One of the greatest challenges organisations face today is to continuously evolve their products and services and the processes that underpin them. The emergence of digital tools and methodologies for unlocking operational efficiency and elevating the customer experience has radically changed the steps we need to take to achieve operational excellence. A fresh approach to improvement is needed. For many organisations the goal is the same: enabling agility, designing better and faster processes and uplifting the customer experience. However, legacy operating models, customary ways of working and siloed approaches to operational improvement often act as a barrier. Put simply, existing methods need to evolve. As the business landscape shifts, it’s imperative that organisations adopt an enduring, integrated and future-proofed approach to operational improvement which becomes part of ‘the way we do things around here’. Unintegrated approaches: It’s not uncommon to see a disconnect between teams that work across the same end-to-end value stream, with one group identifying automation processes using technologies such as Robotic Process Automation and Artificial Intelligence, others redesigning processes using lean tools and techniques to remove rework and waste, and separate teams using workflow tools to digitise manual work. Each of these examples presents a lever that can be pulled to uplift operational performance, but addressing them together provides the most powerful recipe for maximising customer value.

1. An integrated approach to
achieve operational
excellence in a digital world
Integrated Improvement Model
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2. TIME FOR A FRESH APPROACH
One of the greatest challenges organisations face today is to continuously evolve
their products and services and the processes that underpin them. The emergence
of digital tools and methodologies for unlocking operational efficiency and
elevating the customer experience has radically changed the steps we need to take
to achieve operational excellence.
A fresh approach to improvement is needed. For many organisations the goal is the
same: enabling agility, designing better and faster processes and uplifting the
customer experience. However, legacy operating models, customary ways of
working and siloed approaches to operational improvement often act as a barrier.
Put simply, existing methods need to evolve.
As the business landscape shifts, it’s imperative that organisations adopt an
enduring, integrated and future-proofed approach to operational improvement
which becomes part of ‘the way we do things around here’.
Unintegrated approaches: It’s not uncommon to see a disconnect between teams
that work across the same end-to-end value stream, with one group identifying
automation processes using technologies such as Robotic Process Automation and
Artificial Intelligence, others redesigning processes using lean tools and techniques
to remove rework and waste, and separate teams using workflow tools to digitise
manual work. Each of these examples presents a lever that can be pulled to uplift
operational performance, but addressing them together provides the most
powerful recipe for maximising customer value.
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Integrated Improvement Model | A fresh approach

3. NEW CHALLENGES, BUT
OLD ONES REMAIN
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Piecemeal improvement approaches:
Emerging technology and digital tools are leveraged to drive improvement but
are often piecemeal and unintegrated with other approaches
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Traditional approaches to operational improvement need to evolve:
Fast-changing shifts in customer expectations mean that change is now
continuous
New challenges
Improvement driven by ‘the experts’:
Improvement is delivered only by a central improvement team and/or external
consultants, resulting in a failure to improve organisational capability
Sustainability challenges:
Numerous improvement methodologies have been attempted in the past, with
varying success, but never really sustained
Too much discovery, not enough delivery:
Front-line staff have spent hours in workshops and offered plenty of ideas but
delivery has fallen flat
Existing challenges
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Integrated Improvement Model | A fresh approach

4. RESPONDING TO
THE CHALLENGE
INTRODUCING THE
INTEGRATED IMPROVEMENT
MODEL
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5. Organisations can adopt the Integrated Improvement Model to
respond to these challenges. In the simplest terms, it is a
framework and operating model that enables a continuous flow of
improvement at all levels
Integrating
improvement levers
It helps organisations
optimise across an
end-to-end value stream
through top-down and
bottom-up improvement
that cuts across multiple
improvement levers
Building internal
capability
It helps build internal
improvement capability
through training for
different stakeholder
groups and a re-usable
set of methodologies
and toolkits
AN INTEGRATED
IMPROVEMENT APPROACH
Habitualising
improvement
It helps to embed the right
thinking and philosophy to
ensure improvement goes
beyond a framework and
toolkit and becomes
habitualised throughout
the organisation
Integrated Improvement Model | Introducing the Integrated Improvement Model

6. 02
Strategically aligned:
The nature of improvements will
shift depending on the strategic
objectives of the organisation. If
efficiency is the goal, then all
initiatives are prioritised based on
the efficiency they unlock.
Embrace zero-based design
before optimisation:
Optimal design of experiences and
internal processes coupled with
incremental improvement and
iterative delivery.
Integrate improvement
levers:
Combine various improvement
levers to ensure the right
improvements are delivered in the
right order to maximise the benefit.
Empowered value stream
owners:
Value stream owners are empowered
to drive improvement across their
respective streams. This means they
have the capacity, capability and
budget they need to succeed.
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03
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Rapid improvement using a
scientific method:
Fast improvement cycles that
embrace uncertainty and leverage
a test-and-learn approach to
improvement are adopted.
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Visualise the work and limit
work in progress:
Maintain focus on the things that matter
and bring problems to the surface by
making work visual.
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CORE PRINCIPLES
Ten fundamental principles underpin the model and are weaved into
the approach. They combine traditional agile and lean principles
with lessons learned from delivering operational excellence in
multiple businesses. While the methods and tools that form part of
the approach are important, the key enabling factor is the
application of the underlying philosophy and thinking.
Integrated Improvement Model | Introducing the Integrated Improvement Model

7. 08
Build capability at all levels:
Provide people with the skills,
capability and tools they need to
solve their own day-to-day
problems.
Empathise with the customer:
Gain insight into customer wants
and needs and align design and
improvement activity to address
these needs.
07 09 Make operational improvement part
of the day job:
Operational improvement isn’t driven by
a centralised improvement team or
external consultants. It’s part of
employees’ day-to-day roles.
10 Start small and tailor the model:
Start with one value stream or part of a
value stream and use this as a beacon to
prove the value of the model, then tailor
the approach to meet the needs of the
business.

8. IMPLEMENTING
THE MODEL
Organisations should follow a structured
approach to implementing the model. While
deploying the model at scale may be a sizeable
undertaking, it’s possible to start small with a
single value stream, or even part of a value
stream, and scale from there.
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9. PRE: Create a compelling why
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PORTFOLIO LAYER
1) Define and select end-to-end value streams
2) Assign value stream owners and establish improvement circles
3) Train improvement circles
4) Create a measurement framework
5) Reimagine the value stream using a customer-centered approach
DELIVERY AND SOLUTION LAYER
6) Run the first wave planning event
7) Deliver rapid improvement using the scientific method
8) Continuously land change
TEAM LAYER
9) Embed team-based ways of working
THE PATH TO
OPERATIONAL EXCELLENCE
Integrated Improvement Model | Implementing the model

10. PORTFOLIO LAYER
Laying the foundations that
underpin operational improvement
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11. 1. DEFINE AND SELECT
END-TO-END VALUE STREAMS
The starting point is to define end-to-end value streams. Organisations can
start small with one value stream, or a section of a value stream, and use
this as a beacon to demonstrate the potential of the model.
The full potential of the model comes to bear when you combine improvement levers
across an end-to-end value stream. While this is an objective for many organisations, it
can easily be hampered by existing operating models.
Achieving end-to-end thinking at an enterprise level entails orchestration at a much
higher level than individual teams. It is a transformational leadership challenge for the
entire enterprise. The existing mental models concerning the organisation, behaviours,
budgeting, governance systems and legacy operating model must all be reconsidered
from the perspective of enterprise-wide value streams. Our recommendation to
overcome this challenge is to start small, create a pull from the rest of the organisation
and see the journey as one of maturity. ‘Base camp one’ may be a hybrid model to
work with before the desired end state is achieved.
1. Strategy to execution
Bridging the gap between current reality and long-term strategy
7. Technology concept to decommission
Managing technology through its end-to-end lifecycle
4. Order to Cash
From a customer order to
receipt of cash
5. Issue to Loyalty
Managing customer service and
customer relationships
Support the Enterprise
2. Insight to awareness
Creating awareness of products and services through marketing activity
3. Concept to Retire
Generating ideas for new products
and services, then launching,
managing, and retiring them
8. Hire to Retire
Managing the employee experience end-to-end
9. Record to Report
Collecting, processing and delivering timely and
accurate financial information and insights
6. Source to Pay
Sourcing suppliers of goods
and services through to
making payment
Customer
Integrated Improvement Model | Implementing the model

12. 2. ESTABLISH
IMPROVEMENT CIRCLES
Once a value stream has been selected, organisations should bring together
a diverse set of skills to drive improvement. Each circle should include
representatives from different product teams so that automation (RPA, AI,
predictive analytics) and digitalisation are augmented with traditional
process improvement methods. These teams take the form of improvement
circles. Each of these is a self-organising, cross-functional team formed
around an end-to-end value stream.
PORTFOLIO LAYER
Business architect, portfolio management, value
stream owner(s), IIM consultant
SOLUTION LAYER and DELIVERY LAYER
Agile coach, business change agent(s),
service/process owner(s), product team/COE reps,
operational excellence practitioner(s)
TEAM LAYER
CI Lead, front-line team
Integrated Improvement Model | Implementing the model

13. HOW MANY IMPROVEMENT
CIRCLES ARE REQUIRED
Understanding how many improvement circles are required across an
end-to-end value stream is more an art than a science. Organisations should
consider the number of FTE, the complexity, the strategic importance and the
appetite for change.
Integrated Improvement Model | Implementing the model
The options for the number of circles include:
Option 1: One team that works end-to-end
Option 2: By value stream stage. Teams work across different parts of the value stream
Option 3: By segment. Teams that work end-to-end but across different segments e.g.
product, customer/client segmentation
Option 2: Multiple teams for one workstreamOption 1: End-to-end
Option 3: By segment
Product 1
Product 2
Product 1
Product 2

14. The portfolio circle is responsible for...
● laying the foundations that underpin operational improvement
● translating strategic goals into the areas of the value stream that require
focus
● creating a continuous flow of top-down improvement opportunities through
customer-centered end-to-end discovery & design
As a value stream owner, I...
● uplift performance across the end-to-end value stream by ensuring that it’s
designed, managed and improved
● act as a servant leader and create an environment for the improvement circle
to achieve its goals
● role model for lean and agile principles
● create an environment of transparency, collaboration and empowerment
IMPROVEMENT CIRCLE
ROLES & RESPONSIBILITIES
Integrated Improvement Model | Implementing the model

15. The delivery and solution circle is
responsible for...
● delivering a continuous flow of improvements
● coaching front-line teams on improvement tools and techniques
● ensuring solutions are translated into changes to be landed in the business
The team improvement circle is
responsible for...
● habitualising improvement
● solving local operational improvements
● continuously exploring improvement opportunities through multiple levers
● communicating improvements that aren’t in their gift to the delivery and
solution circle
IMPROVEMENT CIRCLE
ROLES & RESPONSIBILITIES
Integrated Improvement Model | Implementing the model

16. 3. TRAIN IMPROVEMENT
CIRCLES
PORTFOLIO
LAYER
Operational
Excellence for
Leaders
Operational
Excellence
Playbook &
Toolkit
Landing
the change
framework
Operational
Excellence &
Agile WOW
guide
OPERATIONAL
EXCELLENCE
& AGILE FOR
LEADERS
OPERATIONAL
EXCELLENCE &
DIGITAL
PRACTITIONER
LANDING
THE
CHANGE
OPERATIONAL
EXCELLENCE
AGILE
PRINCIPLES
AND WOW
Digital
Toolkit
(RPA,
workflow
tools etc)
Digital
Toolkit
(RPA,
workflow
tools etc)
SOLUTION
LAYER
TEAM
LAYER
DELIVERY
LAYER
Organisations will need to build capability at all levels. The Integrated
Improvement Model comes with training courses and modules that can be
applied at each layer. This training is not one-size-fits-all. It is tailored to
different organisational levels and stakeholder groups.
Integrated Improvement Model | Implementing the model

17. COST
QUALITY
TIME PO cycle
time
Conduct
Sourcing
Select
Vendor
Manage
Contract
Process
Purchase
Requisition
Process
Invoice
Process
Payment
Average cost
to process a
PO
Invoice
first-time
match rate
Spend under
management
Average cost
per invoice
% of preferred
suppliers
Invoice
processing
cycle time
Savings
through
sourced spend
Average time
to process
payment
Defining a set of measures and KPIs that underpin the end-to-end
value stream will provide organisations with a data-driven approach
to identifying and delivering improvement initiatives. Measures
should be customer-driven, clear, unambiguous and relevant.
4. CREATE A
MEASUREMENT FRAMEWORK
Example measures for the Source to Pay value stream
Integrated Improvement Model | Implementing the model

18. Given the increasing pace of change, organisations must be prepared to
reimagine how work gets done using a zero-based design approach.
This ‘blank sheet of paper’ approach can transform customer experiences,
unlock massive efficiency, and reveal opportunities to leverage digital.
5. REIMAGINE THE VALUE
STREAM USING ZERO-BASED
DESIGN PRINCIPLES
3. Scope initiatives with a hypothesis
comprising solutions across multiple
improvement levers
The design work generates improvements
that cut across multiple levers. These are
then bundled into improvement initiatives
to be passed to the delivery and solution
circle.
1. Empathise with the customer
and reveal digital opportunities
To begin, organisations gain deep
insight into customer wants and needs
through immersion, data analysis and
research. Mapping the value stream
and the customer journey end-to-end
will reveal internal process and
customer experience improvement
and digital opportunities.
2. Design an ideal state value
stream using zero-based design
principles
After defining design principles, it
becomes possible to design an ideal
state end-to-end customer journey
and value stream that transforms the
customer experience, unlocks massive
efficiency and embraces digital.
Traditional value stream measures coupled with an
automation assessment of opportunities to harness digital:
Integrated Improvement Model | Implementing the model

19. There are a number of levers organisations can pull to optimise the value
stream. By codifying a broad range of improvement levers it ensures a
holistic set of solutions that maximises the benefits.
Levers can be layered to bring about a multiplier effect. For instance, an invoicing
process can leverage optical character recognition to translate a PDF into structured
data so that robotic process automation can process the invoice approvals (the
automate lever), can move from manual chasing to notifications (digitise lever) and
transactional steps can transition to a low-cost location (transition/outsource lever).
The combined use of complementary approaches and technologies can be truly
transformative when applied across an end-to-end value stream.
IMPROVEMENT LEVERS

20. WHICH LEVERS?
ASK THE RIGHT QUESTIONS
Integrated Improvement Model | Implementing the model
To unearth opportunities to optimise source-to-pay, organisations
should apply multiple improvement levers. Combining traditional
lean process improvement techniques to remove waste and
rework with digital and automation capabilities can produce
transformational results. Revealing the opportunities doesn’t
need to be complicated. It simply entails asking the right
questions.
Standardisation
Creating one best way of
executing a process or
activity
Improvement levers
to pull across
Source-to-PaySimplification
Identifying and eliminating
non-value-add steps, waste
and rework
Intelligent Automation
Revealing opportunities to automate
processes and activities using
multiple digital capabilities
e.g. RPA, machine learning,
neuro-linguistic programming and
cognitive agents
Transition/Outsource
Identifying opportunities to
transition work to another
location
Technology
Identifying improvements via
new features or system
enhancements

21. KEY QUESTIONS FOR UNEARTHING
OPPORTUNITIES ACROSS EACH LEVER
EXAMPLES FROM SOURCE-TO-PAY
Simplification
How might we remove
non-value-add activity and
reduce waste and rework?
While this question will be familiar for
any organisations that have embraced
lean, it remains as relevant as ever. We
worked with a large
telecommunication company and
found that the average time from the
submission of an existing supplier
work package to purchase order
approval was 46 days. One of the key
drivers of this was duplication of
approvals and excessive approval
cycle times. As a result, 95% of
suppliers ended up working at risk
without an approved purchase order.
To address this, process simplification
improvements were suggested and
delivered which eliminated duplicate
approvals.
Standardisation
Is there one best way of carrying
out this process today?
In many cases, the same procurement
processes are carried out differently
across multiple business units,
geographies and categories. There are
often opportunities to harmonise
processes to reduce variation. But,
when it comes to category
management, standardisation can
deliver superior supply chain
performance and cost savings. That’s
because it allows procurement teams
to leverage their spend across fewer
manufacturers and maximize
operational efficiency by managing
fewer stock-keeping units.
Integrated Improvement Model | Implementing the model

22. Intelligent automation
Robotic process automation
Is there a rules-based, repetitive
activity?
Robotic process automation lends itself
to activity that is rules-based and
transactional in nature. This means RPA is
suited to Source-To-Pay activity in which
there is no room for interpretation.
A typical RPA use case in
Source-To-Pay:
A majority of companies continue to
match invoices, purchase orders and
goods/services receipts manually. This
work is accompanied by manual
resolution of issues like mismatches
between the prices and quantities on
POs and those on invoices. Automated
matching bots can be employed earlier in
the process and toward the front end,
using intelligent character recognition
and confidence intervals to automatically
identify mismatches and minimise the
need for manual intervention and
queries.
Intelligent automation
Smart Workflow
How might the workflow and key
rules and decisions be digitalised
and automated end-to-end?
Full end-to-end digitalisation of
Source-To-Pay can be achieved with
Smart Workflow, a process
management software tool that sits
between human and digital capabilities
such as RPA to manage the hand-offs
and provide real-time visibility on
status.
A typical Smart Workflow use case
across Source-To-Pay:
Contract Management
Smart workflow can be used to
automatically scan contracts, extract
terms, predict approvals and send
remaining documents to procurement
resources to process. The length of the
whole contract review process can be
reduced dramatically.
Integrated Improvement Model | Implementing the model
KEY QUESTIONS FOR UNEARTHING
OPPORTUNITIES ACROSS EACH LEVER
EXAMPLES ACROSS SOURCE-TO-PAY

23. Typical machine learning use cases in
Source-To-Pay:
Supplier risk management
Procurement leaders can adopt
machine learning to make predictions
on supplier risk based on supplier
stability and financial viability.
Invoice processing
Organisations are also using machine
learning algorithms to match invoice
data to the correct spend category,
automatically sorting procurement
spend into categories and
sub-categories.
Intelligent Automation
Machine learning
Are there outcomes that can be
predicted using data?
With the right data, machine learning
can be used to process tasks that
involve more complex rules. By
defining the inputs that enable
predictions, organisations can
automate tasks that would otherwise
require human judgement.
Integrated Improvement Model | Implementing the model
KEY QUESTIONS FOR UNEARTHING
OPPORTUNITIES ACROSS EACH LEVER
EXAMPLES ACROSS SOURCE-TO-PAY

24. DELIVERY &
SOLUTION LAYER
Delivering a continuous flow of
improvements
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25. At this stage, initiatives are added to a hopper and considered for delivery as part of a
wave planning event. This is a key event that brings together each improvement across
a value stream to prioritise initiatives for delivery. It’s also an opportunity for the value
stream owner to create a vision for the wave and assign circle team members to
initiatives. Organisations will prioritise based on their contribution to
strategically-aligned criteria.
Typically, initiatives are delivered within a quarter. While this is the goal, there may be
initiatives that split across multiple waves.
6. CONDUCT WAVE PLANNING
TO PRIORITISE INITIATIVES
FOR DELIVERY
Integrated Improvement Model | Implementing the model

26. Organisations should set up cadence and iterations for delivery to establish commitment
and regularity over time. This establishes a clear schedule for delivering optimisation
initiatives, realising their benefits at each iteration and enabling agility. Quarterly wave
delivery is often a sensible cadence with fortnightly sprints used to maintain momentum.
7. DELIVER RAPID
IMPROVEMENT AND
CONTINUOUSLY LAND CHANGE
Portfolio layer
The value stream is
redesigned at a macro
level to reveal
improvements across
multiple levers.
Initiatives are defined
and added to a
hopper.
Delivery Layer
The delivery and solution
circles prioritise
initiatives as part of wave
planning and deliver
using the scientific
method. Solutions are
broken down into
component parts.
Solution Layer
When ready, solutions are
added to a sprint for
delivery. Development,
testing and deployment runs
in parallel to change
management activity.
Solutions land as part of a
monthly solution drop or
longer term releases.
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Integrated Improvement Model | Implementing the model

27. TEAM LAYER
Habitualising improvement from the
ground up
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28. The final component of the model is the establishment of team-based
ways of working. A large majority of operational problems can be
solved by the people who do the work. It’s immensely empowering for
people to solve their own problems, and organisations must create the
conditions for this to happen.
8. ESTABLISH TEAM-BASED
WAYS OF WORKING
1. Leadership behaviours:
Leaders where the work is, coaching
improvement using a structured coaching
method
2. Team-based root cause problem solving:
Front line teams solving their own operational
problems
3. Demand & capacity management:
Visual demand and capacity management to
balance the workload across the team
4. Visual management:
Visualisation of the work to spot problems
early and maintain flow
5. Daily performance huddle:
Daily performance huddles to enable
collaboration
6. Principles and behaviours: Clear
articulation of the Integrated Improvement
Model principles
1
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Elements that drive continuous improvement from the ground up
Integrated Improvement Model | Implementing the model

29. IN SUMMARY
Conclusion
A new approach is needed
The rapidly-changing business landscape calls for a new
approach to deliver change and operational improvement.
Combine improvement levers
Combining various improvement levers creates a powerful
recipe for maximising business and customer value.
Top-down design coupled with incremental improvement
While incremental improvement has value, the pace of
change and the pressures organisations face due to
COVID-19 mean that a clean-sheet approach based on
zero-based design principles may be needed.
Start small, then scale
To deploy the model, organisations should start with one
value stream and scale from there. This will result in a
multiplier effect that is truly transformative. The pilot value
stream can also act as a beacon for proving the value of
the model.
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30. Author
ARRON CLARKE
Managing Director
Hudson&Hayes
Hudson&Hayes is a transformation and operational excellence
consultancy providing a broad range of services and solutions
from strategy to execution.
With top transformation talent and a unique and integrated
approach to operational excellence, Hudson&Hayes helps
organisations deliver on their strategy, unlock efficiency and
enable continuous improvement.
www.hudsonandhayes.co.uk
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