Process-Based Management: A Winning Strategy

Object Management Group Workshop Process-Based Management: A Winning Strategy by David E. Farrar Associate Technical Fellow Process Integration & Command Media Program Management & Business Excellence Global Mobility Systems Precision Engagement & Mobility Systems Integrated Defense Systems OMG Workshop at Hyatt Regency SF Airport Hotel Burlingame, CA 17 October 2006

The Global Mobility Systems Organization The Boeing Company Boeing Technology Commercial Airplanes Integrated Defense Systems Connexion by Boeing Boeing Capital Corporation Shared Services Group Network and Space Systems Precision Engagement and Mobility Systems Support Systems Advanced Defense and Security Systems Global Strike Systems Global Mobility Systems Airborne Anti-Submarine Warfare and Intelligence, Surveillance and Reconnaissance Rotorcraft Systems Advanced Precision Engagement and Mobility Systems C-17 Program 767 Tankers Program Derivative Airplane Programs Advanced Mobility Systems HQ in Long Beach, CA 2

The Global Mobility Systems Products C-40A C-32A Next Generation 767 Tanker C-17 C-40B 3

GMS Vision, Mission, and Values Boeing Vision 2016 People working together as a global enterprise for aerospace leadership Global Mobility A&T Vision Systems Vision The world s first choice for innovative mobility solutions setting the standard for excellence Global Mobility A&T Mission Systems Mission A&T Global provides Mobility solutions Systems that provides shape the solutions future of that mobility shape for the our future global of military mobility and for commercial our global military customers. and government We will leverage customers. our strengths, We will team-based leverage our culture, strengths, supplier team-based partners, culture, and customer supplier partners, knowledge and to customer achieve market knowledge leadership to achieve and provide market unprecedented leadership and provide value to all unprecedented value to all stakeholders. stakeholders. Global Mobility A&T Values Systems Values Leadership People Working Together Integrity A Diverse and Involved Team Customer Satisfaction Good Corporate Citizenship Quality Enhancing Shareholder Value 4

The Law of Change Drives Improvement The Law If you always do what you have always done, you will get what you have always gotten! The Corollary If you want a different outcome, you must change either the process, the product, or both. 5

Cultural Change Focused on Processes Then $$, Schedule, schedule, cost, cost, quality quality $$, schedule, cost, quality Product / service-oriented Product service-oriented Tribal work-knowledge Tribal work-knowledge Directed solutions Directed solutions Reward heroes Reward heroes Now Quality, schedule, cost Quality, schedule, cost Customer solution-oriented Customer solution-oriented Process management Process management Team-based solutions Team-based solutions Reward values // results Reward values / results 6

Process Management Brings it Together Tactical Direction Strategic Direction Work Group Individual Many Unaligned Projects Malcolm Baldrige Principles Planned Journey Adapted from Applied Strategic Planning: A Comprehensive Guide, page 330, published by Pleiffer and Company, 1992 7

Baldrige Criteria Framework: A Systems Perspective 2 Strategic Planning 5 Human Resource Focus 1 Leadership 7 Business Results 3 Customer and Market Focus 6 Process Management 4 Measurement, Analysis, and Knowledge Management 8

Baldrige Category 6 : Process Management STABLISHMENT: What are your key value creation and key support processes and how does your organization determine them? EQUIREMENTS: How do you determine requirements for your key value creation processes, incorporating input from customers, suppliers, and partners? EASURES: What are your key indicators or performance measures to control and improve these processes? REVENTION: How do you prevent rework and defects in these processes? 9

Characteristics of a Process-Managed Organization Senior Leadership Buy-in View business as a collection of processes Strategic plans drive processes Clear relationships between processes and key business results and goals Focuses on key customer-driven processes Work Teams learn processes Process health reporting and review 10

Characteristics of a Process-Managed Organization (cont d) Manage by data Managerial patience Emphasis on sustainable improvements Improvement in processes across the business Integrated with other initiatives Common processes and standardization across user groups 11

What is a Process? A set of sequential or concurrent tasks performed by a process team led by a Process Owner that transforms inputs from suppliers Requirements into useful outputs for customers Inputs Tasks Outputs E.g., Requests, Raw Materials, Parts, Tool Designs, Planning Documents, Maintenance Schedule Resources E.g., Completed Documents, Completed Assemblies, Fabricated Tools, Delivered Kits, Functioning Equipment that meets requirements and utilizes resources to complete the outputs. 12

Generic Enterprise Process Model Denotes Key Process Ensure Integration of Strategic Business & Functional Planning (P. Smith) Ensure Organizational Effectiveness (P. Smith) Ensure Quality & Mission Assurance (A. Jones) Ensure Continuous Improvement (A. Jones) Generic Enterprise Process Model (For Training Purpos es Only Not Real) 1.0 Enterprise 1.0 Lead the Management Enterprise Perform Integrated Business Financial Management (T. Green) Communicate Positions & Direction (R. Brown) Integrate & Deploy Processes & Procedures (P. Smith) 2.0 Manage Programs 2.01 Manage Program Planning 2.02 Administer Contracts 2.03 Minimize Program 2.04 Manage IWA 2.05 and Execution (G. Hermann) (R. Altman) Risk (G. Hermann) Performance (V. MacIvy) 3.01 3.02 3.03 1.01 1.02 1.03 1.04 3.0 Create, Acquire & Grow Business Process Owner: B. Braun Create Opportunities & New Markets (D. Lane) Acquire New Business (S. Larkins) Maintain / Grow Existing Business (E. Andrews) 4.01 4.02 4.03 4.04 4.0 Integrate Product/Service Definition Process Owner: N. Nester Define & Manage Product/Service Requirements (M. McDonald) Plan & Control Product/ Service Design (S. Adell) Concurrently Develop Product/Service/ Build-to / Buy-to/ Support Elements (K. Kern) Verify & Validate Product/Service (B. Sills) 1.05 1.06 1.07 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08 5.0 Manage Suppliers Process Owner: M. Delaney Manage Material Requirements (S. Howell) Select Source (Nelson) Negotiate & Award Purchase Contracts (P. Nelson) Manage Supplier Performance (P. Nelson) Manage Supplier Quality (M. Perry) Manage Supply Base (G. Harding) Manage Gov t Property (J. Givens) Manage Inventory (J. Johnson) 8.0 Provide Enabling Infrastructure 6.01 6.02 6.03 6.04 6.0 Produce Product Process Owner: S. Jurgens Define Production Plan (A. Ballard) Provide Parts, Supplies, GFE, & Tools to Assembly (J. Banks) Assemble and Deliver Product (A. Ballard) Verify Production Processes (M. Kingston) Process Owner: R. Manson 1.08 Perform Self-Governance (A. Jones) 1.09 Ensure Customer Satisfaction (P. Smith) 1.10 1.11 Strengthen the Team (D. Owens) Provide Ethics Guidance (D. Hanson) 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 Rev: 23 Sep 05 Process Owner: E. Andrews Provide Integrated Performance Management (Cost & Schedule) (V.MacIvy) 7.0 Support Products & Services Process Owner: L. Holland Provide Supply Support (D. Schmaltz) Provide Field Services (J. Williams) Provide Retrofit & Modification Services (C. Bearden) Provide Technical Data (D. Blake) Provide Instructional Systems Data & Training (Y. Jensen) Provide Integrated Support Planning & Management (D. Yee) Provide System Support Analysis (S. Gore) Provide Support Equipment (R. Stanton) Process Owner: T. Green 8.01 8.02 8.03 8.04 Provide Financial Services (V. MacIvy) Provide Human Resources Services (D. Owens) Provide Communications Services (R. Brown) Provide Legal Services (J. McBrew) 8.05 8.06 Provide Safety, Health, and Environmental Services (N. Shepherd) Provide Export/Import Compliance (M. Clarrett) 8.07 8.08 8.09 Manage Facilities & Equipment (S. Harelson) Provide Security & Fire Protection Services (R. Vector) Provide Integrated Information Systems & Services (W. Kuhn) 8.10 8.11 Manage Non-Production Procurement (S. Harelson) Provide Flight Operations Services (D. Gregory) Figure P-2, Generic Enterprise Process Model 13

Levels of Processes: Owners at Each Level Enterprise Process Model Processes can be expanded to lower, more-detailed levels Core Area Level 0 Executives Level 1 Executives and others Level 2 14

Levels of Processes (cont d) Level 0 Process: 6.0 Produce Product As one tier is defined the next lower tier is identified Core Family Level 1 Process Model Level 0 Level 1 Level 1 Executives Executives and others Tier 1 Process: 6.03 Assemble and Deliver Product.01.02 Produce Major Assemblies.03.04.05.06.07.08 Tier 2 Process: 6.03.02 Produce Major Assemblies.01.02 Perform 17 A/N/Y Subassemblies.03.04.05.06.07.08 Tier 3 Process: 6.03.02.02 Perform 17 A/N/Y Subassemblies Level 2 Level 2 Level 2 and so on.. Level 3 Level 3 Level 3 and so on.. 15

Process Owners: What Do They Do? Assigned at every level of the Process Model Include Executive Leaders at Level 0 and at many Level 1s Qualifications: May or may not be a manager Usually a subject matter expert on the process Uses the process to manage that piece of the business May be accountable for activities outside functional control May own more than one process 16

Process Owners: What Do They Do? Responsible for: Implementing the steps of PBM Documenting the process Ensuring process performance Ensuring both internal and external customer involvement Involving suppliers of incoming processes Improving the process For certain processes, may manage the process jointly with the Government Customer Must ensure associated procedures are current and are adhered to 17

Process Owners/Teams Use PBM Seven-Step Methodology The Seven Steps of Process-Based Management I m p r o v e m e n t O p p o r t u n i t i e s When the process has not been defined When the process has been defined, but no metrics When the process is defined, has metrics, but is not stable When the process is defined, has metrics, is stable, but still needs improvement Gate 1 Gate 2 Gate 3 Gate 4 Step 1 Define the Process Step 2 Establish Metrics Step 3 Determine Performance Step 4 Analyze Process Stability Step 5 Set Goals Step 6 Analyze and Plan Improvements Step 7 Implement Improvements Six to Ten Manageable Steps From Customer s Perspective If Process Change Required How You Are Doing If Metric Change Required Predictable Performance Where You Are Going and Why If Normal Monthly Performance Cycle How and Why You Will Get There Get There! Continuous Process Improvement Loops 18

Process Owners/Teams Document and Define Processes, with Customer Agreement PROCESS DEFINITION Business: IDS Bus. Unit: PE&MS Site: Long Beach Program(s): GMS: C-17 Process Title: Process No.: 1.07.02 Creation Date: 9-27-2005 Revision Date: 10-12-2005 Next-Higher-Level Process: 1.07 Integrate and Deploy Processes and Procedures Process Objective: For Training Purposes Only Lead PBM Deployment Lead PBM deployment across GMS Programs and IDS-LB Tenants as appropriate in alignment with IDS business strategies Inputs Strategies/Flow-Down Goals/Deployment Plans Training Requests Consulting and Facilitation Requests PBM Products and Data Gap Analyses Training Surveys/Suggestions Internal/External Assessment Results Suppliers 1.01.06, Flow Down Strategies and Deploy Plans 1.02, Ensure Organizational Effectiveness 1.04 Ensure Continuous Improvement Process Owners/Customers/Focals/Users DCMA/SG Executive Management/Program Management Process Requirement Sources: TA-288M, Process Owners Manual TA-318, PBM X31111 NEW (05 DEC 2005) Information Systems Process Tasks Beginning Boundary Task: Receive Inputs from Suppliers.01 Define PBM Methodology/ Command Media.02 Plan PBM Approach.03 Implement PBM Deployment.04 Analyze PBM Deployment and Performance Results.05 Capture Lessons Learned and Improve PBM Ending Boundary Task: Deliver Outputs to Customers PBMS; Root Cause Corrective Action System Outputs Deployment Plan /IMP/IMS PBM Methodology / Command Media / Training Materials Systems to Manage PBM/Health and Deployment Reports PBM Expertise / Process Owner Consulting & Coaching / Process Team Facilitation Effective Resolution of Process Related Conflicts Training Corrective/Preventive Actions Customers 1.01.01, Assess and Understand Inputs Process Owners/Customers/Focals/Users DCMA/SG Process Owner: John Smith Process Customer(s): James Jones Process Specialist: Glen Green, DCMA (Must have concurrence on file for 19 all process changes. Use second page if necessary.)

Process Owners/Teams Define the Process in a Flow Chart PROCESS FLOWCHART Business: IDS Bus. Unit: PE&MS Site: Long Beach Program(s): GMS: C-17 Input Who Responsible Organizations, Individuals or Processes 1.01.06, Flow Down Strategies and Deploy Plans 1.07.02.05 Capture Lessons Learned and Improve PBM SG/DCMA All Users Process Management Integration (PMI) Executive/ Program Management All Level 3 Processes Under 1.07.02 1.01.01 Assess and Understand Inputs X32629 NEW (05 DEC 2005) Strategies/Flowed Down Goals/Strategic Plans Documented Lessons Learned/Improvement Suggestions/Reports Requests Requests/ PBM Products and Data/ Gap Analyses Training Surveys/ Improvement Suggestions Internal/External Assessment Results Process Title: Process Owner: Receive Inputs from Suppliers Input/Output Lead PBM Deployment John Smith Define PBM Methodology and Command Media For Training Purposes Only Plan PBM Approach Implement 20 PBM Deployment Go to 1.03.07 Manage Corrective/ Preventive Actions Process Number: Creation Date: Revision Date: Analyze PBM Deployment 1.07.02 10-12-2005 1-24-2006 Go to In-Process Task Decision X.XX Interface a Connector R Record and Performance Results Q1 Q2 T1 T2 T3 Capture Lessons Learned and Improve PBM Deliver Outputs to Customers PBM Deployment Plan/ IMP/IMS Output PBM Deployment Plan/ IMP/IMS/ PBM Methodology/Command Media/Training Materials/ Systems to Manage PBM/ Health & Deployment Reports/ PBM Expertise/ PO Consulting & Coaching/ Process Team Facilitation/ Effective Resolution of Process- Related Conflicts/ Training Improve t Projects/ Corrective/Preventive Actions/Requests Health & Deployment Reports Control Point

Process Owners/Teams Use Metric Categories to Establish Measures Requirements Key Performance Categories Process Performance Meet or Exceed Customer Expectations Attain Superior Business Results Quality Timeliness Efficiency Cycle-Time Measure of conformance or non-conformance (defects) to requirements or expected performance Measure of success in meeting a customer commitment Measure of output that a process produces in relation to costs Measure of time between a customer request and delivery of the product or service to the customer 21

Process Owners/Teams Define their Metrics in a Process Performance Agreement PROCESS PERFORMANCE AGREEMENT Business: IDS Bus. Unit: PE&MS For Training Purposes Only Site: Long Beach Program(s): GMS: C-17 Process Title: Next-Higher-Level Process: Quality Timeliness Process Title (Verb + Noun) Metric Category Process Measurement Next-higher level process Metric Definition Quality Metric Definition (list company/ organization/source benchmarked [if applicable]) (e.g., % Rework & Repair Hours/Total Hours) Timeliness Metric Definition (list company/ organization/source benchmarked [if applicable]) (e.g., % On-Time to Manufacturing Schedule) Minimum Acceptable Level (MAL) MAL MAL Process No.: Creation Date: Revision Date: Annual / Multi-Year Goals Annual Goals (Multi-Year) Annual Goals (Multi-Year) 0.00.00 MM/DD/YY MM/DD/YY Benchmark/ Comparative Data Benchmark/ Comparative Data Benchmark/ Comparative Data Weighting Factor (Must Have At Least One 1 ) Weight Weight Efficiency Efficiency Metric Definition (list company/ organization/source benchmarked [if applicable]) (e.g., Avg. Hours per Engineering Drawing) MAL Annual Goals (Multi-Year) Benchmark/ Comparative Data Weight Cycle Time Cycle Time Metric Definition (list company/ organization/source benchmarked [if applicable]) (e.g., Total Days from Input to Delivery) MAL Annual Goals (Multi-Year) Benchmark/ Comparative Data Weight John Smith James Jones Glen Green Process Owner s Name Process Customer(s) Name(s) Process Specialist s Name X31112 DRAFT 11/15/05 22

Process Owners/Teams Use Metrics to Measure a Process Weighting Factor Process Performance Assessment 03 04 J F M A M J J A S O N D 2.4 2.5 1.3 2.0 1.3 1.8 1.8 1.8 1.3 2.3 2.8 Quality (3X) 100 Good Efficiency (1X) 10 Good Percent Compliant Orders 90 80 70 60 50 40 30 20 10 Completed Items per Man-hour 9 8 7 6 5 4 3 2 1 0 0 Assessment 03 04 J F M A M J J A S O N D 03 04 J F M A M J J A S O N D 2.2 1.8 1 2 1 2 2 2 1 2 2 Assessment 2.5 2.9 2 2 2 1 1 1 2 3 4 Legend: Mo. Actuals 3-Period Avg Min. Acceptable Level Annual Goal Benchmark 23

Process Owners/Teams Use Tools to Analyze Process Performance! FMEA! Check Lists! Graphs! Bar charts Process Title: Process Title Process No.: Process No. Creation Date: Creation Date Process Owner: Process Owner Revision Date: Revision Date Process Potential Potential S Potential O Current D R Recommended Task Failure Effect(s) of E Cause(s) of C Detection/ E P Actions Mode(s) Failure V Failure C Verification T N 1-10 1-10 1-10 1-10 Controls 2-20 Mirror Process Failure Effect 1 Cause 1 Detection 1 1 2 Actions Task from Process 2 Definition MD-1830-01 (04 Jun 2002) REVISED! 5-Why Analysis! Cause-and-Effect (Fishbone) 24

Process Owners/Teams Use Plans to Improve a Process ACTIONS TASKS ACTION # 1234 INITIATED: 01-May-05 Task Assignee Subject Status Date INITIATOR: Adams, Art ASSIGNEE: Adams, Art 1 A. Adams Develop file compliance checklist CLOSED 15-May-05 PROCESS OWNER: Baker, Bill PBM No: 5.02 Issue Orders C/PA SOURCE: PBM Annual Process Improvement STATUS: Open DATE: 07-Oct-05 2 3 4 B. Baker B. Baker T. Trainer Develop file compliance audit process Revise file compliance procedure Develop training course CLOSED OPEN OPEN 15-Jun-05 SUBJECT: Improve percentage of compliant documentation 5 T. Trainer Provide file compliance training OPEN PROBLEM STATEMENT: Percentage of compliant procurement files is not acceptable. VERIFICATION/ACCEPTANCE CRITERIA: Percentage of compliant files improved by 20% 6 7 A. Adams B. Baker Implement compliance checklist Conduct monthly compliance audits OPEN OPEN ROOT CAUSE ANALYSIS TOOLS USED: FMEA, 5-Why For Training Purposes Only ROOT CAUSE STATEMENT: Buyers are not trained to review files for compliance prior to sending to Procurement Analysis VERIFICATION STATEMENT: 25

Systems House Process Data: PBMS and SSPI <PO Name> 26

Process Owner Discipline: Measured by Vision Support Plan (VSP) Strategy Task 2005 Type Metric Description Target Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec E-01 Execute on programs [IDS, AFS] Executive GProcess G G Owners: E-01-A A&T Operating Earnings To Plan B B B E-01-B A&T Cash Flow To Plan R B B Execute Flawlessly E-01-C On-time delivery - A&T Aircraft & Modifications 100% G G G E-01-DA Mission Success: Non-Space Per Plan G G G E-01-E RONA (Return on net assets) To Plan R R G E-01-F CPARs or equivalent >/= 2.8 (Green) G G G E-01-G Award Fee Percent 80% - 89.9% of contracts score >90% G E-01.11 Deploy and integrate effective Supplier Quality 84% process across IDS G G G E-02 Improve quality and cost G G Y Manage to Long Beach overhead composite E-02-20A rate To plan Y G Y E-02-B Productivity improvement [IDS, AFS] 5% G G G **ACHIEVE/MAINTAIN A&T CMMI LEVEL 5 E-02-E CERTIFICATION Per Plan G G G Improve Quality (Key Quality metrics from the E-02.01 C-17, 767 Tanker, and DAP Programs along Roll-Up >/= Green Rating G G G with A&T Common Quality Initiatives). E-02.02 Improve cost Per Plan Y E-03 Deploy use of the Baldrige framework (including the tools and initiatives that support the To Plan G G G framework) across A&T to improve our business Strengthen the process-based culture within E-03-20A programs and across A&T Provide recognition to 1% of your Process Owners (POs) per month for PBM efforts Attend 75% of monthly PBM review meetings with your Process Owners Per plan G G G [A&T] Become recognized as best-in-industry in E-03-20B Green Rating (Roll Up) G G G lean enterprise (including lean manufacturing) P 27

Process Owners/Teams Use Improvement Tools with PBM PBM is the framework for continuous process improvement If a process needs more stability than PBM tools provide: Micro-process Variability Reduction Macro-process Six Sigma If a process needs more improvement than PBM tools provide: Quality metric Efficiency metric Timeliness/ Cycle Time metric Six Sigma for a macro-process Variability Reduction for a micro-process Lean if no more data analysis is needed Variability Reduction if more data analysis is needed Lean 28

Process Management Leads to ISO Success ISO Principles Baldrige Categories Leadership Strategic Planning Customer and Market Focus Information and Analysis Human Resource Focus Process Management Business Results Customer Focus Leadership Involvement of People Process Approach System Approach to Management Continual Improvement Factual Approach to Decision Making Mutually Beneficial Supplier Relationships 29

Processes that Answer the ISO 9001:2000 Standard 30

Process Management Leads to CMMI Success The quality of a software product is governed by the quality of the processes used to develop and maintain it. To improve quality of the product, one must improve the quality of the processes that create the product. CMMI enables organizations that want to pursue process improvement in multiple functional areas (Software, Systems, Acquisition, Security etc. ) to do so with less additional investment for each function. CMMI supports process integration and product improvement CMMI integrates multiple disciplines into one process-improvement framework Copyright by Carnegie Mellon University 31

Processes that Answer the CMMI Criteria 32

Global Mobility Systems Quality Journey: Results Focus Georgia Oglethorpe Award Macon WA State Quality Award DAP ISO 9001/2000 Certification CAPE Gold Award (C-17) Baldrige Internal Assessment Malcolm Baldrige Site Visit CAPE Silver Award (AFS) Baldrige Internal Assessment Industry Week Top 10 Winner CMMI Level 5 CCE/AQP Team Excellence Award CCE Team Excellence Award Malcolm Baldrige Win Best Practice Exchange Baldrige Internal Assessment Industry Week Top 25 Finalist CCE/AQP Team Excellence Award CCE/AQP Team Excellence Award 1998 1999 2000 2001 2002 2003 Industry Week Top 10 Macon 2004 ISO AS9100 B Certification 2005 33

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