Operational Excellence Maturity Review ‘OEMR’-Model Maturity of the Demand Supply Chain Minna Kärkkäinen Ville Isoherranan Pekka Kess 2017-2018 Student 1 Student 2 Student 3 Student 4 Student 5

MATURITY MODEL Background to the evaluation of production excellence Maturity models describe the maturity level in which an organization or a process is as well as what does it require to achieve the next maturity level In order to achieve a higher maturity level the organization or the process has to fulfill the requirements of the lower levels. This model is based and is in line with several maturity models: CMM Fisherin BPMM Hammerin PEMM Harmon BPM OMG’s BPMM Minna Kärkkäinen / Pekka Kess 24.11.2018

Structure of the model: 6 process factors Defining the processes Skills of the employees Process management Process performance measurement Process optimization IT systems and integration Minna Kärkkäinen / Pekka Kess 24.11.2018

Structure of the model: 6 Process factors Minna Kärkkäinen / Pekka Kess 24.11.2018 Etunimi Sukunimi

Process factors 1. Defining the process 2. Skills of the employees 3 Process factors 1. Defining the process 2. Skills of the employees 3. Process management 4. Process performance measurement 5. Process optimization 6. IT systems and integration Defining the process: Has the process been defined and documented? What sub-processes and tasks are included? What work is included? What skills and knowledge are needed to execute the process? Are the related job descriptions in place? How the process is integrated to other core processes of the organisation? Minna Kärkkäinen / Pekka Kess 24.11.2018

Process factors 1. Defining the process 2. Skills of the employees 3 Process factors 1. Defining the process 2. Skills of the employees 3. Process management 4. Process performance measurement 5. Process optimization 6. IT systems and integration Skills of the employees: How extensively the employees master their work required in the process? How well they master the work of others in that process? How well the employees know and understand the process their are working in? How well the employees can improve the performance of the process? Has the organisation taken any steps in knowledge management? Are the job descriptions and work instructions in place? Can the employees use tools for process improvement? Minna Kärkkäinen / Pekka Kess 24.11.2018

Process factors 1. Defining the process 2. Skills of the employees 3 Process factors 1. Defining the process 2. Skills of the employees 3. Process management 4. Process performance measurement 5. Process optimization 6. IT systems and integration Process management: How and in which ways the process is managed? Is the process manager aware of the various aspects of the process performance and process improvement? How well those in charge can utilize process management techniques related to improvement, re-engineering, predictability, reliability? Minna Kärkkäinen / Pekka Kess 24.11.2018

Process factors 1. Defining the process 2. Skills of the employees 3 Process factors 1. Defining the process 2. Skills of the employees 3. Process management 4. Process performance measurement 5. Process optimization 6. IT systems and integration Process performance measurement: Are any metrics defined for the processes? Any metrics to measure the performance? Are the measurements in line with the customer requirements and with the company strategy as well as company goals? Is measurement data collected and analysed? Are statistical methods used? Minna Kärkkäinen / Pekka Kess 24.11.2018

Process factors 1. Defining the process 2. Skills of the employees 3 Process factors 1. Defining the process 2. Skills of the employees 3. Process management 4. Process performance measurement 5. Process optimization 6. IT systems and integration Process optimization: What is done with the collected measurement data? Is process optimized based on the measurement data. Or is the optimization done only in case-by-case situations (like in crisis)? Are all processes optimized? Are integrated processes optimized? Are the processes designed/optimized to fit into the IT systems? Minna Kärkkäinen / Pekka Kess 24.11.2018

Process factors 1. Defining the process 2. Skills of the employees 3 Process factors 1. Defining the process 2. Skills of the employees 3. Process management 4. Process performance measurement 5. Process optimization 6. IT systems and integration IT systems and integration: How information is shared between departments? Is data/information accurate (real time) and reliable? How (what type of systems) are the IT systems of the organisation? Do every department have their own systems or is there a company wide system? Minna Kärkkäinen / Pekka Kess 24.11.2018

Levels of the maturity model 1. Ad hoc / Initial level and isolated 2 Levels of the maturity model 1. Ad hoc / Initial level and isolated 2. Defined ja integrating operationally 3. Process orientation and managed 4. Optimized and standardized process flow 5. State of continuous improvement smart operating network Ad hoc /Initial level and isolated The definition of the processes and tasks is very limited Processes are isolated Processes are managed in individual styles No team work across departmental borders No measures, no data collection and no analysis of the performance Independent information systems – no integration Minna Kärkkäinen / Pekka Kess

Levels of the maturity model 1. Ad hoc /Initial level and isolated 2 Levels of the maturity model 1. Ad hoc /Initial level and isolated 2. Defined ja integrating operationally 3. Process orientation and managed 4. Optimized and standardized process flow 5. State of continuous improvement smart operating network Defined and integrating operationally More extensive process identification and definition More extensive process integration Department wide team work is used more often Some techniques used to improve processes performance Creation of stable work environment Some data collection and analysis is used Basic measurements are in place IT systems integrated to some extent but not completely Minna Kärkkäinen / Pekka Kess 24.11.2018

Levels of the maturity model 1. Ad hoc /Initial level and isolated 2 Levels of the maturity model 1. Ad hoc /Initial level and isolated 2. Defined ja integrating operationally 3. Process orientation and managed 4. Optimized and standardized process flow 5. State of continuous improvement smart operating network Process orientation and managed Most processes are defined Processes are integrated into other processes and inti line organisation (departments) Teams across departments are trained to team work Process management is done using bes available methods to improve process performance Process performance is measured by collecting and analysing data Measurements are based on customer requirements Process manager establishes priorities Departments in charge of the core processes have a common IT system (ERP) Minna Kärkkäinen / Pekka Kess 24.11.2018

Levels of the maturity model 1. Ad hoc /Initial level and isolated 2 Levels of the maturity model 1. Ad hoc /Initial level and isolated 2. Defined ja integrating operationally 3. Process orientation and managed 4. Optimized and standardized process flow 5. State of continuous improvement smart operating network Optimized and standardized process flow Processes fully defined Processes have been standardized Integration between core processes are strong Team work between departments is a standard practice Process team are responsible for the process performance In management common standards across the company Performance data is collected and analysed statistically Measurements are based on the strategy Core process is designed to integrate with other core processes, which is strongly supported with a common IT system Minna Kärkkäinen / Pekka Kess 24.11.2018

Levels of the maturity model 1. Ad hoc /Initial level and isolated 2 Levels of the maturity model 1. Ad hoc /Initial level and isolated 2. Defined ja integrating operationally 3. Process orientation and managed 4. Optimized and standardized process flow 5. State of continuous improvement smart operating network State of continuous improvement smart operating network State of continuous improvement Processes connecting companies are defined Processes are integrated strongly with processes from other companies in the network Process teams inlcude members from other companies as well Process team is responsible of the two way performance measurement Measurements are defined based on the objectives between companies Common IT system Minna Kärkkäinen / Pekka Kess 24.11.2018

When an organisation moves to the next higher maturity level: Defining processes increases Operational integration between departments will increase Emplyees become more multi skilled. Team work becomes more common Team integration between departments will become more extensive Individuasl management lead towards process management Process perormance is improved with best possible methods Processes are measured and the data is collected and analysed Processes are optimized towards the state of continuous improvement IT systems are more integrated and more modular Development towards horizontal process organization Minna Kärkkäinen / Pekka Kess

The goal Evaluation of the processes Process improvement Skills of employees Process improvement IT systems Process management Process performance measurement Process optimization 24.11.2018 Minna Kärkkäinen / Pekka Kess

Improvement of the company results Improvement of the performence of the processes Process improvement Minna Kärkkäinen / Pekka Kess 24.11.2018

Production processes Demand supply chain OUTPUTS INPUTS Tärkeää rajata prosessialueet. Mitkä osastot ovat mukana kussakin prosessialueessa/ mitkä prosessit integroituvat toisiinsa PROCESSES Minna Kärkkäinen / Pekka Kess 24.11.2018

Core processes of the demand-supply chain 1. SALES PROCESSES Customer 1. Customer relation processes: Sales processes Order processes Customer service 4. PRODUCT DEVELOPMENT PROCESSES 4. Order 3. PRODUCTION PROCESSES 2. PURCHASES PROCESSES 3. 2. Production processes: Production planning Manufacturing Delivery Sourcing / purchases processes: Purchasing Inventory management Supplier network management Tilaus-toimitusketju jaettu 4 osaan Delivery Customer Minna Kärkkäinen / Pekka Kess

Sales processes (N/A in this work) Sales and marketing processes Order receiving processes Customer service processes Minna Kärkkäinen / Pekka Kess 24.11.2018

Production processes Production planning processes, including resource and scheduling planning Production execution processes where inputs are converted into outputs Product delivery processes: Operative processes of the inventories as well transportation processes Production process includes various phases/tasks/actions/work, which interconnect into a production chain. In every stage of the production chain some value is added. Minna Kärkkäinen / Pekka Kess 24.11.2018

Purchase processes Materials sourcing processes: definition of the material specifications supllier relations, supplier selection, supplier evaluations purchasing processes Inventory management processes: Purchasing tools (ABC analysis, inventory management practices, order-point- techniques VMI Minna Kärkkäinen / Pekka Kess 24.11.2018

Product development processes (N/A in this work) Product development process with four phases: Planning Analysing Development Launch Product development is integral part of the demand supply chain of the company Minna Kärkkäinen / Pekka Kess 24.11.2018

-tilaus-toimitusketju, prosessivirta, osastojen integroituminen Minna Kärkkäinen / Pekka Kess

RESULTS State of the process Skills of the employees Team work IT systems Skills of the employees Production Levels State of the process 3,50 Skills of the employees 1,67 Team work 3,67 Process management 1,00 Process performance measurement Process optimisation IT systems 5,00 Process optimisation Team work Process performance measurement Process management Minna Kärkkäinen / Pekka Kess 24.11.2018

LEVEL BASED ON THE SCORE COMBINED RESULTS PROCESS AREA LEVEL SCORE LEVEL BASED ON THE SCORE SALES 2,40 1990,00 3,00 PURCHASES 3,07 1775,00 PRODUCTION 3,31 3310,00 4,00 PRODUCT DEV 2,52 2150,00 COMBINED 2,83 9225,00 SALES PRODUCT DEVELOPMENT PURCHASES PRODUCTION Minna Kärkkäinen / Pekka Kess 24.11.2018 Etunimi Sukunimi

Report Table of Contents Intro To process management To maturity models Empirical study Case organisation Products / industry Turnover Number of employees Maturity assessment Results Level Development ideas Reliability analysis Analysis of the tool Ideas for improvement Lessons learned Minna Kärkkäinen / Pekka Kess