1. Chapter 7
Process
Management

2. Wisdom from Texas Instruments
“Unless you change the process, why would you expect the results to change”

3. 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.

4. Competitive Priorities
Cost
Quality
High-performance design
Consistent quality
Flexibility
Customization
Variety
Volume flexibility
Time
Fast delivery
On-time delivery
Development speed

5. What Is a Process?
Any group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers.
It has to add value.

6. Traditional Organizational Chart (How traditional organizations are managed)
CEO
Sales
Marketing
Engineering
Manufacturing
Distribution
Customer
service
Policy and decisions are deployed downward
Information flows upward

7. Process view (How process-focused organizations work)
Product
Delivered
Order
placed
Chain of events is horizontal

8. Core Process Map Customer Sales Marketing Finance Distribution Field
engineering
&
service
Customer
Order
Delivery
acceptance
1.1 Order
placement
1.2 Order
entry
1.9 Invoice
1.3 Credit
check
1.4 Pick and
Pack
1.5 Schedule
1.7 Ship
1.6 Site prep
1.8 Install

9. Key Idea The Scope of Process Management
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.

10. 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

11. Internal Value-Chain Linkages Showing Work and Information Flows
External suppliers
External customers
Support processes
Supplier relationship process
Order fulfillment process
New service/ product development process
Customer relationship process
The first slide establishes the continuum.

12. Support Processes Examples of Support Processes Capital Acquisition
The provision of financial resources for the organization to do its work and to execute its strategy
Budgeting
The process of deciding how funds will be allocated over a period of time
Recruitment and Hiring
The acquisition of people to do the work of the organization
Evaluation and Compensation
The assessment and payment of the people for the work and value they provide to the company
Human Resource Support and Development
The preparation of the people for their current jobs and future skill and knowledge needs
Regulatory Compliance
The process that insure the company if meeting all laws and legal obligations
Information Systems
The movement and processing of data and information to expedite business operations and decisions
Enterprise and Functional Management
The systems and activities that provide strategic direction and ensure effective execution of the work of the business

13. International Benchmarking Clearinghouse’s Standard Process Classification
Understand markets and customers
Develop vision and strategy
Design products and services
Produce and deliver
Manage improvement and change
Develop and manage human resources
Manage information
Market and sell
Invoice and service customers
Execute environmental management program
Manage financial and physical resources
Manage external relationships
Manage improvement and change

14. Process Management
Process management consists of three key activities: design, control, and improvement.
To apply techniques for process management the processes must be repeatable and measurable.
Process owners are accountable for process performance.

15. Control vs. Improvement
Controlled
process
Improvement
Time
New zone
of control
Out-of-control

16. 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

17. 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

18. Product Development Process
Idea
generation
Concept
development
Product &
process design
Full-scale
production
Product
introduction
Market
evaluation

19. Key Idea Product Design Process
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.

20. Design for Manufacturability
DFM – the process of designing a product for efficient production at the highest level of quality

21. Key Idea DFM
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.

22. 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.
Design for disassembly
Reverse logistics

23. 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

24. 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?

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

26. Key Idea Process Control
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.

27. 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.

28. Key Idea Process Control
In manufacturing, control is usually applied to incoming materials, key processes, and final products and services.

29. After Action Review What was supposed to happen?
What actually happened?
Why was there a difference?
What can we learn?

30. 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.

31. Key Idea Process Improvement
Improvement should be a proactive task of management and be viewed as an opportunity, not simply as a reaction to problems and competitive threats.

32. Process Analysis
Process analysis is the documentation and detailed understanding of how work is performed and how it can be redesigned.
2 Define Scope
3 Document
Process
1 Identify
Opportunity
4 Evaluate
Performance
6 Implement
Changes
5 Redesign
Process

33. 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.

34. 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.

35. Types of Flexibility
Volume
Variety
Customization

36. 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.

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

38. Key Idea Breakthrough Improvement
Stretch goals force an organization to think in a radically different way, and to encourage major improvements as well as incremental ones.

39. 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.

40. 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

41. 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.

42. Key Idea Reengineering
Reengineering involves asking basic questions about business processes: Why do we do it? and Why is it done this way?

43. 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