assess process performance Key Steps:- Flowchart Team charter Cause and Effect DiagramRun chart or control chart Analyse data Analyse process Determine potential root causes Hypothesis Testing Verify root causes Key Steps:- Review remaining project opportunities Review other applications Review learnings

21 CRICOS Provider 00109J | 21 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 Barriers to Process Improvement Initiative

22 CRICOS Provider 00109J | 22 Improvement Example Fleet Management

23 CRICOS Provider 00109J | 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

24 CRICOS Provider 00109J | 24 Fleet Management InnovateImproveImplement Define Does MET exist? Control Implement Develop Explore Measure Control Implement Improve Analyse Measure MET Sufficient ? NO YES NOYES NO 3i Model 1

25 CRICOS Provider 00109J | 25 Outcomes All transactional fleet processes outsourced All decision support processes in-sourced Surplus resources redirected to commercial systems support

26 CRICOS Provider 00109J | 26 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 CRICOS Provider 00109J | 27 THANK YOU DISCUSSION


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