Kaizen Strategies and Activities

Activity Group Manual

October 2002

TABLE OF CONTENTS

INTRODUCTION...............................................................................................................1ACKNOWLEDGMENTS....................................................................................................2PURPOSE.........................................................................................................................3

The Manual.................................................................................................................4The Kaizen Activity Groups........................................................................................4Benefits for Staff.........................................................................................................5

STRATEGY....................................................................................................................... 6The manual....................................................................................................................7

Adapting the culture....................................................................................................7Facilitating process improvement...............................................................................7Harness internal synergies.........................................................................................8Global approach.........................................................................................................8Summary....................................................................................................................8

Kaizen............................................................................................................................9Dual focus.................................................................................................................10

ESTABLISHING GROUP GUIDELINES..........................................................................111.0 Preparing for Kaizen Activities............................................................................122.0 Kaizen Activity Group Responsibilities...............................................................143.0 Other Reading and Related Information.............................................................16

KAIZEN REVIEW.............................................................................................................171.0 – Plan.....................................................................................................................18

1.1 Plan What – Definition of Problem and Analysis of Problem..............................181.2 Plan Why – Identification of Causes...................................................................211.3 Plan How – Planning Countermeasures.............................................................22

2.0 Do – Implementation..............................................................................................243.0 Check – Confirmation of Results............................................................................264.0 Action – Standardisation........................................................................................27

CONTINUOUS IMPROVEMENT.....................................................................................29Continuously improving............................................................................................30Future strategies and opportunities..........................................................................31

APPENDIX A...................................................................................................................32Analysis tools...............................................................................................................32

Cause and effect diagrams.......................................................................................35Histograms...............................................................................................................37Control Charts..........................................................................................................42

APPENDIX B...................................................................................................................44Contact List..................................................................................................................44

Toyota Customer Service Marketing........................................................................45Best Practices Team USA........................................................................................45Global Best Practice Group......................................................................................46Other References.....................................................................................................47

APPENDIX C...................................................................................................................48Definitions....................................................................................................................48

Common Language of Kaizen..................................................................................49APPENDIX D...................................................................................................................50

Process Mapping.........................................................................................................50Mapping a Process...................................................................................................51Main Elements of an Activity Decision Flow Diagram...............................................52Alternative Nature of a Process................................................................................53Hierarchical Composition of a Process.....................................................................54

INTRODUCTION

The Toyota Way was launched globally in 2001. Following this, Mr Hideo Ozaki, President of Toyota Financial Services Corporation outlined a plan to focus upon building the internal synergies and processes within each Sales Finance Company (SFC). To facilitate the introduction of The Toyota Way, Global Best Practice Group (GBPG) was established.

The GBPG consists of a representative Champion from each SFC within Toyota Financial Services (TFS). A Regional Coordinator has been appointed for each of the four global best practices regions: Asia/Oceania, Northern Europe, Southern Europe (including South Africa) and Americas. Together this group reports to a Global Coordinator.

The focus of the GBPG is to champion the introduction of The Toyota Way concepts into each SFC. These concepts are:

Continuous Improvement Respect for People

This manual will assist you to achieve success through proven methods of Continuous Improvement (Kaizen), a concept adapted from the world-recognised Toyota Production System (TPS). This system has been responsible for the improving profits, quality and delivery time of Toyota vehicles over the past 60 years. It has also provided a basis for empowerment, encouraging factory staff to make improvements to their jobs.

Whilst TPS concepts have their roots in a manufacturing environment, they can also apply to operations of SFC's. The task of translating these concepts has been a major challenge and will also be subject to continuous improvement.

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ACKNOWLEDGMENTS

This first release must acknowledge invaluable assistance and support in developing this manual:

Hideo Ozaki – President TFSCKoji Kobayashi – Executive Vice President TFSCLarry Cannon – Senior Vice President TFSCRoss Springer – President Asia/Oceania TFSIchrio Yajima – Deputy Managing Director Australia TFSWalter Leyendecker – Chairman Europe/Africa TFSYoshihiko Morinaga – President Europe/Africa TFSDavid Betteley – Vice President Europe/Africa TFSGeorge Borst – President Americas TFSKen Arnold – Managing Director Canada TFSNampachi Hayashi – Executive Advisory Engineer TPS

The TPS group at Araco Corporation, Toyota Industries Corporation Takahama Plant and Toyotomi Kiko Plant, Best Practice Team USA, and representative Champions and Coordinators of Global Best Practices Group are also acknowledged for their participation in the first year of GBPG.

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PURPOSE

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The Manual

TFS operates in an increasingly competitive market, where internal and external demands require more than just the provision of goods and services. The increasing international expansion of TFS and the changing nature of the business environment into the technologically reliant economy have seen new opportunities evolve. To continue to exceed customer expectations, the harnessing of synergies within the TFS global community is paramount. Your contributions to TFS are recognised as important to the company's success. This first release manual will assist you to become involved in group-based activities where your contributions can result in improvements to your work environment.

The manual is designed to be used in all SFC's by staff with a wide ranging skill set. The manual will also provide a universal platform for information sharing and permit direct comparison between SFC's. The building of Knowledge Management will eventually stem from the use of this standardised process of Kaizen initiatives, involving concepts, measuring, fact/data recording and eventual reporting to a GBPG.

The manual also gives a framework to help staff undertake Kaizen activities that qualify for a TFS Global Kaizen Award. Further information is available in the Global Best Practices Group pack, or from your Global Best Practices representative.

The Kaizen Activity Groups

The role of Kaizen Activity Groups is to identify opportunities for improvement within business processes.

Two main opportunities for improvement are:

1. The elimination of Muda (waste) from processes2. The correction of any issues/problems within processes in addition to Muda

The relevance of Muda is that it both directly causes problems and also hides or disguises other issues or problems that are occurring within a process. It is therefore the most important element to eliminate from a process.

Past experience through TPS has shown that Muda has the worst effect upon a process and, in turn, upon a business. Therefore the orientation of Kaizen Activity Groups will be to focus on elimination of Muda to improve efficiencies and to detect issues or problems within processes where improvement opportunities can be introduced.

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Benefits for Staff

Kaizen Activity Groups are an opportunity for all staff to participate and learn about: Toyota Job functions Problem identification and analysis Project management Group activities and synergies The Toyota Way The Toyota Production System Process improvement/management

The undertaking of Kaizen activities is not extra work and must not be thought of as such. Kaizen is a part of working at TFS. Some will no doubt be asking why this is not additional work. The simple answer to this is that Toyota has empowered staff to challenge processes, and will reward them for doing so. This philosophy is a factor for success of TPS in Toyota manufacturing. Similar to Toyota, TFS is developing staff through training and education to naturally identify areas for opportunity in their roles and to deliver Customer First products and services.

Kaizen also offers opportunities to participate in a global initiative which will increase staff understanding and exposure to aspects of TFS, provide opportunities to meet with people from within the local SFC and other SFCs in the TFS family.

Ultimately, Kaizen gives employees, customers and TFS satisfaction for the accomplishment of activities. The constantly evolving nature of Continuous Improvement provides an ongoing improvement, so as an employee you are part of something special; a cultural adaptation of The Toyota Way to TFS.

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STRATEGY

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The manual

TFS is looking to sustain long term growth. The company's strategic goals are focused upon creating opportunities to make this happen. One such strategy has been the formation of the GBPG. This group will contribute towards the goal of long term growth by:

Changing the culture of TFS Facilitating process improvement Harnessing internal synergies Promoting a global approach

Methods of achieving this are briefly addressed below.

Adapting the culture

The Kaizen culture is one that requires discipline and dedication. It is not something that is isolated to management or non-management staff. It is a way of doing business. In adapting TFS culture to The Toyota Way, we should consider matching:

Job related requirements, including:o Ways to acto Ways to thinko Key accountabilities

Corporate goals Staff training and development

Human Resources will play a large roll in the facilitation and management of these activities. Translating The Toyota Way into meaningful actions is necessary to encourage and develop the people of TFS. Moments of truth where staff should encounter The Toyota Way are:

Corporate, Business and Personal goals Induction and Orientation Job descriptions Training and Development Policies and Procedures

Facilitating process improvement

Kaizen requires both the proficient thinking and action skills of The Toyota Way. The skills necessary for identifying opportunities to improve the measurement and implementation of processes are partly addressed in this manual. The whole directional pull for Kaizen comes from:

Internally – from senior management through corporate and business goals and objectives to process operators

Externally – from our customers and through market researchOther methods of facilitating process improvement come from the sharing of policies and procedures by SFCs. These documents provide the starting point for newer SFCs to develop best practices or for established SFCs to compare and assess their ongoing practices.

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Harness internal synergies

People and knowledge are the most important resources of TFS. Learning to manage and effectively promote knowledge transfer between our people and companies will bring improvements in processes.Sharing the following types of knowledge resources will improve internal synergies:

People Policies and Procedures Research Experiences Techniques

All of these knowledge resources add value to the way business is done. Sharing these resources would reduce the amount of initial development required and encourage improvement of existing benchmarks.

Global approach

This Kaizen Activity Manual contributes towards a global approach by: Being a universally adaptable resource Providing a common language for Kaizen Providing a common platform for activities Providing a universally comparable output

Summary

Kaizen Activity Group outcomes and activities will become comparable throughout the TFS global community. This will improve:

Cultural adaptation Facilitation of process improvements Internal synergies Global approach

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Kaizen

The principles of Kaizen are:

1. the most important company assets are the people

2. evolution of processes will occur by gradual improvement rather than radical changes

3. beneficial changes are to be implemented immediately where possible

4. improvement recommendations must be based on statistical and quantitative evaluation of processes

The Kaizen Activity Groups support and encourage the principles of Kaizen.

Kaizen strategies are generally implemented at three different levels:

1. Management Oriented2. Group Oriented3. Individual Oriented

This activity manual will explain and address Group Oriented activities. Briefly, the support mechanism of Group Orientated Kaizen activities will integrate with the Hoshin Kanri from Management and a suggestion system from Individuals. These two areas provide some meaningful guidance for Kaizen Activity Groups pre work activities.

Supporting the strategies of planning and staff development the Kaizen Activity Groups will develop the skills of participants to a level where they may become group leaders for future process reviews.

The manual is a resource that is to be used throughout the TFS family to ensure a consistent approach to Kaizen training and application, provide a universal comparison of activities and outcomes, and globalise Kaizen Activity Group practices.

Other than the incentives for Kaizen Activity Groups which are related to the empowerment and participation of staff, increased job satisfaction and exposure to a global concept, TFSC is also recognising and rewarding Kaizen activities. The next World Sales Finance Conference will host the winner of a TFS Global Kaizen Award competition. The winner will present their implemented Kaizen Group Activity to the Senior Management and Country Managers of the company. (For further information see the TFS Global Kaizen Award criteria)

The use of existing Policy and Procedure as a basis to move forward is paramount. Policy and Procedure documents will explain the "as is" situation, and initiate the base of the Kaizen activity. Kaizen Activity Group outcomes will in turn update and create new and improved Policies and Procedures. These documents will form Best Practices within

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TFS, and will build the platform for further improvement opportunities, by looking both within TFS and externally.

Dual focus

During the identification stage of the activity, focus will be upon identifying problems in processes. A method for this is to observe a job function in its entirety in order to measure those aspects that add value, are incidental or wasteful. This will in turn identify processes that can be improved upon or eliminated.

The group is structured to address and deliver:1. Process improvements2. Job function improvements

Processes that are improved will become Best Practices. Full utilisation of staff will eliminate Muda and maximise value added work.

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ESTABLISHING GROUP GUIDELINES

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1.0 Preparing for Kaizen Activities

The members of the group should have skills in the following areas:

1. Project Management2. Some basic statistical analysis3. Microsoft Word4. Microsoft Excel5. Microsoft Visio

The group is structured to address and deliver:1. Process improvements2. Job function improvements

As with most roles, preparatory work forms some part of the overall job function. For a Kaizen Activity Group, preparatory work forms an important starting point. This is explained here in this strategy section and includes:

1.1 Establishing a Kaizen Activity Group

The Kaizen Activity Group is responsible for various functions including: 1. Project Management2. Process Management3. Statistical Analysis4. Problem Solving Techniques5. Implementation6. Updating of Policies and Procedures

SFC are encouraged to establish groups with a diverse range of members with complementary skills and knowledge to fulfil roles that are naturally best suited to them. Establishing a group of like-minded people with similar skills may not be able to achieve the same results of a broad skill based group.

Appointments will be made by the local GPBG representative and local management, however GBPG will assist whenever possible.

1.2 Identifying the SFC Corporate Goals and Key areas for Improvement

The identification of Corporate Goals that the Kaizen Activity Group can contribute towards can be identified through discussions with the senior management of the SFC. Further research may be required into:

1. Balance Sheet2. Profit or Loss

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3. General Ledger

Research into submissions in a Kaizen suggestion scheme may also provide direction for various areas of improvement.

1.3 Contribution the towards the attainment of Corporate Goals

Corporate Goals may consist of: cost reduction processing improvement quality improvements

Usually Corporate Goals will stipulate a level of attainment required for the company as a whole, and during the scope setting, the group can set itself a target to reach. The Kaizen Activity Group should undertake work that is not only valuable for group members but that will also contribute to the achievement of Corporate Goals.

1.4 Obtain all related Policy and Procedure documents

The base point for examination and analysis of processes commences with Policies and Procedures. Current Policies and Procedures should be an accurate and relevant reflection of the current process, "as is" and business rule. If Policy and Procedure documents are outdated or inaccurate, the "as is" process will need to be established.

1.5 Identify major stakeholders in the area where the Kaizen Activity Group propose to work

Prior to commencing work the Kaizen Activity Group must identify all stakeholders that will be impacted by activity outcomes. The list of stakeholders may include:

operators in the business process for review the supervisor and manager of the area other departments with inter-related activities either prior to or after the process

area senior management

A full list must be drawn up to facilitate communication throughout the activity. Communication and involvement of stakeholders is an important aspect of successful Kaizen Activity Group activities.

1.6 Obtain stakeholder support to the Kaizen Activity Group

Stakeholder meetings should be called prior to the commencement of the Kaizen activity. The meeting should address issues such as:

scope of the Kaizen Activity Group purpose of the Kaizen activity role of stakeholders and Kaizen Activity Group stakeholder concerns expected length of the Kaizen activity plan for future communication and involvement of stakeholders

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2.0 Kaizen Activity Group Responsibilities

2.1 Structured format - PDCA

Providing a structured format for all Kaizen Activity Group activities, the adoption of the Plan, Do, Check, Action (PDCA) cycle is applied. The PDCA has proven to be a successful method of reaching goals and objectives for organisations in Japan and around the world, and it is a tried and tested method at Toyota and TFS.

The integral part of the Kaizen strategy is to systematically follow a cyclical channel of developing and delivering Continuous Improvement. The format is utilised after Pre-Kaizen work.

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2.2 Eliminate Muda

The Kaizen Activity Group will be focused on the elimination of Muda.

Muda (Waste) is the residue of poor process

Muda is waste. Muda is represented by all types of waste in a process inclusive of conveyance (movements), waiting, redundancy, overburden, unevenness and correction/rework amongst other things.

Incidental work is non value added work which is necessary under present working conditions

Value added work (Net work) is value added job operations that customers desire.

IMPORTANT:IMPORTANT: The addition of all parts will equal 100% of a process. Addition of all processes will equal 100% of a job function.

2.3 Process Mapping

Attached in the appendix is information that will assist with process mapping. This information is designed to standardise the mapping of "as is" and "could be" processes. GBPG encourage the use of Visio software for documenting the process maps, which will permit and foster comparison between SFC processes.

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2.4 Report all Kaizen Activities

An A3 coversheet developed for the universal documenting of Kaizen Group Activities must be completed throughout activities and head up all of the work papers and analysis. The A3 supports the PDCA cycle, and provides a reference for global reporting. This summary of the activity will give an opportunity for quick review and comparison of undertakings around the TFS global community. It places not only an emphasis upon the PDCA cycle, but is also an avenue for learning and training for future activities.

3.0 Other Reading and Related Information

As well as the Kaizen Activity Group manual, Global Best Practices Group has prepared: TFS Global Kaizen Award Global Best Practices Group – World Sales Finance Presentation Global Best Practices Group – Reference materials and Toyota Kaizen contact list

Refer to the appendix of this Manual for more information.

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KAIZEN REVIEW

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1.0 – Plan

The Planning stage is the initial stage where multiple activities occur to truly identify:1. What the problem is2. Why it is occurring3. How to correct it

The reasoning for planning is to identify the root cause of an issue. It is not concerned with improving the work created by the problem, but the reason for the original cause, which may have formed several steps prior to its actual detection. The issue and the steps taken during the planning stage may result in detecting the cause of a problem in a far off environment to where the problem actually exists. This interrelated flow highlights the effect of processes on the business, and should involve other stakeholders in the Kaizen Activity Group communications.

1.1 Plan What – Definition of Problem and Analysis of Problem

By defining the problem, the scope of the Kaizen Activity Groups' activities is set. As a definition, a problem is "a doubtful or difficult matter requiring a solution"1. The pre-work undertaken has set the basic area and focus of where the Kaizen Activity Group will commence.

1 The Australian Concise Oxford Dictionary, Fifth edition, AGPS 1994

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Define Work Categories

All processes can be categorised into 1. Value added work2. Incidental work3. Muda

An obvious problem in a process will be associated with Muda. The Muda is making the process inefficient because of unnecessary actions, such as those listed next to the diagram below. The detection of Muda in a process and the removal of this will give a clearer picture, and will expose issues or problems in the process.

Categorising the work requires the definition of all the work that is undertaken by the staff member during the working day. This includes value added work, incidental work and Muda. The categorisation is not at this point concerned with a particular process, but is focused on the efficiency of work undertaken by the staff member.

100% of all processes undertaken within a position must be recorded. A matrix should be used to record the data as it will be referred to later when work on processes has been completed, and improvements implemented. The matrix will separately list the processes undertaken, placed into the three categories of value added, incidental and waste. Addition of all the time in the matrix will add to the working hours, and therefore give an indication of each category for improvement.

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Find the Facts

Fact finding requires the documenting of data that applies to both the whole job role, the processes within that role, and the processes identified as having a problem. This data is used in the next step of "why", and therefore it should be recorded so that its manipulation for the next step can occur. Documenting (in a measurable and comparable format) aspects such as time, quality level and costs when applied to parts of a process, or a whole process, will develop a data source that can be used in further analysis. For assistance with this process, please consider reviewing the next stage from 1.2.1 to 1.2.4 where the data is used to form graphs and charts for analysis.

The way to determine and observe problems is by Genchi Genbutsu. You will have to go to the source, which is the part of the business where the process is undertaken. You will have to talk with the people that do the process and are experienced in its operation. You will have to build a firm understanding of the process, and at this point, compare the actual process undertaken to the existing documented "as is" process, recorded in the Policy and Procedure. Where deviation occurs, standardisation is require to either the documented "as is" process or production of a new "as is" process.

Information that was gathered in the pre-Kaizen Activity Group activities should provide detailed information such as expense, time, quality and other statistics that will help to determine the benchmark of process improvements that the group are about to undertake. It is this information that can be matched to the matrix of work (usually cost and time are indicators) however all can be used as benchmarks for improvement. Should this information not be available, it is a priority for the group to document and establish this benchmark prior to investigating further.

Where a process is not documented in Policy and Procedure, and is carried out differently by each operator it will be difficult to establish the exact process, but at the same time an immediate issue will have been identified. Other statistical fact recording can still be carried out despite a lack of standardised information.

Information recorded by Genchi Genbutsu is the created benchmark. This raw data will be used in the next step to understand "why" the issue has occurred.

Summary Areas reviewed

o Whole job functiono Processes

Defined the Problem by:o Genchi Genbutsu – going to the sourceo Recorded the facts of the processo Warusa-Kagen – what is it that is not quite right with a process

Analysed the Problem by:o Matrix revision of whole job processes (value added, incidental, Muda)o Comparison to the "as is" processo Comparison to the Policy or Business rules of the process

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o Preparing the facts into graphs and models

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1.2 Plan Why – Identification of Causes

Understanding "why" a problem has been caused is a key aspect in understanding what countermeasures can be produced to correct the situation. When asking why, do not stop at the first response. Ask "why" 5 times.

Asking "why" 5 times will result in a more in depth answer and understanding as to the root cause. The root cause may have gone unnoticed until now and it must be pursued even if it occurred in another area of the business.

Methods that support the analysis of data gathered to assist with the discovery of why an issue has occurred are listed below. This is not an exhaustive list of mediums to display results of analysis. It is at this time that statistical interpretation is required where the graphs and charts will isolate problems and assist with identification of the root cause.

1. Pareto diagrams2. Cause and effect diagrams3. Histograms4. Control charts

More detailed information is included in appendix A of this Manual.

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1.3 Plan How – Planning Countermeasures

There is no set standard or rule of thumb as to how a good countermeasure is developed. As part of The Toyota Way, a countermeasure that puts the Customer First is going to be the most advantageous. The goal of developing countermeasures is to solve the root cause of a problem with little or no capital expenditure. This important fact is to support the human element of a process and not to force system solutions, prior to exhausting all other solutions. People are the most important asset of TFS and are always put before system solutions.

Here is an opportunity to build Jidoka into the "to be" process. A countermeasure should not create any additional issues, and the awareness of Jidoka will avoid possible future issues or problems.

As it is difficult to quantify how good a potential countermeasure is going to be prior to implementation, there is a method of gauging the capability of proposed countermeasures that will help in putting a rigour test around propositions for change. The methods are:

Issue/Problem Countermeasure Best ResultProductivity Increase Zero MudaQuality Increase 100% QualityCycle time Decrease Zero Cycle timeControl/Consistency Increase Zero Variations

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The decision of how a countermeasure is to be introduced into the process also needs to be considered here. If the implementation (the next stage) is to occur in a test environment, that environment needs to be established, and organisation of resources as to where other work goes during this time needs to be recognised. If the implementation is to occur to the whole process, then sufficient support is required to ensure service levels do not drop.

A "to be" decision can be pictured using the matrix of all parts of a job role. The way in which the "to be" is executed will be the arrangement of job functions that add the most value. When reviewing the "as is", the process can be arranged for improvement to the "to be". The "to be" is the process that will be implemented to bring about improvement to the process and address the issue and problems that have been identified for correction.

At this point, the implementation of countermeasures needs to be discussed with the stakeholders.

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2.0 Do – Implementation

The Do part of PDCA is where the implementation of all that has occurred during the planning process happens. For both the whole job function and the processes, the Do's come from:

1. Immediately recognised improvements/countermeasures2. More detailed and analysed improvements/countermeasures

Where the immediately recognised improvements/countermeasures are introduced, the implementation of other countermeasures will usually require a quick measurement of the improvement, and then a return to the planning process to understand the benefit achieved by this implementation. The implementation may not bring a resolution to the issue or problem identified, nor may it even bring about a reduction in cost or time, or an improvement in quality or profit. It has simply made the working environment conducive to more improvements, by substituting value added work for Muda.

More detailed and analysed improvements/countermeasures should now be executed as per the plan. The plan should address:

Responsibilities for implementation Responsibilities for results measuring

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Other group member responsibilities such as training the processor to undertake the standardised process, or provision of a workbook to assist implementation

As would have been considered during the planning process, adequate time should be allowed to measure the results of the implemented countermeasure. Determinants of what amount of time is regarded as adequate include:

Is this implemented in a test environment Is this implemented more broadly than in a test environment Does the implementation affect other parts of the business How complex or relatively simple the implementation is

It is recommended that the implementation of countermeasures should be undertaken into an environment where there is little effect upon customers and other parts of the business. This is recommended for two reasons:

1. There is no detraction from service to customers2. There is a "test environment" created where immediate effects can be

observed, measured and adjusted

The effort exercised during the planning process should see that the countermeasures are successfully implemented and result in the predicted and desired change. However in some circumstances this is not always the case and further planning is required following the implementation. This is covered in the Check.

As implementation is designed to improve and change a process or job role, this must be done in strict consultation with the persons affected. These stakeholders should already have been involved in some of the stages of the Kaizen activity already, even if they are not a part of the Kaizen Activity Group. The Kaizen activity is now at a point of reliance upon the persons affected, and if these persons are not properly briefed about and understanding of the change, the passion and enthusiasm of the Kaizen Activity Group may not be enough for them to appreciate the benefits of this change. Make all attempts to address the concerns of the people now affected.

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3.0 Check – Confirmation of Results

The Check is the measurement of the Do. This means that the countermeasures implemented must be measurable. If they are not, there has been a failure in the planning section. As is understood, if you can not measure it, it is not worth doing.

Result benchmarks that were gathered, observed, measured and recorded during the Plan stage as the "as is" are now to be compared to the "to be" result. It is the "to be" result that has been implemented during the Do stage, and is proposed to form the future "as is" for other Kaizen activities.

As measurable countermeasures, checking should be able to determine: Decrease in costs Increase in quality Decrease in rework Decrease in cycle time Increase in processes per period of time Decrease in variations Elimination of MUDA

The results of checking are some of the indicators for gauging the success of the Kaizen Activity Group.

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4.0 Action – Standardisation

Recapping on the process; the planning has resulted in problems and issues being identified at the root cause, countermeasures were developed to correct the issue at the root cause and to increase value added work and eliminate Muda. These countermeasures have been implemented, and their results have been compared and measured against the benchmark "as is" and the "to be". The results from the measuring are either:

Satisfactory Unsatisfactory

Where the results are satisfactory, finalising the Kaizen Activity Group activity is required. The following areas need to be completed:

1. Changes are implemented throughout the company where the processes are undertaken

2. Resources are reallocated to either the increase in value added work or elimination of Muda

3. Changes are documented into Policy and Procedure4. Changes are documented into updated Process Maps5. All stakeholders and staff affected are advised of the changes6. Kaizen Activity Group finalise A3

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Where the results of Checking are unsatisfactory, the Kaizen Activity Group is required to revisit the Planning process to repeat the PDCA cycle. Before returning to the Plan stage, the Kaizen Activity Group must complete the A3. The learning section of the A3 is a time for reflection upon how the activity could have achieved different results. The reason/s for unsatisfactory results are usually isolated to incorrect identification of the root cause to an issue or problem. It may be that a root cause was identified, but that there was more than one root cause. If however the root cause has been correctly identified, attention should be turned to the countermeasures or their implementation. Countermeasures should address the root cause. If the countermeasures do not do this directly, then they require further development. If however they do, then the implementation may not have been successful and have therefore skewed the results of measurement during the Check stage. These are important lessons for the Kaizen Activity Group and future groups. By documenting into the A3, learning and improvement to Kaizen Activity Groups can occur.

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CONTINUOUS IMPROVEMENT

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Continuously improving

Kaizen and PDCA is a continuous cycle as the following picture depicts. As the Kaizen Activity Group is closing their activity, it does not mean that this process will now be exempt from further process improvement initiatives.

The Kaizen Activity Group, through the process it has undertaken will leave a legacy of learning in the business. This will permit the education and development of staff; not only those who participated in the Kaizen Activity Group, but also those who were affected by the change, to participate in future activities and contribute suggestions through the acceptable medium within the SFC.

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Future strategies and opportunities

The GBPG is dedicated to contributing to improving processes throughout the global network of SFCs, by promoting a culture of Best Practices in the spirit of The Toyota Way.

The best practice concept is about delivering the best possible solution through various methods. Kaizen is just one of those methods.

The improvements achieved from Kaizen and documented as TFS best practice policies and procedures will not only embody the starting point for more internal Kaizen initiatives, but will also promote a basis for Benchmarking and focus upon Knowledge Management.

Benchmarking requires measuring comparative operating processes and performance with others to identify best practices. This technique requires knowledge of your business, processes and performance, for which Kaizen is delivering the understanding. By comparing the operations of the business to others provides a guide as to what competitive advantages exist within businesses, and provide benchmarks of performance attainment.

Benchmarking at TFS can be both internal (amongst SFCs) and external (to companies outside of TFS). Through Kaizen, internal benchmarking is encouraged as it utilises existing synergies. External benchmarking requires a different approach as it exposes the internal workings of TFS to outside companies that may result in disadvantage to TFS.

Knowledge Management is about harnessing the knowledge of the company and making it available to where it is needed, in a form that is useful for the recipient. The Kaizen initiatives resulting from this manual will be constantly building knowledge resources and making these available to SFCs.

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APPENDIX A

Analysis tools

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Pareto diagrams2

The Pareto diagram will help to isolate the characteristics that are the major contributors to a process. By isolating these features, a more focused approach can be taken upon the process itself. The characterisation and isolation of parts to a process (the inputs) will also assist determine the factors that are related to an issue.

Best application of Pareto diagrams

The Pareto chart is most suitable where problems are isolated. This does not mean that the root cause of the problem has been identified; it is just that a problem is readily identifiable, such as:

Complaints Rework Downtime Errors

Example Pareto

0

5

10

15

20

25

30

35

Depositcheque

Check data Processcheque

Input data File input Logon toprogram

0%

20%

40%

60%

80%

100%

120%

# of Errors

Percentage

The Pareto effect operates on the principle that 80% of problems usually stem from 20% of the causes. Pareto charts are used to display the Pareto principle in action, arranging data so that the few vital factors that are causing most of the problems reveal themselves. Concentrating improvement efforts on these few will have a greater impact and be more cost-effective than undirected efforts.

Things to look for

2 Adapted from http://www.skymark.com/pathmaker/tour/dataanal.asp

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In most cases, two or three categories will tower above the others. These few categories which account for the bulk of the problem will be the high-impact points on which to focus. If in doubt, follow these manual lines:

1. Look for a break point in the cumulative percentage line. This point occurs where the slope of the line begins to flatten out. The factors under the steepest part of the curve are the most important.

2. If there is not a fairly clear change in the slope of the line, look for the factors that make up at least 60% of the problem. You can always improve these few, redo the Pareto analysis, and discover the factors that have risen to the top now that the biggest ones have been improved.

3. If the bars are all similar sizes or more than half of the categories are needed to make up the needed 60%, try a different breakdown of categories that might be more appropriate.

Often, one Pareto chart will lead to another:

before and after charts

charts that break down the most important factors discovered in an earlier chart

charts that use different scales, such as number of complaints and the cost to respond, with the same categories.

Pareto chart statistics

For the Pareto chart, the following overall statistics are calculated:

Mean: the average of all the values in the series, i.e. the average bar height.Sum: the sum of all the values in the series.

35

Cause and effect diagrams3

The cause and effect diagram is used to explore all the potential or real causes (or inputs) that result in a single effect (or output). Causes are arranged according to their level of importance or detail, resulting in a depiction of relationships and hierarchy of events. This can help you search for root causes, identify areas where there may be problems, and compare the relative importance of different causes.

Causes in a cause and effect diagram are frequently arranged into four major categories. While these categories can be anything, you will often see:

1. equipment2. policies3. procedures4. people

These guidelines can be helpful but should not be used if they limit the diagram or are inappropriate. The categories you use should suit the needs of the Kaizen Activity Group.

Best application of cause and effect diagrams

The cause and effect diagram is suited best where problems require isolation. It provides for a brainstorming session, where the facts that have been observed and data recorded are applied and questioned with rigour. Here is where the application of the 5 "whys" will assist with determining root causes.

Cause and effect – Tree diagram

Cause and effect diagrams can also be drawn as tree diagrams (resembling a tree turned on its side.) From a single outcome or trunk, branches extend that represent major categories of inputs or causes which create that single outcome. These large branches then lead to smaller and smaller branches of causes (all the way down to twigs at the ends.) As explained, the difference here is that the outcome determines what the contributing factors are to that process. The tree structure has an advantage over the fishbone-style diagram. As a fishbone diagram becomes more and more complex, it becomes difficult to find and compare items that are the same distance from the effect

3 Adapted from http://www.skymark.com/pathmaker/tour/dataanal.asp

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because they are dispersed over the diagram. With the tree structure, all items on the same causal level are aligned vertically.

To successfully build a cause and effect diagram:

1. Be sure everyone agrees on the effect or problem statement before beginning.

2. Be succinct.

3. For each node, think what its causes could be and add them to the tree.

4. Pursue each line of causality back to its root cause.

5. Consider grafting relatively empty branches on to others.

6. Consider splitting up overcrowded branches.

7. Consider which root causes are most likely to merit further investigation.

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Histograms4

A histogram is a specialised type of bar chart. Individual data points are grouped together in classes, so that you can get an idea of how frequently data in each class occur in the data set. High bars indicate more points in a class, and low bars indicate fewer points.

The strength of a histogram is that it provides an easy-to-understand diagram of the location and variation in a data set. There are, however, two weaknesses of histograms that you should bear in mind:

1. The first is that histograms can be manipulated to show different pictures. If too few or too many bars are used, the histogram can be misleading. This is an area which requires some judgment, and perhaps some experimentation, based on the analyst's experience.

2. Histograms can also obscure the time differences among data sets. For example, a histogram of a process run tells only one part of a long story. There is a need to keep reviewing the histograms and control charts for consecutive process runs over an extended time to gain useful knowledge about a process.

Best application of histograms

The histogram is suited best where a large data set is held and requires comparison to both upper and lower limit standards of TFS. The application builds the data into a diagram (as above) and then it is compared to the standards of TFS, thereby addressing variations. This process assists in producing regular standard levels in areas such as:

Time Cost Quality Productivity

The SFC will need to determine the upper and lower benchmarks, as well as the mid point of acceptability prior to detailed analysis occurring. The benchmarks should be aimed at reducing variation in a process and delivering the best result possible.

4 Adapted from http://www.skymark.com/pathmaker/tour/dataanal.asp

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Histograms require a level of mathematical ability, so prior to undertaking this analysis the internal strengths of the group should be reviewed to ensure this method can be correctly applied in practice.

Histogram statistics

For histograms, the following statistics are calculated:

Mean The average of all the values.Minimum The smallest value.Maximum The biggest value.Std Dev An expression of how widely spread the values are around the

mean.Class Width The x-axis distance between the left and right edges of each

bar in the histogram.Number of Classes The number of bars (including zero height bars) in the

histograms.Skewness Is the histogram symmetrical? If so, skewness is zero. If the left

hand tail is longer, skewness will be negative. If the right hand tail is longer, skewness will be positive. Where skewness exists, process capability indices are suspect. For process improvement, a good rule of thumb is to look at the long tail of your distribution; that is usually where quality problems lie.

Kurtosis Kurtosis is a measure of the pointiness of a distribution. The standard normal curve has a kurtosis of zero. The Matterhorn has negative kurtosis, while a flatter curve would have positive kurtosis. Positive kurtosis is usually more of a problem for quality control, since, with "big" tails, the process may well be wider than the spec limits.

Specification Limits and Batch Performance

Where relevant, you should display specification limits on your histograms. The specifications include a target value, an upper limit and a lower limit. For example, if Michael Jordan is shooting a basketball at a hoop, his target is the middle of the hoop. His spec limits are those points in the circle of the hoop that will just allow the ball to bounce through the basket. If the shot is outside spec limits, the ball doesn't go in.

When you overlay specification limits on a histogram, you can estimate how many items are being produced which do not meet specifications. This gives you an idea of batch performance; that is, of how the process performed during the period that you collected data.

When you have added target, upper and lower limit lines, you can examine your histogram to see how your process is performing.

39

If the histogram shows that the process is wider than the specification limits, then it is not presently capable of meeting TFS specifications. This means the variation of the process should be reduced.

Also, if the process is not centred on the target value, it may need to be adjusted so that it can, on average, hit the target value. Sometimes, the distribution of a process could fit between the specification limits if it was centred, but spreads across one of the limits because it is not centred. Again, the process needs to be adjusted so that it can hit the target value most often.

Centre of a Distribution

Processes have a target value (the value that the process should be producing) where most output of the process should fall. The centre of the distribution in a histogram should, in most cases, fall on or near this target value. If it does not, the process will often need to be adjusted so that the centre will hit the target value.

Spread of a Distribution

The spread or width of a process is the distance between the minimum and maximum measured values. If the spread of the distribution is narrower than the specification limits, it is an indication of small variability in the process. This is almost always the goal, as consistency is important in most processes. If the distribution is wider than the specification limits then the process has too much variability. The process is generating output that does not conform to specifications, and is therefore unwanted.

Shape: Skewness and Kurtosis

A "normal" distribution of variation results in a specific bell-shaped curve, with the highest point in the middle and smoothly curving symmetrical slopes on both sides. The characteristics of the standard normal distribution are tabulated in most statistical reference works, allowing the relatively easy estimation of areas under the curve at any point.

Many distributions are non-normal. They may be skewed, or they may be flatter or more sharply peaked than the normal distribution.

A "skewed" distribution is one that is not symmetrical, but instead has a long tail in one direction. If the tail extends to the right, the curve is said to be right-skewed, or positively skewed. If the tail extends to the left, it is negatively skewed. Where skewness is present, attention should usually be focused on the tail, which could extend beyond the process specification limits, and where much of the potential for improvement generally lies.

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Kurtosis is also a measure of the length of the tails of a distribution. For example, a symmetrical distribution with positive kurtosis indicates a greater than normal proportion of product in the tails. Negative kurtosis indicates shorter tails than a normal distribution would have.

Taken together, the values for process centre, spread, skewness and kurtosis can tell you a great deal about your process. However, unless you have a solid statistics background, you will probably learn more from looking at the histogram itself than from looking at the statistics. Remember that where there is data in the tails near a specification limit, chances are that some non-conforming output is occurring. If your process is actually making five outputs in every thousand, and you are sampling twenty in every thousand, it will take some time before you find anything outside of the specifications. There are two things you should do:

1. continue tracking data

2. make sure your sampling plan is efficient

Distributions you may encounter

The standard normal distribution, with its zero skewness and zero kurtosis. Focus for improvement should be with any outlying results.

A skewed distribution, with one tail longer than the other. Focus for improvement should be with the outlying results, most likely in the direction that the data is skewed.

A double-peaked curve often means that the data actually reflects two distinct processes with different centres. You will need to distinguish between the two processes to get a clear view of what is really happening in either individual process.

A truncated curve (with the peak at or near the edge while trailing gently off to the other side) often means that part of the distribution has been removed through

41

screening, 100% inspection, or review. These efforts are usually costly and make good candidates for improvement efforts.

A plateau-like curve often means that the process is ill-defined to those doing the work, which leaves everyone on their own. Since everyone handles the process differently, there are many different measurements with none standing out. The solution here is to clearly define an efficient process, standardise and remeasure.

Outlying results in a histogram – bars that are removed from the others by at least the width of one bar. Sometimes this may indicate that perhaps a separate process is included, but one that doesn't happen all the time. It may also indicate that special causes of variation are present in the process and should be investigated, though if the process is in control before the histogram is made, as it should be, this latter option is unlikely.

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Control Charts5

Every process varies to some degree (both system managed and human related processes). There is an inherent variation with each process, however through management controls it should vary between predictable limits. For many processes, it is important to notice "special causes" of variation as soon as they occur.

There is also "common cause" variation. In most processes, reducing this saves money and produces a more reliant standard of output that customers expect.

There are many different subspecies of control charts which can be applied to the different types of process data that are typically available.

All control charts have three basic components:

a centreline, which is usually the mathematical average of all the samples plotted.

upper and lower statistical control limits that define the constraints of common cause variations.

performance data plotted over time.

Best application of control charts

The control chart is suited best where a process is permitted to vary within a certain set of parameters. This differs to the histogram, which is concerned with bringing a process to a set standard (the mid point). The control chart uses the data itself to determine a midpoint and then applies the deviation standard of TFS. In this example it is 3σ (3–sigma).

A process where some variation is permitted could be found in:

processing time for collections/customer service calls

processing vehicle stock inspections

5 Adapted from http://www.skymark.com/pathmaker/tour/dataanal.asp

43

other processes where external factors can attribute to variation

Types of errors

Control limits on a control chart are commonly drawn at 3σ (3-sigma) from the centreline. 3σ limits are a good balance point between two types of errors:

Type I or alpha errors occur when a point falls outside the control limits even though no special cause is operating. Tampering with data usually distorts a stable process and wastes time.

Type II or beta errors occur when a special cause is missed as the chart is not sensitive enough to detect it. In this case, you will proceed unaware that the problem exists and thus unable to identify it.

All process control is vulnerable to these two types of errors. The reason that 3σcontrol limits balance the risk of error is that, for normally distributed data, data points willfall inside 3σ limits 99.7% of the time when a process is in control. This makes theType I errors infrequent but still makes it likely that unusual causes of variation will bedetected.

If your process is in control, that is not necessarily good enough. You have to start removing special causes, so that you have a stable process to work with. But then the most substantial benefits occur when improving the process, so that common cause variation is reduced.

The concept of Jidoka will assist here. Building quality into the process, supported by an undertaking from the staff in the process that they will not pass on a defective result to the next person is true Jidoka. For this to happen effectively, staff must be aware of what is a defective standard, and the diagrams displaying the deviations greater from 3σ will be a good starting point.

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APPENDIX B

Contact List

45

GLOBAL KAIZEN CONTACTS

Kaizen is a way of life within the global Toyota Motor Corporation

• TPS (Toyota Production System) - TMC• TSM (Toyota Customer Service Marketing) – TMC•& also GBPG (Global Best Practice Group) – TFS

Where can you see Kaizen activity already happening?

TPS is in place at all Toyota Manufacturing plants globally.TPS is also in operation in all Parts distribution operations.

TSM is a global after sales project (parts & service), which is being rolled out into individual Toyota dealers across the world.

Toyota Customer Service Marketing

COUNTRY DIST NAME TITLE TELEPHONE E-mail

U.S.A. Lexus Mr. Jim Anderson Service Development Manager 310-468-3296 Jim_Anderson@toyota.com

Canada TCI Mr. Roger Ebanks Manager,Service Process Development

416-431-8389 rebanks@toyota.ca

Australia TMCA Mr. John Cutler Manager, Business Development, Customer Services Divison

61-2-9710-3333 john.cutler@toyota.com.au

Thailand TMT Mr. Surasak Suthongwan After Sales Development Manager 66-2-386-1126 ssuthong@toyota.co.th

Saudi Arabia

ALJ Mr. Othman Al-Oraabi General ManagerField Operations Tech. Training

02-678-3333 oraabioa@alj.com

Brazil TDB Mr. Osnil A. Bruschi Field Representative, After Sales 55-11-4390-5298 bruschi@toyota.com.br

South Africa

TSAM Mr. Keith Cokayne Assistant General ManagerAfter Sales Skills Development

27-11-809-2247 cokayne@tsb.toyota.co.za

Belgium TMME Mr. Jose Munoz ManagerAfter Sales Planning Department

32-2-7452737 Jose.Munoz@toyota-europe.com

Venezuela TMV Mr. Daniel Lugo Field Operations Manager 58-212-242-46-22 dlugo@toyota.com.ve

Malaysia UMWT Mr. Ismet Suki Assistant General Manager, Service Division

03-55191911 ismet@umwt.toyota.co.jp

UnitedKingdom

TGB Mr. Jon Micklefield ManagerTSM Planning & Development

44-1737-363633 jon.micklefield@tgb.toyota.co.uk

Best Practices Team USA

U.S.A. Toyota Mr. Jesse Zamora National ManagerBest Practices Group

310-468-3489 Jesse_zamora@toyota.com

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Global Best Practice Group

It is suggested that at first help is sought from within our own Group.

COUNTRY DIST NAME TITLE TELEPHONE E-mail

U.S.A. TMCC Mr Ron Dockstader Group Leader 1-310-468-6410 Ron_dockstader@toyota.com

Americas Region Canada TCCI Mr Sylvain Gareau Regional Coordinator – Americas

& SFC Champion1-905-513-5440 sylvain_gareau@toyotacredit.

ca

Argentina TCA Mr Jorge Sganzetta SFC Champion 54-11-4341-7857 Jsganzetta@toyotacredit.com.ar

Brazil BTB Mr David Cunha SFC Champion 55-11-5504-2060 david_cunha@bancotoyota.com.br,

U.S.A. TMCC Mr Jeff Miller SFC Champion 1-310-468-6410 Jeff_Miller@toyota.com

Asia/Oceania RegionAustralia TFA Mr Mark Ramsay Regional Coordinator Asia/Oceania

& SFC Champion61-2-9934-1204

(x 1298)mark.ramsay@toyota.com.au

Japan TFC Mr Takatoshi Ikenishi SFC Champion 81-52-954-8171 t_ikenishi@toyota-finance.co.jp

New Zealand

TFNZ Mr Matthew Bond SFC Champion 64-9-571-4298 matthew.bond@tfs.co.nz,

Thailand TLT Ms Raewadee (Ming)Chiraburanun

SFC Champion 66-2-636-1313(x 701)

reawadee_c@tlt.co.th

South Europe RegionUnited

KingdomTFSUK Mr Martin Bates Regional Coordinator –Europe/South

& joint SFC Champion44-1737-365542 martin.bates@toyota-fs.com

CzechRepublic

TFSCZ Olga Genadievova SFC Champion 420-2-227-2-2971 olga.genadievova@toyotafinance.cz

France TFSF Mr Rene Laz SFC Champion 33-1-47-01-6015 rene.laz@tfrf.toyota-europe.com

Germany TKG Mr Juergen Huebinger SFC Champion 49-2234-102-1805 juergen.huebinger@toyota.de

Hungary Mr Gabor Nagy SFC Champion gabor.nagy@toyota.hu

Italy TFSI Mr Armando Colin SFC Champion

South Africa

TFSSA Mr Tony Ayling SFC Champion 7-11-809-2039 tayling@toyfin.co.za

North Europe RegionUnited

KingdomTFSUK Mr Keith Doughty Regional Coordinator –Europe/North

& joint SFC Champion44-7831-480593 keith.doughty@lexus-fs.com

Denmark TFSD Henriette.Gamdrup SFC Champion 45-44-85-03-33 Henriette.Gamdrup@toyota-fs.com

Finland TFF Mr Jukka Korkiala SFC Champion 358-9-8518-2269 Jukka.korkiala@toyota.fi

Norway TKN Mrs Liv Rosengren SFC Champion 47-32-20-8402 liv.rosengren@toyota-fs.com

Poland TBP Mr Piotr Lanzinski SFC Champion 48-22-874-4757 piotr.lazinski@toyotafinance.pl

Sweden TFSSW Mr Tommy Wretenlind SFC Champion 46-8-622-3545 tommy.wretenlind@toyota-fs.com

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Other References

Toyota Consulting Group and the Toyota Global Knowledge Centre (located in the US headquarters)

Monthly GBPG reports - for identifying possible process improvement opportunities.

Benchmarking printed material (many examples on amazon.com).

Benchmarking websites and workshops.

http://www.benchnet.com http://www.benchmarkingnetwork.com/

http://www.apqc.org/ http://www.globalbenchmarking.com/

http://www.iccbc.org/ http://www.qualitydigest.com/

Motor industry relevant reports – JD Power

http://www.jdpa.com/

There are a vast amount of other potential sources of information for reference or training material & your own Human Resources Department may well be able to help. The most economical solution is always to see if we can provide the resource from within TFS so going direct to the members of the GBPG is always highly recommended.

Related reading material

"The Wisdom of Teams" "The Five Dysfunctions of a Team"“The Memory Jogger" All available through this website and most local and online book stores http://www.goalqpc.com/

“Benchmarking for Best Practices” is a guide written by the Process Management Functional Committee and is available from Global Best Practice Group.

Books titled “Lean Thinking” by Womack & Jones & “Gemba Kaizen” (Work Kaizen) by Imai give insight into the Toyota Production System.

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APPENDIX C

Definitions

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Common Language of Kaizen

Genchi Genbutsu Go to the source, and observe personally. Only when you have personally observed and fully understand the effects upon a process, will you then be qualified enough to make suggestions for improvement. This method gives a total appreciation of the process environment.

Kaizen Continuous Improvement. A perpetual cycle of improvements that occur gradually and involve everyone. This is not the responsibility of any one person or department.

Hoshin Kanri A strategic management system which provides an organisational communication process to plan and manage company efforts and align company resources for addressing business needs as effectively and efficiently as possible through the systematic application of PDCA (Plan-Do-Check-Act) thinking.

Warusa-Kagen Something which is not quite correct, but not a problem. It may be that this does become a problem and addressing the issue now will avoid future events.

Standardised Combination of worker and system. A set way of doing something that optimises all available resources.

Muda Waste.

Jidoka Building quality into the process by stopping immediately when a defect is identified

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APPENDIX D

Process Mapping

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Mapping a Process

The development of a Process Model can go through much iteration before it is complete. First, the Process Model has to be created; then it is necessary to verify that the data has been correctly entered into the Model. Next, a reality check must be conducted to determine whether the Model is an accurate representation of what the organization actually does. To pass the verification and reality check phases of Process Model development, Process data must be viewed and analysed (with updates made to the Model accordingly) Process Data are Data items that pertain to the attributes of Business Processes. The Process data items are (but not exclusive to): Activities, External Processes, Variables, Decisions, and Choices. The key to process is based upon understanding four important concepts:

1. A Process is chronological. Accurate models must therefore be oriented on a timeline.

2. Flow modelling should display how objects and/or data are transferred and where they are going. The majority of business problems stem from interdependent relationships, which are best identified in a flow chart.

3. A Process can be modelled in a hierarchical fashion and can be viewed from many levels. That is, Processes can contain other Processes.

4. The Choices made for Decisions, which occur within a Process, determine which of all potential paths shall be taken. It is vital to capture all potential paths of a Process.

Data collection for Process Modelling efforts can be an individual or a group effort. Modelling a Process involves the creation of an Activity Decision Flow (ADF) Diagram, which captures the inner workings of the Process. The boundaries (i.e., beginning and ending) of a Process are defined first. If large in size, the Process can be broken down into smaller Processes. Each of these smaller Processes will have its own detailed ADF Diagram.

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Main Elements of an Activity Decision Flow Diagram

A Process is defined in an Activity Decision Flow Diagram. The main Activity Decision Flow Diagram objects are activities - Tasks, Process Objects, and External Processes - which are connected and driven by Decisions.

Tasks: A Task represents a low-level activity a generic term that represents the work performed in a Business Process. Processes and Tasks are activities performed within the Organization. External Process is activities performed outside the Organization, which takes place within a Process. It has a cost and duration associated with it and employs the resources (e.g., employee or software) of a particular group or organization.

Process Objects: A Process Object is a high-level activity that takes place in a Process. A Process Object represents a lower-level Process that can contain Tasks or even other Process Objects, creating a hierarchy.

External Entities and External Processes: An External Process is an activity performed in your Process by an External Entity. Either an individual or a company outside an Organization can impact the Organization’s Process. In an Activity Decision Flow Diagram, the flow between an External Entity and the Organization goes in one direction—meaning that External Entities can provide either input to, or receive output from, an Activity Decision Flow Diagram, but not both. Although External Processes are outside the control of your organization, they are essential to modelling the realities of a Process.

Decisions and Choices: During a Process, Decisions, which influence the routing of work, may be required. A Choice is an alternative value of a Decision. They are the answers to the questions that a Decision asks. For a “What type of order?” question, the answers (or conditions) could be “Product A” or “Product B.” Each Decision Choice creates a new alternative path through the Process - a new Case. Also, Choices have a probability of occurrence in the context of the other Choices of that Decision. Thus, the total percentage of all the Choices of a Decision must be 100%. A Decision must be made in order to identify the subsequent Tasks.

Connectors: Connectors The chronological connection between two Activity Decision Flow Diagram objects. By default, it represents the flow of control in an Activity Decision Flow Diagram and defines the sequence of activities in a Process. In addition, Connectors can define the media that represents the method (e.g., courier, electronic mail) used to transport an output from one activity to the next.

Stops: These graphical markers show that a particular path within the Process has stopped. For the Design Flow variation of the ADF, they mark the end of paths that are part of the Multi-Thread and Choice Box modelling objects.

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Stop

Alternative Nature of a Process

The presence of Decisions in a Process creates at least two alternative paths of execution. Each of these paths can result in completely different activities.

As the path of the Process is travelled, a Choice has to be made when a Decision Point is reached. There are as many unique paths through the Process as there are combinations of Decisions and Choices. Each unique path, from the beginning to the end, is called a Case.

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AProcess

A

BProcess

B

CProcess

YES

NO

Hierarchical Composition of a Process

The boundaries of a Process are set only by your point of view. For example, a Manager may maintain an overall point of view of her or his department, but each Unit Supervisor has their own point of view (sub-process), as depicted in the inset box below (as an example). Each of the square Process Objects (i.e., Process Customer Order, Pack Customer Order, and Fulfil Customer Order) contains their respective smaller Processes (or sub-processes).

In this way, a hierarchical tree structure of your Process can be developed. You can think of Processes and Process Objects as the branches of the tree, and the Tasks as leaves on the branches.

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Process Customer Order

Pack Customer Order Produc

t

Fulfill Customer Order

Customer Rejection Notice

Customer Order Form

Customer Order Form C1Package Order

Enter

Customer Order

Customer

RejectedCustomer Rejection Notice

Customer Order Form C1

Customer Order Form

Assembled Product

Off Shelf

SUB-PROCESS – Process Customer Order