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Chapter 7 - Process management. This chapter presents an overview of the importance of strategic planning and the process for developing a strategic plan. Typical problems encountered when strategy and projects are not linked are noted. A generic methodology that ensures integration by creating very strong linkages of project selection and priority to the strategic plan is then discussed.
Chapter 7 Process Management Wisdom from Texas Instruments “Unless you change the process, why would you expect the results to change” 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 Competitive Priorities Cost Quality – Highperformance design – Consistent quality Flexibility – – – Customization Variety Volume flexibility Time – – – Fast delivery Ontime delivery Development speed 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 Traditional Organizational Chart (How traditional organizations are managed) CEO Sales Marketing Information flows upward Engineering Manufacturing Distribution Customer service Policy and decisions are deployed downward Process view (How processfocused organizations work) Product Delivered Order placed Chain of events is horizontal Core Process Map Customer Sales Marketing Finance Distribution Field engineering & Customer service Customer Order Delivery acceptance 1.1 Order placement 1.2 Order 1.9 Invoice entry 1.3 Credit check 1.4 Pick and Pack 1.5 Schedule 1.7 Ship 1.6 Site prep 1.8 Install 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: valuecreation processes and support processes Types of Processes Valuecreation 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 After Action Review What was supposed to happen? What actually happened? Why was there a difference? What can we learn? 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 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 Process Analysis Process analysis is the documentation and detailed understanding of how work is performed and how it can be redesigned Define Scope Identify Opportunity Document Process Implement Changes Evaluate Performance Redesign Process 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 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 Types of Flexibility Volume Variety Customization 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 valueadded steps such as rework. Breakthrough Improvement Discontinuous change resulting from innovative and creative thinking, motivated by stretch goals, and facilitated by benchmarking and reengineering 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 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 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 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 Key Idea Reengineering Reengineering involves asking basic questions about business processes: Why do we do it? and Why is it done this way? 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 43 ... 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... Control? ?vs. Improvement Out -of -control Controlled process Improvement New zone of control Time 15 Leading Practices (1? ?of? ?2) Define, document,? ?and? ?manage important value creation? ?and? ?support processes... 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? Process? ?Control Control? ?–? ?the? ?activity? ?of? ?ensuring