PROCESS INNOVATION

 A process is a naturally occurring or designed sequence of steps

or events which produces some outcome

Output Input
 Process innovation combines adopting a process view of
business functions with the application of new ideas and
technology.

 Process innovation depends on the transfer of knowledge and

information.
 Increase bottom-line profitability
 Reduce costs
 Improve efficiency, improve productivity
 Increase employee job satisfaction
 Deliver enhanced product or service value to the
customer
 Process innovations builds an adaptive business process
management system (BPMS)

 For manufacturing companies – integrates new production

methods & technologies that lead to improved efficiency, quality,
or time-to-market, and services that are sold with those products

 For service companies – introduces "front office" customer

service improvements and add new services.
 Migrating to a new process requires understanding the current
one

 Recognizing problems in an existing process ensures that

problems are not repeated in the new process

 Analyzing current process reveals strategies for new process

 Promoting individual and organizational learning strategies

sustains process innovation
1. Elimination or decrease in manual processes
2. Coordination of processes across distances
3. Change of process sequence; allow parallel processes
4. Capturing process information to understand process better
5. Improved analysis of information and decision making
6. Capture and distribute organizational information
7. Monitoring process status
8. Coordination of tasks and processes (cross functional)
9. Elimination of go betweens & multiple authorizations
 Automation Geographic
1. More web information 1. Multiple sites on campus
2. Improve IVR service 2. Coordination with other
3. Increase self-service departments
4. Reduce access to files

Process Sequence Tracking

1. Parallel processing 1. Transaction volume
2. Virtual linkages 2. Document management
3. Simultaneous entry and 3. Priority processing
review 4. Transaction type
 Integration
1. Coordination of activities
2. Policy and process
alignment
3. Scheduling and planning
Analysis
1. Management Information
2. Scheduling, staffing,
process design
Information
1. Process cycle times
2. FAQs?
3. Peak processing
4. Customer profiles
Knowledge
1. Knowledge Management
2. Standard operating
procedures
3. Regulation and statutory
changes
 new process

Process innovation

saturation

Old process
 Development of a product that  Product Innovation is always a team
• Reduces cost or sport
• Is an improvement over an existing
product or
• Is new to the company and local
market or
• Is new to the world
 Precision Ring Makers (PRM)
 made components to high specifications, largely for the
aircraft industry
 Its main development work was focused upon process
improvements
 It had developed low cost tooling techniques which resulted in
great savings
• for example, tooling changes for thin guage shimsusing
conventional techniques cost about £4000, while with
PRM’s technique the cost was about £30
 It had purchased CNC machines for milling and engraving,
and was planning to network the CNC machines to its
computer system so that programmes could be transmitted
directly to production
 Fabrication and Assembly Company (FAC)

 was primarily interested in welding technology

 A recent example of process improvement was the
application of plasma cutting instead of drilling, in the
manufacture of heat exchangers and plates
 A flushing system to prevent the build-up of sludge in the air
chambers of the water tables which were being
manufactured, was also developed to assist the introduction
of plasma cutting
 Business Process Re-engineering

 Lean Production System

 Kaizen

 5S Concept

 Six Sigma

 Total Quality Management

 Hammer and Champy (1993) define BPR as
• “... the fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in critical
contemporary measures of performance, such as cost, quality,
service, and speed.”

 Process of using scientific management techniques to reduce the

amount of time, motion and physical work consumed in doing a
particular task
1. Envision New Process

2. Initiating Change

3. Process Diagnosis

4. Process Redesign

5. Reconstruction

6. Process Monitoring
 Japanese strategy for continuous improvement
 Not a single day should go without any improvement
 Customer driven strategy for improvement
 Quality first, not profit first
 Consists of two major components
• Maintenance
• Improvement
Refers to the five words:

 Seiri – eliminating everything not required for the work being

performed

 Seiton – efficient placement and arrangement of equipment and

material

 Seison – tidiness and cleanliness

 Seiketsu – ongoing, standardized, continually improving seiri, seiton,

seison

 Shitsuke – discipline with leadership

 Six Sigma focuses on making improvements in all operations within a
process, producing results more rapidly and effectively.
 While traditional quality programs have focused on detecting and
correcting defects
 Six Sigma provides specific methods to re-create the process itself so
that defects are never produced in the first place

Six Sigma Methodology - DMAIC

 Remarkable improvements in
• Processes
• Products and services
• Investor relations
• Design methodology
• Supplier relationships
• Training and recruitment
 Results achieved over the first two years (1996-1998):
• Revenues have risen to $100 billion, up 11%
• Earnings have increased to $9.3 billion, up 13%
• Earnings per share have grown to $2.80, up 14%
• Operating margin has risen to a record 16.7%
• Working capital turns have risen sharply to 9.2%, up from 1997's
record of 7.4
 TQM refers to an integrated approach by management to focus all functions and
levels of an organization on quality and continuous improvement
 Focuses on encouraging a continuous flow of incremental improvements from the
bottom of the organization's hierarchy
 Encourages a strategic approach to management at the operational level
 Provides high return on investment through improving efficiency
 Works equally well for service and manufacturing sectors
 Allows organizations to take advantage of developments that enable
managing operations as cross-functional processes
 Fits an orientation toward inter-organizational collaboration and strategic
alliances through establishing a culture of collaboration among different
departments within organization