1. Business Process Reengineering Class Session 5 – Fall 1385
Toolbox for Improvements
Departments or Processes?
Organizing Improvements
Process Documentation
Performance Management
Process Toolbox
Anderson Ch. 1-4

2. Departments or Processes?
Specialized skills
Workforce secure
Lower cost
Clear Org structure
Processes
Focus on customers
Value creation
Requirements understood
Reduce sub-optimization
Time/resource control
Example:
Salesperson reserves order
“in the drawer” for next period

3. Business Process . . A logical series of related transactions
that converts inputs to outputs or results.
a chain of logical connected, repetitive activities
utilizes the enterprise’s resources
refine an object (physical or mental)
for a purpose of specific /measurable results/products
internal or external customers

4. Classification of Business Processes
Primary Processes
Central & value-creating
Support
Indirect to support primary
Development
Take to higher performance

5. Why Process Improvements?
Performance tend to decrease over time.
Your competitors will improve processes.
Customer expectations /demands are exceeding.

6. Organizing Improvements
Planning: analyze the problem & plan activities to remedy it.
Doing: carry out the activities, experiment with the solution.
Checking: evaluate activities with planned measurements.
Acting: modifying process by confirmed results activities.
Systematic approach for continually improving!!

7. A Model for Process Improvement

8. Team for Process Improvement
Team Leader
Management Link
Process Owner
Cross-section organization units
Process Customer
Process Supplier
External Assistance
Requirements for Members
Time to participate
Competencies and knowledge
Motivation
Cooperate, listen, communicate
Credibility, respect

9. Process for Process Improvement 1- Process Documentation
Need to know current state, before deciding which improvements to make.
Documenting one by one in connection with the specific processes.
Documenting all processes at once at the start of improvement journey.
A common understanding of the content of processes & activities
Scope of the processes, and boundaries to adjacent processes.
Specific problems, if possible to define, within the process.

10. Relationship Mapping
Overall picture of who are part of the process and what relationship they have to one another and to the rest of the world.
For more extensive & more complicated processes with a number of individuals or departments exchanging goods and information.
It does not consider the details of activities or their sequence in the processes.

11. Case: A large international corporation
Case: A large international corporation with one central manufacturing site

12. Flowchart Flowchart is a graphic depiction of activities in a process.
Start or finishing point
Step or activity in the process
Decision point
Input or Output
Document

13. Examples of Flowchart

14. Cross-functional Flowchart

15. Flowchart with
Time
Cost
Completion
Value added

16. Several-leveled
Flowcharts
Top chart
Second-level
Charts

17. From Departments
to Processes

18. Performance Measurement
You cannot manage, what you cannot measure!
What gets measured, gets done!
Measurement impacts behavior!
Variation of truth!
Measurement is threatening!
Precision is essential for useful measurement!
Subjective measures are sloppy!
Standards are necessary and sufficient!

19. Multi-dimensional Measurement

20. Hard versus Soft Measures
Hard Measures
Soft Measures
Objective reference
Observer bias
Accurately known
Surrogate indicator
Hierarchical
Multivariable situation
Deming: Most important numbers are not known.
Customer Satisfaction or Employee Satisfaction.
Quality of atmosphere in a meeting room

21. Financial versus Non-financial Measures
Total sales
Profit Margin
Value added
Turnover of capital
Non-financial Measures
Set-up Time
Delivery Time
Defect Rate
Customer Satisfaction

22. Results versus Process Measures
Western versus Japanese attitudes
A manager of a large agricultural collective in the former Soviet Union three years in a row won the prize for the most productive collective. The performance measure used was the number of kilos of meat produced per year.
The fourth year, he shot himself… He had no breeding stock left.

23. Measures defined according to purpose
Results Measures
Net Profit
Return on Investment
Market Share
Diagnostic Measures
Delivery Precision
Delivery Flexibility
Lead Times
Customer Satisfaction
Competence Measures
Investment in Product Development
Attitude towards Change
Flexibility to Deliver New Products
Training Levels

24. The Contents of the Instrument Panel