The benefits of using six sigma to optimize supply chains

1. Benefits of the
Process Centric
Organization
July 2013
Steve Depoe
Steve.depoe@gmail.com
1

2. Agenda
Business Process Re-engineering roots
The Process Centric Organization
The Methodology
Appendix – Case Studies

3. The Beginning of the Process Centric Organization began in the early 1900’s
“A business process illustration is
produced. The first step in gaining
control over an organization is to
know and understand the basic
processes. “
Pioneers like Taylor, Demining and
Juran knew Processes were the key
to gaining control over Operations

4. Later Michael Hammer popularized the use of Process Reengineering
4
“Reengineering means to disregard all the
assumptions and traditions of the way
business has always been done, and
instead develop a new, process-centered
business organization that achieves a
quantum leap forward in performance.”
Michael Hammer, 2000

5. Companies have invested in BPR since the 1990’s
Since the early to mid 1990‟s thousands
of companies have invested millions of man
hours in Business Process Re-engineering
efforts.
The reviews have been mixed:
Although companies have discovered who does
what when. Control over these processes and
the driving improvement has fallen short

6. Agenda
Business Process Re-engineering roots
The Process Centric Organization
The Methodology
Appendix – Case Studies

7. The prevailing thought behind the Process Centric Organization have matured
Today, the Process Centric mindset
increasingly is viewed as a source
of value in its own right and as a
powerful management discipline.
Process Centricity can be used to
create sustainable competitive
advantages that are difficult to
copy. This value driven mindset
helps organizations to transform
strategy into people and IT based
execution, at pace and with
certainty.

8. Some of the most well known and best run companies have embraced the
Process Centric organization
8
Although the process-based
organization reduces
bureaucracy and eliminates
non-value added work, if
properly conceived and
implemented, they develop
new roles for current and future
employees as well as new
processes that provide value to
the customer and help support
long-term success.

9. Falling Short of the Process Centric goal!
9
Most companies that have undertaken
substantial process innovation initiatives
have simply imposed process management
as an additional dimension of structure –
on top of the existing dimensions –
assigning process ownership to managers
who may also have functional and/or
product responsibilities. In almost none of
these companies process responsibility has
been accorded organizational legitimacy.
Process
Responsibility
Organizationa
l
Responsibility
Employee
Responsibility
Shareholder
Responsibility
Functional
Responsibility
Divisional
Responsibility
Business
Leader
Pressure

10. How does the Process Centric Organization differ?
10
The new process-centric
organization structure, must
be one that is built by using
the core processes and
process teams as the
foundation. Staff
units, centers of excellence
and ultimately, to create
value for customers.

11. The first steps towards becoming Process Centric
11
In order to adequately satisfy emerging
business needs, the process-based
organizational structure should consist of:
(1) Few core business processes managed by
process owners, who have direct support of
process advisors.
(2) Centers of excellence, where the functional
knowledge is gathered, with a role of
connecting employees from similar
functional areas
(e.g., manufacturing, R&D, marketing, etc.).
(3) Staff units or functional support units, in
charge of administration and corporate
activities (e.g., HRM, accounting, IT, legal
affairs, public relations, etc.)
(4) A process council, which is responsible for
lateral coordination between different
processes and units.
COE
Sales
Marketing
Product
Development

12. Agenda
Business Process Re-engineering roots
The Process Centric Organization
The Methodology
Appendix – Case Studies

13. How does the Process Centric Organization differ from the Traditional organization
The process-based organization addresses
the alignment challenge by first aligning
the core business processes to enterprise
goals and strategies, and then aligning the
apparatus of the organization (structures,
systems, and resources) to meet process
needs. In another words, the organization
and its proposed structure should be put
in a process environment. To achieve that,
many changes are required.

14. Understanding of the Process Centric Mindset
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Organizations exist to deliver value to customers and
stakeholders.
That’s strategy.
They do this via a series of coordinated activities across a
number of functional elements of the organization.
That’s a process.
It makes sense to optimize these processes so that they
satisfy the requirements of customers and other
stakeholders.
That’s process improvement.
Taking a coordinated view of the performance of all of the
processes by which an organization delivers value,
optimizes performance.
That’s process management.
Process management allows organizations to focus on
processes that create the market differentiation described by
the strategy.
That’s execution.

15. What is the overall meaning of the Process Centric Organization
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Process-centric management
encompasses all that is required to
sustainably deliver value to external
customers and other stakeholders
Process-centric management is about
improving organizational performance
in meaningful ways.

16. To Create the Process Centric Environment requires a 4 phase process
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Build
Capability
Operations
Increasing
Service
Delivery
Status Quo
Normalize
Operations
How does an organization
become process-centric?
The roadmap for achieving
process-based management is
straightforward. Some parts of
the journey can be difficult, but
the destination provides a
revitalized view of the
organization and its customers,
and a framework for
optimizing the value that
moves between them. Key
waypoints on the journey are:

17. Step 1: Building Capability Foundations
17
This first phase of the project proper is about developing the first level of
capability. The education curriculum delivery is begun, a Business Process
Architecture is developed
Education
During this phase, foundational courses for BPM capability are delivered.
These courses should cover the fundamentals of OPM , and methodologies
for process management and process improvement.
Business Process Architecture
Having a Business Process Architecture (BPA) is fundamental for process-
centric management. The BPA provides a view of the organization as a
hierarchical set of business processes.
Plan Process Improvement Projects
Demonstration projects to improve the performance of particular processes
will be conducted.
Office of OPM
Implementation of the Office of OPM can commence during this first phase.

18. Step 2: Increasing Service Delivery
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This second phase should be about continuing to develop BPM capabilities.
Office of Process Management
Process Improvement Projects
One or two process improvement projects should be conducted to
demonstrate the power of process improvement and use of the chosen
methodology.
OPM Community of Practice
To be process-centric, an organization needs an active culture of interest in
OPM and related matters
Process Execution
BPM Systems technology offers the possibility for direct execution of the
business process models. This means that application development can be
rapid and agile.
Office of Process Management
The operation of the Office of Process Management should be reviewed, its
internal processes updated, and its
service offerings confirmed.

19. Step 3: Normalize Operations
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Phase 3 is concerned with further refinement of the Office of Process
Management to ensure its ability to be a leading force in the development of
a sustainable process-centric culture and capability.
The operation of the Office to date would be carefully reviewed, and its
processes subject to scrutiny and improvement. Additional services can be
defined, developed and rolled out.
During this phase, there would be additional process improvement projects
throughout the organization, further education programs delivered as
required, and the Community of Practice will be active in spreading the
message of process-centric management

20. Step 4: Establishing the Status Quo
20
Phase 4 brings the final establishment of a full service Office of Business
Process Management, as well as significant process improvement and
related activities throughout the organization. As the transformation project
concludes, plans are made to implement effective ongoing operations
as part of „business as usual‟ – or perhaps we should say, „business better
than usual‟.
The Business Process Architecture will now be quite mature and a valuable
reference for all process management and improvement work, as well as for
general management and IT development. Process improvement projects
will deliver short-, medium- and long-term benefits across the organization.
Process performance will be actively measured and managed. A OPM
Community of Practice will be providing a social network for further
support and development of process-centric approaches. The transformation
to a process-centric organization will be well underway, and the capability
to continue development and operations in this way will be firmly
embedded in internal resources.

21. Agenda
Business Process Re-engineering roots
The Process Centric Organization
The Methodology
Appendix – Case Studies

22. Case Study 1:
Market Leadership
As industries become commoditized, the mastery of
business process improvement provides a powerful
route to market leadership. Consider Cemex. This
highly successful Mexican-based cement company
grows by acquiring less-successful businesses. Cemex
uses its own OPM approach to ensure that it learns
improved practices from every acquisition it makes and
that every operating unit follows these practices. It uses
acquisitions as a source of improvement rather than a
source of complexity, as is usual in acquisitions.

23. Case Study 2:
•An International Systems Networking
Client wanted to radically transform its
business through a transformation
program that will completely empower
the customers and give them superior
control over their products and services.
•Enabling this transformation required
collapsing all legacy networks and
migrating to a single IP based converged
network.
•The Client had : (1) More than 16 legacy
networks and as many silo processes, (2)
Each network supported by different
systems (3) Extended product launch
timelines (4) Higher operational cost.
Through the use of the Process
Centric Organization they were
able to
•Develop an Integrated Process
Infrastructure to rapidly launch
next generation services
• These processes when fully
implemented would support
existing products and will bring
operational cost savings of $1
Billion/ year