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Business Process Summit

Boston, MA

June 9, 2005

Lean Thinking for Business Processes


James P. Womack, President, Lean Enterprise Institute
Lean Thinking for Managers
• All value is the result of a process.

• Process managers need to focus on horizontal


value-creating processes, rather than organizations
and assets.

• Function managers need to focus on vertical assets.

• Improvement teams (in a function) advise process


managers.

• Senior leaders need to make sure that the needs of


process managers and function managers are met.

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Types of Business Processes
• Some processes are primary, serving an external
customer.
Example: A process to certify and pay an insurance
claim.
• Some processes are internal, to support the primary
processes.
Example: A hiring process to obtain the needed
employees to process the insurance claim.
• Primary processes are easier to see, but support
processes are equally necessary.

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The Nature of a Business Process
• A set of actions (steps), each of which must be
accomplished properly in the proper sequence at the
proper time to create value for someone.
Example:
9 Receive the life insurance claim.
9 Verify the data.
9 Verify the death certificate.
9 Calculate the amount of the pay out.
9 Write the check.
9 Send the check.

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The Perfect Process
We are all in search of the perfect process.

But perhaps you have not realized this!

The perfect process has some simple but challenging


attributes:

• It creates precisely the right value for the customer.

Value is hard to determine for external processes


and even harder for support processes.

But note: In the absence of correctly specified value,


every step in any process is muda!

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The Perfect Process

• Each step within the process must be:

9 Valuable (Toyota Production System)

9 Capable (Six Sigma)

9 Available (Total Productive Maintenance)

9 Adequate (Theory of Constraints & TPS)

9 Flexible (TPS)

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The Perfect Process

• The steps/actions in the process must be linked by:

9 Flow (in low volume with high variety, TPS)

9 Pull (TPS)

9 Leveled demand, from the pacemaker step/action


(TPS)

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The Perfect Process
• The actions in the process are satisfying for people
to perform and managers to manage:
9 No injuries or fatigue.
9 A sense of providing a valuable good or service.
9 A sense of personal fulfillment & accomplishment.
Putting good people in a bad process is the best
way to produce “bad” people!
People only support a process they can see,
understand, and believe in!

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The Perfect Process In Summary
• The right purpose.

• The best process.

• Motivated people.

In a organization where everyone can see,


understand, and believe in the process.

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Why Is Improvement So Hard?
• Employees in office/business processes often say
they are doing “creative work”:
9 Tasks are not repeatable.
9 Different steps may be needed for each cycle of the
process.
9 Time needed is unknown.
9 Capacity is hard to plan.
• Managers also say they are doing “creative work:”
9 Because tasks can’t be planned and sequences
change, continuous adjustment is needed.

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But Is This True?
• Based on our observations of many business
processes over many years, we find that if:
9 Product families are clearly defined and
separated.
9 Steps in each process are clearly defined.
9 Support processes needed to successfully
perform primary processes are clearly defined.
Most office/business processes are
“transactional” – they can be operated
repetitively in a tight sequence with predictable,
excellent results without need for creative
primary work or creative management!

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The Real Role for Creativity
• Periodically taking a walk together through
every office/business process.
• Verifying that the correct value is being
provided.
• Asking how the process can be fundamentally
changed and improved to leave out
unnecessary steps and to make remaining
steps capable, available, adequate, flexible,
flowing, pulled, and level.
• Asking how the process of process
improvement can be improved!

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Some Advice from Toyota:
“We get brilliant results from average people
operating and improving brilliant processes.
Our competitors get mediocre results from
brilliant people working around broken
processes.
When they get in trouble, they try to hire even
more brilliant people.
We are going to win.”
Since most of us are average most of the time,
don’t we need to work together to create
brilliant processes?

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Specifically, How Can You Make Every
Business Process Perfect?
Start by identifying your key processes:
• Which are primary? (Value creating.)
• Which are support? (Incidental work.)
• Which are most important to the customer?
• Which are most important to the success of the
organization?
• Which are most troubling to your people?

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Creating the Perfect Process

Ask who is responsible for each process.

When you discover that the answer is “no one”,


appoint someone!

Note that in the early going it helps if the someone is a


“someone”. (That is, a widely respected person with
a bright future in the organization.)

Responsibility doesn’t mean a full time job; it certainly


doesn’t mean direct reporting by everyone involved
in the process. (Example: Toyota Chief Engineer.)

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Creating the Perfect Process

Select the most important processes (but only a few).

Form a team of the responsible person and those


involved in the process – customers, participating
employees across functions, technical advisors.

Map the process as it currently operates, taking extra


care to specify value from the standpoint of the
customer (external or internal).

Label this map the “current state”, making sure that


everyone agrees that the map is truly accurate.

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Current-State Process Map
For Order Entry Customer

Sales Dept.

Verify Design
Applications Credit Order Entry/
Quoting &
Engineering Checking Scheduling
BOM

Valuable? Valuable? Valuable? Valuable? Valuable? Valuable? Valuable? Valuable? Valuable?

Capable? Capable? Capable? Capable? Capable? Capable? Capable? Capable? Capable?

Available? Available? Available? Available? Available? Available? Available? Available? Available?

Adequate? Adequate? Adequate? Adequate? Adequate? Adequate? Adequate? Adequate? Adequate?

99 6 Days 3 Days 1.5 Days 3.5 Days 14 Days

21 6 Hours 12 Hours 4 Hours 55 Min 5 Min 21 Hours

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Creating the Perfect Process
Ask how the process should be changed to move
toward perfection.
¾ If the value of the existing process is found to be
incorrectly specified, the entire process may need to
be changed or even eliminated.
¾ In many cases, one tangled process with many
exceptions may need splitting into a number of
processes, each with its own flow path.
Label this map the “future state”, making sure that
everyone agrees about the key changes in the
process, who will perform them, and when.

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Future-State Process Map
For Order Entry
C u s to m e r

S a le s D e p t .
OXOX

Q u o te & O r d e r E n try /
C r e d it
A p p li c a t i o n s F IF O C h e c k in g
F IF O BOM/
E n g in e e r in g S c h e d u li n g

V a lu a b le ? V a lu a b le ? V a lu a b le ? V a lu a b le ? V a lu a b le ?

C a p a b le ? C a p a b le ? C a p a b le ? C a p a b le ? C a p a b le ?

A v a i la b l e ? A v a i la b l e ? A v a i la b l e ? A v a i la b l e ? A v a i la b l e ?

A d e q u a te ? A d e q u a te ? A d e q u a te ? A d e q u a te ? A d e q u a te ?

5 4 H o u rs 4 H o u rs 2 D ays

2 6 H o u rs 1 .5 H o u rs 30 M in 8 H o u rs

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Creating the Perfect Process
Think a bit about your organization:
• From the standpoint of its customers, an
organization is the sum of its processes, both
primary and supporting.
• Processes flow horizontally toward customers,
across departments, functions, and organizations.
• However, organizations tend to be vertical, looking
upward toward senior leadership.
• Organizations often measure functional performance
in asset utilization (people, machines) and other
metrics that are inconsistent with a perfect process.

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Creating the Perfect Process
Ask what changes in your organization will be needed
to create & sustain future state of test processes:

• Create a new position of “process manager”?

• Or can business line managers perform this task?

• Rearrange existing departments and functions?


(Generally not necessary.)

• Introduce new metrics to align department and


function performance with process needs?

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Creating the Perfect Process
Implement the necessary changes to create the “future
state” process:
• Measure the performance compared with the current
state.
• Reflect on what has been accomplished and how it
could have been better. (“Check” in PDCA
language.)
• Introduce necessary changes to adjust the process.
(“Act” in PDCA language.)
• Determine whether the adjusted process is stable
and sustainable.

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Creating the Perfect Process
Once test processes have proved improvement
method:
• Develop a “Plan for Every Process”.
• Determine and clearly explain what you will do with
excess people and assets.
Hint: Business processes only perform at a high
level for the customer if employees feel the
management is introducing lean methods in a fair
and equitable way. Deal with processes painful to
employees early; use excess people to grow.
• Tackle every process, in order of importance.

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Creating the Perfect Process
Once you have tackled all of your processes:

• Start the cycle again! (The former “future state” is


the new “current state”.)

• Start to look at extended processes shared


downstream and upstream with other organizations.

• Periodically review the Plan for Every Process to


guard against backsliding.

• Share your successes (and failures) with the Lean


Community as we all pursue the perfect process!

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Let’s Begin Sharing Now
We invited nine leaders to share their processes:
• Two from the office: GM & Southco
• Two from financial services: Jefferson Pilot &
Wellmark
• Two from overhaul and maintenance: Eagle &
Letterkenny Army Depot
• Two from healthcare: ThedaCare & UPMC
• One from….counting(?!): Washington Inventory
Services
Note: We believe that processes all share the same
characteristics; we can learn from every process.

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What We Have Asked Them to Share
• Tell us about your key processes.

• Tell us how you are improving your key


processes. (Process improvement process.)

• Tell us about your role as a leader in process


transformation.

• Give us the complete details of your methods &


answer all our questions during the breakouts.

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