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

2. 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

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.
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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.
Kaizen “events” - a focus of Lean
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

27. 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

28. 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

29. 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

30. 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

31. 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

32. 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

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.
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing

34. 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

35. 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