In 1999 Fujio Cho, president of the Toyota Motor Corporation, sent this chilling message to the company’s competitors: ‘We get brilliant results from average people managing brilliant processes, while our competitors get average or worse results from brilliant people managing broken processes.’
This comparison between organisations is as true today as it was then. Yet we still see many executives and managers struggling to implement the simple but somehow still elusive concepts behind this message.
Everything we do is a process; whether we are concerned with manufacturing aeroplane parts or producing a publication. Consequently, we need to learn how to design, manage and improve processes so that they do what we (and the customers) want them to do over and over again.
A process is simply something that converts a set of inputs into outputs. The inputs can include materials or information and are supplied into the process externally or internally. The outputs of a process go to a customer, again external or internal. This simple explanation may be represented as the flow of:
supplier –> inputs –> process –> outputs –> customer
otherwise known as SIPOC.
Any substantial process may be broken down into its main steps or sub-processes, all of which have the same SIPOC flow (see figure 1).
Processes and functions
In the design of many organisations, top management has seen the need to establish functions – groups of specialists in areas such as marketing, finance, research, production or operations and HR. This is reasonable because, for example, in the financial area we need the experts to work together to ensure we can properly raise the finance to run the business. In HR too, experts in employment law, recruitment, training and development come together to make sure we have good policies that help us to properly manage our people.
However, as the customer of an organisation, we are more likely to be interested in outputs from its processes, such as delivery of an item on time, the right component being assembled or the opening of a bank account correctly. We don’t usually care how the company or bank is structured functionally; just how well it meets our needs.
Experiencing Processes
If you order a new printer to go with your computer from a market leader, you are likely to experience some of the company’s core business processes straight away:
- design products process – you may be attracted by the printer’s features
- generate orders process – you may respond to an advertisement
- fulfil orders process – you may call into a retailer or order online and have the product delivered
If you use the printer for a while, you will no doubt experience the company’s ‘supply parts and services’ process (such as ordering a new printer cartridge, for example).
The chances are that, if the company is excellent at the design, management and continual improvement of these ‘end-to-end’ processes, you will be delighted with the service you receive from them. Customers effectively take a walk through these processes, none of which sit in one department because they cut across functions.
Business process management
This is essentially the concept detailing how organisations design, understand, manage and improve their processes. While it begins with the SIPOC flow, there will also be controls on the processes that come from legislation, company policies and so on. The processes will require resources for them to run, such as skills, equipment and so on. A key point is that resources are not converted by the process – they are used by it.
Inputs, controls, outputs, resources (ICOR) modelling can be used to help understand, design, operate and generally improve processes. ICOR is a box-based diagrammatical approach to showing process inputs (on the left side), controls (on top), outputs (on the right side) and resources (at the bottom). Sub-processes and how they connect can be shown in ICOR modelling by:
- identifying the key steps within the process, linking them together and showing the relationships between inputs, outputs and controls
- checking that all inputs are processed and all outputs are produced
- repeating the breakdown of each process step to achieve the level of detail required
Other techniques which can help to improve processes are chevron diagrams of the major steps in process, flow charts and diagrams of processes. They allow people who manage and work in and on the processes to create a vision of the way they want things to be done – the approach. They also allow these people to help in the operation of the processes, including training – the deployment. This can all be usefully documented in a quality management system, which may be designed and assessed against an international standard like ISO 9001.
Once an organisation has defined and mapped out the core processes, people need to develop the skills to understand how the process structure will be analyzed and made to work, eg the core processes will need breaking down into sub-processes, activities and tasks.
Process ownership
The people who know most about the practical running of a process are those who work in and on it every day. They experience the problems of resourcing and supplying the process, the issues with handling the outputs, and lack of information. They can provide valuable information but they can also be part of the problem, of course, as they become too close to the detail.
Many processes cross the functional boundaries so often there is no one who has overall responsibility for them. Consequently, each high level or core process needs a named individual with sufficient authority and enthusiasm to champion improvements and optimisation. It is essential that the sponsor or owner takes a view of the whole process and is not perceived to be biased towards a particular function.
Process measurement
Key to process management and improvement is the measurement of the performance of the process. This may be expressed both in qualitative and in quantitative terms and should be compared with the required level of performance. The set of measurements should include internal, output and satisfaction measures.
Internal measures relate to what is happening within the process and usually cover things like cycle time or the amount of resources used. Output measures relate to the outputs of the process. Satisfaction measures relate to the customer’s view of the process. Process measures should address the simple performance trio of: on-quality, on-time and on-cost.
Having decided what to measure, these questions need to be answered:
- what is the measure about? (an operational definition)
- how will we gather the data?
- how often will we gather the data?
- how often will we report and review the data?
- how will we present the results?
- what is the current level of performance?
- what is our targeted level of performance?
Having meaningful measurements in place will help the management of the processes, the identification of which processes are operating efficiently and are satisfying their customers, and when the performance of a process is not acceptable. In the latter case you need to determine if the performance is consistently unacceptable or if the performance is variable. This will help you to identify appropriate corrective action.
Process improvement
Process improvement projects can be run in two ways. The first is an incremental, continuous basis and the second is for step change or breakthrough improvements. The latter is associated with business process re-engineering (where processes need fundamental redesign) often in conjunction with the implementation of new technology or IT systems.
In the process performance triangle (quality, time, cost), failure to deliver on time is usually associated with time being wasted. The avoidance of this type of waste means getting rid of the non-value adding activities that we spend time on. The collective approaches referred to as ‘lean’ address this problem head-on. They use simple tools and techniques to improve flow and strip out as much of the non-value adding activities as possible. Failure to deliver on-quality is often associated with high levels of variability and poor process capability compared with the requirements, (perhaps in the form of a specification).
The avoidance of this variation means constantly examining and reducing the variation until we have highly capable processes. The collective approaches referred to as ‘six sigma’ address this problem and lead to greater consistency. This in turn brings the key to customer delight – meeting their requirements again and again. Eliminating waste and unnecessary variation reduces costs, hence the performance triangle is complete without resorting overtly to cost-cutting regimes.
In performance improvement there is always the need for a fact based, closed-loop improvement methodology. For one thing, this will prevent people from jumping straight to their ‘pet’ solution without proper definitions, measurement and analysis. Many man years of research have led to development of the DRIVER concept. DRIVER is similar to other continuous improvement schemes and is associated with the use of 30 odd process improvement tools and techniques.
Develop a process framework
- write the process purpose in the form of verb + noun
- define process inputs and outputs
- define interactions between customer-facing processes first
- separate out the support processes because they link to everything
- check that the top level processes are each necessary and together sufficient to deliver the organisation’s strategic goals and objectives
- aim at no more than ten processes at top level, including support processes
- keep to the highest level – it is easy to lose yourself in the detail of the lower levels
Take responsibility
The process sponsor takes responsibility for the process to:
- ensure that appropriate resources are made available to understand, design, map, manage, operate, investigate and improve the process
- ensure that those who operate the process are properly trained and able to take responsibility for improvement
- ensure that a few key measures of process performance are identified and monitored
- review the effectiveness of the process at regular intervals
- ensure that appropriate corrective action is taken when process performance falls below standard or when problems are identified
- work continuously with those operating the process to identify and implement improvements and assist in selecting process improvement team leaders and members and remove blocks to the improvement team’s progress
- carry out audits after the implementation of improvements to ensure that the successes are maintained and report progress to the senior management team
Improvement on three levels
Process improvement can take place on three different levels:
Standardisation
This approach aims to achieve a consistent level of performance or compliance – it is of particular benefit where current practice is subject to significant variation, or where processes operate in informal, ill-defined ways and a more systematic approach would be beneficial
Incremental improvement
This involves changing relatively small elements of the process to generate improvements in performance – it is often a continuous activity using simple tools and techniques
Re-engineering or redesign
This is used only when the process needs a complete overhaul – it involves the use of techniques such as ‘assumption busting’ to encourage thinking creatively in terms of how the process might operate and can lead to significant changes in performance
The DRIVER closed loop improvement methodology
Define the scope and goals of the improvement project in terms of customer and/or business requirements and the process that delivers these requirements.
Define
Map the ‘as-is’ process and measure the current process performance to understand the value-add.
Review
Analyze the gap between the current and desired performance, prioritize problems and identify root causes of problems.
Investigate
Generate the improvement solutions to fix the problems and prevent them from recurring so that the required financial and other performance goals are met.
Verify
Implement the improved process in a way that ‘holds the gains’. Standards of operation will be documented in standards of performance established using techniques such as SPC.
Execute
Capitalise the improvement by ‘learning the lessons’ and establishing process re-assessment for continuous improvement.
Reinforce
Capitalise the improvement by learning the lessons and establishing process re-assessment for continuous improvement