CHAPTER 7: PROCESS chain that affect customer satisfaction.

MANAGEMENT These processes typically fall into two

categories: value-creation processes and
Wisdom from Texas Instruments: support processes.
“Unless you change the process, why would you
expect the results to change” Types of Processes
 Value-creation processes – those most
Importance of Process Management important to “running the business”
 Prevent defects and errors, o Design processes – activities
 Eliminate waste and redundancy, that develop functional product
 Lead to better quality and improved specifications
company performance through shorter o Production/delivery processes –
cycle times, improved flexibility, and those that create or deliver
faster and more consistent customer products
response.  Support processes – those most
important to an organization’s value
Key Process Management Principles for creation processes, employees, and daily
Performance Excellence operations
 Identify vital work processes that relate
to core competencies and deliver Key Idea
customer value, profitability,  In many companies, value-creation
organizational success, and sustainability. processes take the form of projects—
 Determine key work process temporary work structures that start up,
requirements, incorporating input from produce products or services, and then
customers, suppliers, partners, and shut down.
collaborators.
 Design and innovate work processes to Process Requirements
meet all requirements, incorporating new  Value creation process requirements
technology, organizational knowledge, o Usually depend significantly on
cycle time, productivity, cost control, and product and service
other efficiency and effectiveness factors. characteristics.
 Minimize overall costs associated with  Support process requirements
inspections, tests, and process or o Usually depend on internal
performance audits, and seeking to requirements, and they must be
prevent defects, service errors, and coordinated and integrated to
rework and minimize warranty costs or ensure efficient and effective
customers’ productivity losses, as linkage and performance.
appropriate.
 Implement work processes and control Example: Pal’s Sudden Service
their day-to-day operation to ensure that
they meet design requirements, using
appropriate performance measures along
with customer, supplier, partner, and
collaborator input as needed.
 Improve work processes to achieve better
performance, reduce variability, improve
products and services, and keep processes
current with business needs and
directions, and share improvements with
other organizational units and processes Key Idea
to drive organizational learning and  Process management involves planning
innovation. and administering the activities necessary
to achieve a high level of performance in
Key Idea key business processes, and identifying
 Leading companies identify important opportunities for improving quality and
business processes throughout the value
 operational performance, and ultimately,
customer satisfaction. Key Idea
 The goal of process design is to develop
AT&T Process Management Principles an efficient procedure to satisfy both
 Process improvement focuses on the end- internal and external customer
to-end process. requirements.
 The mind-set of quality is one of
prevention and continuous improvement. Agility
 Everyone manages a process at some  Agility refers to flexibility and short
level and is simultaneously a customer cycle times.
and a supplier.  Enablers of agility include
 Customer needs drive process o close relationships with
improvement. customers to understand their
 Corrective action focuses on removing emerging needs and
the root cause of the problem rather than requirements,
on treating its symptoms. o empowering employees as
 Process simplification reduces decision makers,
opportunities for errors and rework. o effective manufacturing and
 Process improvement results from a information technology,
disciplined and structured application of o close supplier and partner
the quality management principles. relationships, and
o breakthrough improvement.
Process Management Activities
1. Design Key Idea
 ensuring that the inputs to the process,  Flexibility refers to the ability to adapt
such as materials, technology, work quickly and effectively to changing
methods, and people are adequate, and requirements. It might mean rapid
that the process steps are well-defined, changeover from one product to another,
mistake-proofed, sequenced properly, rapid response to changing demands, or
lean, and understood for consistent and the ability to produce a wide range of
effective execution. customized services.
2. Control
 assessing whether the process performed Process Design
as planned and the process output is on 1. Identify the product or service: What
target. work do I do?
3. Improvement 2. Identify the customer: Who is the work
 continually seeking to achieve higher for?
levels of performance in the process, 3. Identify the supplier: What do I need and
such as reduced variation, higher yields, from whom do I get it?
fewer defects and errors, and so on. 4. Identify the process: What steps or tasks
are performed? What are the inputs and
Requirements for Process Management outputs for each step?
 Processes must be repeatable 5. Mistake-proof the process: How can I
 Process must be measurable eliminate or simplify tasks? What “poka
yoke” (i.e., mistake-proofing) devices
Meeting these two conditions ensures that can I use?
sufficient data can be collected to reveal useful 6. Develop measurements, controls, and
information for evaluation and control, as well as improvement goals: How do I evaluate
learning that leads to improvement and maturity. the process? How can I improve further?

Designing Work Processes

Process design can have a significant impact on
 Cost
 Agility
 Quality
Example: The Ritz-Carlton Three Steps of  Identifying potential defects and stopping
Service Process a process before the defect is produced.
 Finding defects that enter or leave a
process.

Service Errors
 Task errors include doing work
incorrectly, work not requested, work on
the wrong order, or working too slowly.
 Treatment errors in the contact between
the server and the customer, such as lack
of courteous behavior, and failure to
acknowledge, listen, or react
appropriately to the customer.
Service Process Design
Three basic components:  Tangible errors, such as unclean facilities,
dirty uniforms, inappropriate
 Physical facilities, processes and
temperature, and document errors.
procedures
 Customer errors in preparation such as
 Employee behavior
the failure to bring necessary materials to
 Employee professional judgment
the encounter, to understand their role in
the service transaction, and to engage the
Key Service Dimensions
correct service.
1. Customer contact and interaction
 Customer errors during an encounter
2. Customization
such as inattention, misunderstanding, or
3. Labor intensity
simply a memory lapse, and include
failure to remember steps in the process
Mistake-Proofing Processes
or to follow instructions.
Typical reasons for mistakes and errors:
 Customer errors at the resolution stage of
 Forgetfulness due to lack of
a service encounter include failure to
concentration
signal service inadequacies, to learn from
 Misunderstanding because of the lack of
experience, to adjust expectations, and to
familiarity with a process or procedures
execute appropriate post-encounter
 Poor identification associated with lack actions.
of proper attention
 Lack of experience Process Control
 Absentmindedness Control – the activity of ensuring conformance to
 Delays in judgment when a process is requirements and taking corrective action when
automated necessary to correct problems and maintain stable
 Equipment malfunctions performance

Key Idea Key Idea

 Poka-yoke (POH-kah YOH-kay) is an  Process control is important for two
approach for mistake-proofing processes reasons. First, process control methods
using automatic devices or methods to are the basis for effective daily
avoid simple human error. management of processes. Second, long-
term improvements cannot be made to a
Poka-Yoke process unless the process is first brought
Poka-yoke is based on: under control.
 Prediction, or recognizing that a defect is
about to occur and providing a warning Components of Control Systems
 Detection, or recognizing that a defect Any control system has three components:
has occurred and stopping the process. 1. a standard or goal,
2. a means of measuring accomplishment,
Three levels: and
 Designing potential errors out of the
process.
 3. comparison of actual results with the document the incident, and then return to
standard, along with feedback to form the their routine.
basis for corrective action.  Critical success factor control for critical
processes. Process teams use customer
Control versus Improvement and organizational requirement
measurements to determine quality,
speed, and cost performance. These
measurements are compared against
benchmarks and customer satisfaction
data to determine corrective action and
resource allocation. In addition, The Ritz-
Carlton conducts both self-audits and
outside audits.

Importance of Process Improvement

Control and Improvement
 Customer loyalty is driven by delivered
 Control should be the basis for value.
organizational learning and lead to
 Delivered value is created by business
improvement and prevention of defects
processes.
and errors.
 Sustained success in competitive markets
requires a business to continuously
After-action review
improve delivered value.
 What was supposed to happen?
 To continuously improve value creation
 What actually happened?
ability, a business must continuously
 Why was there a difference? improve its value creation processes.
 What can we learn?
Kaizen
Key Idea  Kaizen – a Japanese word that means
 In manufacturing, control is usually gradual and orderly continuous
applied to incoming materials, key improvement
processes, and final products and  Focus on small, gradual, and frequent
services. improvements over the long term with
minimum financial investment, and
Effective Control Systems participation by everyone in the
 Documented procedures for all key organization.
processes;
 A clear understanding of the appropriate Key Idea
equipment and working environment;  A kaizen blitz is an intense and rapid
 Methods for monitoring and controlling improvement process in which a team or
critical quality characteristics; a department throws all its resources into
 Approval processes for equipment; an improvement project over a short time
 Criteria for workmanship, such as written period, as opposed to traditional kaizen
standards, samples, or illustrations; and applications, which are performed on a
 Maintenance activities. part-time basis.

Quality Control in Services Cycle Time Improvement

Example: The Ritz-Carlton Hotel Company Cycle time – the time it takes to accomplish one
 Self-control of the individual employee cycle of a process
based on their spontaneous and learned
behavior. Reductions in cycle time serve two purposes
 Basic control mechanisms, which are  First, they speed up work processes so
carried out by every member of the that customer response is improved.
workforce. The first person who detects a  Second, reductions in cycle time can only
problem is empowered to break away be accomplished by streamlining and
from routine duties, investigate and simplifying processes to eliminate non-
correct the problem immediately, value-added steps such as rework.
Key Idea 9. Select the most promising solution(s).
 Improvement should be a proactive task
of management and be viewed as an Do
opportunity, not simply as a reaction to 1. Conduct a pilot study or experiment to
problems and competitive threats. test the impact of the potential
solution(s).
Process Improvement Methodologies 2. Identify measures to understand how any
 Redefining and analyzing the problem: changes or solutions are successful in
Collect and organize information, analyze addressing the perceived problems.
the data and underlying assumptions, and
reexamine the problem for new Study
perspectives, with the goal of achieving a 1. Examine the results of the pilot study or
workable problem definition. experiment.
 Generating ideas: “Brainstorm” to 2. Determine whether process performance
develop potential solutions. has improved.
 Evaluating and selecting ideas: 3. Identify further experimentation that may
Determine whether the ideas have merit be necessary.
and will achieve the problem solver’s
goal. Act
 Implementing ideas: Sell the solution and 1. Select the best change or solution.
gain acceptance by those who must use 2. Develop an implementation plan: what
them. needs to be done, who should be
involved, and when the plan should be
The Deming Cycle accomplished.
Act  Plan  Study  Do 3. Standardize the solution, for example, by
writing new standard operating
Plan procedures.
1. Define the process: its start, end, and 4. Establish a process to monitor and
what it does. control process performance.
2. Describe the process: list the key tasks
performed and sequence of steps, people Key Idea
involved, equipment used, environmental  The Deming cycle focuses on both short-
conditions, work methods, and materials term continuous improvement and long-
used. term organizational learning.
3. Describe the players: external and
internal customers and suppliers, and Creative Problem Solving
process operators.  Mess Finding – identify symptoms
4. Define customer expectations: what the  Fact Finding – gather data; operational
customer wants, when, and where, for definitions
both external and internal customers.  Problem Finding – find the root cause
5. Determine what historical data are  Idea Finding – brainstorming
available on process performance, or  Solution Finding – evaluate ideas and
what data need to be collected to better proposals
understand the process.  Implementation – make the solution work
6. Describe the perceived problems
associated with the process; for instance, Key Idea
failure to meet customer expectations,  How one approaches problem solving is
excessive variation, long cycle times, and not as critical as doing it in a systematic
so on. fashion, whether one uses the Deming
7. Identify the primary causes of the cycle, FADE, Juran’s approach, CPS, or
problems and their impacts on process some hybrid variation.
performance.
8. Develop potential changes or solutions to Breakthrough Improvement
the process, and evaluate how these  Discontinuous change resulting from
changes or solutions will address the innovative and creative thinking,
primary causes.
 motivated by stretch goals, and facilitated 6.1 Work Systems
by benchmarking and reengineering a. Work System Design
b. Key Work Processes
Key Idea c. Emergency Readiness
 Stretch goals force an organization to
think in a radically different way, and to 6.2 Work Processes
encourage major improvements as well a. Work Process Design
as incremental ones. b. Work Process Management
c. Work Process Improvement
Benchmarking
 Benchmarking – “the search of industry Process Management in ISO 9000
best practices that lead to superior  Planning and controlling the design and
performance.” development of products and managing
 Best practices – approaches that produce the interfaces between different groups
exceptional results, are usually involved in design and development
innovative in terms of the use of  Management of inputs and outputs for
technology or human resources, and are design and development activities, and
recognized by customers or industry use of systematic reviews to evaluate the
experts. ability to meet requirements, identify any
problems, and propose necessary actions;
Types of Benchmarking purchasing processes; control of
 Competitive benchmarking - studying production and service, including
products, processes, or business measurement and process validation;
performance of competitors in the same control of monitoring and measuring
industry to compare pricing, technical devices used to evaluate conformity;
quality, features, and other quality or analysis and improvement; monitoring
performance characteristics of products and measurement of quality management
and services. processes; and continual improvement,
 Process benchmarking – focus on key including preventive and corrective
work processes action.
 Strategic benchmarking – focus on how  Use quality policy, objectives, audit
companies compete and strategies that results, data analysis, corrective and
lead to competitive advantage preventive actions, and management
reviews to continually improve its quality
Reengineering management system’s effectiveness
 Reengineering – the fundamental
rethinking and radical redesign of Process Management in Six Sigma
business processes to achieve dramatic  Understanding and improving processes
improvements in critical, contemporary on a project-by-project basis. Projects are
measures of performance, such as cost, clearly linked to strategic needs and
quality, service, and speed. organizational objectives, and that
projects are managed under a common
Key Idea framework.
 Reengineering involves asking basic  The Six Sigma team-project approach
questions about business processes: Why provides a natural fit with the
do we do it? and why is it done this way? requirements of product and process
design, control, and improvement.
Process Management in the Baldrige Award  Process owners should be trained in Six
Criteria Sigma methods and be involved in formal
The Process Management Category examines how Six Sigma projects, but still have
an organization designs its work systems and how responsibility for continuous
it designs, manages, and improves its key improvement on a daily basis.
processes for implementing those work systems to
deliver customer value and achieve organizational
success and sustainability, and prepare for
emergency readiness.