process management - v.g

Process Management - V.G.

Process Management - V.G. 2

▪ Name: Velimir Gojnic, MSc ME

▪ Occupation: Business Excellence & Restructuring

Interim Management Consultant

▪ Experience:

Introduction

Principles of process organisation – part 1

3

Companies: „Rade Končar” – „Siemens”

„The Coca-Cola Company”

„Pliva” – „Teva”

„Wienerberger AG”/– „Tondach”, „Semmelrock”

SME Companies: SAP, IBM, Microsoft, Pfizer, Philips, Siemens, banks

Consulting Companies: E&Y; KPMG; Arthur Andersen, BCG

Area Covered: 12 countries in Europe, Australia and USA

4 languages, 2 scripts

Introduction

Principles of process organisation – part 1Process Management - V.G.

Principles of Business Process& Quality Management

Velimir Gojnic

[email protected]

s

Principles of Business Process Management Part 1

Velimir Gojnic

[email protected]


Part 1

9.00 – 10.30 → Principles of Business Process Management

10.30 - 11.30 → Coffee Break + Group Work

11.30 - 13.00 → Lecturing

Training Schedule



▪ Make your business more competitive

▪ Ensure business longevity

▪ Increase flexibility of your business processes (and company)

▪ Define and focuse on the core business processes

▪ Add value to the business

▪ Reduce learning curve

▪ Increase data quality

▪ Increase total profitability of the business

▪ You will be presented with the methodes/concepts and tools of Business Process & Quality Management

Key Benefits and Objectives



Positioning of Process Management


PROJECT

PROCESS

CHANGE

Agenda


Principles of process organisation

Constructing a process management system

Process optimisation methods


▪ The traditional view of organisations

▪ Processes – the organisational perspective

▪ What is a process?

▪ Distinguishing between processes and projects

▪ Points of contact

▪ Matrix organisations

▪ Process management roles

▪ The continuous improvement cycle (CIC)

▪ Strategic process management

▪ Process maps

▪ Process levels

1. Principles of process organisation



What is an ORGANISATION?

An organisation is the ENTITY with the

particular purpose.

It can be also defined as the ACT of

taking an efficient and orderly

approach to TASKS comprising

multiple people.



What is an ORGANISATION STRUCTURE?

Organization structure is a setup or a framework which determines the hierarchy of people, its function, workflow and the reporting system in an organization.

It regulates STATIC relationship between jobs.



Four Types of Organizational Structures Today

1. Administrative Structure➢ Highly regulated

➢ Suitable for the larger multifaceted organizations (government,

education)

2. Traditional/Functional Structure➢ Includes undertaking like supervision, direction, management and

allocation of responsibilities

➢ Quick decision making and easy interconnection among employees

➢ Easy learning from each other

3. Divisional/Product Structure➢ Arrangement of a business that breaks down the organization into

geographical, market/product and service groups

4. Matrix Organization➢ This structure bonds employees by both FUNCTION as well as the

DIVISIONAL/PRODUCT



Administrative Structure



Traditional/Functional Structure

Board of directors

Department

A

Department

B

Department

C

Department

D

Department

E

Department

F

Customer

???

Customer

???

Work flows vertically

Source: A. Tenner




FORD Assembly Line –arround 1913



Main drawbacks of the traditional view:

▪ Assumes that employees must be given instructions and monitored

when carrying out their work

▪ No consideration of relationships between staff in a particular function,

between different functions or with customers

▪ Focus is internal, not on the customer

Source: Arthur R. Tenner




Divisional/Product Structure



Divisional/Product Structure


▪ The divisional structure is a type of organizational structure that groups each

organizational function into a division. These divisions can correspond to

either products or geographies

▪ Each division contains all the necessary resources and functions within it to

support that product line or geography (for example, its own finance, IT, and

marketing departments)


▪ Awareness of relationships between sections

▪ Active target-based process management

▪ Special roles

▪ Cooperation with line managers

Matrix Organisation

Managing Director

Division

A

Division

B

Division

C

Division

D

Division

E

Division

F

Process manager

Process owner

Process team


PRODUCT 1

PRODUCT 2

PRODUCT 3

FUNCTIONS


Matrix Organisation


In a matrix structure, the organization is grouped by both product and function

Product lines are managed horizontally and functions are managed vertically

This means that each function—e.g., research, production, sales, and finance—

has separate internal divisions for each product


Due to significant market changes in the last 60 years (globalisation and

increased competition) – from PULL to PUSH market - customer

appreciation/understanding starts to be crucial factor for company's

success.

▪ CUSTOMER focused organization – STRUCTURE follows PROCESS

▪ Therefore the companies’ organization had to change as well!


The Organisational TRANSITION


Board of directors

Department

A

Department

B

Department

C

Department

D

Department

E

Department

F

Customer Customer

Work flows horizontally

PROCESS (based Organisation) – the organizational perspective

Source: A. Tenner



▪ Aligning PROCESS with the CORPORATE STRATEGY

▪ Being aware of organisational processes – have PROCESS MAP

▪ Define ROLES within organisation – process

responsibility

Managing PROCESS means:


▪ Identify CORE PROCESSES

▪ Process performance – process measurement

▪ Introduce Continuous Process Improvement

▪ Determing new and removing outdated processes


▪ improved effectiveness (doing the right things) –

focusing on markets, customers and results

▪ improved efficiency (doing right things right) –

harmonising points of contact and reducing coordination

activities

• continuous improvement – creating a learning

organisation

Objectives of process management


▪ to encourage interdepartmental thinking and behaviour

instead of a focus on the employee’s own department


▪ Improved process transparency

▪ Clear definition and allocation of responsibility for individual activities

▪ Creating awareness of internal customer-supplier relationships

▪ Adapting processes to customer needs

▪ Measurability and auditability of process performance

▪ Increasing productivity with continuous process improvement

▪ Clearly defined points of contact

Corporate benefits



▪ A business process can be defined as the premeditated collection

of interlinked tasks which find their end in the delivery of the service

or product which was whished/demanded by the client.

▪ This is a set of different activities and tasks, once completed, will

accomplish an organizational goal.

… but WHAT is the BUSINESS process



▪ It is initiated from the OUTSIDE of the organisation!

… but WHAT is the BUSINESS process



▪ All business processes have to be synchronized and optimised in

order for organisation to function successfully

▪ One has to understand links among processes and to differentiate

them according to different types (i.e. legal requirements, business

core processes, supporting processes,…)

▪ Rightly chosen business processes are fundamental for creation of

organisation’s strategy

▪ Organisation’s strategy is vital for the survival and longevity of the

whole organisation, security of jobs for the employees and return of

investment for the investors

How to manage the business processes in the organisation?



▪ Would be good to have some kind of the SCORECARD to monitor

efficassy and efficiency of business processes and their strategy

alignment.

▪ In 1992 Kaplan and Norton introduced research results of

performance measurement of intangible assets.

▪ The point was that if the companies want to improve management of

their intangible assets, they have to integrate the measurement of

intangible assets into their management system.

▪ To actively support efforts of the companies, the concept of BSC was

broadened and extended into management tool for describing,

communicating and implementing strategy.

Would be good to have tools!



Financial perspective

What are our objectives, based on the financial expectations of our investors?

Customer perspective

Regarding structure and customer needs, which objectives should be set in order to

achieve our financial targets?

Business process perspective

Which business process objectives should be set in order to fulfil the targets of the

financial and customer perspectives?

Learning and growth perspective

Which learning and growth objectives should be set to enable us to deal with

current and future challenges? ..\B S C\BSC svih PJ.xls

Source: Kaplan / Norton

The four perspectives of the balanced scorecard (BSC)


../B S C/BSC svih PJ.xls


The cause and effect chain


Financial perspective

Customer perspective

Business process

perspective

Learning and growth perspective

Return on

equity

Customer

loyalty

Prompt

delivery

Staff

qualifications

Process

quality

Process

cycle time





▪ Important for long design /

development cycles

▪ New product sales

▪ Time to market

▪ From order to delivery

▪ Often already highly efficient

▪ Cycle times, quality, cost

▪ Guarantee

▪ Invoicing

▪ Support

▪ First-time resolution

Customer

need fulfilled

Identify customer

need

Identify

market

Product /

service

design

Product /

service

production

Product /

service

delivery

Customer

service

Innovation Production After-sales service



Business process perspective – Vaccine

development stages – draft presentation


Customer

need fulfilled

Stage 1.

Exploratory

Stage

Stage 2.

Pre-clinical

Stage

Stage 3.

Clinical

Development

(3 Phases)

Stage 4.

Regulatory

Review

and Approval

Stage 5.

Manufacturing

Stage 6.

Quality Control

and Side

Effects

Tracking

Innovation Production After-sales service


• Quality control in Pharmaceutical industry is on the highest standards prescribed by authorities(i.e. FDA in the USA)

• Every process step is depicted in details• Education of staff is crucial to the whole process• Process duration for vaccine production is from 2-5 years and constant improvement is required• New drug development requires 8 – 10 years and some billions of euros/dollars!


Examples of strategic objectives:

▪ improving sales process efficiency

▪ eliminating duplication

▪ reducing response times for new requests

▪ shortening development cycles

▪ speeding up offer issue

▪ reducing costs

▪ improving the supply chain

Source: Horvath und Partner




CustomerCustomer

Process owner

Business process

Process owner

Business process

Process owner

Business process

HRmanagement

IT

Facilitymanagement

Legal

Support processes

Processes – the organisational perspective

Source: A. Tenner



Definition:

▪ Customer + customer demand

▪ Input-output ratio

▪ Permanent, complex tasks

▪ Trigger

▪ Key success factors


▪ Roles & responsibilities

Customer Customer

ProcessInput Output

Wishes

Demands

FeedbackFeedback

What is a process?

Source: A. Tenner



..occurs n times…

A PROCESS is a series of planned activities to transform

defined inputs into defined outputs

..occurs once…

Tasks

Control

function

Plan

Process

Procedure

Measures

Project

▪ Customer contact

▪ Complex

▪ Changing responsibility

▪ Internal

▪ Simple

▪ Individual responsibility

▪ Internal

▪ Simple

▪ Inter-departmental

▪ Complex



▪ Service

▪ Quality

▪ Cost

▪ Speed

▪ Communication

Process-focus means customer-focus

Customer

Explicit and implicit

wishes

Recommendation, repeat purchase, change

of supplier without notification,

renegotiation, regress, etc.

Source: Tenner


Customer Customer

ProcessInput Output

WishesDemands

FeedbackFeedback


Points of contact

DivisionA

DivisionB

DivisionC

DivisionD

DivisionE

DivisionF

Customer Customer

Information loss

between divisions

up to 60%

Information lossbetween departments

up to 25%

Information loss within departments

up to 12%

Source: Tenner



▪ Awareness of relationships between sections

▪ Active target-based process management

▪ Special roles

▪ Cooperation with line managers

MATRIX organisationsManaging Director

Division

A

Division

B

Division

C

Division

D

Division

E

Division

F

Process manager

Personal loans

Securities transactions

Budgeting

Assessment of creditworthiness

Process owner

Process team



Process owner

▪ Responsible for overall

performance of the process

management system

▪ Occasional involvement in

process team meetings

▪ Conflict resolution (escalation)

▪ Promoting the process

management system (power

based on hierarchical

position)

▪ Process management expert

Process manager

▪ Responsible for ongoing

process performance

regarding contents and

deadlines

▪ Chairs internal team meetings

and motivates the team

▪ Introduces and implements

improvements

▪ Documentation support

Process team

▪ Process specialist

▪ Active participation in process

team meetings

▪ Acceptance and careful

execution of allocated tasks

Process management roles



Continuous improvement of processes and products – the process

management cycle

Process

Process evaluation, e.g.:

▪Customer satisfaction

▪Cycle time

▪Error rate

Data analysis by process owner

and team:

· Discover causes

· Develop solutions

· Proposed improvements

· Implementation plan

Decision making:

▪Report to decision maker

▪Coordination with functional

organisation

▪Strategic alignment

▪Communication

▪Resource allocation

Implementation:

· Planning

· Dry run

· Controlling effectiveness



▪ Strategic management of processes

▪ Alignment of processes with corporate strategy

▪ Implementing process organisation

▪ Identifying processes

▪ Determining new and removing outdated processes

▪ Defining process documentation standards

Operational process management

▪ Process analysis and design

▪ Process documentation

▪ Developing support measures for process implementation

▪ Operational processes roll-out

▪ Process optimisation

▪ Process controlling

▪ Continuous process improvement

Strategic process management

ProzessProzess



Identifying Core Process



Process categoriese.g.:

▪ budgeting▪ strategic planning▪ HR development

e.g.: ▪ handling loan transactions▪ implementing customer

projects▪ providing support services

e.g.: ▪ IT helpdesk▪ payroll▪ accounting▪ implementing IT projects

Management

processes

…support management of the

company

Business

processes

…produce value-adding goods or

services for customers

Support

processes

Improvement

processes

…support other processes to

maximise performance

…to promote continuous

improvement

e.g.: ▪ complaint management▪ internal auditing



Case study: Process map for a retail bank

Strategic

planningBudgeting

Strategiccontrolling

HR

developmentRevision

Customer

relationship

management

Commercial

Lending

Commercial lending (Regular management)

Commercial lending (Asset-based management)

Internet banking

Syndicated loans

Consumer lending (Small personal loans)

Non-standardised personal loans

Integration of

new employees

Branch renovation/

constructionIT support

Facilitymanagement

Projectmanagement

Internal

auditing

Measuringcustomer

satisfaction

Complaint

management

Measuring

employee

satisfaction

Continuous

improvement

Management processes

Business processes

Support processes

Improvement processes



1. Process levels

Level 1

Process map and main processes

Level 2

Sub-processes

Level 3

Guidelines, manuals, work

instructions


Business processes

Support processes


Verantwortlichkeiten

D E M IInput Ablauf / Aktivitäten Output

Rechnung erfassen

Monats-

ARZ- oder KSV-

Rechnung?

Eingangsrechnung

RE inhaltlich (fachlich) prüfen

und pouvoirmäßig unterfertigt

retoursenden

Nein

Ja

Nein

Sek

151/155

IAV-DB

Bestellung /

Lieferschein ggf.

IT-

Komponenten

bestellen

Spezielle Aufbereitung

der Rechnung

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ARZ- oder KSV-

Rechnung?

Ja

Rechnung

trifft ein

E2

Rückmeldeprüfung

und ggf.

Reklamationsbearb.

E6

Vollständigkeit der Einträge

im Stempel prüfen

(ggf. ergänzen),

RE-Info in DB eintragen

E7

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und weiterleiten

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E = Entscheidung

M = Mitarbeit

I = Informationsrecht

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Verweis auf

Erläuterung

Konsortialkredit abwickelnVerantwortlichkeiten


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der Rechnung

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Rechnung?

Ja

Rechnung

trifft ein

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Rückmeldeprüfung

und ggf.

Reklamationsbearb.

E6


im Stempel prüfen

(ggf. ergänzen),


E7

RE einscannen

und weiterleiten

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freigegebene und

zugeordnete RE

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bzw.

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unterfertigen

Ja

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Rechnung erfassen

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Rechnung?

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retoursenden

Nein

Ja

Nein

Sek

151/155

IAV-DB

Bestellung /

Lieferschein ggf.

IT-

Komponenten

bestellen


der Rechnung

E1

E3

Sek151

Monats-

ARZ- oder KSV-

Rechnung?

Ja

Rechnung

trifft ein

E2

Rückmeldeprüfung

und ggf.

Reklamationsbearb.

E6


im Stempel prüfen

(ggf. ergänzen),


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und weiterleiten

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zugeordnete RE

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bzw.

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> 7.500 Euro

RE gemäß Pouvoir

unterfertigen

Ja

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Div. Unterlagen zur

Aufteilung an

Prüfer

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151/155

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Eingangsrechnung



retoursenden

Nein

Ja

Nein

Sek

151/155

IAV-DB

Bestellung /

Lieferschein ggf.

IT-

Komponenten

bestellen


der Rechnung

E1

E3

Sek151

Monats-

ARZ- oder KSV-

Rechnung?

Ja

Rechnung

trifft ein

E2

Rückmeldeprüfung

und ggf.

Reklamationsbearb.

E6


im Stempel prüfen

(ggf. ergänzen),


E7

RE einscannen

und weiterleiten

E8

Kontrollierte,

freigegebene und

zugeordnete RE

OE 820

bzw.

Tochter

-BuHa

Mail, AV,

Kopie der RESek151


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Lief.

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> 7.500 Euro

RE gemäß Pouvoir

unterfertigen

Ja

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Aufteilung an

Prüfer

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151/155

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Rechnung erfassen

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ARZ- oder KSV-

Rechnung?

Eingangsrechnung



retoursenden

Nein

Ja

Nein

Sek

151/155

IAV-DB

Bestellung /

Lieferschein ggf.

IT-

Komponenten

bestellen


der Rechnung

E1

E3

Sek151

Monats-

ARZ- oder KSV-

Rechnung?

Ja

Rechnung

trifft ein

E2

Rückmeldeprüfung

und ggf.

Reklamationsbearb.

E6


im Stempel prüfen

(ggf. ergänzen),


E7

RE einscannen

und weiterleiten

E8

Kontrollierte,

freigegebene und

zugeordnete RE

OE 820

bzw.

Tochter

-BuHa

Mail, AV,

Kopie der RESek151


weiterleiten

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Prüfer

ggf.

Lief.

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ggf.

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ggf.

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1

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> 7.500 Euro

RE gemäß Pouvoir

unterfertigen

Ja

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Aufteilung an

Prüfer

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151/155

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Rechnung erfassen

Monats-

ARZ- oder KSV-

Rechnung?

Eingangsrechnung



retoursenden

Nein

Ja

Nein

Sek

151/155

IAV-DB

Bestellung /

Lieferschein ggf.

IT-

Komponenten

bestellen


der Rechnung

E1

E3

Sek151

Monats-

ARZ- oder KSV-

Rechnung?

Ja

Rechnung

trifft ein

E2

Rückmeldeprüfung

und ggf.

Reklamationsbearb.

E6


im Stempel prüfen

(ggf. ergänzen),


E7

RE einscannen

und weiterleiten

E8

Kontrollierte,

freigegebene und

zugeordnete RE

OE 820

bzw.

Tochter

-BuHa

Mail, AV,

Kopie der RESek151


weiterleiten

E4

Prüfer

ggf.

Lief.

E5

ggf.

Lief.

ggf.

Prüfer

1

ÖVAG-RE

> 7.500 Euro

RE gemäß Pouvoir

unterfertigen

Ja

NeinLtg150

E9

Div. Unterlagen zur

Aufteilung an

Prüfer

Sek

151/155

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151/155

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En =

Verweis auf

Erläuterung





Management review Project managementAnnual marketing plan

HR managementRisk management Auditing

Sales managementOperative planning

and budgetingStrategic planning

Process map – level 1



Business processes

Current accounts,

overdrafts

Consumer loans,

small personal loans

High-volume

residential construction

Commercial lending

Regular managementCommercial lending

Commercial lending

Asset-based management

Non-certificated

SME loans

Non-standardised

personal loans

Syndicated loans

Foreign currency loans

MBS

Capital market transactions

incl. fund-based savings plans

Internet banking

Home & office banking




Support processes

Repairing faults

with domestic installationsRepairing machine faults

Preparing workspaces for

new employees

Rectifying IT faults

Staff exitNew employee induction

Project managementBranch renovation

and new branch construction





Measuring employee

satisfactionComplaint management

Measuring customer

satisfaction

Event management Internal auditing Process measurement

Corrective measures

and improvements



Agenda


Principles of process organisation




▪ Phases in developing Process Management System projects

▪ Questions in the introductory phase

▪ Process identification and delineation

▪ Representation of current situation

▪ Analysis of current situation (measurement)

▪ Target situation

▪ Alignment with corporate strategy

▪ Indicators and parameters

▪ Implementation and controlling

2. Constructing a Process Management System



▪ Senior management

mandate and

commitment

▪ Project structuring

▪ Determination of roles

and responsibilities

▪ Definition of relationship

between process

management system and

functional organisation

▪ Development of process

map

▪ Selection of processes

for optimisation

▪ Define

▪ Measure

▪ Analyse

▪ Implement

▪ Control

▪ Develop measured data

history

▪ Inspection of results by


▪ Implementation of

measures

▪ Documentation

▪ Ensure communication of

results to functional

organisation

▪ Knowledge transfer

▪ Controlling

▪ Secure resources for

system

▪ Outline and communicate

successes

▪ Coordinate training

activities

▪ Staff motivation

System

design

Roll-out-

Phase

Functioningprocessmanagementsystem

Introduction

Project

Process Management Design - Overview


▪ What is the objective of Process Management?

▪ What should the system eventually look like?

▪ How many people and positions can be / do I want to be involved?

▪ How much time can I / do I want to take?

▪ How detailed can / should the system be? How can exceptions be handled?

▪ What is the relationship between new and existing responsibilities?

▪ What should be the incentives associated with the process management system in future?

▪ Which “marketing” activities should be carried out in advance?

▪ Which instruments / tools can I / do I want to apply?

Questions in the introductory phase

Constructing a process management - introductory phase

Introductory

phase


Project objectives and structures are defined

and communicated in the introductory phase


Participants Contents

Detailed

discussion

Board of directorsProject managerClient

Details of upcoming project procedures

Kick -off

Board of directorsProject managerHead of the department

Internal auditWorks council

General project information

Start-up

workshop

Board of directorsProject manager

Head of the department

Process mapProject organisationProject definition

PO-tourProcess owner Process required?

Process delineationTeam members?

1st teammeeting

Process teamProcess managerProject manager

TrainingProcess identification

Introductory

phase


▪ Planning/controlling

▪ MS-Project

▪ PSP

▪ Excel

▪ Data storage

▪ h:\............process owner

▪ v:\............team members

▪ Intranet....all employees

▪ Templates for process owner

▪ Marketing

Precise planning and predefined cooperation structures simplify project coordination


Introductory

phase

..\Project Management\3. PRMS Budget -detailed,people & money 99.xls

..\Project Management\Ex4. Project Charter.doc

..\Project Management\Maximo-Orgchart-local-team1.ppt

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Five steps to process optimisation

Process

management

Representation of

current situation

Analysis of current

situation

(measurement)

Target situation

Implementation

and controlling

Process identification

&

delineation

12

3

4

5


System

design



&

delineation

1


Representation of

current situation

Analysis of current

situation

(measurement)

Target situation

Implementation

and controlling

System

design

Process

management


Process Profile



Objective description of key process attributes based on analysis of current situation

CUSTOMER:• Who is the process customer?

• What are the customer’s process quality expectations?

Process:• What is the purpose of the process?

• Where does it being/end?

• What is the input / trigger?

• Which products and services are outputs?

• Where are the most important point of contact? To whom?

KEY SUCCESS FACTORS:• Under which conditions does the process function

smoothly?


Customer Customer

ProcessInput Output

Customer needs

Requirements

FeedbackFeedback

System

design


▪ Hasty solutions – collect facts instead

▪ Clear delineation of processes

▪ Overambitious targets, limited time resources

▪ Wordy descriptions instead of focus on data

▪ Weak project management

▪ Confusing communication and information

Obstacles in this phase:


System

design


2

Representation of current situation


&

delineation

Process

management

Representation of

current situation

Analysis of current

situation

(measurement)

Target situation

Implementation

and controlling

System

design

Process Management - V.G. 66Representation of current situation

System

design

RESOURCES

FONDS €€€€€

HUMANS/EMPLOYEES

TIME/DURATION


▪ Outline the individual process steps

▪ Validate problem / process

▪ Refine problem / objective definition

Individual process stages are depicted (FLOW CHART)


Decision

Process

step/activity

Document/

output

Other process

Database/

input

System

design



Rechnung erfassen

Monats-

ARZ- oder KSV-

Rechnung?

Eingangsrechnung



retoursenden

Nein

Ja

Nein

Sek

151/155

IAV-DB

Bestellung /

Lieferschein ggf.

IT-

Komponenten

bestellen


der Rechnung

E1

E3

Sek151

Monats-

ARZ- oder KSV-

Rechnung?

Ja

Rechnung

trifft ein

E2

Rückmeldeprüfung

und ggf.

Reklamationsbearb.

E6


im Stempel prüfen

(ggf. ergänzen),


E7

Mail, AV,

Kopie der RESek151


weiterleiten

E4

Prüfer

ggf.

Lief.

E5

ggf.

Lief.

ggf.

Prüfer

ÖVAG-RE

> 7.500 EuroJa

Div. Unterlagen zur

Aufteilung an

Prüfer

Sek

151/155

PrüferSek

151/155

Sek151

Sek151

Sek

151/155

Sek

151/155

D=


E = Entscheidung

M = Mitarbeit


En =Verweis aufErläuterung


ProzessschrittProzessschrittProzessschritt

Process

DokumentDocument

DBDB

Entsch.Entsch.Entsch.

As few as possible, as many as necessary

Rules for use of symbols:


Process step/activity (verb + noun)

Decision

Document (input/output)

Data storage (database/intranet)

Reference to another process

Process step

DecisionYes

No

System

design


SWIMLANE DIAGRAMS shows

clearly transitions of responsibilities


System

design


Analysis based on depiction of processes

<Prozessname>

GF

MF

AL

eite

r P

KK

UB

EK

un

de

▪ Data-based

▪ Documented

▪ Coordinated (shared view)

▪ Optimum use of tools


System

design


System

design Capability Maturity Model Integration


System

design

Attribution-ShareAlike 4.0 International – Oleg Garipov

DRAKON Algorithm


System

design

By DanielPenfield - Own work, CC BY-SA 3.0

Value Stream Mapping


System

design Value Stream Mapping

Value-stream mapping is a lean-management method

for analyzing the current state and designing a future

state for the series of events that take a product or

service from its beginning through to the customer with

reduced lean wastes as compared to current map.

A value stream focuses on areas of a firm that add

value to a product or service, whereas a value chainrefers to all of the activities within a company.

https://en.wikipedia.org/wiki/Lean_product_development

https://en.wikipedia.org/wiki/Value_stream

https://en.wikipedia.org/wiki/Value_chain


System


The purpose of value-stream mapping is to identify and

remove or reduce "waste" in value streams, thereby

increasing the efficiency of a given value stream.

Waste removal is intended to increase productivity by

creating leaner operations which in turn make waste

and quality problems easier to identify.


System



System

design Types of Waste

1.Faster-than-necessary pace: creating too much of a good or service that damages production flow, quality, and

productivity. Previously referred to as overproduction, and leads to storage and lead time waste

2.Waiting: any time goods are not being transported or worked on.

3.Conveyance: the process by which goods are moved around. Previously referred to as transport, and includes

double-handling and excessive movement.

4.Processing: an overly complex solution for a simple procedure. Previously referred to as inappropriate

processing, and includes unsafe production. This typically leads to poor layout and communication, and

unnecessary motion.

5.Excess Stock: an overabundance of inventory which results in greater lead times, increased difficulty identifying

problems, and significant storage costs. Previously referred to as unnecessary inventory.

6.Unnecessary motion: ergonomic waste that requires employees to use excess energy such as picking up

objects, bending, or stretching. Previously referred to as unnecessary movements, and usually avoidable.

7.Correction of mistakes: any cost associated with defects or the resources required to correct them.

According to Daniel T. Jones


System

design Waste removal Operations

According to Monden

Identified three types of operations:

1.Non-value adding operations (NVA): actions that should be

eliminated, such as waiting

2.Necessary but non-value adding (NNVA): actions that are

wasteful but necessary under current operating procedures

3.Value-adding (VA): conversion of processing of raw

materials via manual labor


System

design Business Architecture

Policies & Rules &

Regulation

Capabilities Vision & Strategies &

Tactics

InformationOrganization

Initiatives & Projects

Value StreamsProducts & Services

Decisions & Events

Metrics & Measures

Stakeholders

?

?

?

?

?

??

?

??


▪ Describe details of activities

▪ Document exceptional cases which occur infrequently

▪ Graphic representation reduces complexity

Example: instructions


Prepare

customer

meeting

System

design

No.

1

Process step Description

Preparing documents needed for the meeting:

•Prepare available customer documents (customer/company

data, financial statements, balance sheets)

•Evaluate customer’s business environment (market, financial

situation)

•Analyse any customer accounts (data, figures)

•Collect/process relevant customer information, use of latest

customer ratings

•Evidence of active customer service – how can I secure an

appointment with the customer?

•Evidence of customer support – arrange appointment;

examination of amounts outstanding recommended (information

from ???)

•Analyse current evidence (previous loans, audit reports, etc.

New customers: collect external information (association for

protection of creditors, debt collection organisations, etc.

Step II: Analysis of current process /

depiction and description of current process steps


▪ Input side

▪ Output side

▪ Between departments / individuals

▪ Customer-facing

Who

participates?

What is

provided?

How often? When? In which form?

Points of contact


System

design


Process identification should reveal potential for improvement. These

should be centrally recorded and kept up to date.

Process nameProcess owner Weaknesses Options for improvement Measures Tasks for Deadline? Status Comments

Potential for improvement


System

design


3

Analysis of current situation (measurement)


&

delineation

Process

management

Representation of

current situation

Analysis of current

situation

(measurement)

Target situation

Implementation

and controlling

System

design


Which parameters can be used to

measure the current situation?



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der Rechnung

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Rechnung?

Ja

Rechnung

trifft ein

E2

Rückmeldeprüfung

und ggf.

Reklamationsbearb.

E6


im Stempel prüfen

(ggf. ergänzen),


E7

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und weiterleiten

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PrüferSek

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E = Entscheidung

M = Mitarbeit


En =

Verweis auf

Erläuterung



Rechnung erfassen

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ARZ- oder KSV-

Rechnung?

Eingangsrechnung



retoursenden

Nein

Ja

Nein

Sek

151/155

IAV-DB

Bestellung /

Lieferschein ggf.

IT-

Komponenten

bestellen


der Rechnung

E1

E3

Sek151

Monats-

ARZ- oder KSV-

Rechnung?

Ja

Rechnung

trifft ein

E2

Rückmeldeprüfung

und ggf.

Reklamationsbearb.

E6


im Stempel prüfen

(ggf. ergänzen),


E7

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RE gemäß Pouvoir

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Ja

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Div. Unterlagen zur

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Prüfer

Sek

151/155

PrüferSek

151/155

Sek151

Sek151

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151/155

D=


E = Entscheidung

M = Mitarbeit


En =

Verweis auf

Erläuterung


▪ All key success factors

▪ Time (waiting time, cycle time,

processing time, etc.)

▪ Costs

▪ Types and frequency of

errors

▪ Everything which the

customer can also

measure


System

design


▪ Confusing current and target situations

▪ Insufficient, unrepresentative or imprecise data

▪ Forgetting the customer – always consider impacts on the customer

▪ Measuring everything which is measurable

▪ Lack of focus on key objectives/statements

▪ Clean slate instead of tried-and-tested approaches

Obstacles in this phase:System

design



4Target situation

Process

management

Representation of

current situation

Analysis of current

situation

(measurement)

Target situation

Implementation

and controlling


&

delineation

System

design


▪ Process identification and delineation

▪ Customers / expectations / success factors

▪ Analysis of weaknesses and catalogue of measures

▪ Classification of weaknesses

▪ Point-of-contact analysis

▪ Depiction and description of current process steps

▪ Current flow chart

Present outcomes

Target situation

System

design


The target situation illustrates the desired future process, based on information collected on the current situation and performance

▪ Strategic objectives

▪ Technological requirements

▪ HR requirements

▪ Cost objectives

▪ Local requirements

▪ Potential for improvement identified in analysis of current

situation



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Monats-

ARZ- oder KSV-

Rechnung?

Eingangsrechnung



retoursenden

Nein

Ja

Nein

Sek

151/155

IAV-DB

Bestellung /

Lieferschein ggf.

IT-

Komponenten

bestellen


der Rechnung

E1

E3

Sek151

Monats-

ARZ- oder KSV-

Rechnung?

Ja

Rechnung

trifft ein

E2

Rückmeldeprüfung

und ggf.

Reklamationsbearb.

E6


im Stempel prüfen

(ggf. ergänzen),


E7

RE einscannen

und weiterleiten

E8

Kontrollierte,

freigegebene und

zugeordnete RE

OE 820

bzw.

Tochter

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Mail, AV,

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Lief.

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ÖVAG-RE

> 7.500 Euro

RE gemäß Pouvoir

unterfertigen

Ja

NeinLtg150

E9

Div. Unterlagen zur

Aufteilung an

Prüfer

Sek

151/155

PrüferSek

151/155

Sek151

Sek151

Sek

151/155

Sek

151/155

Sek

151/155

D=


E = Entscheidung

M = Mitarbeit


En =

Verweis auf

Erläuterung



Rechnung erfassen

Monats-

ARZ- oder KSV-

Rechnung?

Eingangsrechnung



retoursenden

Nein

Ja

Nein

Sek

151/155

IAV-DB

Bestellung /

Lieferschein ggf.

IT-

Komponenten

bestellen


der Rechnung

E1

E3

Sek151

Monats-

ARZ- oder KSV-

Rechnung?

Ja

Rechnung

trifft ein

E2

Rückmeldeprüfung

und ggf.

Reklamationsbearb.

E6


im Stempel prüfen

(ggf. ergänzen),


E7

RE einscannen

und weiterleiten

E8

Kontrollierte,

freigegebene und

zugeordnete RE

OE 820

bzw.

Tochter

-BuHa

Mail, AV,

Kopie der RESek151


weiterleiten

E4

Prüfer

ggf.

Lief.

E5

ggf.

Lief.

ggf.

Prüfer

1

ÖVAG-RE

> 7.500 Euro

RE gemäß Pouvoir

unterfertigen

Ja

NeinLtg150

E9

Div. Unterlagen zur

Aufteilung an

Prüfer

Sek

151/155

PrüferSek

151/155

Sek151

Sek151

Sek

151/155

Sek

151/155

Sek

151/155

D=


E = Entscheidung

M = Mitarbeit


En =

Verweis auf

Erläuterung


NEW

Target situation

System

design


Source: H. Thompson

Strategic alignment of processes with corporate objectives

Strategies

Strategic objectives

Operative

objectives

processes

Staff

VorstandVorstand

COC

Z

COC

Z

COC

Y

COC

Y

COC

X

COC

X

COC

W

COC

W

COC

V

COC

V

COC

U

COC

U

Bereich

A

Bereich

ABereich

B

Bereich

BBereich

C

Bereich

CBereich

D

Bereich

DBereich

E

Bereich

EBereich

F

Bereich

F

Departmens

Projects

Vision

Mission

Customer perspective Company perspective

▪ Medium to long-term planning

and management

▪ Business plan

▪ Balanced scorecard

▪ Company “DNA”

▪ Self-perception

▪ Values

• Short-term planning and

management

▪ Budget

▪ Annual plans

▪ Discussion of objectives

Target situation

System

design

..\Vision and Mission\Vision and Mission.pptx

../Vision and Mission/Vision and Mission.pptx


Source: Horvath und Partner

Very

gen

era

l

Very

specific

StrategyStrategic

objectiveParameters Targets Strategic projects

Retain existing

customers

Deal with customer

requirements more

quickly

Improve service

quality for existing

customers

Turn secondary

customers into key

customers

Time from order to

payment

Customer

satisfaction index

Number of new

customers

-10%

+25%

+50%

Relieving sales

staff of

administrative

work

Use of

discussion

guidelines and

controlling

Using

controlling to

manage

targeted

discussions

Service quality as

a source of

differentiation

Increase

proportion of new

customers

Putting strategy into action

Target situation

System

design


The target situation defines the framework for

future process management approaches

▪ Who is the process owner?

▪ Who works in the process team?

▪ Who is the process manager?

▪ Who is the system sponsor?

▪ Who reports to whom on process performance?

▪ How often are reports made?

▪ Which process indicators will

be measured in future?

▪ How should measurement take place?

▪ Have resources been earmarked for data

generation?

▪ How much time is available

for process improvement

Roles and responsibilities Reporting

Measurement Resources

▪ What form do the reports

take?

process

▪ How should resources be allocated between

projects, processes and functional organisation?

Target situation

System

design


Process indicators

Source: Wagner

No. Process objective Indicator Target Measurement method Frequency Responsibility

1

Restoring IT

services as quickly

as possible in the

event of faults

1st level support:

<= 4 hours

2nd level support:

<= 24 hours

Automatic

measurement

via ticketing

system

Weekly,

evaluation and

discussion during

jour fixe

Helpdesk

manager

Indicators define the parameters

which make up the content of

measurements

How often are

measurements taken?

Avoid manual measurement (cost,

precision!)

Who is responsible for measurement,

evaluation and analysis?

Targets based on experience and

management specifications

Time from user call

to helpdesk to

closure of ticket

Target situation

System

design


Requirements for good indicators

▪ Measurement should not be excessively difficult (in the best case automated)

▪ Not in conflict with other corporate targets

▪ Compatible with goals of departments affected by the process

▪ Must be realistic

▪ Content, scope and timeframe should be clearly defined

▪ Achievement of process targets should have management implications

(incentive system)

▪ Management should receive the main process measurement results and

analyses through a reporting system.

Target situation

System

design


1. Specify what is being measured

feasible / valuable?

2. Develop precise definitions

Avoid misunderstandings (E.g. red vehicles)

3. Identify data sources

Staff / systems

4. Draw up a data-collection plan

Checksheets, characteristics

5. Implement and refine the indicators

Test, data-collection procedures

Source: Pande / Neumann / Cavenaugh

Target situation

System

design


▪ Processing applications

for commercial loans in

four weeks

Bad: Good:

▪ Maximum seven days between

initial contact and arrangement

of appointment with assessor

▪ Maximum one working day to

on-site appointment

▪ Maximum three working days

from loan approval to transfer of

required sum

Target situation

Example: formulating indicators –commercial lending

System

design


▪ Specific

▪ Measurable

▪ Action oriented/Achievable

▪ Realistic/Relevant

▪ Timebound

Target situation

System

designGoals/Indicators Characteristics

▪ Ecological

▪ Rewarding


▪ Have customer expectations been fulfilled?

▪ Have weaknesses influencing the process been considered?

▪ Where should documentation/inputs be integrated into the process?

▪ Where are explanations necessary?

▪ Can process quality really be measured?

▪ Have measures been outlined in full (who/deadline)?

▪ Are the costs of the measures transparent?

Final checks before process inspection

Target situation

System

design


▪ Links to strategy overlooked

▪ Line managers forget to record results

of improvements

▪ Too much bureaucracy

▪ Cost of implementing improvements not

considered

▪ Sticking too rigidly to method – do the

sensible thing (use common sense)

Obstacles in this phase:System

design

Target situation


5

Implementation and controlling

Process

management

Representation of

current situation

Analysis of current

situation

(measurement)

Target situation

Implementation

and controlling


&

delineation

System

design


Implementation: Pilot (dry run)

▪ Trying out new ideas on a small scale

▪ Learning from mistakes – collect experience

▪ Minimise cost of errors

▪ Small number of process cycles / limited scope

▪ Document results

2. Constructing a process management system


System

design


Training Measuring

Documentation Fine tuning

Troubleshooting

Critical ingredients

Implement changes to the process

Implementation: key success factors


System

design


Controlling: before “go live”

5 ▪ Approval by line organisation

4

3 ▪ Plan roll-out

2 ▪ Update project storyboard and list of potential improvements

1 ▪ Finalise process documentation

▪ Approval of project by client (if end of project)


System

design


Drafting of

measures

(documentation)

Approval by line

organisation

Electronic

publicationTechnical

roll-out

Methodical

roll-out

Appro

val


Einleitungs-

Phase

System

designIntroduction


Roll-out

phase


▪ Underestimating time required for

implementation

▪ Lack of or unclear approval can lead to

constant backsliding

▪ Forgetting people and their attitudes (importance

of change management)

▪ Ignoring resistance

Obstacles in this phase: System

design




mandate and

commitment





between process




map


for optimisation

▪ Define

▪ Measure

▪ Analyse

▪ Implement

▪ Control


history




measures

▪ Documentation



organisation


▪ Controlling


system


successes


activities


System

design

Roll-out-

phase


Introduction

Project

Roll-out phase

Roll

out


Activities in the roll-out phase(1)

Roll-out phase

▪ Determine exact process for identifying indicators with the process owner,

i.e. organising data provision => fine tuning

▪ Develop history of measurement data and objectives

▪ Identify essential measures to be implemented before approval

▪ Examine list of measures and allocate responsibilities to specific individuals

▪ Pass on general process management information (flows, process map,

website, etc.) to centre manager level at least

Roll

out


▪ Create organisational structures which support flow of technical information

to people influenced by the process (line communication)

▪ Pushing and coaching process team members (supporting data collection,

arranging meetings, etc.) => independence

▪ Hold meetings with process owner, e.g. corrective measures and

improvements, reporting, comparing notes, etc.

▪ Knowledge transfer process map => process manager

Activities in the roll-out phase(2)

Roll-out phase

Roll

out



mandate and

commitment





between process




map


for optimisation

▪ Define

▪ Measure

▪ Analyse

▪ Implement

▪ Control


history




measures

▪ Documentation



organisation


▪ Controlling


system


successes


activities


System

design

Roll-out-

Phase


Introduction

Project

Functioning process management system - overview

FocusPrinciples of Process Organisation and Quality Management


9.00 – 10.30 → Process Optimization Methods

10.30 - 11.30→ Coffee Break + Group Works

11.30 - 13.00 → Lecturing

Training Schedule


Agenda


Principles of process organization


Process optimization methods


▪ Customer analysis▪ Interviews

▪ Focus groups

▪ Surveys

▪ Process analysis▪ Value creation

▪ Failure mode and effects analysis (FMEA)

▪ Moments of truth


▪ Process measurement▪ Selecting performance indicators

▪ Interpreting performance measurements

3. Process optimisation methods



Integrating customer requirements

Product / service

definition

Market volume

Market characteristics

Purchasing motives

Product / service

features

Market research

Focus on customer

requirements

Process design

Identify potential customers

Define customer expectations

Determine customer requirements

Process design based on

customer requirements Product / service

manufacturing process



▪ How do I ask the customer?

▪ Interviews

▪ Focus groups

▪ Surveys

▪ What do I ask the customer?

▪ Purchasing motive

▪ Expectations

▪ Quality of contact (processes)

3.1 Customer analysis methods



▪ Purpose

To reveal customer views on quality of service, product and/or service features and

indicators of success.

▪ When is it used?

When the company needs to know what is important for the customer and why,

and to check any assumptions (confirming/testing hypotheses)


3.1 Customer analysis – Interviews


▪ Flexible

▪ Complex questions

possible

▪ High reply rate

▪ High costs

▪ Results can be influences

▪ Difficult to analyse

▪ Sample representative enough?

Advantages Disadvantages


3.1 Customer analysis – Interviews


▪ Purpose

To collect information from a group of customers

who are representative of a particular segment.

▪ When are they used?

To discover what is important for the customer, whether any particular demands

have priority, and to check any assumptions (confirming/testing hypotheses)


3.1 Customer analysis – Focus groups


▪ confirming segmentation

decisions

▪ testing hypotheses on customer

needs

▪ rectifying communication

problems between company and

market

▪ conflict situations

▪ quantitative analysis

▪ Situations where confidentiality is

important

▪ Sales situations

Suitable for… Unsuitable for...


3.1 Customer analysis - Focus groups


▪ Purpose

To measure customer requirements of the importance of or customer

satisfaction with a product, service or attribute in one or more segments.

This method produces quantitative data.

▪ When they are used?

To collect information efficiently from a large group of respondents. Reliable

statistical analysis is possible. Measuring the current situation (and any

changes over time)


3.1 Customer analysis – Surveys


3.1 Customer analysis – Surveys

▪ suggestive questioning

▪ examples

▪ over-/underspecification

▪ sequence of questions

▪ lack of criteria, etc

Can be influenced by…



The most common measurement and optimisation criteria for business processes

Source: Studie Geschäftsprocessmanagement

in der produzierenden Industrie, Bach, Lehrstuhl für

U-Führung und Organisation, 2004.


3.1 Customer analysis

Cycle time

Reliability

Error rate/down times/defects/error

costs

Costs (processes, HR)

Productivity/efficiency

Income/revenue/growth

Process quality

Process expertise

Product quality

Transparency

Points of contact/information flow

Staff motivation

Capacity utilisation

Inventory reduction

Frequency (%)


1. Systematic identification of weaknesses:

Determine ownership

Structuring and prioritising potential improvements ensures their systematic and understandable implementation

Weakness Cause(s)Proposed

solutions

Solution

approved by/on

Responsible for

implementation until

Implementation

costs

1-4

Importance for

process

1-4

2. Prioritise and categorise

Identify quick wins (what can be changed immediately?)

Consider project criteria


3.2 Process analysis


▪ Value creation analysis

▪ Process failure mode and effects analysis

(FMEA)



➢ Long-term potential for improvement

➢ Continuous process improvement


3.2 Process analysis methods


Preparation:Preparatory activities for subsequent steps(e.g. tidying workplace, retrofitting)

Controlling:Internal process controlling activities (e.g. checking, approval)

Delay/maintenance/storage:Activities which must be completed before work can continue (e.g. temporary storage, stockkeeping)

Malfunction:Activities resulting from errors in a particular process step(e.g. reworking, recall)

3.2 Process analysis – Value creation analysis



▪ Purpose?

Identify process stages which incur costs and take up time

without creating additional value for the customer

▪ Where is it used?

To identify parts of a process where improvements could be

made

3.2 Process analysis – value & cycle time worksheet

Source: Pande/Neumann/Cavenaugh, The Six Sigma Way



Process stage 1 2 3 4 5 6 7 8 9 10 Total Total %

Value 10 100%

Value-adding 1 1 2 20%

Supporting 1 1 1 1 4 40%

Non value-adding 1 1 1 1 4 40%

Time 180 100%

Processing VA 10 20 30 17%

S 20 10 20 20 70 39%

NVA 20 10 30 20 80 44%

Down time

(maintenance) 120 330 0 20 180 10 20 180 20 0 880

Cycle time 130 350 20 30 190 30 40 200 50 20 1060

Value-adding total time 30

Value-adding total time in % 17%



3.2 Process analysis – value & cycle time worksheet

Total Capacity (24h x 7days a week)

Idle

Time

Other

Activities

Paid Time (Base for Efficiency)

Earned Time

(Theoretical Hours)

unrec.

Down

Times

Continuous Operation

(Prod. Running)

recorded

Down- and

Stoptimes

Paid vs. Earned Time








▪ Process failure mode and effects analysis (FMEA)




▪ Systematic, semi-quantitative risk-analysis method

▪ Tool for preventive examination of process, product and system

weaknesses

▪ Preventive elimination of errors by…

➢ identifying potential causes of errors

➢ evaluating errors with regard to potential risk

3.2 Process analysis – Process FMEA



Process stage Risk ImpactProbability

(1-10)

Impact

(1-10)

Likelihood of

identification

(1-10)

Risk

potentialMeasures

Input of the

customer detailsDouble input

Orders and invoices cannot be

clearly assigned

Incorrect customer history

(incorrect CRM analysis)

Customers incorrectly categorised

2 5 8 80

Identical or similar

customer names

displayed

automatically


3.2 Process analysis– Process FMEA


Customer evaluation of quality takes place before, during and after

service consumption

Source: Fließ, Dienstleistungsmanagement (2004)

Potential-

quality

(expected)

Result

quality

(retained)

Process

quality

(experienced)

TECH dimension

WHAT?

TOUCH dimension

HOW?

Building/room facilities,

technical equipment,

education, certification

Duration, procedure,

level of customer

integration

Satisfaction,

communicative

after-sales service

Atmosphere, climate,

method of customer integration,

interactive behaviour

Prominence,

appearance, staff

personalities

Function, durability,

consequences, supplementary

services



Moments of truth – it is all about creating EXPERIENCE!

“The point where a customer has contact with any aspect of the company –

regardless of distance – is a chance to leave an impression.”- Jan Carlzon

e.g.:

▪ initial contact

▪ problem solving

▪ initial use

3.2 Process analysis – Moments of truth


▪ ongoing support

▪ repeat purchase

▪ recommendation

It is about INVOLVING CUSTOMERS in one’s business.


3.2 Process analysis – Moments of truth


Zero Moment of Truth (ZMOT). Introduced by Google, it's what people search for and find after encountering the stimulus that directs their next steps. As Google itself puts it, this is "that moment when you grab your laptop, mobile phone or some other wired device and start learning about a product or service you’re thinking about trying or buying.”

First Moment of Truth (FMOT). Introduced by Proctor & Gamble (P&G), it's what people think when they see your product, and the impressions they form when they read the words describing your product. "It is in these precious moments that P&G believes marketers must focus efforts on converting shoppers into customer.”

Second Moment of Truth (SMOT). Furthering P&G's thinking, it's what people feel, think, see, hear, touch, smell and (sometimes) taste as they experience your product over time. It's also how your company supports them in their efforts throughout the relationship.

Ultimate Moment of Truth (UMOT). A stage that Solis introduces brings to light the importance of shared experiences and why organizations must first design them rather than just react. It's that shared moment at every step of the experience that becomes the next person's ZMOT.

by A.G. Lafly CEO P&G and Brian Solisthe author of What's the Future of Business: Changing the Way Businesses Create Experiences

http://www.briansolis.com/

http://www.wtfbusiness.com/


Contact partners: Person : Person

Person : Machine (AI?)

Machine : Machine

Point of contact between Subject Method of transfer

Customer advisor and back office Loan application Electronic

Back office staff and back office

manager

Credit rating Presentation in weekly back office

meeting

Process: Commercial lending

3.2 Process analysis – Point-of-contact analysis



3.2 Process analysis – Point-of-contact analysis


Advantages of human beings (HB) over the Artificial Intelligence (AI) – at least for now:

- Creativity- Thinking „out of the box”; identifying new ways of solving problems; true creativity is

exclusively human characteristic

- Compassion- Ability to empathize with people and to „step into their shoes”; Finding points of connection

- Connection- People are social beings. They connect to each other; Building relationships; Discovering what

makes people tick

- Social Intelligence- Social intelligence belongs to humans only! Ability to understand non-verbal cues, ton of voice,

sarcasm, humor. More than 90% of communication is made of body language


Examples

▪ Quality: Proportion of errors, level of goal attainment

▪ Time: Cycle time, execution time, defined end point

▪ Cost: Production, breakdowns

Quality

CostTime

3.2 Process analysis –process objectives should meet three criteria:


Process Objective Criteria


How can I identify reliable indicators?

1. Link to moments of truth

(evaluation by the CUSTOMER!)

2. Define on basis of key success factors

3. Use observable and measurable factors

4. Create pass/fail standards

5. Process requirements must correspond to customer needs





▪ Observe, then measure

▪ Can’t do won’t do

▪ Measure for a good reason

▪ Measuring demands resources, energies, etc.

▪ Discrete and continuous data

▪ Attributes (red, yellow, green), indivisible units (e.g. people),

▪ artificial scales (agree … disagree), etc. = discrete

▪ Measured on an infinitely divisible scale,

e.g. weight, height, time, temperature, etc. = continuous


3.2 Process analysis –evaluating and interpreting process performance



Supplier Input Process Output Customer


Where in the process should indicators be put in place?

3.3 Process measurement



Efficiency

▪ Resources used in the

process relative to best

possible usee.g.:

▪ cost per transaction

▪ duration of each activity

▪ cycle time

Supplier Input Process Output CustomerSupplier Input Process Output Customer

Process effectiveness

▪ Ability of process to produce

products/services in line with

specifications e.g.:

▪ number of rejects

▪ reaction times

▪ punctuality

▪ service levels

Customer relevance

▪ Ability of outputs to meet

customer expectations

e.g.:

▪ satisfaction with product/service

▪ usefulness in customer processes



3.2 Process measurement methods –the position of indicators determines their significance


Continuous data

▪ Measured on an infinitely divisible

scale, e.g. weight, height, time,

temperature, etc.


Discrete data

▪ Attributes (red, yellow, green), indivisible

units (e.g. people), artificial scales (agree

… disagree), etc.

▪ Highlighting variance in processes

▪ Diluted “average”

NORMALVERTEILUNG

LSL USL

Firmenzugehörigkeit

9

12

7

5

0-1 Jahre

1-5 Jahre

> 5 Jahre

k.A.

3.2 Process analysis –process performance evaluation and interpretation


Normal distribution

Quality management – Part 2

Methods, benefits, practical applications

Agenda


Principles of quality management

Principles and scope of quality management

Quality philosophy

Quality management methods

Additional explanations

147

Principles and scope of quality management

▪ Definition

▪ Scope

▪ Pillars

▪ Quality philosophy

▪ Kaizen and quality circles

▪ TQM

▪ EFQM

▪ ISO 9000

▪ Establishing quality management in companies

..\Motivation\MOTIVACIJA.ppt

The Principles of Quality managementProcess Management - V.G.

../Motivation/MOTIVACIJA.ppt


Principles of quality management

The Principles of Quality Management


Definition

▪ Quality management is designed to ensure that proper consideration is

given to quality issues in an organization.

Quality is relevant for a company’s products and services and internal

processes. It is defined as the extent to which products or processes meet

customer requirements.

These requirements may be either explicitly or implicitly defined.



System and Tools Teamwork

Customer focus

Quality triangle



Scope

Focus on results

Customer-focus

Leadership and

goal consistency

Management with processes and

facts

Staff development and participation

Continuous learning,

innovation and improvement

Building

partnerships

Responsibility to the public


The Pillars of Quality Management

„Customer is the king!”

▪ Customer satisfaction is the most important fact for

the company success (not for the monopolists!)

▪ Company must measure it!!!

▪ … but – there is a problem! One has to measure hard

facts but also SOFT success factors!

Process Management - V.G. 152The Principles of Quality Management

Management Concepts - Tools

Some of existing tools are:

▪ Balanced Score Cards (BSC)

▪ EFQM Excellence Model (European Foundation for Quality Management)

▪ Service-Profit Chain

These tools are measuring not only financial impact but also soft

success factors.


Quality PhilosophyContinuous Improvement of Processes and Products


Quality PhilosophyContinuous Improvement of Processes and Products


CPI - Continuous

Process

Improvement =

KAIZEN


The Objectives of CPI

▪ Increased productivity (i.e. reducing down time)

▪ Cost savings (i.e. inventory reduction – JIT principle)

▪ Increased flexibility (i.e. flexible organisation)

▪ Quality improvement (i.e. reducing rework or waste)

▪ Increase job satisfaction and staff motivation (i.e. better

working conditions)

▪ Raising customer satisfaction (i.e. satisfying customers’

demand)


Meaning of Quality Management

Quality is the result of

PREVENTION, not CONTROL!

The ultimate goal of good quality management

is to AVOID mistakes in every process step!



Today in the most successful companies exists position of Quality

Manager (Company or Corporate Quality Manager)

His/Hers priorities are:

▪ With a team to provide systematic suport to top management

▪ To administer quality management (introducing new processes,

laws…)

▪ To position the QM topic as the key aspect of the organizational

politics



Quality management systems are:

▪ Structured descriptions of models

▪ Quality is a part of the overall management (TQM)

▪ Top corporate function

▪ System involving tasks and the allocation of functions – structures,

measures, checks and balances

▪ This is the fact-based management

▪ TQM has holistic view of the whole company (all processes!)


Quality Management is defined by ISO 9001 as LEADERSHIP FUNCTION


Quality Philosophy

Kaizen

Process Management - V.G. 160KAIZENThe Principles of Quality Management

Meaning of Kaizen

▪ Kai → change

▪ Zen → better

161

Kaizen

„Change for the better” with the goal of Continuous Improvement

. The Principles of Quality ManagementProcess Management - V.G.

Beginning

▪ 1936 Kaizen Improvement teams – Toyota Motor Corporation▪ During the WW II - in the USA production plants – focus on small-step work

improvements – existing technologies and workforce

▪ After WW II - USA developed scientific approaches to optimizing production processes – focus on quality

▪ TWI Job Methods (Training Within Industry)

▪ W. Edwards Deming introduced Statistical Process Control in QC

▪ Those methods were transferred to Japan in 1950-60▪ TWI → KAIZEN

▪ 1950 – 1960 – post-war Japan miracle

▪ Japan starts to take over in the USA developed ideas (among others) of QM and significantly improved them

▪ Using PULL method for production planning → JIT was born!

▪ Eliminating waste → lean manufacturing

162Process Management – V.G. The Principles of Quality Management

Meaning of Kaizen

➢ Kaizen is NOT the METHODOLOGY

➢ Kaizen is PHILOSOPY/State of mind

This philosophy was adopted by Japanese industry

TOYOTA PRODUCTION SYSTEM

(TPS)


Champions of Kaisen

▪ Dr. Shigeo Shingo

▪ Production cycle optimisation

▪ Consultant to Toyota Company

▪ Taiichi Ohno

▪ Shop flor & production optimisation

▪ Toyota executive

▪ With Dr. Shingo helped created TPS

Process

Management -

V.G.


Kaisen characteristics

▪ Continuous improvement process

▪ Quality enhancing drive – product quality and the quality of the whole

Company

▪ Has impact on the WHOLE Company on EVERY management and

hierarchy level

▪ Inter-disciplinary cooperation and cross-functional management (no

SILO effect!)

▪ Supporting Company’s ultimate goal – meeting CUSTOMER’s

needs

Process

Management -

V.G.


Kaizen Structure

▪ Flow Kaizen

▪ Reorganisation of entire production area/company

▪ Process Kaizen

▪ Improvement of the individual workstand/single process

Process

Management -

V.G.


Continuous Improvement

▪ Both Kaizens are used to continuously improve functionality of the

company

▪ Focus on meeting customers’ needs

▪ Ensuring Company's’ longevity

Process

Management -

V.G.


Kaisen Umbrella

Process

Management -

V.G.


Business Optimisation Tools

▪ Kanban

▪ Kaizen

▪ TPS

▪ TQM

▪ CI

▪ Lean Management

▪ 6 Sigma

▪ Just-in-Time

▪ Bata-Poka → Poka-yoke

▪ ……

Process

Management -

V.G.


Total Capacity (24h x 7days a week)

Idle

Time

Other

Activities

Paid Time (Base for Efficiency)

Earned Time

(Theoretical Hours)

unrec.

Down

Times

Continuous Operation

(Prod. Running)

recorded

Down- and

Stoptimes

Paid vs. Earned Time


Other QM Tools

Quality Circles

▪ In house working groups

▪ Employees come together voluntarily every 2-3 weeks to discuss

different topics and to search for the improvement

▪ Meeting during the working hours

▪ Topics are from their working environment

171Process Management - V.G.

Other QM Tools

Total Quality Management (TQM)

▪ This is the philosophy but also the tool transferring KAIZEN to

actions

▪ This is organizational leadership method/philosophy

▪ Does not involve revolutionary ideas

Key areas of TQM:

▪ Methods and Processes

▪ Behaviors and Attitudes


Other QM Tools

Total Quality Management (TQM)

▪ Total:▪ Whole organization is involved!!!

▪ Quality:▪ Defined in DIN 55350 part 11: „QUALITY referres to the characteristic of

a unit regarding its ability to satisfy defined and derived requirements”.

▪ Good quality means satisfying requirements

▪ The customer decides whether requirements have been satisfied

▪ Requirements are becoming ever greater

▪ Management▪ The process is actively managed.

▪ Entire company is involved with all employees


Other QM Tools

Five elements of TQM

▪ Training

▪ Teamwork

▪ Quality Improvement/Excellence Teams

▪ Problem Solving Teams

▪ Natural Work Teams

▪ Leadership

▪ Communication

▪ Recognition


Other QM Tools

European Foundation for the Quality Management (EFQM)

175

PEOPLEInvolment of all employees

EVENTSTo achieve improved results

PROCESSESAs part of CIP

The pillars of TQM

Process Management – V.G. The Principles of Quality Management

Other QM Tools

European Foundation for the Quality Management (EFQM)


Other QM Tools


PDCA Deming

178

Source: Wikipedia.de


Deming Key Principles

1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive, to stay in business and to provide jobs.

2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.

3. Cease dependence on inspection to achieve quality. Eliminate the need for massive inspection by building quality into the product in the first place.

4. End the practice of awarding business on the basis of a price tag. Instead, minimize total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust.

5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.

6. Institute training on the job.

7. Institute leadership (see Point 12 and Ch. 8 of Out of the Crisis). The aim of supervision should be to help people and machines and gadgets do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.

8. Drive out fear, so that everyone may work effectively for the company. (See Ch. 3 of Out of the Crisis)

9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and usage that may be encountered with the product or service.

10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

➢ Eliminate work standards (quotas) on the factory floor. Substitute with leadership.

➢ Eliminate management by objective. Eliminate management by numbers and numerical goals. Instead substitute with leadership.

11. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.

12. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objectives(See Ch. 3 of Out of the Crisis).

13. Institute a vigorous program of education and self-improvement.

14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.

W. E. Deming book „Out of the Crisis” p. 23-24


https://en.wikipedia.org/wiki/Continual_improvement_process

https://en.wikipedia.org/wiki/Culture_of_fear#In_the_workplace

https://en.wikipedia.org/wiki/Vitality_curve

https://en.wikipedia.org/wiki/Management_by_objective

https://en.wikipedia.org/w/index.php?title=Management_by_numbers&action=edit&redlink=1

https://en.wikipedia.org/wiki/Pride_of_workmanship

https://en.wikipedia.org/wiki/Performance_rating_(work_measurement)

https://en.wikipedia.org/wiki/Management_by_objectives

6 Sigma (DMAIC)

▪ Based on the statistics work of Joseph Juran

▪ Meaning:

▪ Illustrates how far the given process deviates

from perfection (standard deviation)

▪ The higher the value of sigma, the closer is the

process to perfection

▪ The highest value – Six Sigma – is defined as

3,4 defects per million units produced


6 Sigma (DMAIC)

181

1. DEFINE- Identify the problem- Define requirements- Set objectives

2. MEASURE- Validate problem- Refine problem/objective

definition- Measure main steps/inputs

3. ANALYZE- Develope hypothesis for causes- Identify main causes- Validate hypothesis

4. IMPROVE- Validate problem- Refine problem/objective

definition- Measure main steps/inputs

5. CONTROL- Establish standard

measurements to maintainperformance

- Correct where required


6 Sigma (DMAIC)


SERVQUAL

183

▪ This is technique for analysing gaps between company’s service

quality and customer requirements

▪ It is empirical method

▪ Interview with the customer related to a selection of key services

dimensions:

▪ Tangible

▪ Reliability

▪ Responsiveness

▪ Competence

▪ Courtesy

▪ …

Process Management V.G. The Principles of Quality Management

SERVQUAL Model


5 S Method


Other Tools

▪ Fault list

▪ Histogram

▪ Control Chart

▪ Trend

▪ Portfolio

▪ Pareto Principle

▪ Correlation Chart

▪ Ishikawa (Fishbone) Diagram

▪ Relationship Diagram

▪ Decision Matrix

▪ Comparing Pairs

▪ Brainstorming



PORTFOLIO

Pareto Diagram

188

Source: www.sixsigmablackbelt.de/pareto-diagramm-excel/


Pareto Diagram

189

Source: http://www.whatissixsigma.net/pareto-chart-and-analysis/


Pareto Diagram

190

Source: http://www.whatissixsigma.net/pareto-chart-and-analysis/


191

Ishikawa – Fishbone or Cause-and-effect Diagram


192

Ishikawa – Fishbone or Cause-and-effect Diagram

1.Define the problem to be solved

2.Identify key causes and enter on the main branches on the diagram

3.Identify secondary causes and enter on the secondary branches

4.Discuss and assess the diagram


193

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