Business Process Optimization w/ Innovative Results

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1 Business Process Optimization w/ Innovative Results Sam DiSalvatore

2 Introduction The principle of continuous process improvement is based on the belief that even excellent products and services can be made better by improving the processes that make the products possible To fuel our clients transformation and growth through innovative technology, specialized expertise and strategic partnerships - Socius Mission Statement

3 Sam DiSalvatore

4 Session Objective Socius is more than a Microsoft Dynamics Technical Consultancy Customer Relationship Management (CRM) practice has taught us much Convey Business Solutions to our clients Solutions that extend beyond the boundaries of unique technologies

5 Agenda Processes What are they / Why study them Process Control System Step 1 - Finding the Process Step 2 - Process Analysis Step 3 - Documenting the Process Step 4 - Monitoring the Process Step 5 - Standardize and Replicate Identifying Process Issues Value Stream Mapping BPM in Action Dr. W. Edwards Deming

6 Agenda Processes What are they / Why study them Process Control System Step 1 - Finding the Process Step 2 - Process Analysis Step 3 - Documenting the Process Step 4 - Monitoring the Process Step 5 - Standardize and Replicate Identifying Process Issues Value Stream Mapping BPM in Action Dr. W. Edwards Deming

7 Processes What are they Actions or Operations Inputs Repetitive Actions Generally speaking, a process takes a measurable input and transforms it (through the change, addition, or subtraction of value) into a measurable outcome Outcomes A repetitive and systematic series of actions or operations whereby an input is used to achieve an outcome

8 Processes What are they Business Process Optimization Business Process Improvement Business Process Re-Engineering Customer Relationship Management Business Process Management Corporate Performance Measures Customer Experience Management Customer Experience Transformation

9 Processes Why study them Achieve consistency in daily work with improved results Clarify individual contribution toward achieving customer satisfaction Systematically improve and control daily or repetitive operations Maintain the gains achieved through improvement projects

10 Processes Why study them Why should we change? Why should we bother with improving our processes? -Better customer service -Better quality products/services -Competitive products/services -We must stay prepared (future) -Keep our owners happy -Help keep costs low -Less frustration -Better place to work -Less firefighting (reactive) -More focus on process problems -More pride in the workplace -Easier to be productive BUSINESS EMPLOYEE

11 Agenda Process Control System Step 1 Processes What are they / Why study them Process Control System Step 1 - Finding the Process Step 2 - Process Analysis Step 3 - Documenting the Process Step 4 - Monitoring the Process Step 5 - Standardize and Replicate Identifying Process Issues Value Stream Mapping BPM in Action Finding Process Step. 2 Process Analysis Step. 3 Document Process Step. 4 Monitor Process Step. 5 Standardize / Replicate

12 Step 1 - Finding the Process Products or services are the end result of; Processes - countless transactions and decisions made inside an organization by a complex interaction of individuals or departments Internal Customers Internal Customers cooperate to ultimately satisfy the needs and expectations of the External Customer

13 Step 1 - Finding the Process Begin with the End in Mind (Objective) BPM is a very broad categorization What is it you are trying to improve; Production of Product Supply Chain of Product Quality Assurance Standards Example - Customer Experience Management (CEM) This process is all about being proactive and constantly innovative to capture the changing requirements and voice of the customer

14 Step 1 - Finding the Process Determining valid Process-Related Requirements The term VALID requirements refers to needs and reasonable expectations To identify which needs are true valid requirements, simply take each of the needs and ask: Is this requirement... Reasonable Understandable Measurable Believable Achievable

15 Requirements and feedback (product and process) Requirements and feedback (product and process) Step 1 - Finding the Process Customer/Supplier Model (SIPOC) Requirements Requirements S I P O C Supplier Input Process Output Customer Measures Measures This model can be simplified to: Adding Value Input(s) Output(s) Supplier Process Customer

16 MS Lifecycle Services Stay Tuned Business Process Modeler Create, view, and modify business-processes Perform fit-gap analysis between the business needs and the default processes in Microsoft Dynamics Add new business processes and create flowcharts for processes that are not already defined in Microsoft Dynamics

17 Agenda Process Control System Step 2 Processes What are they / Why study them Process Control System Step 1 - Finding the Process Step 2 - Process Analysis Step 3 - Documenting the Process Step 4 - Monitoring the Process Step 5 - Standardize and Replicate Identifying Process Issues Value Stream Mapping BPM in Action Finding Process Process Analysis Step. 3 Document Process Step. 4 Monitor Process Step. 5 Standardize / Replicate

18 Step 2 Process Analysis Deeper Dive move from Strategic to Tactical Every process must be designed to help ensure that all daily work satisfies customers (focus on INTERNAL CUSTOMERS) needs and reasonable expectations a chain is only as strong as its weakest link, Process Analysis emphasizes that the customer directly receiving a product or service is the next process customer

19 Step 2 Process Analysis (Process Bridge) Organization NEEDS EXTERNAL CUSTOMER Core Process Process Process Process Process Process Internal Customers Enabling Process SATISFACTION EXTERNAL CUSTOMER

20 Step 2 Process Analysis The point at which the input is received from the supplier Position profiles may have already been written. Some activities (especially those involving precision or safety) are carefully described in written standards Generally describe ways of doing things - Either formal (as in procedures manuals) or informal (hand written and posted) The point at which the product or service is delivered to the next process customer Checklists help people organize their activities Checklists are often associated with specific jobs

21 Step 2 Process Analysis Prioritization - What is a top-priority process? Work process(es) that are not consistently meeting customers needs and reasonable expectations (i.e., fails RUMBA) Team knows is broken or consumes at least 80% of the resources Choosing a top-priority process Using prioritization techniques, identify three to five significant processes that are part of daily work since a team can deal effectively with only a single process at a time Example - Cost of Poor Quality (COPQ) Many strategies includes an attack on the Costs Of Poor Quality (COPQ) For an average company, the COPQ can be as high as 25% of sales In almost every company where the COPQ is unknown, the COPQ exceeds the profit margin

22 Agenda Process Control System Step 3 Processes What are they / Why study them Process Control System Step 1 - Finding the Process Step 2 - Process Analysis Step 3 - Documenting the Process Step 4 - Monitoring the Process Step 5 - Standardize and Replicate Identifying Process Issues Value Stream Mapping BPM in Action Finding Process Process Analysis Document Process Step. 4 Monitor Process Step. 5 Standardize / Replicate

23 Step 3 - Documenting the Process Flowchart / Process Flows Is the Primary documentation Artifact Is a graphic representation of a (that is, one-single) process Shows the process activities sequenced from step to step to produce an output 1. Identify the process being described 2. List inputs, activities, decision, outputs 3. Define columns for persons/departments across top 4. Draw dotted lines for persons/departments 5. Put activities in sequence as they are usually performed 6. Connect the symbols using arrows to illustrate process flow 7. Identify activities that are non-value-added (NVA) 8. Identify cycle time for each activity 9. Place process steps down the left column

24 Step 3 - Documenting the Process Additional Value - To-Be vs. As-Is Milestones of desired performance Established after analyzing data Factors to consider: Customer valid requirements Business Survey results Past performance Competitors performance Defect rate

25 Step 3 - Documenting the Process Two Types Macro Micro Swimlanes Living / Breathing complete as information is obtained

26 Step 3 - Documenting the Process

27 Step 3 - Documenting the Process Indicators Process vs. Quality Circles with P or Q represents the location of a process indicator or quality indicator P1 Q1 Characteristics of indicators Measurable Verifiable Cost Effective Requirements Requirements S I P O C Supplier Input Process Output Customer Process Indicators X s Quality Indicators Y s

28 Step 3 - Documenting the Process Process Indicators Control points used to predict the output Measure performance within the process Help take action early in the process Warning signal Provides information for analysis of failures Decide how best to measure Quality Indicators Assure the measure and the requirement are related Measure data at intervals that allow for useful judgments Describe HOW to get results Measure defects Avoid using averages alone as outcome indicators Incorporate Customer Specifications

29 Step 3 - Documenting the Process Calls with problem Start Take call Activity Input Parts Decision End Dispatch Crew Repair on-site? Yes Repair Equipment Build replacement equipment P1 No Activity Process Indicator Activity Remove defective equipment Install new equipment Activity Output Indicators Q1 Q2 End

30 Step 3 - Documenting the Process Quality Indicator Charts How is the process doing? Is the process meeting targets? Are the customers satisfied? Nothing answers these questions like a picture % over 30 minutes Q1 Percentage of time the order to customer process exceeds 30 minutes Target Days Good Output indicator charts are used to understand how the process is performing (see Monitor Process below)

31 Step 3 - Documenting the Process Data (Measures) Collection What should be collected When should the collection be done Who (job) collects the data Contingency plan describes what should be done when defects occur Miscellaneous information provides clarity to all other items

32 Agenda Process Control System Step 4 Processes What are they / Why study them Process Control System Step 1 - Finding the Process Step 2 - Process Analysis Step 3 - Documenting the Process Step 4 - Monitoring the Process Step 5 - Standardize and Replicate Identifying Process Issues Value Stream Mapping BPM in Action Finding Process Process Analysis Document Process Monitor Process Step. 5 Standardize / Replicate

33 Step 4 - Monitoring the Process Must understand process variation before we can analyze a process for improvement Common Cause normal variation in a process. Special (assignable) Cause, can be associated with particular identifiable reasons for variation Control Chart is formed by the patterns in the process variation used to distinguish Common cause from Special cause variation Without an understanding of the variation in a process: Resources may be wasted reacting to variation that is normal fixing what is not broken Opportunities for improvement can be missed failing to react when we should

34 Step 4 - Monitoring the Process Record the Results Customer Perception Threshold Range - R The difference between the highest and lowest values Standard Deviation - s Measures the expected variation around a mean Square root of the variance - Variance is the sum of the squared differences from the mean Empirical Rule: 68.26% of all data should fall within a distance of ±1s from the mean % within a distance of ±2s from the mean % within a distance of ±3s from the mean. Customer Limit of Satisfaction 1 σ 1 σ { { Customer Realistic Satisfaction Threshold

35 Step 4 - Monitoring the Process Control Limits are calculated to measure the natural variability of a process performance over time progress after process changes / improvements process capability separate common cause and special cause variation Points outside statistical limits signal a special cause Can be used for almost any type of data collected over time

36 Step 4 - Monitoring the Process

37 Step 4 - Monitoring the Process 1. Point outside the limit: Any point on or outside the limit is considered abnormal and requires investigation 2. Run: A run is indicated when points lie continually on one side of the center line A run of seven points is considered abnormal 3. Trending: Seven points in a continuous Upward or downward direction

38 Step 4 - Monitoring the Process 4. Approaching the center line: When most points lie within the center line and 1.5 sigma (s), the process is not in a controlled state Indicates the mixing of data from different populations, which makes the control limits too wide and stratification of data necessary 5. Cycling (periodicity): Any repeated up and down trend is abnormal and requires investigation 6. Approaching control limits: 2 of 3 points lying outside the 2 sigma* (s) line is considered abnormal

39 Agenda Process Control System Step 5 Processes What are they / Why study them Process Control System Step 1 - Finding the Process Step 2 - Process Analysis Step 3 - Documenting the Process Step 4 - Monitoring the Process Step 5 - Standardize and Replicate Identifying Process Issues Value Stream Mapping BPM in Action Finding Process Process Analysis Document Process Monitor Process Standardize / Replicate

40 Step 5 - Standardize and Replicate The indicators must continue to be monitored at regular intervals The process control system becomes a vehicle for continuous improvement When difficulties arise, they present an excellent opportunity to start problem-solving teams to investigate and solve them But the power of the process control system comes from using it to maintain the gains that have been achieved through setting it up This is referred to as standardization, making sure that the good effects of the system are not lost through neglect or forgetfulness

41 Step 5 - Standardize and Replicate Simplification Review and simplify the process system to its essential working elements Training Train the people actually doing the job so that they understand and can use the process control system Communication Make sure the process control system is posted where all the workers can see it. Highlight any changes that occur so that everyone can see them clearly.

42 Step 5 - Standardize and Replicate 1. Simplification - Review and simplify the process system to its essential working elements To do this, ask questions such as the following: Who needs to know this and why? Is this element necessary to understand and follow the process control system? What purpose is served by this part of the system?

43 Step 5 - Standardize and Replicate 2. Training - Train the people doing the job so that they understand If a process control system is to succeed, the understanding and cooperation of everyone in the workplace must be enlisted No matter how good it is in theory, a system will not benefit the customer unless all the people involved in the top-priority process understand and implement it A process control system represents a change in the way business has been done and this change will be considered by some to be a threat

44 Step 5 - Standardize and Replicate 3. Communication - Make sure the process control system is posted where all the workers can see it. Highlight any changes that occur so that everyone can see them clearly. For a process control system to be the standard way of doing business, everyone must own it In this way, all workers can see the way they are working together and how they are doing It will encourage communication and encourage suggestions for improvement.

45 Step 5 - Standardize and Replicate Once the process control system has been standardized and has become a permanent part of the workplace, Find other departments and/or systems that can benefit from it This is what is called Replication A Process Control System to process invoices invented by one department might easily be applied in others A Process Control System for Material Handling might be unique to a department, aspects of the system might apply to other departments in their own handling of materials

46 Agenda Identifying Process Issues Processes What are they / Why study them Process Control System Step 1 - Finding the Process Step 2 - Process Analysis Step 3 - Documenting the Process Step 4 - Monitoring the Process Step 5 - Standardize and Replicate Identifying Process Issues Value Stream Mapping BPM in Action Dr. W. Edwards Deming

47 Process Mgmt. Identify Process Problems Generate a list of all inputs and outputs for a process Review each step in the process List inputs and outputs for each step Mark each input as C Controllable N Noise P Company policy Noise: Process input that causes variation in the output Noise is random, expected and not controlled Noise is also referred to as white noise, random variation, common cause variation, non-controllable variable

48 Process Mgmt. Identify Process Problems Process Map

49 Process Mgmt. Identify Process Problems Value-Added and Non-Value-Added Steps Waste Waste Elimination Correction Overproduction Movement of Material Motion Waiting Inventory Processing

50 Process Mgmt. Identify Process Problems Waste Mgmt. LEAN - a process improvement initiative focused on eliminating waste in the workplace Pull vs. Push Pull Make what we need, when we need it Push Make all we can, just in case KAIZEN - A Kaizen event is conducted over several days and includes a variety of Lean tools TAKT TIME focuses on the pace of production needed to meet customer demand KANBAN controls inventory within the overall Lean Production system 5S focuses on organization, cleanliness and standards

51 Process Mgmt. Identify Process Problems Bottlenecks increase cycle time A bottleneck is Any resource whose capacity limits the amount of information / material that flows through the process Any resource whose capacity is equal to or less than the demand placed upon it

52 Agenda Value Stream Mapping Processes What are they / Why study them Process Control System Step 1 - Finding the Process Step 2 - Process Analysis Step 3 - Documenting the Process Step 4 - Monitoring the Process Step 5 - Standardize and Replicate Identifying Process Issues Value Stream Mapping BPM in Action Dr. W. Edwards Deming

53 Value Stream Mapping The ideal process adds value at every step However, design production delivery Lead Time Value Adding Activity Waste (Muda)

54 Value Stream Mapping The sequence of all actions (both value-added and non-value added) that occur to a given product from inception through delivery Requirements Design Raw Materials Parts Manufacturing Assembly Plants Distribution Customer

55 Process Mgmt. Value Stream Mapping "ITEMS" flow through a value stream In manufacturing, materials are the items In design & development, designs are the items In services, external customer needs are the items A Value Stream Map is a graphical tool illustrates the flow of information and materials for a given product (service) family

56 Agenda BPM in Action Processes What are they / Why study them Process Control System Step 1 - Finding the Process Step 2 - Process Analysis Step 3 - Documenting the Process Step 4 - Monitoring the Process Step 5 - Standardize and Replicate Identifying Process Issues Value Stream Mapping BPM via CEM BPM in Action Dr. W. Edwards Deming

57 Socius CRM OVERALL OBJECTIVE How to help our clients realize the Strategic value of a properly layed-out CRM initiative and/or help our clients with their next Phase of CUSTOMER-CENTRIC solutions Stepping through the Process Control System we are effectively in Step 5 Standardize and Replicate Step 1 Identify Processes found many, needed consensus, GAP with Business Process consulting Step 2 Process Analysis no standards, inflexible (CUSTOMER-CENTRIC) Step 3 Document Process As-Is and To-Be documentation complete Step 4 Monitor the Process Sample Testing has proven favorable

58 Socius CRM 1. Socius Internal Course - Presentation, Communication, Teaching (soft skills)

59 Socius CRM 2. Socius Internal Course Business Process Mgmt.

60 Socius CRM 3. Socius Internal Course Identify the Process, Requirements Best Practices

61 Socius CRM 4. Socius Internal Course - Design Best-Practices

62 SUMMARY (finally) Processes What are they / Why study them Process Control System Step 1 - Finding the Process Step 2 - Process Analysis Step 3 - Documenting the Process Step 4 - Monitoring the Process Step 5 - Standardize and Replicate Identifying Process Issues Value Stream Mapping BPM in Action Dr. W. Edwards Deming

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