Diffusion of business improvement processes in manufacturing
companies in India
1Gudimetla,
1,2,4
P., 2Allimuthu, P.S., 3Chintala, G.V., 4Yarlagadda, P.K.D.V.
School of Engineering Systems, Queensland University of Technology, Gardens Point
Campus, P.O. Box 2434, 2 George Street, Brisbane Q4001
Email: p.gudimetla@qut.edu.au
3Principal,
Chaitanya Engineering College, Kommadi, Visakhapatnam 530 041, AP, India
Email: gopinathcv@yahoo.com
Abstract: Manufacturing organisations spend more on Business Process Improvement
initiatives to make them more competitive in growing global market. This paper presents
a Rapid Improvement Workshop (RIW) framework which companies can used to identify
the critical factors regulating the diffusion of business process improvement in their
company. The framework can then be used address how process improvement can be
efficiently implemented. We use the results from case studies at Caterpillar India. The
paper identifies the critical factors that contribute to the successful implementation of
process improvement programs in manufacturing organisations. We further identify
certain technological and cultural barriers to the implementation of process improvement
programs and how Indian manufacturing companies can overcome these barriers to
attain competitive advantage in the global markets.
Keywords: business processes, organizational culture, rapid improvement workshop
(RIW), Six Sigma, competitive advantage
1. INTRODUCTION
Manufacturing is an extremely processcentric industry. A variety of pre-established steps
go into the creation of each product, while other
sets of defined processes support materials
procurement, scheduling, and logistics. To succeed
in today’s challenging market; manufacturers need
to optimize process execution to maximize
operational efficiency [1]. Every business is
governed by a set of business processes that are
somehow defined, implemented, executed, and
maintained and this is certainly true for
manufacturing companies. The success of every
manufacturing company depends on how well it
manages the lifecycle of its processes.
Business processes are often not explicitly
and formally captured, automated and managed.
Some processes are completely implicit and
manual. They are carried out via meetings, phone,
e-mail, mail, fax, and documents without any
automation. Others may be partially or fully
automated by packaged applications, home grown
proprietary systems, and integration. Hence they
can be manual and inefficient, or partially hardcoded or locked up in systems that IT owns and
controls [1]. Business people have little control
and visibility into their workings. What is even
worse is that the processes often need to change.
And changing such processes is no easy feat. It is
cumbersome and may impact multiple systems.
Hence, the disconnect between business and IT,
and the pressure of constant change makes
managing the process lifecycle of Manufacturing
quite challenging. While there are various processrelated software for manufacturing companies to
help with managing various phases of business
process lifecycle – modeling & analysis, workflow,
EAI and B2B, BPM, BAM – there is a need for a
uniform and comprehensive process system that (1)
manages any type of process end-to-end, and (2)
can manage the entire process lifecycle [2].
2 Lifecycle management of manufacturing
processes
Every manufacturing process has a lifecycle: at
some point in time it is created and defined either
implicitly or explicitly. It is then implemented
(manually or automatically via some software) and
executed. Hopefully data from its execution is
collected and analysed to identify and alleviate
inefficiencies in the process. Whether because of
A process improvement effort begins with the
process which is broken, or needs fixing. Various
criteria are concerned for selecting the process for
improvement, below are the list of criteria
indentified as major criteria for the selection of the
process within a manufacturing organisation.
These criteria are identified on the basis of study
conducted at Caterpillar India:





Customer Complaints (Internal or External)
Poor first pass yield
Cost Savings Potential (reducing inventory,
equipment cost)
Incidence of Quality problems
Process timing
Usually each management team creates its
own unique selection criteria. And the decision on
prioritising the process for improvement is
normally taken by deriving a selection matrix in
which the list of processes that are candidates for
improvement is listed. The listed processes are
scored against the selection criteria identified by
the team. An example is shown in Table 1. The
matrix is created by listing the processes in the left
column and selection criteria across top of the
page. The score is from one to five, with five
indicating greatest opportunity for improvement.
The process with high total score is taken and the
team studies the feasibility of the project and
proceeds further.
3
4
3
Total
Score
2
3
3
Process
time
5
2
3
First
PassYield
Welding
Fitting
Machining
Quality
Table 1: Selection Criteria Scores
Cost
Savings
But things get worse. Change is a constant in
every business. Economy, markets, business
strategies, company goals and objectives,
organizations, products and their positions,
services, employees, customers, partners, suppliers,
etc. are all subject to change. And every change
means changes in some business processes.
Processes then must change accordingly and be
redeployed. Thus, the process of change
management itself becomes quite complex and
cumbersome. In the recent years, large
manufacturing companies have been acquiring and
deploying various “process” technologies to help
with managing the complexities in dealing with
their business processes. There are players focused
on business or process modeling, simulation, and
analysis without an execution engine. Workflow,
EAI, business rules, and pure-play BPM vendors
cover the process execution. BI and performance
management that has little ties to process is a wellestablished market segment in its own right and
has its own leaders. BAM seems to be an emerging
category that links up process with BI and
performance management. Because there are still
no
widely
adopted
process
standards,
implementing a full process platform for managing
the process lifecycle end-to-end becomes yes
another IT challenge: integrating heterogeneous
process products coming from various vendors.
3 Process selection
Customer
complaints
Alternatively,
some
Manufacturing
companies may have their IT organization
“automate” their processes [5]. The knowledge of
these processes is communicated to IT which can
prepare detailed requirements for the process and
acquire and deploy systems and software that
provides functionality for carrying out the
processes. Ironically the unique processes that
differentiate a business from others are less well
defined and there may not be out-of-the-box
solutions for them. In such cases, IT may build
proprietary systems and perform integration to
implement such processes. At this point IT, rather
than the business group, takes control of the actual
processes. It is not clear if such an implementation
is optimized, how well the process automation is
achieved, and how the “automated” processes are
performing [4]. The result is a piecemeal,
heterogeneous, complex system that the business
people may have difficulty in understanding and
controlling.
For manufacturing companies to reap the full
benefit of process management there is a need for
a fully integrated and uniform process product
suite. In an attempt to offer such an integrated
product set, some vendors may choose
partnerships. For example, there have been several
alliances between BPM and BPA providers. Others
may go the acquisition route. And yet others
attempt to build their own solution.
Process
process inefficiencies or due to changes in the
business or market, acquisitions or mergers, the
process often needs to be modified or redefined.
Hence the process has to be modified and
redeployed and at some point the process may be
retired and potentially replaced with a whole new
process [3].
3
2
2
2
2
1
15
13
12
4 Process Improvement
Caterpillar India
methodology
at
There are various ways in a manufacturing
industry in executing a process improvement
projects and various tools have been used in
different sectors for carrying out the initiatives.
For example, in Company A, Six Sigma is used
widely as the process improvement method for
improving various business processes. A study in
Company A reveals that they adopt Six Sigma
methodology for following processes
 Selection of a location for a major Product
showroom
 Implementing a change in HR payroll
procedure
 Introducing a new assembly line.
 Value Stream Transformation
 Making major technology up gradation
(Introducing Robotic Welding)
Furthermore, all kinds of manufacturing
process improvement initiatives like reducing
process timing, improving efficiency and reducing
quality issues are done with Six Sigma
methodology. They adopt two kinds of projects
through Six Sigma
 Six Sigma project led by Black Belt either
DMAIC or DMEDI methodology, which
usually runs between four to 15 months. Long
term process improvement.
 Six Sigma Rapid Improvement Workshop
adopts DMAIC, mostly done on shop floor
manufacturing processes; led by black belt
duration is 5 days.
5 The Rapid Improvement Workshop (RIW)
framework
While it only takes 50 minutes to produce a
crankshaft, it takes 6 months from receipt of raw
materials until it is installed in a car! Obviously
there is a lot of waste to be found in this value
stream, a problem which is common among many
companies today. This explains why we see so
many companies begin a worldwide ‘hunt for
waste’, which is only too often accompanied by
deep frustration due to a lack of satisfactory results.
These issues can be tackled with a proven method
called ‘Rapid Improvement’. The philosophy of
Rapid Improvement is straightforward: value
stream optimization by leveraging a hands-on
approach from day one that focuses on
improvements
without
significant
capital
investment [6].
As one of the first steps in the Rapid
improvement process, we identify the value stream,
door-to-door. By putting the whole process on
paper and collecting information from everyone
involved, we can target those areas on which to
focus for the greatest overall performance
improvement
using
Rapid
Improvement
Workshops. After addressing the issues in one
piece of the value stream, we can use the same
approach with other pieces until the entire stream
has been optimized. During this process of value
stream optimization, there is constant knowledge
transfer from us to our clients, enabling our clients
to continue the process on their own.
A group activity built around the Six Sigma
DMAIC process, commonly lasting 5 days in
which a team identifies and implements a
significant improvement in a process. Workshops
aim for the quick focused discovery of root causes
and quick focused implementation of solutions.
Caterpillar has seen tremendous benefits with the
use of RIW for manufacturing process
improvements, the management encourage process
improvement by RIW, the strategy behind is that
the duration is very short and it ends in most cases
with significant improvements, it also involves
operator involved in that process to a greater
extent supporting and implementing their ideas
and creativity.
In this way the RIW has grown as a very
successful initiative involving operators, quality
and manufacturing engineers and supporting
department representatives. An RIW is planned
first and a RIW team is formed, next the team
discusses and comes out with major process
parameters that need to be collected for RIW, this
collection will then be done for one month and
then RIW is initiated. The major steps in a RIW
are detailed below:
Day 1 Training Participants were trained on
 Caterpillar Production System Yellow
Belt
 RIW Core Training
 RIW Tools and techniques
Next, participants are divided into sub teams and
individual assignments were given for each team,
followed by
 Initial 5S audit
 Safety and Ergonomics audit
Day 2 – Current State In day 2, the current state
or so called “As Is Process” is studied with the
support of Caterpillar Production System (CPS)
tools and principles. All teams are supported to
conduct a Waste Walk and safety observations
within their process areas. With the principle of
CPS Management System, a Process Improvement
Dialog is carried out with the entire team and with
the result a list of continuous improvement
processes are identified and initiated. Also
activities like 5S are initiated. In Parallel, a team
will be working on CPS Operating System for
Time observation study and data’s required for
spaghetti chart are collected.
Day 3 – Future state Now, with all the study
conducted on day-2, the Future State so called “To
Be” process is prepared as team with all
supporting members, and decision of various
issues are taken and feasibility of improvements
are defined and the teams comes out with Design
of new process layout and New process sequence
simulation. Also resource required for the
improvement is planned.
Day 4-Do It On day 4, the proposed improvements
are executed with the support resources.
Day 5- Action Plan Preparation In the process
study done, lot of improvements would have been
identified and many operator concerns were raised,
all these improvement cannot be done in a short
period of time. To support activities which takes
long time, RIW team will discuss the action points
which need to be implemented and prioritization of
activities required to be carried out is studied in all
perspectives and listed down, next with the help of
supporting departments the Action Plan for the
activities are made with appropriate dates of
completion. These tasks are need to be completed
within 30 days, and after 30 days a close out of
RIW is done, wherein all the improvements and
benefits are highlighted and the members are
certified for participating in RIW.
5 Barriers to diffusion of process improvements
This project concentrates on the link between
process improvement programs and organisational
culture. In particular, to implement process
improvement
programs
effectively,
the
organisation's culture needs to be moulded to the
improvement method or the improvement program
needs to be moulded to the organisation's culture.
Negative attitudes arising from past experiences
can be a significant barrier to the successful
implementation of any change program [7].
Older employees who had spent their work
life being rewarded on completely different criteria
viewed Process improvement programs as the
latest ``fashionable”. This has also created a threat
to their positions, authority and priority offered to
them. In general, specialist skills and fluent in
English is not considered a major factor for
employment of manufacturing operators [10]. On
the other hand, this does not create a problem in
executing daily activities, but factor is creating a
difficult situation to communicate new initiatives
like Six Sigma and gain commitment from the
operators.
Study on Caterpillar India, reveals that an
earlier
attempt
of
introducing
Process
Improvement Initiatives had created a disinterest
that influences at all levels of organisation. This at
operator level affected recent initiatives, lacked
credibility, particularly because some good
employee suggestions had previously been ignored.
The study also showed that the result of new
process improvement initiative makes the changes
on the way the people work, by modifying the
current process. These changes are commonly
found to be in following ways: Use of new tools,
Change in process sequence and Adopting
standard procedures. These are the common output
which the operators believe that the process
improvement initiative would bring in, so they
ultimately pretend to be not interested in adopting
the new way or changing the traditional way they
are working.
5.1 Supplier Relationship
Suppliers’ involvement in BPI programs
helps to provide a high quality of products and
services to the ultimate customers. Companies put
emphasis on obtaining significant benefits from
Six Sigma projects, which requires them to explore
more avenues for improving quality, including
those related to their suppliers. A supplier
selection system is set up based on quality
considerations and whether suppliers are willing to
cooperate, which helps to establish a long term
working relationship between the company and a
small number of its suppliers. In current scenario,
companies are engaging their suppliers at the early
stage of improvement projects. Major corporate
implement this by training their suppliers on their
improvement strategy. For example, companies
like Motorola, G.E and Toyota carefully evaluate
whether suppliers will contribute to technology
and quality objectives before integrating them into
process improvement programs. Suppliers are
trained for Six Sigma Black Belt and a project is
assigned to the suppliers and they are required to
work closely with the company’s strategy and their
efforts in improvement programs are closely
supported and coordinated. Ultimately, the efforts
results in supplier’s contribution to higher product
quality and cost savings.
5.2 Cultural Audit
There are various factors of organizational
culture
that
influences
the
effective
implementation of the process improvement
programs. To mitigate the risk of cultural impact
and for successful implementation it is
recommended to conduct a cultural audit before
implementing new initiatives. The audit is
expected to reveal the current practices, values and
behaviour of employees in relation to process
improvement initiatives obtained from the past
initiatives. The cultural audit also tells about what
organizational culture is being practised in. Apart
from conducting cultural audit and with the results
identified tailoring the improvement program,
cultural audit need to be continued and to be done
once in fixed period, say 12 months, which helps
the management to identify positive and negative
impacts that the new process improvement
initiative created.
6 Factors influencing successful diffusion of
business improvement processes
The implementation and successful benefits
out of a Business process improvement programs
largely depend on many factors. In different set of
organisations different factors contribute to the
success. For example, if a multinational
manufacturing company originated from United
States which basically adopts Six Sigma for their
process improvement is trying to implement a Six
Sigma way of process improvement program in a
Asian country, in this case the process
improvement success lies more on organizational
culture. Similarly, process improvement success
factors vary for different situation, but in common
there are few factors which influence it in all
situations but the level or priority varies.
A study conducted at Caterpillar India reveals
that the following are factors most influencing
their process improvement programs





Management Involvement and Commitment
Organizational Culture
Resources & Funding
Adequate Training
Communication
6.1 Management Involvement and Commitment
At
Caterpillar,
process
improvement
programs are successfully implemented by
motivating the employees by making the managers
and senior executives to participate in the shop
floor activities. For example during Rapid
Improvement workshop, managers and senior
executives come way through shop floor and
involve in process study and brainstorming
sessions. This makes the operators in involved in
the process to get motivated and the importance of
improvement program is well established.
6.2 Adequate Training
Training is considered to be an important
factor for successful implementation. Training
should be provided to all levels of organizations
tailored to their designation. First, the senior
executives then managers of each value stream and
then engineers of each section are trained. Next,
the operators are trained, training operators needs
more planning and effort than training others, and
the training should be designed taking in factors
their language ability, understanding capability
and culture. Rewards and performance based
reorganization should be provided to operators for
motivation.
6.3 Communication
Communication is considered one other key
factor for successful implementation. All six sigma
improvements are highlighted and communicated
well more graphically if needed. Most shop floor
improvement
activities
are
communicated
irrespective of the boundary i.e., to all departments
and sections in an organisation. Management
support this communication activities in order that
the employees to become aware the depth of
involvement the company shoes on improvement
and also communicating shop floor improvements
encourages other operators to make it on their
processes. Also the concept of best practices are
also well established with this, as operators from
various sections views an improvement, they tend
to think about the opportunity available for that
kind in their processes. In case Rapid
Improvement projects, daily newsletters are
distributed and for long term six sigma projects the
communication channel chosen is manly IT
solutions and communications of other forms for
operators.
7 Diffusion of BPI as Competitive Advantage
Process improvement programs serves as a
competitive advantage for many industries, which
brings them benefits in different forms.
Competitive advantage can be gained from two
ways Cost and Differentiation [8]. Process
Improvement programs to a level bring in both
competencies. For example, Six Sigma reduces
cost of the product with increased quality level;
this is taken as cost leadership competitive
advantage [9]. Most companies in manufacturing
sector uses six sigma well, as a tool or method for
process improvement programs. They use Six
Sigma to focus on the process improvement which
yields increase quality and cycle time reduction
and productivity improvement through process
optimization, efficiency improvement through
process redesign, and cost reduction through
optimization. These benefits put together in
manufacturing strategy called as Operational
Efficiency and Effectiveness (OEE). Increase in
OEE ultimately increases the value of the product
and profit to the organisation, also it serves as a
competitive advantage for companies which
successfully yields benefits from Six Sigma. On
the other hand, the use of six sigma for operations
is developing and more companies have started to
implement for various activities in their
organisation. This strategy of using Six Sigma in
long run as a competitive advantage has become
questionable. Few companies have competed
successfully on the basis of OEE over an extended
period. The most obvious reason for that is the
rapid diffusion of best practices: competitors copy
best practices, thus improving their OEE as well
[10].
[2] K.D. Barber, F.W. Dewhurst, R.L.D.H. Burns,
J.B.B. Rogers, (2003) "Business-process
modelling and simulation for manufacturing
management: A practical way forward",
Business Process Management Journal, 9(4),
527 – 542
In global markets, the increase in OEE cannot
be converted into higher profits, as the competition
is increasing. Also, study in this field reveals that
companies competing based on OEE alone are
mutually destructive for businesses that participate
in this race, as the consumer gains the benefits in
terms of high quality and reduced cost and on time
delivery and service. In a nutshell, increase in OEE
serves as a competitive advantage for companies,
but in long run this is not achieved as the use of
Six Sigma to gain competitive advantage is
imitable or easily copied by the competitors. In
such a scenario, Six Sigma should be applied
strategically to make it a competitive advantage for
companies in long run which should not be easily
imitable and serve as a distinctive competency.
[4] Popovič, A., Štemberger, M.I.m and Jaklič, J.
(2006) Applicability of Process Maps for
Simulation Modeling in Business Process
Change Projects, Interdisciplinary Journal of
Information, Knowledge, and Management, 1,
109-123
8 Conclusion
It is apparent how important the diffusion of
business process improvement programs is in the
present manufacturing context. The models,
approaches and philosophies pervade across
cultures and people and can be implemented if top
management adopts the right approach and has the
vision to enhance its brand quality and market
share. Emerging concepts such as RIW can
augment the well tried and tested Six Sigma
approach in analysing the in-house culture, it’s
receptiveness to change and ways to homogenise
output across the board.
In addition, diffusion of BPI can lend
competitive advantage and improve efficiency of
manufacturing operations. The case of Caterpillar
has shown that issues such as involvement and
sponsorship of top management, appropriate
training and good communication can contribute to
this framework and mitigate the barriers of
traditional subscription, negative attitudes of
employees and inhibition to adopt newer
technologies.
9 References
[1] Maddison, D. (2005) Process mapping,
process
improvement,
and
process
management: A practical guide for enhancing
work and information flow, Paton Press, CA,
2005
[3] Hlupic, V., de Vreede, G.D., and Orsoni, A.,
Modelling and simulation techniques for
Business process analysis and re-engineering,
I.J. of Simulation, 7(4-5), ISSN 1473-804x
[5] Dewhurst, F. W., Barber, K. D., and Rogers, J.
B. (2001) Towards integrated manufacturing
planning with common tool and information
sets. Int. J. of Operations and Production
Management, 21(7), 1460-1481
[6] Hoerl, R.W. (2001) Six Sigma black belts:
what do they need to know? J. Quality
Technology, 33(4), 391-406
[7] Paper, D. (1999) Business process reengineering and improvement: a comparison
of US and Japanese firms, Knowledge and
Process Management, 5(3), 185-191
[8] Rohleder, T.R., and Silver, E.A. (1998) A
tutorial on business process improvement, J.
Operations Mgmt, 15(2), 139-154
[9] Alcorta, L. (1999) The diffusion of advanced
automation in developing countries: factors
and adoption process, Technovation 19, 163175
[10] Yung, K.L., and Chan, W.Q. (2001) The
adoption of business process reengineering in
SMEs: a diffusion of innovation approach,
Intl. J. Manuf. Tech. & Mgmt., 3(4-5), 361374
[11] Bask, A., Lipponen, Rajahonka, M., Tinnilä,
M. (2010) The concept of modularity:
diffusion from manufacturing to service
production, Journal of
Manufacturing
Technology Management, 21(3), 355 – 375
[12] Roper, S., Dundas, N. (2004) Innovation,
Networks and the diffusion of manufacturing
best practice, Northern Ireland Economic
Research Centre.
[13] Harter, G.G., and Lousberg, K. (1998) Rapid
Improvement: Accelerating the Pace of
Change,
Annual
Quality
Congress,
Philadelphia, PA, 52, 520-527