What Has Happened

1
What Has Happened
to our Business Processes?
2
Why Is Improvement Necessary?
What worked yesterday may barely pass today, be
inefficient today, and totally unsatisfactory
tomorrow
3
Definition of a Business Process - SIPOC
SIPOC Model

• Process - A logic series of related transactions
  that converts input to results or output.

PROCESS
SUPPLIER
CUSTOMER
Input
Output
REQUIREMENTS AND FEEDBACK
Business Process Improvement Toolbox, Bjorn
Andersen, ASQ Press, 1999
4
Business Process Fallacies

• 1. Ineffective business processes do not cost
  the organization much money.
• 2. There is little to be gained by improving
  business processes.
• 3. The organization can work around business
  practices.
• 4. Business processes cannot be controlled
• 5. Business processes are unimportant compared
  to production processes.

5
Vertical Departments - Horizontal Processes

• A conflict exists between the traditional
  departments and the way work gets done

6
Suboptimization
Optimize
Optimize
Optimize
Suboptimized

7
Transition to Business Process Management

• Every process has a customer
• The value creation takes place in horizontal
  processes
• Identify process boundaries, customers and
  suppliers
• By managing entire processes to reduce the risk
  of suboptimization
• Appoint process owners, who are responsible for
  the process
• Managing processes provides a better foundation
  for controlling time and resources.

Business Process Improvement Toolbox, Bjorn
Andersen, ASQ Press, 1999
8
Business Process Customers.Many Types

• Primary Customers
• Secondary Customers
• Indirect Customers
• External Customers
• Consumers

9
Asking the Customer

• The finance department of a large company
  produced weekly reports for the sales department
  containing credit status of the customers. The
  responsible accountant put his heart into the
  accuracy of the report despite the time involved
  and occasional delays. The sales department was
  not depending on precise accuracy, but on having
  the report on time, so as to be able to issue
  order confirmations at the agreed upon time.
  They assumed that the finance department
  understood this and did nothing to enlighten the
  accountants. Instead, they continued to be
  annoyed by the delayed reports, without
  appreciating the accuracy, and nothing got
  better.
• What is critical to the customer?

10
Customer Perceptions The Kano Model

• It helps employees set priorities
• Dont work on Delighters until Must Bes are in
  place
• It helps you avoid the trap of thinking that
• no complaints customer satisfaction

Delight
Delighters
More is Better
Neutral
Must Be
Dissatisfied
Absent
Fulfilled
Dr. Noriaki Kano
11
Example Buying a Car
Leather seats Alloy wheels Metallic paint
Gas milage Luggage space
Delight
Delighters
More is Better
Neutral
4 wheels Working engine
Must Be
Dissatisfied
Absent
Fulfilled
What happens if the must bes are absent, but
you have the delighters and the more is
betters?

12
The Customer
Huh?

• At the start . . .
• We need more customer complaints!

The trick is to increase complaints while
improving quality
13
The Danger of Suboptimization

• Optimization - is a process of orchestrating the
  efforts of all components toward achievement of a
  stated aim. Optimization is managements job.
  Everyone wins with optimization.
• Suboptimization - the maximizing or fine-tuning
  of a part of the system
• We need to work together to optimize the system
  as a whole, not seek to optimize separate pieces.
  - Deming
• Optimizing separate pieces
• destroys the effectiveness
• of the whole.

14
To Avoid Suboptimization..

• Know the difference between a function and a
  process
• Solve the problem (or work the project) taking
  into consideration the next higher level, core
  processes

FUNCTIONS -Accounting -Sales -Engineering
PROCESSES -Invoicing and Collections -Customer
Acquisition -New Product Development