PROCESS OPTIMIZATION

O R G A N I Z A T I O N A L E F F E C T I V E N E S S C O N F E R E N C E

A P R I L 2 0 , 2 0 1 8

WELCOME & INTRODUCTIONS

JASON ALCEDOMBA Candidate & Graduate Research AssistantGeorgia Tech Scheller College of Business

ANDREW BILLINGSenior Consultant & Process Optimization Competency LeadGeorgia Tech Strategic Consulting

RASHAAD OWENSFacilitatorGeorgia Tech Strategic Consulting

WELCOME & INTRODUCTIONS

Take 60 seconds to introduce yourself to others at your table:What is your name?Where do you work?

What is your favorite pizza topping?

• Become familiar with Georgia Tech’s process optimization methodology

• Gain a high-level understanding of continuous improvement and lean

• Discover the purpose of a SIPOC and how to conduct it for any process

• Understand the importance of value stream awareness

• Learn how to capture, decipher, and prioritize customer feedback and why this information is important for process optimization

TODAY’S OBJECTIVES

DEFINITIONS

PROCESS OPTIMIZATION

CONTINIOUS IMPROVEMENT

A PROCESSA set of sequential activities that transforms an input into

an output.

Increasing the efficiency and effectiveness of a process in order to create value for the customer and advance the

organization’s strategy.

An ongoing effort to optimize processes and services in

pursuit of perfection. This can be done through incremental

or groundbreaking improvements. It transforms the practice of improvement into a mindset, rather than a

single event.

• There are a variations in frameworks and methodologies for breaking down the continuous improvement approach.

• The one used by Georgia Tech Strategic Consulting is a four step repeating cycle called the Plan, Do, Check, Act (PDCA) method.

• GTSC’s BPO methodology aligns with the PDCA method.

PLAN-DO-CHECK-ACT

PLANImprove

the Process

DOImplement on a small

scale

CHECKEvaluate results to determine

effectiveness

ACTImplement on larger

scale

PROCESS OPTIMIZATION

Answer

<5%

• The remaining 95% of the process is either non-value-adding (waste), or considered non-value-adding but necessary due to regulatory, policy, or legal requirements.

• To the extent possible, the wasteful activities should be eliminated.

• This is why it is critical to constantly evaluate our processes and ensure they are aligned with the most efficient and effective way currently known to complete the work.

What percentage of the time spent in a typical process is considered “value adding” in the eyes of the customer?

A time-tested method to create value for the customer by stabilizing and continuously

improving all processes through the systematic elimination of waste.

WHAT IS LEAN?

• Lean focuses on simplifying the process, without compromising quality in the eyes of the customer.

• Key elements of lean:

o Focus on the customer (internal and external)

o Respect for people who do the work

o Elimination of waste

o Stable and strong processes

o Continuous commitment to seeking out and solving problems (continuous improvement)

WHAT IS LEAN?

Lean is about more than just improving processes. It is a shift in culture, where employees and senior leaders work together to solve problems and continuously improve.

/ 10 /PREPARED BY GEORGIA TECH STRATEGIC CONSULTING. FOR LIMITED DISTRIBUTION ONLY.

STRATEGIZE/ENGAGE

GTSC’S PROCESS OPTIMIZATION METHODOLOGY

EXECUTE

KEY

ACT

IVIT

IES

• Clearly define the reason for action

• Identify major process components

• Identify stakeholders• Consider up/

downstream impacts• Specify customer

requirements and expectations

• Scope the project• Identify and mobilize

improvement team• Document background

and current state on the process improvement summary (A3)

• Define the desired outcomes in specific, measurable, achievable, and relevant format using baseline data and voice of the customer findings

• Document the goals on the process improvement summary (A3)

• Map the current state process flow by involving the people who do the work

• Verify the current state

• Review the current state map

• Identify waste• Conduct root cause

analysis• Document the root

cause on the process improvement summary (A3)

• Address root cause• Eliminate waste• Create unimpeded flow• Prioritize

improvements• Document the

improvements on the process improvement summary (A3)

• Redesign the process to incorporate improvements

• Identify change impacts by stakeholder group

• Define follow-up approach

• Develop implementation action plan for pilot phase and document on the process improvement summary (A3)

• Create communications and training plan for pilot phase

• Launch pilot

• Evaluate efficacy of improvements based on desired outcome with workers and customers

• If desired outcomes are not achieved, make refinements until successful

• Document results and observations on the process improvement summary (A3)

• Update stakeholder impact

• Develop action plan for broader implementation

• Develop communication plan

• Develop training plan and finalize job aides

• Secure leadership support• Monitor risk• Share and celebrate

results• Prepare for continuous

improvement of the process

MET

HO

DS

& T

OO

LS

• Process inventory• SIPOC (Suppliers, Inputs,

Outputs, Clients)• Stakeholder analysis• Voice of the customer• Collect baseline data

using data collection plans (if available)

• Project charter

• Voice of the customer feedback

• Baseline data

• Process narratives• Observe the process• Process mapping guide• Cross-functional,

facilitated mapping session using sticky notes

• Open house

• Process map walk for waste identification

• 5 whys• Fishbone diagram

• 5S• Standard work• Error proofing• Visual management• Improvement

brainstorming• Improvement

prioritization and selection

• Clean sheet redesign• CIRRA

• Rapid improvement testing

• Communication plan• Training plan• Standardized work

• Use baseline data to measure improvements

• Voice of the customer• Status reporting

• Standardized work• Training plan• Communication plan• Project management tools• Managing for daily

improvement tactics• Project storyboards• CIRRA

Grasp the Situation Establish the Goals

Define the Current State

Analyze the Problem

Determine Improvements

Test Improvements

Evaluate & Refine

Implement System-wide

GTSC approaches process optimization using an eight step framework based on lean continuous improvement methodology. The approach is applicable to any process, no matter the complexity or number of functions impacted.

1 3 4 5 6 7 82

PLAN

Infinite Loop of Continuous Improvement

REVIEW/LEARN/ENHANCE

The competency areas discussed in the other breakout sessions are critical for successfully carrying out process optimization work:

COMPETENCY INTERRELATIONSHIPS

OrganizationalReadiness &

Managing Change

StrategyDevelopment & Implementation

Project Management

Identifying who needs to be involved in the improvement effort and addressing the needs of those who will be impacted by the change as they transition to new ways of working

Managing the activities required to carry-out the improvement effort, and

providing the structure for implementation

Clearly defining the strategic direction of the organization so processes are appropriately aligned to achieve the goals and objectives

SIPOC

SSUPPLIERS

IINPUTS

PPROCESS

OOUTPUTS

CCUSTOMERS

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• In order to start on our process optimization journey, we need to understand the big picture of the process.

• A SIPOC is a funny sounding acronym that stands for Suppliers, Inputs, Process, Outputs, Customers.

• It is a visual diagram that captures the high-level business process from beginning to end and the key components.

STEP 1: DEFINE THE HIGH-LEVEL PROCESS

SSUPPLIERS

IINPUTS

PPROCESS

OOUTPUTS

CCUSTOMERS

• The process section defines the high-level activities that transform the inputs intooutputs which are ready for the customer.

• In the SIPOC, these should be described as the 4 to 6 major steps (or milestones).• Define the first and last steps first and then add in the 2 to 4 major steps in between.

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GEORGIA TECH STRATEGIC CONSULTING | PROCESS OPTIMIZATION TOOLKIT

SUPPLIERS INPUTS PROCESS OUTPUTS CUSTOMERS

PROCESS: Making a coffee drink

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SIPOC DIAGRAM

Take customer order

Brew the coffee

Customize the drink

Serve the coffee

FIRST STEP FINAL STEP

STEP 2: DEFINE THE PROCESS OUTPUTS

SSUPPLIERS

IINPUTS

PPROCESS

OOUTPUTS

CCUSTOMERS

• The outputs section lists all the items that are produced by the process.• Every process produces at least one output.• Examples of outputs include a report, a letter, a payment, an authorization, an order, a

decision, a product, a new staff member, etc.

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GEORGIA TECH STRATEGIC CONSULTING | PROCESS OPTIMIZATION TOOLKIT

SUPPLIERS INPUTS PROCESS OUTPUTS CUSTOMERS

• Coffee drink

PROCESS: Making a coffee drink

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SIPOC DIAGRAM

Take customer order

Brew the coffee

Customize the drink

Serve the coffee

FIRST STEP FINAL STEP

STEP 3: DEFINE THE CUSTOMERS OF THE OUTPUTS

SSUPPLIERS

IINPUTS

PPROCESS

OOUTPUTS

CCUSTOMERS

• Use this column to list the customers of the process.• These are the people who receive the outputs and/or benefit from the process.• Each output should have at least one customer associated with it.

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GEORGIA TECH STRATEGIC CONSULTING | PROCESS OPTIMIZATION TOOLKIT

SUPPLIERS INPUTS PROCESS OUTPUTS CUSTOMERS

• Coffee drink • Dine-in customers• Take-out

customers

PROCESS: Making a coffee drink

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SIPOC DIAGRAM

Take customer order

Brew the coffee

Customize the drink

Serve the coffee

FIRST STEP FINAL STEP

STEP 4: DEFINE THE INPUTS TO THE PROCESS

SSUPPLIERS

IINPUTS

PPROCESS

OOUTPUTS

CCUSTOMERS

• Define the inputs by thinking about the resources that are necessary to perform theprocess.

• An input can be what triggers the process to begin.• Examples could include an authorization, a request, a system notification, a raw

material, etc.

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GEORGIA TECH STRATEGIC CONSULTING | PROCESS OPTIMIZATION TOOLKIT

SUPPLIERS INPUTS PROCESS OUTPUTS CUSTOMERS

• Customer order• Espresso machine• Coffee beans• Milk• Flavoring• Sweetener• Cup• Stirring stick• Water

• Coffee drink • Dine-in customers• Take-out

customers

PROCESS: Making a coffee drink

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SIPOC DIAGRAM

Take customer order

Brew the coffee

Customize the drink

Serve the coffee

FIRST STEP FINAL STEP

STEP 5: DEFINE THE SUPPLIERS OF THE INPUTS

SSUPPLIERS

IINPUTS

PPROCESS

OOUTPUTS

CCUSTOMERS

• Define the suppliers in the first section.• This column lists the “who” or “what” supplies the inputs.• Examples could include a software system, students, a vendor, another department,

etc.

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GEORGIA TECH STRATEGIC CONSULTING | PROCESS OPTIMIZATION TOOLKIT

SUPPLIERS INPUTS PROCESS OUTPUTS CUSTOMERS

• Customer• Coffee roaster• Coffee cup

supplier• Food supply

company (dairy, sugar, condiments, etc.)

• City water supply

• Customer order• Espresso machine• Coffee beans• Milk• Flavoring• Sweetener• Cup• Stirring stick• Water

• Coffee drink • Dine-in customers• Take-out

customers

PROCESS: Making a coffee drink

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SIPOC DIAGRAM

Take customer order

Brew the coffee

Customize the drink

Serve the coffee

FIRST STEP FINAL STEP

NOW IT’S YOUR TURN!

1. Work in groups of four (each half of the table) to complete a SIPOC.

2. Appoint a scribe (the person who will capture the SIPOC information for the group).

3. Flipchart paper has already been prepared with the SIPOC columns—all you have to do is fill-in the details.

4. Review the case and take 10 minutes to complete a SIPOC diagram using the information provided, and your group’s creative and imaginative assessment of the situation.

5. We will debrief at the end.

SPEEDY PIZZERIA

Speedy Pizzeria opened in 2015. They are located in Atlanta and serve three types of customers: • Dine-in• Delivery• Carry-out

The company has 115 employees and three stores.

The pizzeria was recently featured on the Food Network and this led to a sudden and significant increase in business. They are having a hard time keeping up with all the orders and seem to be making a lot of errors. They have received some negative online reviews and the owner is concerned. He thinks the process is broken, but doesn’t know where to start. He wants to look at the process for making the pizza, from the time the order is taken, to the time the pizza is served to the customer.

He is very glad your group came into the pizzeria this evening, because he knows you are process optimization experts and wants your advice. You tell him it would be a good idea to start with a SIPOC.

You spend some time observing the process and talking to the staff to collect the information for the SIPOC.

What would your SIPOC look like?

WHAT IS A VALUE STREAM?

A value stream includes all the processes that come together to make a product or service ready for the customer.

VALUE STREAM

WHAT IS A VALUE STREAM?

CUSTOMER REQUEST PROCESS A PROCESS B PROCESS C PROCESS D CUSTOMER

DELIVERY

A value stream is composed of multiple processes.Each process in the value stream is made up of multiple steps.

PIZZA MAKING VALUE STREAM

PIZZA MAKING VALUE STREAM

CUSTOMER REQUEST

Prep the dough Top the pizza Bake the pizza

Prep pizza for customer

CUSTOMER DELIVERY

What happens when we improve processes locally, and don’t consider the impacts to upstream and downstream processes in the value stream?

• Inventory build-up

• Unevenness in work, resulting in wasted capacity or burnout

• A rise in defects and rework

• Sub-optimization

IMPORTANCE OF VALUE STREAM THINKING

Completing a SIPOC will help you identify the upstream and downstream processes in the value stream. Any impacts the improvements may have on the value stream must be

considered and addressed with all process owners as a part of a process optimization effort.

• VOC identifies the desired needs or requirements which will add value to a process, product, or service.

Voice of the Customer

• Based on strategic direction, VOB moves the organization closer to it’s goals.

Voice of the Business

FOUR VOICES OF PROCESS IMPROVEMENT

• VOP includes measures that describe how the process is performing in its current state.

Voice of the Processes

• VOE refers to the knowledge and requirements of the employees who are performing the work.

Voice of the Employee

VOICE OF THE CUSTOMER

• In lean, the value of a good or service is defined by the customer.

• Lean organizations are customer-centric—they understand what their customers value and continuously optimize their processes to deliver it.

• The voice of the customer is an approach used to gather and decipher customer requirements and feedback which identifies process improvement opportunities.

• It is critical that we constantly collect and understand this information in order to continuously improve our processes.

A customer is the direct beneficiary of the product or service. A customer also refers to any operation or function that is downstream in the process.

IDENTIFYING YOUR CUSTOMERS

Stakeholder AnalysisYou can use a stakeholder analysis to identify

your customers.

Project:

Dine In Customers High High LowCarry Out Customers High High LowDelivery Customers Low Medium LowAccounting Low High HighIT Medium High HighCustomer Service Team Medium High HighDrivers Low Low LowProcurement Low Low Low

CommentsGroup

Level of INFLUENCE

they will have on the project

Level of INTEREST they

have in the project

Level of IMPACT the project will have on them

SIPOCYou can use the customers identified in

the customer column of the SIPOC.

TYPES OF CUSTOMER FEEDBACK

There are two types of customer feedback—reactive and proactive:

Reactive feedback: Feedback the customer provides by channels like customer complaints, online social media, online reviews, etc. This type of feedback is often negative.

Proactive feedback: The most effective form of feedback because in most cases, it allows us to get out ahead of an issue. It refers to directly and proactively engaging customers to solicit their opinions.

Surveys Focus Groups Interviews

Complaints Returns Social Media Comments Sales Figures

Informal Conversations

COLLECTING & TRANSLATING VOC DATA

What the customer told us is… After clarifying with them, the key issue is…

The specific and measurable requirement is…

“The pizza arrived cold, again! This has been the fifth time!”

Customer wants pizza at right temperature.

Pizza should be 140 degrees when received by customer.

“I come here because of the quality.”

Customers like the freshness of the ingredients we use.

We should continue to meet or exceed current quality standards.

“I love the presentation of your food.”

Customers like it when we add a garnish to the plate.

A garnish should be placed on every plate.

“The pizza is priced appropriately.” The pizza is less expensive than other pizzerias in the area.

The cost of our pizza should be equal to, or less than $15

“I want the pizza that I ordered.” We are mixing up customer orders. Customer orders must be accurate 100% of the time.

“I’m tired of waiting.” Pizza needs to arrive sooner. Food must arrive within 20 minutes or less from time of order.

1 2 3What the customer told us is… After clarifying with them, the key

issue is…The specific and measurable

requirement is…

REQUIREMENT CLASSIFICATION & PRIORITIZATION

Classify the requirements to determine the most necessary improvements:

• Must be (MB): The characteristic must be present or the customer will go elsewhere.

• Satisfiers (S): The better we are at meeting these needs, the happier the customer is.

• Delighters (D): Those qualities that the customer was not expecting but received as a bonus.

Once we classify the requirements, we can then prioritize them based on the following:

1. First, focus on the Must beitems and ensure these are being met.

2. Second, focus on meeting the Satisfiers.

3. Focus on delivering on the Delighters last, but only if they will truly add value in the eyes of the customer.

VOC REQUIREMENT CLASSIFICATION EXAMPLES

• Must be (MB): The characteristic must be present or the customer will go elsewhere.

• Satisfiers (S): The better we are at meeting these needs, the happier the customer is.

• Delighters (D): Those qualities that the customer was not expecting, but see as a bonus.

Customer Requirement RequirementClassification

Satisfier

Must beSatisfier

Pizza should be 140 degrees when received by the customer.

We should continue to meet or exceed current quality standards.The cost of our pizza should be equal to, or less than $15.

As a customer, what classification would you assign this requirement?

• Must be (MB): The characteristic must be present or the customer will go elsewhere.

• Satisfiers (S): The better we are at meeting these needs, the happier the customer is.

• Delighters (D): Those qualities that the customer was not expecting, but see as a bonus.

YOUR TURN

A garnish should be placed on every plate.

As a customer, what classification would you assign this requirement?

• Must be (MB): The characteristic must be present or the customer will go elsewhere.

• Satisfiers (S): The better we are at meeting these needs, the happier the customer is.

• Delighters (D): Those qualities that the customer was not expecting, but see as a bonus.

YOUR TURN

Food must arrive within 20 minutes or less from time of order.

As a customer, what classification would you assign this requirement?

• Must be (MB): The characteristic must be present or the customer will go elsewhere.

• Satisfiers (S): The better we are at meeting these needs, the happier the customer is.

• Delighters (D): Those qualities that the customer was not expecting, but see as a bonus.

YOUR TURN

Customer orders must be accurate 100% of the time.

After prioritizing the customer requirements, you should validate your hypothesis with a wider range of customers before grouping and finalizing your list of improvement opportunities. Here are some methods you can use to validate:

• Be the customer – role play and experience the process as if you are a customer

• Customer survey – apply Likert scale, rank order, or comparative questions to validate prioritization list

• Focus groups – bring in small groups of customers to create dialogue around the requirement

• Interviews – talk one-on-one with customers to get their feedback and rankings

VALIDATE THE VOICE OF THE CUSTOMER

GEORGIA TECH’S INTERNAL LEAN CERTIFICATION COURSEThe course is an intensive development opportunity that gets participants learning and

using basic lean process optimization methods and tools.

Participants will be able to use their new knowledge and skills immediately to achieve measurable results by reducing complexity, increasing efficiency, and continuously

improving the service delivery experience in any organization at Georgia Tech.

We anticipate holding the pilot course in the fall of 2018

WRAP-UP & QUESTIONS