Best Practice for Business Processes

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Best Practice for Business Processes

• Developing Strategies for the Improvement of
  Business Process

Workshop on Business Processes
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Introduction Prof David Ross

• USQ since 1987
• 36 years in tertiary education
• Graduate Assistant. Teacher Education Program
• Higher Education Programs
• Teaching Experience
• Blended and Flexible Delivery Consultancy
• Current Position at USQ

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Practices Make Perfect

• The Path to World Class Business Process
• Do you have a phobia of fads?
• Are you sick and tired of hearing about the next
  big thing,
• Having a go at it, getting some short term
  results and then having everything return to
  'normal'
• A state of mediocre performance driven by
  uninspiring practices?
• You're not alone.

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Business Process Strategy
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Business process Strategy
What then, is the essence of business process
strategy? Surely manufacturing's role in
strategic competitiveness is to ensure that
strategy and customer needs are translated all
the way down to the practices being carried out
on the shop floor.

• what the customer needs and wants
• what we are inherently capable of doing due to
  our
• product-process type (the nature of the
  business)
• what we are able to do with those processes due
  to our
• "maturity".

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Practices-Performance Model
Which practices are vital to our success? How
well are we doing at those things?
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Step 1 Define the Market Agenda

• Beyond knowing the customer's basic product
  requirements we need to think about what their
  order qualifying criteria (OQC)
• And order winning criteria (OWC) are.
• What qualifies us to be an option in the buying
  decision of that customer?
• Do we have a ticket to participate?
• Once we have taken the necessary steps to ensure
  that we DO qualify to participate we must then
  examine the criteria that will win us the order.

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How is value created

• The four fundamental ways in which value is
  created for customers in manufacturing (others)
  are
• Cost, quality, lead time and flexibility
• It's a mix of those four things that the customer
  wants.
• Which of those qualify us to be in the decision
  band of the customer and once we've qualified to
  play in that market,
• Which of them will win us the order?

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Once you have mix of OQC and OWC

• We need to systematise the qualifiers.
• We need to build systems around the qualifiers
  so that predictably,
• We will always be in the decision band of the
  customer.
• If you systematise the winners, you get
  predictable output. On the winners,
• You want ever-better output.
• You want to be raising that bar all the time to
  ensure continuous improvement.
• You need to channel the creativity of your people
  around the winners so that you are continuously
  honing them.

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Step 2 Understand the Nature of Your
Manufacturing Process

• There are certain process types that should be
  employed to meet the requirements of your market.
• What this model suggests is that as the products
  go from low volume to high volume, the most
  appropriate process types would go from job shop
  through to continuous process.
• For instance, custom design products need to be
  manufactured in a job shop environment which is
  designed for flexibility whilst commodities and
  other high volume products require specialised
  equipment that produce in a continuous processing
  manner.

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Product-Process Matrix
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Where are you on the chart

• You need to be on this diagonal in order to have
  inherited the appropriate process for the product
  you're trying to deliver.
• If you find yourself in the top right hand corner
  your business may have evolved in this direction
  to accommodate increasing volumes, without
  adapting your process accordingly - unfortunately
  a very common occurrence.
• At the jobbing end of the spectrum companies
  should compete with custom designs and high
  margins whilst continuous processing operations
  compete with standard designs and low margins.

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Managers role

• It is important to recognise that there are quite
  different key management tasks required for each
  of these modes or zones.
• For the job shop, management must focus on fast
  reaction cost estimating, as each job is
  different, and on breaking bottlenecks to ensure
  optimum throughput.
• For the assembly type industries, the important
  things are developing standards, methods
  improvement and developing systems for managing
  the diversity that's happening on the production
  floor.
• For continuous processing, it's running the
  equipment at its peak, and raising capital.

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The Challenge

• The challenge is that many manufacturing
  facilities are a mix of the jobbing, assembly and
  continuous zones.
• Yet many a manager will come up with one set of
  measures, one mode of team and one set of
  management tasks across all process types.
• If you are a beverage manufacturer there is only
  a limited amount you can learn by going and
  visiting a car manufacturer in Japan.
• Yet, it is not uncommon for managers in
  continuous processing industries to take ideas
  out of textbooks or from visits to assembly-based
  facilities and plug them straight in to their
  operations with limited or no success.

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External Delivery .

• Have we got it available and reliable?
• Have we got that machine operating at its peak
  speed?
• And are we hitting good material yields?
• While these are inherent characteristics of a
  continuous process type,
• You need to analyse and identify the things that
  drive your process type.

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What Drives the Process
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Step 3 Identify the Key Success Factors for your
Business

• Your key success factors (KSFs), or the things by
  which you measure your performance.
• Plant availability
• Plant utilisation
• Material yield
• Overall equipment effectiveness (OEE)

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KSFs that are your performance criteria
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Step 4 Identify the Practices at Which you Must
Excel

• determine what practices drive performance in
  these key success factors

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Practices

• Foundation practices include
• Leading and managing change
• Shopfloor teamwork
• 5S Housekeeping and organisation
• Visual performance measurement
• Problem solving and continuous improvement

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Practices

• Functional practices are more likely to provide
  an immediate cash flow return and may include
• Autonomous maintenance
• Effective maintenance
• Set-up time reduction
• Quality
• Process flow
• Waste reduction
• Product design and control
• Materials management
• Safety, health and environment

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Step 5 Measure your Performance and your
Practices

• Do we manage those practices at the boardroom
  table?
• Do we know which practices are key to our
  success?
• Do we know how mature we are in them?
• Do we know our resulting performance?
• Can we plot our position on the
  Practices-Performance Chart

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Measure your Performance and your Practices

• The profile of each of the stages then looks
  something like this
• Stage 1 - No best practice, crisis management, ad
  hoc responses
• Stage 2 - Stabilisation, instructive management
• Stage 3 - Starting to get ownership of best
  practices at shop floor level, middle management
  level and senior management level
• Stage 4 - Honing and refining practices,
  consultative management, utilising technology as
  appropriate (Note investments in new technology
  prior to this will disappoint in terms of
  expected ROI)
• Stage 5 - Best practices become a "way of life",
  mentoring style of management, proactive,
  learning organisation

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Step 6 Identify Practices and Targets on which
to Focus your Improvement Effort
radar charts
radar charts
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Step 7 Implement Best Practices

• Establish a sense of urgency
• Form a powerful guiding coalition
• Create a strong vision
• Communicate the vision
• Remove all obstacles to the new vision
• Systematically plan for and create short-term
  wins
• Don't declare victory too soon
• Anchor changes in the corporate culture -
  institutionalise

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Step 7½ Back to Step 5

• Returning to Step 5 is not so much about making
  your WCM initiative sustainable as it is about
• Promoting continuous improvement.
• Sustainability is the result of driving your
  performance with best practices and measuring
  both of these elements.
• In other words the key to sustainable performance
  is having the right practices in place
• This step, instead, promotes continuous
  improvement by ensuring you go back and set some
  new target maturity levels in these practices -
  the key to moving forward and remaining
  competitive.  

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Conclusion

• A world class manufacturer has the following
  characteristics
• Operational strategy is based on the order
  winners and qualifiers of its products and
  services as well as an explicit understanding of
  process type.
• Key success factors are defined according to
  market agenda and process type.
• The shop floor, middle management and senior
  management all know explicitly which best
  practices drive their performance.
• Maturity in these practices is measured
  continually.
• Improvements in best practice maturity levels are
  driven right across the organisation.

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Conclusion

• Performance against key success factors is
  measured and fed back to the source as soon as
  possible.
• New technology is introduced in a cost-effective
  way to establish critical capabilities at an
  appropriate stage of maturity.
• There is a company-wide culture of continuous
  improvement, with everyone contributing
  suggestions to eliminate waste or variability.
• Strategy and customer requirements are translated
  all the way down to the practices at the shop
  floor level to ensure performance rather than
  letting it happen by accident.

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• Questions?

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VSM

• How Value Stream Mapping (VSM) can
  dramatically improve your manufacturing
  performance

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VSM

• World-class Business companies achieve
  outstanding levels of performance by making
  products flow through the production process from
  dock to dock.
• These companies have successfully eliminated the
  barriers that prevent material and information
  flowing smoothly throughout the organisation.
• The benefits are significant reductions in
  manufacturing lead times (and its inverse
  inventory turns), inventory levels and higher
  throughput.

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VSM

• But how did they manage to do this, and more
  importantly
• How can you do the same?

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VSM

• Value Stream Mapping has an overall product level
  focus cutting across processes, functions and
  departments.
• It incorporates lean concepts and tools, such as
  take time (cycle time based on customer demand),
  theory of constraints and pull-based scheduling
  systems.

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Creating Your Value Steam Map

• Form a Team
• Select a Product Family
• Draw a Current State Map
• Develop a Future State Map
• Prepare an Action Plan

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Form a Team

• Because value stream mapping is a holistic
  approach it is a good idea to involve people from
  different parts of the business.
• Forming a cross functional team allows current
  issues to be understood from different
  perspectives and provides better problem solving
  and buy in when you come to developing solutions.

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Select a Product Family

• Next you need to set some boundaries for the
  process to make the exercise manageable.
• Trying to map every product and process flow
  creates unnecessary complexity, so value stream
  maps work on individual product families where
  each product family has its own value stream map.
  
• A product family is a group of products that
  follow basically similar process routings,
  possibly with minor variations for product
  varieties.

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Draw a Current State Map

• Start by walking through the process starting at
  the downstream (customer) end and walking back
  towards the raw material stage.
• Next we draw out a basic high level map of the
  material flow.
• Now we can start to collect the detailed data for
  each process step and start to add this to the
  map. The main process data we are interested in
  are process cycle time, batch size, downtime,
  scrap rate and inventory levels.
• We now start to add the information flows to the
  map. Use arrows to show the sequence and
  direction of the key information flows, things
  like orders, schedules and drawings.

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Develop a Future State Map

• How long is our overall lead time?
• What percentage of the lead time is spent on
  value added processes?
• How much inventory are we carrying?
• Where is our process bottleneck?

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Prepare an Action Plan

• Are you focusing enough attention on the
  pacemaker (bottleneck) process?
• Does the customer pull demand through the
  system, or do you push material as soon as it
  becomes available?
• Is inventory used strategically to protect
  against variability, or does it accumulate and
  provide limited benefit?
• Do you make small frequent batches or large
  irregular ones?

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In Summary

• Most manufacturing companies face a whole range
  of challenges that impact the performance of
  their systems. Many, if not most of these issues
  are related to the way material and information
  flows through the process. Proof of this lies in
  the longer than expected lead times and resulting
  high inventories, which are required to maintain
  acceptable delivery times.

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Summery

• Many companies take a piecemeal approach to
  smoothing their process flow, such as buying a
  new machine to relieve a bottleneck or
  implementing a set up reduction on a key process.
  However, the only way to achieve the type of
  dramatic improvements seen at the companies
  mentioned above is to take a holistic approach
  that shows exactly what the current flow is
  doing.

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Summery

• Value Stream Mapping is by far the best way of
  understanding flow in a holistic way, and the
  tools it contains provides a step by step process
  for selecting the key actions that lead to
  dramatically improved performance.

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Workshop outline

• The workshop is made up of the following 8
  activities
• A historical processes of innovation
• A guide to developing a case study for the use
  and or implementation of a technical innovation
• Design for future markets
• Enabling technologies
• Risks and reward of novelty
• Inspirational-led innovation come alive
• Market-led innovation advances
• The future of innovation

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Activity 1

• Your task is to identify a technology innovation
  that has been implemented in a company or the
  identification of a new technology innovation
  that you would recommend to a company for the
  purpose of adding value or an improvement to a
  procedure or process

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Activity 1

• The technology innovation can be a
• New machine,
• A new piece of equipment,
• A new information and communication technology
• New computer hardware and or software.
• Electronic commerce in managing the supply chain
  for an organisation
• It can be related to a new service development in
  a high technology activity to assist in
  decision-making.
• Could be an IT implementation in a construction
  organisation or
• A new market process reengineering through an
  electronic marketing system for an organisation

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Activity

• While developing your case study you will have
  three requirements.
• Assignment 1 your case study proposal
• Assignment 2 the case study first draft
• Assignment 3 the final case study

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The Proposal

• The format for the proposal
• Upfront information
• Letter of transmittal
• (From someone in the company you want to work
  with )
• Title page
• Project summary (approx. 200 words abstract)
• (The abstract is a condensed version of the
  longer work, and it summarises and highlights the
  major points of the study. It included the
  subject, scope, purpose, methods, and obtained
  results of the study, as well as any
  recommendations and conclusions.)

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The proposal

• Introduction
• Body of project proposal (Includes statement
  of the area for improvement, proposed technology
  innovation's)
• Introduction (Gives the background and state
  the purpose of the proposal)
• Statement of the problem in the company
• Proposed solutions
• Additional information
• Activities of implementation
• Conclusion/recommendations

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The proposal

• Supporting information
• Bibliography and/or any documentation from the
  company
• Qualifications (of yourself and anyone that
  will be working with you on the study within the
  company)
• Budget (Itemisation of expenses in the
  implementation of the technology if available or
  for the of the proposed plan, and detail of
  materials, facilities, equipment and personnel
  etc. An estimation of time required to complete
  the study.)
• Appendices
• Bibliography

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The Planning Process

• Analysis of the situation requiring a case study
• What is the subject of the case study? (This is
  based on the company you selected.)
• For whom is the proposal and case study
  intended?
• How do you intend the proposal to be used?
• Note the deadline date for submission of the
  proposal and the other two assignments
• Have you reviewed permission access to the
  information literature that would provide support
  for your proposal? (Include all relevant names
  and documentation).

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The Planning Process

• Purpose of the proposal
• Statement of the problem
• Proposed solution's) or plan's), including the
  methods or procedures
• Conclusion/recommendations
• Additional information to be used in
  explication of the Innovation selected (This
  includes costs, personnel and their
  qualifications, training, etc.)
• Types and subject matter of appendices to be
  included in the proposal
• Works cited by the company /references used in
  the text of the proposal
• Citing electronic sources
• Bibliography of related source and support
  information

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The Case Study Format

• The format for, the case study is as follows
• 1. Define the key issue
• 2. Describe the company background
• 3. Develop the key players
• 4. Relevant data and information
• 5. Direction
• 6. Define the answer
• 7. Your case study notes

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The Case Study

• Identifying your organisation
• What did you use as research materials
• A release form or letter of proprietary
  information
• The case study proposal
• Your steps in getting started on the case
• Background information

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The Case Study

• Identification of factors contributing to the
  problem
• Prior efforts toward the technical innovation
• Desired results of all involved
• Where and how did you end your case study?
• Youre case study notes
• How do you intend to use the case study?

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The Case Study

• A case study narrative
• Describe your procedure for developing your
  case study
• Define the key issue as you see them
• Develop a description of the key players
• Relevant data and information
• Future directions from your case study
• Define the answer as a statement

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The Case Study

• Elements may include the following
• (a) How did the process start?
• (b) Who initiated the process?
• (c) A discussion of the heuristic
  approach
• (d) What resources (time, human, money, etc.)
  were made available? From whom?
• (e) How has the initiative been received?
• (f) Who participated? Who did not?
• (g) Is the story known in the university/college
  community?
• (h) How has it been validated (formal and
  informal processes, i.e. change in mission
  statement, in catalogue, committees, coffee
  talks, etc.)?
• (i) Analysis of validation
• (j) Challenges what roadblocks were encountered
  along the way? How were they overcome? What
  worked? What didnt work?
• (k) Analysis of why the initiative succeeded
  and/or failed

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The Case Study

• Your companies corporate culture is discussed
• Corporate vision and core technological
  competence listed
• What was the companies approach to managing
  innovation?
• How where cross-functional teams involved?
• Describe the project leadership in the company
• How were employees motivated to accept the
  innovation?
• Describe how suppliers and customers were used
  in the technological strategy.