Perfecting Six Sigma Through Process Management

8/14/2019 Perfecting Six Sigma Through Process Management

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www.statamatrix.com 800-472-6477 [email protected]

Perfecting Six Sigma Through

Process Management

Rohit RamaswamySTAT-A-MATRIX Inc.


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2008 STAT-A-MATRIX and Oriel Incorporated. All rights reserved. 2

Process Management

www.statamatrix.com.com 800-472-6477 [email protected]

Implementing Six SigmaList the challenges that your organization has faced in its SixSigma implementation


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Process Management


Current Organizational Realities Organizations are changing rapidly

Customer expectations are dramatically increasing whileavailable internal resources are declining

Speed is a fact of life

Few people see organizations as a system of interrelated

pieces; most view organizations functionally Cross-functional interdependencies are often exceedingly

complex; over time interactions become obscured

Often the functional measurement systems compound the problem and reinforce the wrong behaviors

The difference between task and process is the difference between part and whole


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Process Management


Dilbert and Six Sigma A popular American comic strip written and drawn by Scott

Adams that has run in newspapers since April 1989

Typical themes Bureaucracy

Scheduling without reference to reality

Office politics always stand in the way of productivity Mismanagement is rampant

Employees skills and efforts are not rewarded

Low moraleFrom Wikipedia.org/wiki/Dilbert


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Process Management


Six Sigma StudiesRecent Six Sigma studies show that organizations have difficulty: Engaging senior leadership, management, and employees

Tying improvement efforts to business strategy

Tying improvement efforts directly to customer requirements

Sustaining results from improvement projects Transferring knowledge and skills to non-

manufacturing processes

Identifying where to focus improvement efforts for highest impact

Putting knowledge and skills into everyday practice acrossthe organization


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Process Management


Improving Work ProcessesSix SigmaApproaches1. Think about your job and the tasks that are required of

you; if you were to do all of those tasks and consistently

do them very well, how many hours per week would your job require?

2. What percentage of your time do you spend doing

someone elses job because you cant rely on them to do atask correctly or within your required time frame?

3. What percentage of your time do you spend on tasks that

are unnecessary or dont add value?Six Sigma methods reduce variability,

reduce defects, and add value


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Process Management


Improving Work ProcessesLeanApproaches1. How much junk mail comes across your desk and

computer screen?

2. How much stress and personal aggravation do thesecause? Do you ever carry it home with you?

3. Are you willing to learn and do something about it?

Lean methods reduce waste, reduce imbalance, andimprove problem-solving ability


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Process Management


The Process Approach The common word between the Six Sigma and Lean

approaches is:

PROCESS

Process management is the strategic discipline of documenting and measuring processes to identifyopportunities for improvement


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The Real Organization

Products and services for customers are not produced by functions, but by processes that tend to cross functional lines

Some of these processes tend to be the way the customers identifywith the company

Functions are (or should be) the residence and building placefor competencies

Process capabilities and competencies are the key leverage pointsin order to achieve strategy (the desired state of the organization)

FUNCTIONS

PROCESS

STRATEGY


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Process Management


Process Management Is the Driver of Improvement

In order to achieve Six Sigma, a business must be excellent atmanaging existing processes, improving existing processes, and

designing new processes

ProcessManagement

Design

Improvement


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Process Management


What Is Process Management? Process management refers to the set of tools needed to

document, measure, monitor, and control processes

It is about ongoing accountability for managing entire cross-functional processes to satisfy goals

Outcomes Provide consistent service to the customer

Provide direction for improvement activities

Hold the gains created by improvement activities Manage process quality with a link to strategic objectives


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What Is Process Management?, cont.How does it relate to improvement and design? Process management ends when changes in process effectiveness

or efficiency create the need for improvement or design When these are complete, the improved or redesigned processes

re-enter the process management system

ProcessManagement

Design

Improvement


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Maximizing Profitability Through ProcessManagementThe value chain establishes linkages between

profitability and performance as follows

Profitability

Loyalty

Customer Satisfaction

Service Value Provided

Consistently Meeting Customers Expectations at Acceptable Cost

Process Management Activities

arises from

which is created by

which is the result of

which maximizes

result in

Typical Point of Fracture

Value Chain

ProcessManagementContributions


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Process Management


When Is Process ManagementAppropriate? When a Lean and/or Six Sigma infrastructure is in place

When the full benefits of Six Sigma are not being realized

When companies are focused primarily on improvement or design projects and not on strategic transformation

Project

Focused

Organization

Focused

Transformation

Focused


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Process Management


Organizational Transformation Stages

Stages defined by: Operational definition of Lean and Six Sigma in place

Methodologies applied

Breadth of application Benefits realized

ProjectFocused

OrganizationFocused

TransformationFocused


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Process Management


Characteristics of Each Stage

Plus:

Philosophy

Foundation for creating value

Plus:

Vision

Improvementinfrastructure

Discipline andattitude

Approach

Performance metric

BenchmarkGoal

Tool set


OrganizationFocused

Project Focused

Definition Builds in Each Stage


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Process Management


Methodologies Used in Each Stage

Plus:

Leadershipdevelopment

Organizationalchangemanagement

Plus:

Processmanagement

Lean Six Sigma

Innovation

DMAIC

DMADV

Lean events


OrganizationFocused

Project Focused

Methodologies Build in Each Stage


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Process Management


Breadth of Application in Each Stage

Plus:

Customers andsuppliers processes

All policies andinfrastructure

Cultural issues

Reward andrecognition

Plus:

All core andenabling processes

Key strategicprocesses

Pockets in other areas of theorganization


OrganizationFocused

Project Focused

Breadth Increases in Each Stage


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Process Management


Benefits Realized in Each Stage

Plus:

Customers recognizequality across allbusinessesProcess-focused values,culture, and mindset

Customers needs for

and business needs aresimultaneously satisfiedin the best possiblemanner

Plus:

Integrated and proactivemanagement system thatmeasures and analyzesobjective data across theorganization to help makedecisions

Disciplined and consistentuse of proven quality toolsat all levels

Customer requirementsmet and exceeded

Measure and analyzeobjective data in keyprocesses to help makedecisions

Demonstrated results insome key processindicators


OrganizationFocused

Project Focused


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Process Management


FromFrom ToTo

1. Pockets of customer-recognizedquality within some businesses

2. Spotty use of quality improvementapproaches and tools

3. Frequent ship-and-fix attitude

4. Ignore costs of poor quality

5. Function-focused values, mindset,and practices

6. Frequent guesswork inmaking decisions

Customers recognize qualityacross all businesses, wall-to-wall

Disciplined and consistent use of proven quality tools at all levels

Do it right the first time, based oncustomers requirements

Calculate and communicate coststo all employees

Process-focused values, mindset,and practices

Measure and analyze objectivedata to help make decisions

What Changes with Process Management


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Process Management


1. Pockets of customer-recognizedquality within some businesses

2. Spotty use of quality improvementapproaches and tools

3. Frequent ship-and-fix attitude

4. Ignore costs of poor quality

5. Function-focused values, mindset,and practices

6. Frequent guesswork inmaking decisions

Customers recognize qualityacross all businesses, wall-to-wall

Disciplined and consistent use of proven quality tools at all levels

Do it right the first time, based oncustomers requirements

Calculate and communicate coststo all employees

Process-focused values, mindset,and practices

Measure and analyze objectivedata to help make decisions

Exercise: What Changes with Process

Management1. Rate your organization on a 1 to 5 scale 5.


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www.statamatrix.com 800-472-6477 [email protected]

Implementing

Process Management

Example


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Process Management


Background and Strategy

Healthcare Resources International (HRI) is a major healthinsurance provider for mid- to large-size businesses

Founded in 1978, HRI has commanded a 2540% share of their target market

Over the past three years, market share has declined below20%, despite a successful Six Sigma initiative

The CEO, Harry Wilson, announced the kickoff of processmanagement as an addition to the overall Six Sigma initiative

Success will be measured by increased revenue, reduced costs, and

improved customer satisfaction


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Process Management


Discussion Questions

1. In what way is process management likely to help HRI?

2. Why should HRI implement process management now?3. What is the next thing that HRI should do?


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Step 3: Identifying Key Customer and

Business Output MeasuresKey business measures Revenue from premiums

Costs from claims

Key customer measures Customer satisfaction

Goal is to satisfy business and customer needssimultaneously, thereby creating value

Initiateand

ManagePolicies

BillCustomers

IdentifyMarketNeeds

DevelopService

Provider Relationships

Market andSell to

Companies


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Process Management


What Would You Do Now?

If you are a manager in HRI, what would you do next to ensurethat the customer needs and the business needs are

simultaneously satisfied?


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P M t


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Process Management


Definition of Measures

The linked measures illustrate basic cause-and-effect relationshipsin the organization

Take action on a tactical day-to-day level to influence

process output

Assess how well the process isperforming; where improvement

and innovation need to takeplace; and how this processrelates to the business and

customer needs

Make strategic businessdecisions and

allocate resources

Used To

Uptime of computer system

In-process measures

Time to processquotation

Process outputmeasures

Customer satisfaction

Business and customer output measures

ExampleDefinition

Process Management


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Linkage Between MeasuresA Key

Concept of Six Sigma

In improvement (DMAIC), we identify the key xs toreduce variation in the y

In design, we carefully set specifications on the xs so that

we get the desired y In process management, we monitor and control the xs to

assure we will get the desired y

y = f (x 1, x2, )

process output a function of iskey process and input factors

that cause variation in the output

Process Management


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What Would You Do Now?

If you are a manager in HRI, what would be some process outputand in-process measures that would allow you to meet the

business and customer output requirements?

Process Management


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Step 5: Building the Organization

Process ManagementTeams

Improvement/Design Projects

Senior Leaders(Champions)

Process Team

Sub-ProcessOwners

Process Owner

ProcessSponsor

Improvement/ Design Team

Black Belt

Members

Sponsor

Process Management

BB or MBB MBB

Process Management


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Process Management


Process Owners

Help build process management system and are responsible for lower level process improvement and results

Identify, define, and link key business processes fromlevel 2 to daily work level

Identify, define, and link measurements so that top-levelmeasures are linked to lower level process measures

Develop process management tools for ongoing process monitoring

Review process data and measures, recognize patterns inthe data and respond appropriately

Link process management to standardization, DMAICimprovement, and DMADV design (redesign) projects

Process Management


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g


Process Champions

Drive the building of the process management system andmaintain focus on strategic objectives and goals

Define roles and responsibilities Define high-level rollout plan

Identify key business measures and build dashboards

Establish and map core processes and relationship to key business measures

Monitor overall organization and core process performance

Process Management


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g


Managers and Supervisors

Responsible for daily process management work Manage operations as a process

Identify key output and process measures

Construct process maps and process management charts

Identify and chart data

Participate in standardization, improvement, and design(redesign) of processes

Process Management


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Roles in Process Management

Dedicated improvement resources Coach process champions, process owners, and process team

members in developing and using process management system(Master Black Belt, or MBB)

Provide ongoing support in collecting and analyzing processdata (Black Belt, or BB)

Provide support in reporting results and so whats (BB)

Identify future DMAIC and DMADV projects based on

process management results (MBB)


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Process Output-Level Monitoring Plan

2520151050

0.003

0.002

0.001

0.000

S a m p l e C o u n t

Oct 1Aug 4July 3June 2May 1

Number of complaints u-chart (subgroups = calls received)

week

U=0.001737

UCL=0.002725

LCL=7.48E-04

0Week May 1 June 2 July 3 Aug 4 Oct 1

10

12

14

16

18

20

22

24

S a m p

l e M e a n

1 11

1

11

1

Mean=15.38

UCL=19.04

LCL=11.71

0

5

10

15

S a m p

l e R a n g e

1

R=6.36

UCL=13.45

LCL=0

Cycle time from RFQ to initiate policy (avg. # days)


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Process Management


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Discussion Questions

1. How can HRI use the process monitoring data to meet thestrategic organizational goals (increased revenue, reduced

costs, and improved customer satisfaction)?2. What are some challenges that HRI (or your organization)

must overcome to implement process management?

3. What should HRI (or your organization) do to facethe challenges?

Process Management


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Getting Started with Process

ManagementDifferent ApproachesTop-Down Approach

AA BB CC DD EEL1

L2

L3 Customer Customer

DA DB DC DD DE Middle-Out Approach

Do What You Can Where You Are Approach

Process Management


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Comparing the Different Approaches

Lack full alignment with externalcustomers, strategy, and businessneeds

Your process may not work inharmony with adjoining processes

Addressing management from a processviewpoint

Your process can be aligned with your directcustomers

Do What You CanWhere You Are

Lack full alignment with strategyand business needs

Some process goals may conflict

Process management system can be alignedwith customersMiddle-Out

Takes longer to develop

Requires executive-levelcommitment

Process management system fully aligned withcustomers, strategy, and business needs

All processes work in harmony

Overall system optimized

Top-Down

DisadvantagesAdvantagesApproach

Process Management


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2008 STAT-A-MATRIX and Oriel Incorporated. All rights reserved. 47www.statamatrix.com.com 800-472-6477 [email protected]

Selling Process Management

Benefits for leadership Customer satisfaction rises

Profit margins increase

Operational discipline improves and operational risk declines

Better organizational management and oversight

Improved execution

Higher productivity

Improved organization knowledge and memory Greater organizational flexibility and adaptability

Process Management


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Selling Process Management, cont.

Benefits for process owners Organizational alignment

Customer focus

Clear goals and priorities

Better process execution

Improved process visibility

Accurate measurements

Clear accountability Improved follow-through

Process Management


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Selling Process Management, cont.

Benefits for managers and supervisors Clear goals and priorities

Better utilization of resources

Meaningful measurements

Employee accountability

Less crises

Process predictability

Improved morale Peace of mind


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Process Management

Selling Process Management in Your


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Selling Process Management in Your

OrganizationDiscussion Questions1. How will you sell process management in your organization?

2. What approach are you likely to use and why?


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Process Management


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Oriel Areas of Expertise

Enterprise Voice of the Customer

Six Sigma (DMAIC/DMADV)

Lean

Process management

Lean Six Sigma

Process improvement

Teams

Change management

Process Management


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Oriel Contact Information

For more information about Oriel Incorporated www.orielinc.com

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Perfecting Six Sigma Through Process Management

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