An Introduction to Business Process Management
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1 An Introduction to Business Process Management Alan Mendelssohn September 10,
2 Business Process Management Identifying top-priority, priority, critical processes Validating customer requirements Documenting the process Developing process measures Monitoring the process Managing and improving the process 2
3 Why do Process Management? Control the process to control the outcome Focus organization on core business processes Help to identify non-value added work Work smarter, not harder - do less and get more done Bottom Line: Manage your processes effectively and efficiently, day-to-day, to delight your customers 3
4 Processes Have Inputs and Outputs Inputs Outputs Supplier Process (Add Value) Customer Requirements & Feedback Requirements & Feedback 4
5 Processes Are Cross-Functional Executive Management Business Unit Management Functional Management Activities Business Process 5
6 Processes Have Multiple Levels Order to Delivery Process Attract Attract Customer Customer Take Take Order Order Invoice Invoice Customer Customer Deliver Deliver Product Product Install Install Product Product Customer Requirement Process Customer Requirement Satisfied Pick order at DC Ship to Staging Staged Staged order order Deliver to Customer Sub-Process Activity Activity Procedure Task 1 Task 2 6
7 The Next Process Is the Customer Order to Delivery Process Attract Order Invoice Deliver Install Customer needs a product Internal Customers Customer has product 7
8 Identify Critical Processes Typically operational in nature Can be very complex multiple layers Core to delivering products and services to external customers Problem in critical process directly results in not meeting customer requirements Look at what s s most critical and what s s not performing as expected 8
9 The Customer Two types of customers External Internal Examples of external customers Shoppers Service Users Examples of internal customers Executive management Other functional areas Next process customer 9
10 Validate Customer Requirements Not all customer requirements can be met Requirements are valid when Need can be satisfied We agree to provide it Other stakeholder req. also important e.g., Health Care patients, physicians, families, insurance companies 10
11 The Suppliers Two types of suppliers External Internal Examples of external suppliers Vendors Consultants Examples of internal suppliers Executive management Other functional areas Previous process customer 11
12 How To Define a Process Outline the Observable Components Visit the location, observe the current process Include all activities Place in sequence in a process flowchart Be consistent with detail The Right Amount of Detail Describe the work process in simple terms Use 5-8 activities 12
13 Which Process to Model Procedures manual Management s s opinion The way the process is actually performed (the as-is process) The ideal process (as-is, but cleaner) The future state process Model and measure as-is first. 13
14 Model the Process Various methods Flowcharts Value stream maps Computer modeling Look at multiple levels of processes Identify process owners Always look at current state (as-is) first Look at activities but also look at the various components of the process 14
15 Process Components Materials Systems Documentation Appliances, Treadmills, etc. Environmental Factors SAM, RIM Business Process Systems People Sales Documents Delivery Documents Tools & Equipment Store Layout Hold Areas Store Associates Merchants SNC s Forklifts, Handcarts 15
16 How to Display a Process Deployment Flowchart Example External Customer Dept. A Dept. B Dept. C Step 1 Need Activity Step 2? Activity Activity Activity Step 3 Need Met Activity 16
17 Why Measure? If you cannot measure it, you cannot control it. If you cannot control it, you cannot improve it. Measurement allows us to Check conformance to customer requirements - Results Measures Look at process performance - Process Measures This is the Voice of the Process speaking to us! Let the Data Lead! What do you measure now? 17
18 Results Measures Customer Requirement Results Measure Measured at end of process cycle Focuses on non-performance 18
19 Process Measures Upstream in the process Process owner view Alarm for unwanted outcome Assess process stability/predictability Data record for process improvement 19
20 Developing Process Measures Review process flowchart and results measures Select control points Decide how best to measure Consider both timeliness and accuracy measures Minimize measurement costs Calculate reasonable sample size 20
21 Process Measures Possible Process Measurement Locations Customer Dept. A Dept. B P1 Inputs to the process Step 1 P1 P2 Rework loops N P3 At the end of major process steps P3 Y P2 P4 Hand-offs between departments Step 2 P4 P5 Anywhere that will help you understand process performance R1 P5 21
22 Common Data Display Tools LINE GRAPH BAR CHART PIE CHART Average Delivery Days Cycle Time from Customer to Delivery (All MDO s 10/7/02-12/15/02) Order Target = 3 Days Good # of Unfilled Requests Unfulfilled Requests by Item (Jacksonville RRC - Nov 2002) Type C 39% Refrigerator Sales by Type (All FLS Dec 2002) Type B 11% Type D 21% Week # Item A Item B Item C Item D Item Type Type A 29% Data visually displayed gives a much clearer understanding of what is happening in a process 22
23 More Common Data Display Tools Histogram Scatter Diagram Control Chart Time To Process From Receipt of Order To Ship Relationship of # of Orders to Time to Process an Order (11/97) UCL Time to Process and Ship an Order Number Data Points Hours 9 3 Time to Process Y- Axis (Effect) X-Axis (Cause) # of Orders AVERAGE RANGE AVE ( x ) LCL UCL AVE ( x ) CONTROL CHART (x R) Other simple statistical tools can be used to help manage and improve a process 23
24 Managing & Improving Processes Collect data for key results and process measures Analyze: what are data telling you? Process stable? Process capable? Process meeting customer requirements? How do you sustain the improvement? 24
25 Is This a Problem or a Solution? 25
26 DMAIC Problem Solving Define Measure Analyze Improve Control What is the Problem? How Big is the Problem? What is Causing the Problem? What can you do to Eliminate or Reduce the Root Cause of the Problem? How will you Monitor Gains made? 26
27 Process Improvement Approaches Six Sigma DMAIC, DFSS Problem Solving Process 6-Step, 7-Step, 7 8-Step, 8 etc. Lean Value Stream Mapping, 5S, etc. ISO 9000 Corrective & Preventive Action Use of Statistics 7 Basic Tools Advanced Statistical Tools 27
28 To Improve Business Processes Confirm process model with stakeholders Measure the results and process indicators Establish targets and thresholds Manage and improve process based on analysis of data from the measures. 28
29 Questions? Questions? Questions? Questions? Questions? 29
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