This is an overview presentation of Business Process Improvement. - Michael T. Ligayo (+0639178010366)

1. BUSINESS PROCESS
IMPROVEMENT
(Process Innovation)
MICHAEL T. LIGAYO
ENTREP, S63, TUE, 6:00PM-9:00PM

2. What is a Business Process?
• The complete and dynamically coordinated
(logically-related) set of collaborative and
transactional activities that deliver value to
customers focusing on particular products or
services (Smith and Fingar, 2003)
Input PROCESS Output

3. What is a Business Process?
• Specific ordering of work activities across time
and place, with a beginning and an end, and
with clearly identified inputs and outputs – a
structure for action (Davenport, 1998)
• Examples of business processes are:
purchasing, manufacturing, warehousing, trai
ning, recruitment and many others

4. What is a Business Process
Improvement?
• A systematic approach to help organizations
optimize its underlying processes to achieve
more efficient results
• Focuses is on achieving customer satisfaction
(end goal) as signified by:
– Reduction in costs (90%)
– Reduction in queue or waiting time (90%)
– Reject and complaint elimination (60%)
– Increased turn around time

5. What is a Business Process
Improvement?
• Works by:
– Defining the organization’s strategic goals and
purposes
– Determining the organization’s customers
– Aligning the business processes to realize the
organization’s goals
• Usually project-based so implementation is
through project management

6. What is a Business Process
Improvement?
The And-Then-A-Miracle-Occurs Effect

7. What is a Business Process
Improvement?
FIRST WAVE SECOND WAVE
KAIZEN SOURCE OF INNOVATION
- Used continuous - Saw business processes as a
improvement techniques to source of innovation
empower people to solve - Started the thinking that
problems business processes are
- Pre-1990’s inhibited by organizational
- Example of this thinking Six and cultural boundaries
Sigma - 1990’s and beyond
- Example of this thinking is
Business Process Re-
engineering

8. Levels of Business Process
Improvement

9. Levels of Business Process
Improvement
LEVEL EXAMPLE
5 – Redesign of Industry Value 1. Customer self-service such as
Chain booking of airline tickets
online (resulting to customers
having more control, optimal
process ensuring higher level
of data integrity)
2. Customer-to-customer
interaction such as buying and
selling goods through ebay or
sulit

10. Levels of Business Process
Improvement
LEVEL EXAMPLE
4 – Redesign of Business 1. Processes developed around
customer wishes such as car
insurance company
representative who visits the
customers at the location for
assessment and immediate
payment
2. Flexibility is the process rather
than the exception such as
what Dell did giving customers
the highest flexibility they can
get

11. Levels of Business Process
Improvement
LEVEL EXAMPLE
3 – Redesign of Processes 1. Use of real-time and
geographical information in
the logistics industry helping
customers track their package
using the internet
2. Workflow management and
document management
resulting to reduced
processing times

12. Levels of Business Process
Improvement
LEVEL EXAMPLE
2 – Improvement of Sub-Processes 1. Avoiding one standard process
for a variety of situations such
separating different mortgage
situations giving different
processing and commitments
to those cases that will
require substantial checking
2. Mobile communication for
employees resulting to faster
correction of errors

13. Levels of Business Process
Improvement
• In order to be successful, no organization
should depend solely on the innovation
occurring at one level. It has to happen on all
levels of the organization.
• Much like any other process
improvements, the “plan-do-
check-act” cycle is followed.

14. The Change Process
Consider the linkage of this
diagram to the “The And-
Then-A-Miracle-Occurs
Effect” diagram.

15. Factors Affecting Business Process
Improvement
INTERNAL EXTERNAL
Attractive for Investments Industry Maturity
Intensity of Competition Customer Needs
Company Size Customer Expectations
Origin of Ownership Demand
Export Orientation Technological Opportunity

16. Examples of Business Process
Improvement Patterns
A single process can be added or
eliminated in the entire business
process
An involvement of a
resource instance can be
added or cut in the
business process

17. Examples of Business Process
Improvement Patterns
An IT system can be added or
eliminated in the business
process (automation is not
the key all the time)
An instance of an object
can be added or
eliminated in the input as
well as in the output

18. Implementing Business Process
Improvements
• The most difficult part of business process
improvements is the implementation.
• Some keys to successful implementation are:
– Main the step-by-step approach and do not skip steps
– Set clear timelines
– Do not spread resources thinly and focus on the short term
payoff
– Management and primary stakeholders should be involved
– Maintain customer focus
– Establish process owners, business leaders, operational
manager, process operator

19. Measuring Effectiveness of Business
Process Improvements
The same performance
indicators of measuring
business activities are used
to measure the
effectiveness of business
process improvements.
This is since companies
compete in the
marketplace by virtue of
one or more of these these
competitive priorities.

20. Blockers to Business Process
Improvements
• “Around the Edges” syndrome where the processes
and associated people are treated like sacred
objects (untouchables)
• “Black Box” syndrome where executives don’t know
the details but somehow the processes produce
outcomes
• Many initiatives are not aligned with the
organization’s strategy
• Many organizations take ad-hoc and isolated
initiatives for process improvements
• Failing to obtain the benefits of the initiatives

21. Some Tools to Conduct Business
Process Improvements (Strategies)
Six Sigma
• A business management strategy seeking to improve
the quality of process outputs by identifying and
removing causes of defects (errors) and minimizing
variability
• Uses a set of quality management
methods, including statistical methods
• D-M-A-I-C

22. Some Tools to Conduct Business
Process Improvements
Define
Improve
• Define CTQ
• Determine Current State • Verify Effects of Key
Analyze inputs with DOE’s
• Determine Optimum
Measure • Evaluate Existing Control Plan Settings
• Determine Key Input / • Using statistical methods to
Output Variables determine potential key inputs
• Perform MSA • Prioritize key input variables Control
• Calculate initial process • Update Control Plan
capabilities • Verify Improvements
N

23. Some Tools to Conduct Business
Process Improvements (Strategies)
Lean Manufacturing / Operations / Enterprise
• A production practice that considers the
expenditure of resources for any goal other than the
creation of value for the end customer to be
wasteful, and thus a target for elimination
• Derived from the Toyota Production System
• Aimed at removing the 7 wastes:
transportation, inventory, motion, waiting, over-
processing, over-production and defects

24. Some Tools to Conduct Business
Process Improvements (Strategies)
SEVEN TYPES OF WASTE
Waste Definition Examples of Effects and
Cost-Impacts
OVERPRODUCTION Producing too much, too 1. Large storage space
soon (production did not requirement
stop when they should 2. Excess capacity
have) 3. Overstaffing and Idle
time
CONVEYANCE Too movement and transfer 1. Large production areas
of purchased parts, end- 2. Overstaffing and Idle
items (usually due to poor time
layout)

25. Some Tools to Conduct Business
Process Improvements (Strategies)
SEVEN TYPES OF WASTE
Cause Definition Examples of Effects and
Cost-Impacts
OVERPROCESSING Processing beyond 1. Overstaffing
requirement (maybe due to 2. Higher Overhead and
insufficient standards and Direct Materials
mistakes in processing) Consumption
INVENTORY Ordering and storing 1. Obsolescence and
anything more than the Spoilage
minimum to get the job 2. Large Warehouse Space
done 3. Acceptance of
Overproduction

26. Some Tools to Conduct Business
Process Improvements (Strategies)
SEVEN TYPES OF WASTE
Cause Definition Examples of Effects and
Cost-Impacts
MOTION Bodily movements caused 1. Lost Time (Cost and
by disorganized work plan, Safety)
standards and layout 2. In-Process Rejects
DEFECTS Any scrap or rework 1. Customer issues
2. Overtimes
3. Excess use of materials

27. Some Tools to Conduct Business
Process Improvements (Strategies)
SEVEN TYPES OF WASTE
Cause Definition Examples of Effects and
Cost-Impacts
WAITING Waiting for arrival of input 1. Overstaffing and Idle
into the process Time
2. Poor on-time
performance on
customer requests

28. Some Tools to Conduct Business
Process Improvements (Strategies)

29. Some Tools to Conduct Business
Process Improvements (Strategies)
Total Quality Management
• An integrative philosophy of management for
continuously improving the quality of products and
processes
• Functions on the premise that the quality of
products and processes is the responsibility of
everyone who is involved in the creation or
consumption of the products or services offered by
an organization

30. Some Tools to Conduct Business
Process Improvements (Strategies)
Total Quality Management
• 9 Common TQM practices are:
– Cross functional product design
– Process management
– Supplier quality management
– Customer involvement
– Information and feedback
– Committed leadership
– Strategic planning
– Cross functional training
– Employee involvement

31. Some Tools to Conduct Business
Process Improvements (Strategies)
Business Process Re-Engineering
• The fundamental rethinking and radical redesign of
the business processes to achieve dramatic
improvements in critical, contemporary measures of
performance, such as cost, quality and speed
Redesign Retool Reorchestrate
Simplify Networks Sychronize Processes, IT
Standardize Intranets and Human Resources
Empowering Extranets
Employeeship Workflow
Groupware
Measurements

32. Some Tools to Conduct Business
Process Improvements (Strategies)
Business Process Re-Engineering
• Characteristics of Outcome
– Several jobs combined into one
– Decision making becomes part of he job of the employees
– Steps in the processes are performed in natural order, some
simultaneuosly
– Processes have multiple versions
– Work is performed when it makes the most sense
– Controls and checks and other non-value adding work is
minimized
– A single point of contact is provided to customers
– A hybrid centralized / decentralized operation is used

33. Some Tools to Conduct Business
Process Improvements (Strategies)
Business Process Re-Engineering
• Key Actions for Implementation
– Selection of the strategic (added-value) processes for redesign
– Simplify new processes, minimize steps, optimize efficiency
– Organize team of employees for each process and assign a role
for process coordinator
– Organize the workflow – document transfer and control
– Assign responsibilities and roles of each process
– Automate
– Train the process team to efficiently manage and operate the
new process
– Introduce the redesigned process

34. Some Tools to Conduct Business
Process Improvements (Strategies)
OTHER SETS OF TOOLS
• Quality Control Circles (QC Stories)
• Total Productive / Preventive Maintenance (TPM)
• Kaizen (Continuous Improvement)
• Quality Deployment (House of Quality)
• Quality Tools (Pareto, Cause-and-
Effect, Checksheet, Control Chart, Histogram, Scatter
Diagram, Stratification)
• Many others…

35. References
• Building and Maintaining Competitive Advantage Through
Collaborative Business Process Innovation.
www.boardwalktech.com
• Forster, Florian. The Idea Behind Business Process
Improvement: Toward a Business Process Improvement
Pattern Framework. www.bptrends.com
• Graham, Ben. Business Process Improvement: The Devil’s in
the Detail. The Ben Graham Corporation.
• Jeston, John and Johan Neils. Down Under: Process
Innovation. www.bptrends.com
• McElheran, Kristina. Do Market Leaders Lead in Business
Process Innovation? The Case of E-Business Adoption. Harvard
Business School.

36. References
• Moller, Charles. The Conceptual Framework for Business
Process Innovation – Towards A Research Program on Global
Supply Chain Intelligence. Informatics Research Group.
• Zakic, Nebojsa, Jovanovic, Ana and Milan Stamatovic. External
and Internal Factors Affecting The Product and Business
Process Innovation. Facta Universitatis.
• Zigiaris, Sotiris. Business Process Re-Engineering. BPR Hellas
SA.
• http://en.wikipedia.org/wiki/Business_process_improvement
• http://en.wikipedia.org/wiki/Lean_manufacturing
• http://asq.org/learn-about-quality/seven-basic-quality-
tools/overview/overview.html