1. Designing, Controlling, and Improving Organizational Processes
Chapter 6
Designing, Controlling, and Improving Organizational Processes

2. Process Management
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.

3. AT&T Process Management Principles
Process quality improvement focuses on the end-to-end process.
The mind-set of quality is one of prevention and continuous improvement.
Everyone manages a process at some level and is simultaneously a customer and a supplier.
Customer needs drive process quality improvement.
Corrective action focuses on removing the root cause of the problem rather than on treating its symptoms.
Process simplification reduces opportunities for errors and rework.
Process quality improvement results from a disciplined and structured application of the quality management principles

4. Process Design: Motorola Approach
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?

5. Design for Agility Close customer relationships Empower employees
Use effective technology
Maintain close supplier and partner relationships
Breakthrough improvement

6. Service Processes Outputs not as well defined as in manufacturing
Higher interaction with customers

7. Service Process Design
Three basic design components:
Physical facilities, processes and procedures
Employee behavior
Employee professional judgment

8. Key Service Dimensions
Customer contact and interaction
Labor intensity
Customization

9. Process Control
Control – the activity of ensuring conformance to requirements and taking corrective action when necessary to correct problems and maintain stable performance

10. Components of Process 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.

11. Control vs. Improvement

12. 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.

13. 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.

14. Structured Problem Solving
Redefine and analyze problems
Generate ideas
Evaluate ideas and select a solution
Implement the solution

15. Eastman Chemical Improvement Process
Focus and pinpoint
Communicate
Translate and link
Create a management action plan
Improve processes
Measure progress and provide feedback
Reinforce behaviors and celebrate results

16. The Deming Cycle

17. Plan (1 of 2) Define the process: its start, end, and what it does.
Describe the process: list the key tasks performed and sequence of steps, people involved, equipment used, environmental conditions, work methods, and materials used.
Describe the players: external and internal customers and suppliers, and process operators.
Define customer expectations: what the customer wants, when, and where, for both external and internal customers.
Determine what historical data are available on process performance, or what data need to be collected to better understand the process.

18. Plan (2 of 2)
Describe the perceived problems associated with the process; for instance, failure to meet customer expectations, excessive variation, long cycle times, and so on.
Identify the primary causes of the problems and their impacts on process performance.
Develop potential changes or solutions to the process, and evaluate how these changes or solutions will address the primary causes.
Select the most promising solution(s).

19. Do
Conduct a pilot study or experiment to test the impact of the potential solution(s).
Identify measures to understand how any changes or solutions are successful in addressing the perceived problems.

20. Study Examine the results of the pilot study or experiment.
Determine whether process performance has improved.
Identify further experimentation that may be necessary.

21. Act Select the best change or solution.
Develop an implementation plan: what needs to be done, who should be involved, and when the plan should be accomplished.
Standardize the solution, for example, by writing new standard operating procedures.
Establish a process to monitor and control process performance.

22. DMAIC Methodology
Define
Measure
Analyze
Improve
Control
DMAIC

23. Define Describe the problem in operational terms
Drill down to a specific problem statement (project scoping)
Identify customers and CTQs, performance metrics, and cost/revenue implications

24. Measure Key data collection questions
What questions are we trying to answer?
What type of data will we need to answer the question?
Where can we find the data?
Who can provide the data?
How can we collect the data with minimum effort and with minimum chance of error?

25. Analyze Focus on why defects, errors, or excessive variation occur
Seek the root cause
5-Why technique
Experimentation and verification

26. Improve Idea generation Brainstorming Evaluation and selection
Implementation planning

27. Control Maintain improvements Standard operating procedures Training
Checklist or reviews
Statistical process control charts

28. Lean Production and Six Sigma
The 5S’s: seiri (sort), seiton (set in order), seiso (shine), seiketsu (standardize), and shitsuke (sustain).
Visual controls
Efficient layout and standardized work
Pull production
Single minute exchange of dies (SMED)
Total productive maintenance
Source inspection
Continuous improvement

29. Breakthrough Improvement
Discontinuous change resulting from innovative and creative thinking, motivated by stretch goals, and facilitated by benchmarking and reengineering

30. 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.

31. 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

32. Benchmarking Process Determine what to benchmark
Identify key performance indicators to measure
Identify the best-in-class companies
Measure the performance of best-in-class and compare to your own performance
Define and take actions to meet or exceed the best performance

33. 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.

34. The Key Role of Process

35. Principles of Process Redesign
Reduce handoffs
Eliminate steps
Perform steps in parallel rather than in sequence
Involve key people early

36. Organizational Issues
Resistance to change
Top management support
Diversity of human resources
Methodological rigor
Payoffs and benefits

37. Case Studies Chugach School District Froedtert Hospital
The Walt Disney Company
General Electric