Designing, Controlling, and Improving Organizational Processes

Process Management  Involves design, control, and improvement – the key activities necessary to achieve a high level of performance in key value creation and support processes, and identifying opportunities for improving quality and operational performance, and ultimately, customer satisfaction.

Process Design  Good process management begins with good process design.  The design of the processes that produce and deliver goods and services can have a significant impact on cost, flexibility, and quality.  The design of a process begins with the process owner.

 Major factors in strategy  Cost  Quality  Time-to-market  Customer satisfaction  Competitive advantage Product and Service Design

Trends in Product & Service Design  Increased emphasis on our attention to:  Customer satisfaction  Reducing time to introduce new product or service  Reducing time to produce product

Trends in Product & Service Design (Cont’d)  Increased emphasis on our attention to:  The organization’s capabilities to produce or deliver the item  Environmental concerns  Designing products & services that are “user friendly”  Designing products that use less material

 Translate customer wants and needs into product and service requirements  Refine existing products and services  Develop new products and services  Formulate quality goals  Formulate cost targets  Construct and test prototypes  Document specifications Product or Service Design Activities

Reasons for Product or Service Design  Be competitive  Increase business growth & profits  Avoid downsizing with development of new products  Improve product quality  Achieve cost reductions in labor or materials

 Development time and cost  Product or service cost  Resulting product or service quality  Capability to produce or deliver a given product or service Objectives of Product and Service Design

Design for Quality in Service Processes  Service processes often involve both internal and external activities, a factor that complicates quality design.  Services have three basic components:  Physical facilities, processes, and procedures  Employees’ behavior  Employees’ professional judgment.

Process Control  Control is the activity of ensuring conformance to the requirements and taking corrective action when necessary to correct problems and maintain stable performance.  Any control system has three components: (1) a standard or goal, (2) a means of measuring accomplishment, and (3) comparison of actual results with the standard, along with feedback to form the basis for corrective action.

Process Improvement  Any process performance measure naturally fluctuates around some average level. Abnormal conditions cause an unusual deviation form this pattern. Removing the causes of such abnormal conditions and maintaining level of performance is the essence of control. Improvement means changing the performance to a new level.

Process Improvement (c0nt’d)  To be able to improve a process, it must be repeatable and measurable.  Repeatability means that the process must recur over time.

Continuous Improvement and Kaizen  Continuous improvement to provide quality to customers is essential to total quality.  Kaizen strategy is the cumulative effect of hundreds or thousands of small improvements that creates dramatic change in performance.  Kaizen was created in Japan following World War II. The word Kaizen means "continuous improvement". It comes from the Chinese characters 改 ("kai") which means "change" or "to correct" and 善 ("zen") which means "good".

Improvement Processes  Managers need systematic approaches to drive continuous improvement programs.  Some organizations follow some standard and popular approaches, while others develop unique approaches to meet their own needs and cultures.

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

Assignment. Print in short bond paper Research for the 7 wastes that were regarded by Toyota 1/31/13

Lean Thinking  Lean production refers to approaches initially developed by the Toyota Motor Corporation that focus on the elimination of waste in all forms including defects requiring rework, unnecessary processing steps, unnecessary movement of materials or people, waiting time, excess inventory, and overproduction.  It involves identifying and eliminating non- value-added activities throughout the entire value chain to achieve faster customer response, reduced inventories, higher quality, and better human resources.

Tools for Lean Production  The 5 S’s  Seiri-Sort  Seiton-Set in Order  Seiso-Shine  Seiketsu-Standardize  Shitsuke-Sustain  Visual Controls  Efficient Layout and Standardized Work  Pull Production  SMED  Total Productive Maintenance  Source Inspection  Continuous Improvement C”,)

Breakthrough Improvement  This refers to discontinuous change, as opposed to the gradual, continuous improvement philosophy of kaizen.  This results from innovative and creative thinking; often these are motivated by stretch goals, or breakthrough objectives.  2 Approaches: Benchmarking and Reengineering

Benchmarking  This is the search for best practices that will lead to superior performance.  It helps a company learn its strengths and weaknesses (as well as those of other companies) and incorporate the best practices into its own operations.  2 major types: Competitive Benchmarking and Generic Benchmarking

Competitive Benchmarking versus Generic Benchmarking  Competitive benchmarking usually focuses on the products and manufacturing of a company’s competitors.  Generic benchmarking evaluates processes or business functions against the best companies, regardless of their industry.

Reengineering  This is focused on breakthrough improvement to dramatically improve the quality and speed of work and to reduce its cost of fundamentally changing the processes by which work gets done.  Also known as Process Redesign.  This is often used when the improvements needed are so great that incremental changes to operations will not get the job done. The goal is to achieve quantum leaps in performance.

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

Organizational issues in Process Design and Improvement  2 factors critical to the long-term success of reengineering initiatives:  Breadth – extent to which the process maps onto the dimensions of the business, from a single activity in one function to spanning the entire business unit.  Depth – how many of the depth levers (such as structure, skills, IT systems, roles, measurements/incentives, and shared values) are manipulated