Lean Thinking for Business Processes

8/7/2019 Lean Thinking for Business Processes

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Lean Thinking for Business Processes

Business Process SummitBoston, MA

James P. Womack, President, Lean Enterprise Institute

June 9, 2005


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Lean Thinking for Managers

All value is the result of a process.

Process managers need to focus on horizontalvalue-creating processes, rather than organizationsand assets.

Function managers need to focus on vertical assets.

Improvement teams (in a function) advise processmanagers.

Senior leaders need to make sure that the needs ofprocess managers and function managers are met.


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Types of Business Processes

Some processes are primary, serving an externalcustomer.

Example: A process to certify and pay an insuranceclaim.

Some processes are internal, to support the primary

processes.

Example: A hiring process to obtain the neededemployees to process the insurance claim.

Primary processes are easier to see, but supportprocesses are equally necessary.


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The Nature of a Business Process A set of actions (steps), each of which must be

accomplished properly in the proper sequence at the

proper time to create value for someone.Example:

Receive the life insurance claim.

Verify the data.

Verify the death certificate.

Calculate the amount of the pay out.

Write the check.

Send the check.


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The Perfect Process

We are all in search of the perfect process.

But perhaps you have not realized this!

The perfect process has some simple but challengingattributes:

It creates precisely the right value for the customer.

Value is hard to determine for external processesand even harder for support processes.

But note: In the absence of correctly specified value,every step in any process is muda!


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The Perfect Process

Each step within the process must be:

Valuable (Toyota Production System)

Capable (Six Sigma)

Available (Total Productive Maintenance)

Adequate (Theory of Constraints & TPS)

Flexible (TPS)


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The Perfect Process

The steps/actions in the process must be linked by:

Flow (in low volume with high variety, TPS)

Pull (TPS)

Leveled demand, from the pacemaker step/action(TPS)


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The Perfect Process The actions in the process are satisfying for people

to perform and managers to manage:

No injuries or fatigue.

A sense of providing a valuable good or service.

A sense of personal fulfillment & accomplishment.

Putting good people in a bad process is the bestway to produce bad people!

People only support a process they can see,understand, and believe in!


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The Perfect Process In Summary The right purpose.

The best process.

Motivated people.

In a organization where everyone can see,understand, and believe in the process.


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Why Is Improvement So Hard?

Employees in office/business processes often saythey are doing creative work:

Tasks are not repeatable.

Different steps may be needed for each cycle of theprocess.

Time needed is unknown.

Capacity is hard to plan.

Managers also say they are doing creative work:

Because tasks cant be planned and sequenceschange, continuous adjustment is needed.


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But Is This True?

Based on our observations of many businessprocesses over many years, we find that if:

Product families are clearly defined andseparated.

Steps in each process are clearly defined.

Support processes needed to successfully

perform primary processes are clearly defined.Most office/business processes aretransactional they can be operatedrepetitively in a tight sequence with predictable,

excellent results without need for creativeprimary work or creative management!


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The Real Role for Creativity Periodically taking a walk together through

every office/business process.

Verifying that the correct value is beingprovided.

Asking how the process can be fundamentally

changed and improved to leave outunnecessary steps and to make remainingsteps capable, available, adequate, flexible,flowing, pulled, and level.

Asking how the process of processimprovement can be improved!


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Some Advice from Toyota:We get brilliant results from average people

operating and improving brilliant processes.

Our competitors get mediocre results frombrilliant people working around brokenprocesses.

When they get in trouble, they try to hire evenmore brilliant people.

We are going to win.

Since most of us are average most of the time,

dont we need to work together to createbrilliant processes?


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Specifically, How Can You Make EveryBusiness Process Perfect?

Start by identifying your key processes:

Which are primary? (Value creating.)

Which are support? (Incidental work.)

Which are most important to the customer?

Which are most important to the success of theorganization?

Which are most troubling to your people?


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Creating the Perfect Process

Ask who is responsible for each process.

When you discover that the answer is no one,appoint someone!

Note that in the early going it helps if the someone is asomeone. (That is, a widely respected person witha bright future in the organization.)

Responsibility doesnt mean a full time job; it certainlydoesnt mean direct reporting by everyone involvedin the process. (Example: Toyota Chief Engineer.)


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Creating the Perfect Process

Select the most important processes (but only a few).

Form a team of the responsible person and thoseinvolved in the process customers, participatingemployees across functions, technical advisors.

Map the process as it currently operates, taking extracare to specify value from the standpoint of thecustomer (external or internal).

Label this map the current state, making sure thateveryone agrees that the map is truly accurate.


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Current-State Process Map

For Order EntryCustomer

QuotingApplicationsEngineering

Verify Design&

BOM

CreditChecking

Order Entry/Scheduling

Sales Dept.

Valuable?

Capable?

Available?

Adequate?

Valuable?

Capable?

Available?

Adequate?

Valuable?

Capable?

Available?

Adequate?

Valuable?

Capable?

Available?

Adequate?

Valuable?

Capable?

Available?

Adequate?

6 Hours 12 Hours 4 Hours 55 Min 5 Min

6 Days 3 Days 1.5 Days 3.5 Days

Valuable?

Capable?

Available?

Adequate?

Valuable?

Capable?

Available?

Adequate?

Valuable?

Capable?

Available?

Adequate?

Valuable?

Capable?

Available?

Adequate?

9

2

9

1

14 Days

21 Hours


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Creating the Perfect ProcessAsk how the process should be changed to move

toward perfection.

If the value of the existing process is found to beincorrectly specified, the entire process may need tobe changed or even eliminated.

In many cases, one tangled process with manyexceptions may need splitting into a number ofprocesses, each with its own flow path.

Label this map the future state, making sure thateveryone agrees about the key changes in theprocess, who will perform them, and when.


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Future-State Process Map

For Order EntryC u s to m e r

Q u o te &A p p li c a tio n sE n g in e e ri n g

C r e d itC h e c k in g

O rd e r E n tr y /B O M /

S c h e d u li n g

S a le s D e p t.

V a lu a b le ?

C a p a b le ?

A v a ila b le ?

A d e q u a te ?

V a lu a b le ?

C a p a b le ?

A v a ila b le ?

A d e q u a te ?

V a lu a b le ?

C a p a b le ?

A v a ila b le ?

A d e q u a te ?

3 0 M i n

V a lu a b le ?

C a p a b le ?

A v a ila b le ?

A d e q u a te ?

V a lu a b le ?

C a p a b le ?

A v a ila b le ?

A d e q u a te ?

5

2

2 D a y s

8 H o u r s

O X O X

F IF O F IF O

4 H o u rs4 H o u rs

6 H o u r s 1 .5 H o u r s


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Creating the Perfect ProcessThink a bit about your organization:

From the standpoint of its customers, an

organization is the sum of its processes, bothprimary and supporting.

Processes flow horizontally toward customers,across departments, functions, and organizations.

However, organizations tend to be vertical, lookingupward toward senior leadership.

Organizations often measure functional performance

in asset utilization (people, machines) and othermetrics that are inconsistent with a perfect process.


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Creating the Perfect ProcessAsk what changes in your organization will be needed

to create & sustain future state of test processes:

Create a new position of process manager?

Or can business line managers perform this task?

Rearrange existing departments and functions?(Generally not necessary.)

Introduce new metrics to align department andfunction performance with process needs?


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Creating the Perfect ProcessImplement the necessary changes to create the future

state process:

Measure the performance compared with the currentstate.

Reflect on what has been accomplished and how itcould have been better. (Check in PDCAlanguage.)

Introduce necessary changes to adjust the process.(Act in PDCA language.)

Determine whether the adjusted process is stableand sustainable.


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Creating the Perfect ProcessOnce test processes have proved improvement

method:

Develop a Plan for Every Process.

Determine and clearly explain what you will do withexcess people and assets.

Hint: Business processes only perform at a highlevel for the customer if employees feel themanagement is introducing lean methods in a fairand equitable way. Deal with processes painful to

employees early; use excess people to grow.

Tackle every process, in order of importance.


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Creating the Perfect ProcessOnce you have tackled all of your processes:

Start the cycle again! (The former future state isthe new current state.)

Start to look at extended processes shareddownstream and upstream with other organizations.

Periodically review the Plan for Every Process toguard against backsliding.

Share your successes (and failures) with the LeanCommunity as we all pursue the perfect process!


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Lets Begin Sharing Now

We invited nine leaders to share their processes:

Two from the office: GM & Southco

Two from financial services: Jefferson Pilot &Wellmark

Two from overhaul and maintenance: Eagle &Letterkenny Army Depot

Two from healthcare: ThedaCare & UPMC

One from.counting(?!): Washington InventoryServices

Note: We believe that processes all share the samecharacteristics; we can learn from every process.


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What We Have Asked Them to Share

Tell us about your key processes.

Tell us how you are improving your keyprocesses. (Process improvement process.)

Tell us about your role as a leader in processtransformation.

Give us the complete details of your methods &answer all our questions during the breakouts.

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Lean Thinking for Business Processes