November 9, 2018

Ensure 100% Quality at the Beginning of a Process

IT folks know this expression very well: “Garbage in, garbage out.” Same holds true for a process. If you allow errors, mistakes, and missing information at the beginning of the process, the cost of fixing it grows exponentially as the item moves downstream.

How can we apply this principle? One method is to install a gate at the beginning of the process. The gate can take the form of a review where the item is checked for completeness and accuracy. If it is not complete nor accurate, then it can not pass to the next step. The person reviewing can work with the supplier to fix the problem so it can then be accepted. How often do things get accepted in your organization, only to find out later there was something wrong with them? Then how much time, effort, and expense is consumed by trying to fix the problem? If we only spent the time up front, then the downstream issues would disappear. There are some places in a process where it makes lots of sense to invest time, resources and money. One of these places is the front end of a process.

Another option is with dedicated fields in software programs. If a particular data field has incomplete or wrong information, the field is flagged. Shoppers know this first hand by going to Amazon or other web merchants. Your order does not get accepted unless all of the information is complete and accurate.

If the quality problem is extensive, you should gather data on the frequency of occurrences by category. This data can be illustrated by a Pareto Diagram, which shows which item is most frequent in a descending order. See the example below.

Lastly, you will want to track how often the incoming information is correct. The graph below is a run chart of information coming from the sales force. This graph shows the percentage of correct information on a monthy basis.

 

 Fix the front end of the process first. Everyone downstream will be ecstatic. And your quality costs will plummet.

Contact us at Value Creation Partners to learn more.

Design your process around value-adding activities

The most important design principle is “Design you process around value-adding activities, not departments, job titles, or personalities.” To understand this principle, we first need to know what a value-adding activity would be. A value-adding activity can have any of these three characteristics:

  • It transforms information or material into what the customer wants
  • It is a service feature
  • It is a step the customer would pay for.

Here the steps in green are value-added steps.

After you have created an “as is” flow chart of your process, go back and identify those steps which are value-adding. I usually change these steps to green. Why green? Because money is green. Now look at your process and see how many steps are green. Probably not very many. Nirvana would be a process that would be pure green.

If you are working in an environment of turf protection, strong personalities, and issues about who should do what, then I suggest you do not initially make a functional-activity flow chart for your new process. Instead focus on creating the flow, the sequence of the steps, and optimizing around the value-adding steps. This will allow you to create a great process and not be derailed by arguments about turf, etc.

After you have hammered out a great flow, then put on the boxing gloves and figure out who should do each step. This where the second design principle is used. “Work is performed where is makes the most sense.” Does it make more sense for sales or marketing to do this work? Should the admin do this step or the manager? By keeping these discussions after you have the new flow, you will speed up your efforts significantly.

There is another school of thought in the process improvement community. This school wants you to focus on the non-value added steps and eliminate them or reduce then. I tried this technique once and this is what happened. The folks who were doing the non-value added steps argued with me that these steps were necessary. Secondly, it created a hostile and contentious atmosphere. Third, those folks are probably afraid they will loose their job since they are doing non-value work.

The above is completely circumvented by focusing on value-adding activities and trying to optimize those. By doing that, guess what happens? The non-value adding steps fall away, and you have avoided an unpleasant interaction with many people.

Future posts will highlight other design principles which I commonly use with clients. In addition I plan to write about creating value in processes when we redesign them.

Check us out at Value Creation Partners.

 

 

Improving Business Results Through Process Management

Business processes constitute a significant portion of an organization’s operating costs. And the more bureaucratic an organization is – the greater the potential to reduce operating costs. Management silos (hierarchical structure) can be devastating to an organization’s performance and cost structure. Walls need to be torn down, and the internal customer/supplier model embraced.

Unfortunately, line and staff departments have become too myopic or insular. Process management is imperative in order to manage and improve cross-functional business processes. And the more process-centric an organization is – the more performance-driven it will be. If you think you can be customer-centric, without being process-centric – think again. Processes must put the customer first.

Process Management Introduction

The stark reality is that processes (especially cross-functional processes) are usually not documented, not systematically and continually improved, and not managed. So why improve and manage processes? Simply, processes are the fundamental building blocks for achieving business results, and streamlined processes are critical to building and maintaining a competitive edge.

When I ask a client to give us a snapshot of their business, the discussion usually starts off with their history, an overview of products and services, core capabilities, and even their customer base. Along the way, an organization chart is typically thrown into the fray. But, perhaps the most revealing snapshot of all is an “organizational map” that shows the interrelationship of company-wide key business processes.

An organizational map is a top-level blueprint of the fundamental structure for an enterprise. This macro-level flowchart shows the interrelationship of business processes at a twenty-thousand foot elevation. It is the foundation from which to build an agile, competitive organization. Yet, alarmingly few organizations have taken the time to construct this “capstone” document.

Process Management begins the process of visualizing the organization as a whole – determining how one aspect of the system affects another. Leaders need to extend their vision beyond the project or function – beyond their department – to see the organization through a new set of glasses. They must focus on those key business processes that affect business objectives and critical success factors. Leaders must be visionary, and they must see the world anew.

Process Management Focus Areas & Tools

There are three general focus areas. These are: (1) making business processes effective – producing the desired results; (2) making processes efficient – minimizing the resources needed; and (3) making processes adaptable – being able to adapt to changing stakeholder and customer business needs.

An integrated holistic approach is essential to process management. Process mapping and flowcharting (down to the task level) are central to this effort. You can use a combination of several process flowcharting techniques – process maps, block diagrams, standard flowcharts, functional flowcharts, and geographic flowcharts. But remember, the journey starts with an “organization map – a macro-level flowchart.”

Process maps provide a composite overview of the business process, from an organizational context. Block diagrams provide a quick overview of a business process. Flowcharts are used to analyze the detailed interrelationships of a business process, and geographic flowcharts illustrate the process flow among locations.

Process Management Roadmap

A systematic approach (roadmap) is needed to improve business performance. There are proven strategies, methods, and tools to create a streamlined organization with a significantly lower cost structure. An integrated process management approach should link the organization’s mission, culture, business objectives, and key processes.

Our methodology consists of ten integrated tools and/or steps:

  • Bureaucracy elimination – remove unnecessary administrative tasks, approvals, and paperwork.
  • Duplication elimination – remove identical activities that are performed at different parts of the business process.
  • Value-added assessment – evaluate every activity in the business process to determine its contribution to meeting stakeholder/customer requirements.
  • Task elimination/simplification – reduce the overall complexity of the process.
  • Process cycle time reduction – determine ways to compress cycle time to meet or exceed stakeholder/customer expectations, with fewer resources.
  • Error proofing – make it difficult to do the activity incorrectly, while standardizing the activity at the same time.
  • Problem definition/solving – utilize a problem solving methodology (roadmap) that focuses on identifying and eliminating root causes.
  • Technology/automation considerations – apply technology platforms and enterprise/legacy applications in innovative ways.
  • Business process reengineering – use a radical approach to change the process, when the previous streamlining methods have not provided the desired results.
  • Performance measurement – identify appropriate performance measures that will paint a composite picture of the business process performance.

Process Management Absolutes

There are a dozen process management absolutes that must be considered when you embark on a process management journey. You might also view these as “best practices.” Either way, these are critical to success:

  • Ensure management commitment upfront
  • Create an environment where departments are partners, not competitors
  • Reward cross-functional collaboration
  • Take a disciplined, integrated approach to process improvement
  • Allocate resources based on process needs
  • Link process improvement initiatives to your strategic plan
  • Identify critical business issues to drive improvement
  • Ensure that product and service processes are customer-driven
  • Put comprehensive and reliable process metrics in place
  • Define and implement strategies to keep each process measure in control
  • Measure levels of internal/external customer satisfaction for each process
  • Reward individuals for their contributions to process improvement

For more information on Process Management, contact Value  Creation Partners (925) 459-8755