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Chapter 7Chapter 7Chapter 7Chapter 7

ProcessProcess

ManagementManagement

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Wisdom from Texas Wisdom from Texas InstrumentsInstruments

““Unless you change the process, Unless you change the process, why would you expect the results why would you expect the results to change”to change”

Key IdeaKey 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.

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

Key IdeaKey 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.

Types of ProcessesTypes of Processes

Value-creation processesValue-creation processes – those – those most important to “running the most important to “running the business”business”– Design processesDesign processes – activities that – activities that

develop functional product specificationsdevelop functional product specifications– Production/delivery processesProduction/delivery processes – those – those

that create or deliver productsthat create or deliver products Support processesSupport processes – those most – those most

important to an organization’s value important to an organization’s value creation processes, employees, and creation processes, employees, and daily operationsdaily operations

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Control vs. ImprovementControl vs. ImprovementControl vs. ImprovementControl vs. Improvement

Controlled process

Improvement

Time

New zoneof control

Out-of-control

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Leading Practices Leading Practices (1 of 2)(1 of 2)Leading Practices Leading Practices (1 of 2)(1 of 2)

Define, document, and manage important Define, document, and manage important value creation and support processesvalue creation and support processes

Translate customer requirements and Translate customer requirements and internal capabilities into product and service internal capabilities into product and service design requirements early in the processdesign requirements early in the process

Ensure that quality is built into products and Ensure that quality is built into products and services and use appropriate tools during services and use appropriate tools during developmentdevelopment

Manage product development process to Manage product development process to enhance communication, reduce time, and enhance communication, reduce time, and ensure qualityensure quality

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Leading Practices Leading Practices (2 of 2)(2 of 2)Leading Practices Leading Practices (2 of 2)(2 of 2)

Define performance requirements for Define performance requirements for suppliers and ensure that they are metsuppliers and ensure that they are met

Control the quality and operational Control the quality and operational performance of key processes and use performance of key processes and use systematic methods to identify variations, systematic methods to identify variations, determine root causes, and make correctionsdetermine root causes, and make corrections

Continuously improve processes to achieve Continuously improve processes to achieve better quality, cycle time, and overall better quality, cycle time, and overall operational performanceoperational performance

Innovate to achieve breakthrough Innovate to achieve breakthrough performance using benchmarking and performance using benchmarking and reengineeringreengineering

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Product Development Product Development ProcessProcessProduct Development Product Development ProcessProcess

Ideageneration

Ideageneration

Conceptdevelopment

Conceptdevelopment

Product &process design

Full-scaleproduction

Full-scaleproduction

Productintroduction

Productintroduction

Marketevaluation

Marketevaluation

Key IdeaKey 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.

Design for Design for ManufacturabilityManufacturability

DFMDFM – the process of designing a – the process of designing a product for efficient production at product for efficient production at the highest level of qualitythe highest level of quality

Key IdeaKey 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.

Design Quality and Social Design Quality and Social ResponsibilityResponsibility

Product liability issuesProduct liability issues Environmental issuesEnvironmental issues

– Design for Environment (DfE)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.

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Streamlining Product Streamlining Product DevelopmentDevelopmentStreamlining Product Streamlining Product DevelopmentDevelopment

Competitive need for rapid product Competitive need for rapid product developmentdevelopment

Concurrent (simultaneous) Concurrent (simultaneous) engineeringengineering - a process in which all - a process in which all major functions involved with bringing major functions involved with bringing a product to market are continuously a product to market are continuously involved with the product involved with the product development from conception through development from conception through salessales

Design reviews Design reviews

Designing Processes for Designing Processes for QualityQuality

1. Identify the product or service: What work do I do?

2. Identify the customer: Who is the work for?3. Identify the supplier: What do I need and from

whom do I get it?4. Identify the process: What steps or tasks are

performed? What are the inputs and outputs for each step?

5. 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?

6. Develop measurements and controls, and improvement goals: How do I evaluate the process? How can I improve further?

Service Process DesignService Process Design

Three basic components:Three basic components:– Physical facilities, processes and Physical facilities, processes and

proceduresprocedures– Employee behaviorEmployee behavior– Employee professional judgmentEmployee professional judgment

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Key Service DimensionsKey Service DimensionsKey Service DimensionsKey Service Dimensions

Customer contact and interaction

Labor intensity

Customization

Key IdeaKey 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.

Projects as Value-Projects as Value-Creation ProcessesCreation Processes

ProjectsProjects - - 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

Key IdeaKey Idea

Successful project managers have four key skills: a bias toward task completion, technical and administrative credibility, interpersonal and political sensitivity, and leadership ability.

Project Life Cycle Project Life Cycle Management Management (1 of 2)(1 of 2)

Project Quality Initiation: Define directions, priorities, limitations, and constraints.

Project Quality Planning: Create a blueprint for the scope of the project and resources needed to accomplish it.

Project Quality Assurance: Use appropriate, qualified processes to meet technical project design specifications.

Project Life Cycle Project Life Cycle Management Management (2 of 2)(2 of 2)

Project Quality Control: Use appropriate communication and management tools to ensure that managerial performance, process improvements, and customer satisfaction is tracked.

Project Quality Closure: Evaluate customer satisfaction with project deliverables and assess success and failures that provide learning for future projects and referrals from satisfied customers.

Process ControlProcess Control

ControlControl – the activity of ensuring – the activity of ensuring conformance to requirements and conformance to requirements and taking corrective action when taking corrective action when necessary to correct problems necessary to correct problems and maintain stable performanceand maintain stable performance

Key IdeaKey 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.

Components of Control Components of Control SystemsSystems

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.

Key IdeaKey Idea

In manufacturing, control is usually applied to incoming materials, key processes, and final products and services.

Effective Control SystemsEffective 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.

After Action ReviewAfter Action Review

1.1. What was supposed to What was supposed to happen?happen?

2.2. What actually happened?What actually happened?

3.3. Why was there a difference?Why was there a difference?

4.4. What can we learn?What can we learn?

Importance of Process Importance of Process ImprovementImprovement 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 IdeaKey Idea

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

KaizenKaizen

KaizenKaizen – a Japanese word that – a Japanese word that means gradual and orderly means gradual and orderly continuous improvementcontinuous improvement

Focus on small, gradual, and Focus on small, gradual, and frequent improvements over the frequent improvements over the long term with minimum financial long term with minimum financial investment, and participation by investment, and participation by everyone in the organization.everyone in the organization.

FlexibilityFlexibility

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.

Cycle TimeCycle 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.

Breakthrough Breakthrough Improvement Improvement

Discontinuous change resulting Discontinuous change resulting from innovative and creative from innovative and creative thinking, motivated by stretch thinking, motivated by stretch goals, and facilitated by goals, and facilitated by benchmarking and reengineeringbenchmarking and reengineering

Key IdeaKey Idea

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

BenchmarkingBenchmarking

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 BenchmarkingTypes of Benchmarking

Competitive benchmarkingCompetitive benchmarking - studying - studying products, processes, or business performance products, processes, or business performance of competitors in the same industry to of competitors in the same industry to compare pricing, technical quality, features, compare pricing, technical quality, features, and other quality or performance and other quality or performance characteristics of products and services. characteristics of products and services.

Process benchmarkingProcess benchmarking – focus on key work – focus on key work processesprocesses

Strategic benchmarkingStrategic benchmarking – focus on how – focus on how companies compete and strategies that lead companies compete and strategies that lead to competitive advantage to competitive advantage

ReengineeringReengineering

ReengineeringReengineering – the fundamental – the fundamental rethinking and radical redesign of rethinking and radical redesign of business processes to achieve business processes to achieve dramatic improvements in critical, dramatic improvements in critical, contemporary measures of contemporary measures of performance, such as cost, quality, performance, such as cost, quality, service, and speed.service, and speed.

Key IdeaKey Idea

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

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Process Management in the Process Management in the Baldrige Award CriteriaBaldrige 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