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Business Process Kaizen

Why Focus on Business Processes


WHY BUSINESS PROCESSES
Our business processes have a major influence on customer satisfaction and product cost, yet the vast majority of process improvement effort is generally focused in production. Good product is not enough. Performance relative to delivery, service, or support drives customer satisfaction. The majority of our direct customer interface is through our business processes (Sales, Customer Engineering, Order Entry, Invoicing, Shipping, Warranty, etc.)

Copyright NN, Inc. 2004

Company Confidential

Why Focus on Business Processes


IDENTIFY CRITICAL BUSINESS PROCESSES
Begin by listing only those business processes necessary to run the company. A typical organizations business processes might include:

New product development Product design release Production planning Materials management Hiring Billing and collections After sales service Human resources training Customer needs analysis

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Company Confidential

Why Focus on Business Processes


Macroprocess

THE PROCESS HIERARCHY

Subprocesses

Activities

Tasks

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Company Confidential

Why Focus on Business Processes


SELECT PROCESSES FOR IMPROVEMENT
Normally, one or more of the following symptoms will be the reason for selecting a process for improvement.
External customer problems and/or complaints Internal customer problems and/or complaints High-cost processes Long cycle time processes There is a better-known way New technologies are available

There are three things you should consider during the selection process:
Changeability / Risk Business Impact Customer Impact

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Company Confidential

Why Focus on Business Processes


WEIGHTED SELECTION APPROACH

Process Name
Hiring Process Accounts Payable Engineering Change Release Request for Quotations Employee Appraisal Process New Management Training 3 2 5 5 3 4 5 4 5 5 3 4 4 3 4 3 3 3 60 24 100 75 27 48

Opportunity Priority Number

A rating of 1 indicates that the process is difficult to change or that it has little impact on the business. A rating of 5 indicates that the process is very easy to change or that it has large impact. The ratings of the four categories for each business process are multiplied, and these results are used to set the priorities.

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Company Confidential

Why Focus on Business Processes


TODAYS CUSTOMER

Do you really know your customers ? Do you know what they need and expect ? Are your customers excited about your products and services ? If not, what will it take to excite them ?
Your customer remembers your name under two conditions: 1. When you provide extremely poor products or service. 2. When you provide surprisingly good products or service.

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Company Confidential

Why Focus on Business Processes


PROCESS CUSTOMERS
Who are the customers of the business process ? How do you identify them? Anyone who receives output from the process, either directly or indirectly, is a customer. Customers can be within or outside the organization. A single process can have as many as four different types of customers:
1. Primary Customers: They are customers who directly receive the output from the process. 2. Indirect Customers: These are customers within the organization who do not directly receive the output from the process but are affected if the output from the process is wrong or late.

Internal

External

3. OEM / Distributors: These are the customers outside the company who receive the end product or service. 4. Consumers: Users of products and services. Sometimes, companies deliver their output directly to the consumer.

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Company Confidential

Why Focus on Business Processes


PROCESS CUSTOMERS (continued)
To help you identify your customers, ask your team:
Who receives the output from the process ? What do they expect from the process ? How do they use the output ? What impact does it have on them if it is wrong ? How do they provide you with feedback if it is wrong ? How far beyond the primary customer will errors in the process output impact the effectiveness and efficiency of the operation ? Are there other outputs that are generated during the process ?

This will lead to specific Power Lean tools such as Failure Mode and Effects Analysis (FMEA).

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Company Confidential

Why Focus on Business Processes


MAJOR OBJECTIVES OF BUSINESS PROCESS IMPROVEMENT

Making Processes Effective


- Fit, Form, and Function expected by customers

Making Processes Efficient


- Cost - Speed

Making Processes Adaptable


- Response to customer changing needs

Copyright NN, Inc. 2004

Company Confidential

Why Focus on Business Processes


BUSINESS PROCESS IMPROVEMENT

Business Process Improvement in manufacturing, design, and administrative service industries, takes the form of increasing the effectiveness and efficiency of the processes that provide output

to internal and external customers, while ensuring maximum


adaptability to continuously changing customer needs. Barriers that interrupt the flow of work must be removed, and the

processes streamlined to reduce waste and lower costs.

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Business Process Value Stream Mapping

WHAT IS VALUE STREAM MAPPING ?


The specific actions required, both value-added and non value-added, to bring a product or service through the main flows essential to every product: from design concept to launch from customer inquiry to firm order from raw materials to the hands of the customer

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Business Process Value Stream Mapping


PROCESS WALK-THROUGH
Even a carefully developed flowchart of the entire business process may not be an accurate picture of the business process. Very often the process documented is no what is really happening in the organization. Employees deviate from the process for a number of reasons; for example:
They misunderstand the procedures They do not know about the procedures They find a better way of doing things The documented method is too hard to do They are not trained They were trained to do the activity in a different way They do not have the necessary tools They do not have adequate time Someone told them to do it differently They dont understand why they should follow the procedures

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Business Process Value Stream Mapping


PROCESS WALK-THROUGH (continued)
Suggestions for Process Walk-Through Questions
What are the required inputs ? How were you trained ? What do you do ? How do you know your output is good ? What feedback do you receive ? Who are you customers ? What keeps you from doing error-free work? What can be done to make your job easier ? How do you let your suppliers know how well they are performing ? How is your output used ? What would happen if you did not do the job ? Have you reviewed your job description ? What would happen if your suppliers stopped providing you with input ? What would you change if you were the manager ?

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Value Added Flow Analysis (VAFA) Form


MAPPING THE PROCESS BY WALKING THE PATH Process : ________________________________ Item : ________________________________ Value = 1) Task must be important to customer 2) Task must physically change item 3) Must be done right the first time

Value Added Flow Analysis (VAFA) Form

1) Pretend you are the item going through the process 2) Walk the Path the item takes 3) Record each activity (Working, Waiting, Moving) 4) Determine if the activity has value 5) Are there defeats being generated ?

Time NO. Activity Days Hours Min

ValueAdded (V) Defects

Total Time Value Time

Business Process Value Stream Mapping


Value Added Flow Analysis Example
Consider the cycle time of a letter-writing process: Activity
1. A manager estimates that it takes 12 minutes to write a one-page memo and place it in the outgoing basket. 2. The managers secretary picks up outgoing mail twice a day, at 9 a.m. and 1 p.m. Average delay time is 12 hours. 3. The secretary assists three managers, answers phones, schedules meetings, processes incoming mail, retypes letters, and performs special assignments. All these activities have priority over typing. Average time before starting to type a letter is 26 hours. 4. The secretary types the memo and puts it into the managers incoming mail. 5. Incoming mail and signature requests are delivered twice a day, at 9 a.m. and 1 p.m. 6. The manager reads incoming mail at 5 p.m. 7. The secretary picks up mail at 9 a.m. 8. Retyping is a priority activity and is returned in the 1 p.m mail delivery. 9. The manager reads and signs letters at 5 p.m. 10. The memo is picked up by the secretary at 9 a.m. 11. The memo is put in the copy file and held for the next trip over to the copy center at 2 p.m.
Value Time (hours) Throughput Time (hours)

0.2
0.1

0.2
12.0 26.0

0.3

0.3 12.0

0.1 16.0 0.2 0.1 0.1 0.1

17.0 4.0 4.0 16.0 5.0

Copyright NN, Inc. 2004

Company Confidential

Business Process Value Stream Mapping


Value Added Flow Analysis Example (continued)
Letter-writing process example continued: Activity
12. The secretary walks to the copy center, makes copies, and addresses envelopes. 13. The secretary takes memo to mailbox by 5 p.m. 14. Mail is picked up at 8 a.m. 15. The memo is held in the mailroom for afternoon mail delivery at 3 p.m. 16. Secretary 2 picks up mail and sorts at 4 p.m. Secretary puts memo in managers incoming mail. 17. Secretary delivers incoming mail to manager 2 at 9 a.m. 18. Manager 2 reads mail at 5 p.m. 19. Manager 2 drafts answer and puts it into the outgoing mailbox, telling manager 1 to supply more information. It is classified rush because it is now overdue. TOTAL Value Time (hours) 0.1 0.2 0.1 0.1 0.1 0.1 0.3 Throughput Time (hours) 0.1 2.5 15.0 17.0 1.0 14.0 8.0 0.3

2.2

170.4

This scenario is closer to truth than fiction. While the process throughput time is 170.4 hours only 2.2 hours were spent in actual work effort. The rest was wasted time that does not add value. It is easy to see why we need to measure throughout time.

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Company Confidential

Types of Waste in Business Processes

People Energy
Lack of Focus Lack of Structure Lack of Ownership Inadequate Control Excessive Tampering Inappropriate Assignment Unclear Goal Alignment

Process
Boundary Errors Checking Waste Work-around Waste Variability Waste Lack of Standardization Unbalanced Flow Waste of Sub-optimization Strategic / NVA Process Waste

Information
Hand-off Waste Translation Waste Missing Data Irrelevant Information Waste Inaccuracy Waste

People Work
Processing Waste Non-Value added Motion Waste of Waiting

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Types of Waste

People Energy Waste


Focus Waste is the loss of value that arises when management and employees at all levels are not consistently aligned and energized to address critical issues.
Structure Waste is the loss of value when there is no formal structure in place to support process value streams. Ownership Waste is the loss of value that occurs when employees are not inclined /permitted/allowed to experience their work areas as extensions of themselves.

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People Energy Waste (continued)


Control Waste is energy required for ineffective or nonproductive supervision or monitoring.
Tampering Waste is effort used to arbitrarily change a process without understanding the consequences. Assignment Waste is the effort required to work on unnecessary or inappropriate tasks. Goal alignment Waste is the energy expended by people at cross-purposes they do not understand.

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Types of Waste

People Work Waste


Processing Waste is the result of inefficient work. Employees may be hard at work, but require a better way to do the job.

Motion Waste is the movement that does not add value, such as walking and reaching.

Waiting Waste is people waiting for information, a meeting, a signature, a phone call, a copier, a downed system or computer, etc..

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Company Confidential

Types of Waste

Process Waste
Strategic Waste is value lost (effort wasted) as a result of processes that do not provide value to customers and shareholders.
Sub-optimization Waste is effort wasted by processes that compete with one another Unbalanced flow Waste is invested resources put into material or information that piles up between workstations (WIP). Standardization Waste is effort required to correct consequences of processes that do not consistently produce the same output.

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Company Confidential

Types of Waste

Process Waste (continued)


Variability Waste is effort required to correct for unpredictable process outcomes due to special or common causes.
Work-around Waste is effort invested to create and maintain informal processes that are designed to replace official processes. Checking Waste is any effort used for inspection or verification on process output. Boundary Waste is effort required to correct errors created on information hand off between areas (new forms, re-keying data, etc.).

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Company Confidential

Types of Waste

Information Waste
Hand-off Waste is effort required to pass data between owners.
Translation Waste is effort required to change data, formats and reports between process steps. Missing Information Waste is effort or defects driven by the absence of key information. Irrelevant information Waste is the effort caused by having to deal with unnecessary information. Inaccurate information Waste is the effort or defects caused by having to deal with bad information.

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Business Process Value Stream Map Example Business Process Value Stream Map Example

Business Process Value Stream Map Example

Business Process Improvement Roadmap


STREAMLINING THE PROCESS
Process improvement typically is accomplished by one or more of the following actions:
Bureaucracy Elimination Duplication Elimination Value-added Assessment

Simplification
Process Cycle-Time Reduction Error Proofing Systems Upgrading

Standardization
Supplier Partnership Automation and/or Mechanization

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Business Process Improvement Roadmap


SUMMARY

Identify business process improvement opportunities Walk the process to gain thorough understanding Create business process map identify waste and other improvement opportunities Set improvement objectives Create future state vision

Develop action plans to implement


Establish clear ownership and accountability Implement action plan

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Business Process Improvement Roadmap


1.
Identify Business Opportunities
Prioritize Opportunities Pareto Analysis
Change- OppourProcess ability tunity Priority

2.

Define and Scope Project


End User
1. Selected User Product Selection & Ordering

3.
2. Other End User Product Selection & Ordering

Document Reality

Business Process Value Stream Map


3. Other End User Product Selection & Ordering

Process Flow Analysis

Set Objectives
50% Cycle Time Reduction 100% On Time Defect Free

Establish Process Boundaries

Field Sales Distributor

OEM

Product Selection & Ordering

Product Selection Stocking POU

Customer Assistance Ordering/Quoting Specfication

Inside Sales Plant C/S Engineering Marketing

Customer Assistance Ordering/Quoting Specfication

Specfications, Bill of Materials, Routings, Machine Software

Order Collection Order Entry Customer Assistance

Order Collection Order Entry Customer Assistance

RGOS

Order Management Customer Information Sales & Shipping

OMS

Order Management Customer Information Sales & Shipping

Manuf. & Mfg Systems Assembly

Planning/Purchasing MPS/MRP/CMMS Production/Material Control/Cost/BOM

Shop Order Mg Labor & Cost, Inv ID, MFG, Assem

Ship to Whse

Ship Direct

8.

Measure Progress & Sustain Gains Setup Checklist


Format hard drive Create boot disk Edit BIOS Boot from CDrom Install Windows Set date and time

9.

Communicate Results & Recognize Team

4.

Perform Analysis and Identify Waste


*

* * * * * * * *

X
Correlation and Regression Cause & Effect Diagram

Measure Progress

Error Proofing

7.
Development

Refine and Implement

6.
Week 1

Plan Countermeasures Week 2 Week 3

5.

Outline Desired Results


Define Performance Metrics

Week 1 Week 2 Week 3


MTWT FMTWT FMTWT F

Rolled Throughput Yield Goal

M T W T F M T W T F M T W T F Project Phase I Project Phase II Project Phase III

Database Debug Beta Test Period

Refine Schedules

Team Kaizen Project Management - Gantt Chart

Agree on Goals