Chapter 7 Process Management MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Wisdom from Texas Instruments “Unless you change the process, why would you expect the results to change” MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Process management involves planning and administering the activities necessary to achieve a high level of performance in key business processes, and identifying opportunities for improving quality and operational performance, and ultimately, customer satisfaction. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

AT&T Process Management Principles Focus on end-to-end process Mindset of prevention and continuous improvement Everyone manages a process at some level and is a customer and a supplier Customer needs drive the process Corrective action focuses on root cause Process simplification reduces errors MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Leading companies identify important business processes throughout the value chain that affect customer satisfaction. These processes typically fall into two categories: value-creation processes and support processes. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Types of Processes Value-creation processes – those most important to “running the business” Design processes – activities that develop functional product specifications Production/delivery processes – those that create or deliver products Support processes – those most important to an organization’s value creation processes, employees, and daily operations MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Control vs. Improvement Controlled process Improvement Time New zone of control Out-of-control MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Leading Practices (1 of 2) Define, document, and manage important value creation and support processes Translate customer requirements and internal capabilities into product and service design requirements early in the process Ensure that quality is built into products and services and use appropriate tools during development Manage product development process to enhance communication, reduce time, and ensure quality MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Leading Practices (2 of 2) Define performance requirements for suppliers and ensure that they are met Control the quality and operational performance of key processes and use systematic methods to identify variations, determine root causes, and make corrections Continuously improve processes to achieve better quality, cycle time, and overall operational performance Innovate to achieve breakthrough performance using benchmarking and reengineering Plan and ensure continuity of operations MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Product Development Process Idea generation Concept development Product & process design Full-scale production Product introduction Market evaluation MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Product design can significantly affect the cost of manufacturing (direct and indirect labor, materials, and overhead), redesign, warranty, and field repair; the efficiency by which the product can be manufactured, and the quality of the output. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Design for Manufacturability DFM – the process of designing a product for efficient production at the highest level of quality MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea DFM is intended to prevent product designs that simplify assembly operations but require more complex and expensive components, designs that simplify component manufacture while complicating the assembly process, and designs that are simple and inexpensive to produce but difficult or expensive to service or support. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Design Quality and Social Responsibility Product liability issues Environmental issues Design for Environment (DfE) - is the explicit consideration of environmental concerns during the design of products and processes, and includes such practices as designing for recyclability and disassembly. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Streamlining Product Development Competitive need for rapid product development Concurrent (simultaneous) engineering - a process in which all major functions involved with bringing a product to market are continuously involved with the product development from conception through sales Design reviews MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Designing Processes for Quality Identify the product or service: What work do I do? Identify the customer: Who is the work for? Identify the supplier: What do I need and from whom do I get it? Identify the process: What steps or tasks are performed? What are the inputs and outputs for each step? Mistake-proof the process: How can I eliminate or simplify tasks? What “poka-yoke” (i.e., mistake-proofing) devices (see Chapter 13) can I use? Develop measurements and controls, and improvement goals: How do I evaluate the process? How can I improve further? MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Service Process Design Three basic components: Physical facilities, processes and procedures Employee behavior Employee professional judgment MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Service Dimensions Customer contact and interaction Labor intensity Customization MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Service process designers must concentrate on doing things right the first time, minimizing process complexities, and making the process immune to inadvertent human errors, particularly during customer interactions. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Projects as Value-Creation Processes Projects - temporary work structures that start up, produce products or services, and then shut down. Project management – all activities associated with planning, scheduling, and controlling projects MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Successful project managers have four key skills: a bias toward task completion, technical and administrative credibility, interpersonal and political sensitivity, and leadership ability. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Project Life Cycle Management (1 of 2) Project Quality Initiation: Define directions, priorities, limitations, and constraints. Project Quality Planning: Create a blueprint for the scope of the project and resources needed to accomplish it. Project Quality Assurance: Use appropriate, qualified processes to meet technical project design specifications. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Project Life Cycle Management (2 of 2) Project Quality Control: Use appropriate communication and management tools to ensure that managerial performance, process improvements, and customer satisfaction is tracked. Project Quality Closure: Evaluate customer satisfaction with project deliverables and assess success and failures that provide learning for future projects and referrals from satisfied customers. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Process Control Control – the activity of ensuring conformance to requirements and taking corrective action when necessary to correct problems and maintain stable performance MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Process control is important for two reasons. First, process control methods are the basis for effective daily management of processes. Second, long-term improvements cannot be made to a process unless the process is first brought under control. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Components of Control Systems Any control system has three components: a standard or goal, a means of measuring accomplishment, and comparison of actual results with the standard, along with feedback to form the basis for corrective action. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea In manufacturing, control is usually applied to incoming materials, key processes, and final products and services. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Effective Control Systems documented procedures for all key processes; a clear understanding of the appropriate equipment and working environment; methods for monitoring and controlling critical quality characteristics; approval processes for equipment; criteria for workmanship, such as written standards, samples, or illustrations; and maintenance activities. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

After Action Review What was supposed to happen? What actually happened? Why was there a difference? What can we learn? MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Importance of Process Improvement Customer loyalty is driven by delivered value. Delivered value is created by business processes. Sustained success in competitive markets requires a business to continuously improve delivered value. To continuously improve value creation ability, a business must continuously improve its value creation processes. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Improvement should be a proactive task of management and be viewed as an opportunity, not simply as a reaction to problems and competitive threats. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Kaizen Kaizen – a Japanese word that means gradual and orderly continuous improvement Focus on small, gradual, and frequent improvements over the long term with minimum financial investment, and participation by everyone in the organization. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Flexibility Flexibility – the ability to adapt quickly and effectively to changing requirements. rapid changeover from one product to another, rapid response to changing demands, the ability to produce a wide range of customized services. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Cycle Time Cycle time – the time it takes to accomplish one cycle of a process Reductions in cycle time serve two purposes First, they speed up work processes so that customer response is improved. Second, reductions in cycle time can only be accomplished by streamlining and simplifying processes to eliminate non-value-added steps such as rework. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Breakthrough Improvement Discontinuous change resulting from innovative and creative thinking, motivated by stretch goals, and facilitated by benchmarking and reengineering MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Stretch goals force an organization to think in a radically different way, and to encourage major improvements as well as incremental ones. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Benchmarking Benchmarking – “the search of industry best practices that lead to superior performance.” Best practices – approaches that produce exceptional results, are usually innovative in terms of the use of technology or human resources, and are recognized by customers or industry experts. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Types of Benchmarking Competitive benchmarking - studying products, processes, or business performance of competitors in the same industry to compare pricing, technical quality, features, and other quality or performance characteristics of products and services. Process benchmarking – focus on key work processes Strategic benchmarking – focus on how companies compete and strategies that lead to competitive advantage MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Reengineering Reengineering – the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Key Idea Reengineering involves asking basic questions about business processes: Why do we do it? and Why is it done this way? MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

Process Management in the Baldrige Award Criteria The Process Management Category examines the key aspects of an organization’s process management, including key product, service, and business processes for creating customer and organizational value and key support processes, encompassing all key processes and work units. 6.1 Value Creation Processes 6.2 Support Processes and Operational Planning MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing