Business Process Reengineering
Class Session 5 – Fall 1385
Toolbox for Improvements
Departments or Processes?
Organizing Improvements
Process Documentation
Performance Management
Process Toolbox
Anderson Ch. 1-4
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Departments or Processes?
Departments:
• Specialized skills
• Workforce secure
• Lower cost
• Clear Org structure
Processes
• Focus on customers
• Value creation
• Requirements understood
• Reduce sub-optimization
• Time/resource control
Example:
Salesperson reserves order
“in the drawer” for next period
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Business Process
. . A logical series of related transactions
that converts inputs to outputs or results.
• a chain of logical connected, repetitive activities
• utilizes the enterprise’s resources
• refine an object (physical or mental)
• for a purpose of specific /measurable results/products
• internal or external customers
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Classification of Business Processes
Primary Processes
Central & value-creating
Support
Indirect to support primary
Development
Take to higher performance
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Why Process Improvements?
• Performance tend to
decrease over time.
• Your competitors will
improve processes.
• Customer expectations
/demands are exceeding.
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Organizing Improvements
1. Planning: analyze the problem
& plan activities to remedy it.
2. Doing: carry out the activities,
experiment with the solution.
3. Checking: evaluate activities
with planned measurements.
4. Acting: modifying process by
confirmed results activities.
Systematic approach for
continually improving!!
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A Model for Process Improvement
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Team for Process Improvement
•
•
•
•
Team Leader
Management Link
Process Owner
Cross-section
organization units
• Process Customer
• Process Supplier
• External Assistance
Requirements for Members
• Time to participate
• Competencies and
knowledge
• Motivation
• Cooperate, listen,
communicate
• Credibility, respect
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Process for Process Improvement
1- Process Documentation
Need to know current state, before deciding which improvements to make.
1. Documenting one by one in connection with the specific processes.
2. Documenting all processes at once at the start of improvement journey.
• A common understanding of the content of processes & activities
• Scope of the processes, and boundaries to adjacent processes.
• Specific problems, if possible to define, within the process.
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Relationship Mapping
Overall picture of who are
part of the process and
what relationship they
have to one another and to
the rest of the world.
For more extensive & more
complicated processes with
a number of individuals or
departments exchanging
goods and information.
It does not consider the
details of activities or their
sequence in the processes.
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Case: A large international corporation
with one central manufacturing site
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Flowchart
Flowchart is a graphic depiction of activities in a process.
Start or finishing point
Step or activity in the process
Decision point
Input or Output
Document
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Examples of Flowchart
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Cross-functional Flowchart
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Flowchart with
• Time
• Cost
• Completion
• Value added
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Several-leveled
Flowcharts
Top chart
Second-level
Charts
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From Departments
to Processes
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Performance Measurement
You cannot manage, what you cannot measure!
What gets measured, gets done!
Measurement impacts behavior!
Variation of truth!
• Measurement is threatening!
• Precision is essential for useful measurement!
• Subjective measures are sloppy!
• Standards are necessary and sufficient!
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Multi-dimensional Measurement
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Hard versus Soft Measures
Hard Measures
Soft Measures
Objective reference
Observer bias
Accurately known
Surrogate indicator
Hierarchical
Multivariable situation
Deming: Most important numbers are not known.
Customer Satisfaction or Employee Satisfaction.
Quality of atmosphere in a meeting room
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Financial versus Non-financial
Measures
Financial Measures
• Total sales
• Profit Margin
• Value added
• Turnover of capital
Non-financial Measures
• Set-up Time
• Delivery Time
• Defect Rate
• Customer Satisfaction
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Results versus Process Measures
Western versus Japanese attitudes
A manager of a large agricultural collective in the former
Soviet Union three years in a row won the prize for the
most productive collective. The performance measure used
was the number of kilos of meat produced per year.
The fourth year, he shot himself…
He had no breeding stock left.
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Measures defined according
to purpose
• Results Measures
– Net Profit
– Return on Investment
– Market Share
• Diagnostic Measures
–
–
–
–
Delivery Precision
Delivery Flexibility
Lead Times
Customer Satisfaction
• Competence Measures
– Investment in Product
Development
– Attitude towards Change
– Flexibility to Deliver
New Products
– Training Levels
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The Contents of
the Instrument Panel
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