Chapter 7

Process
Management
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Wisdom from Texas
Instruments
“Unless you change the process, why would
you expect the results to change”
Importance of Process
Management
 Prevent defects and errors,
 Eliminate waste and redundancy,
 Lead to better quality and improved company
performance through shorter cycle times,
improved flexibility, and faster and more
consistent customer response.
Key Process Management Principles
for Performance Excellence (1 of 2)
 Identify vital work processes that relate to core competencies and
deliver customer value, profitability, organizational success, and
sustainability.
 Determine key work process requirements, incorporating input from
customers, suppliers, partners, and collaborators.
 Design and innovate work processes to meet all requirements,
incorporating new technology, organizational knowledge, cycle time,
productivity, cost control, and other efficiency and effectiveness
factors.
 Minimize overall costs associated with inspections, tests, and process
or performance audits, and seeking to prevent defects, service errors,
and rework and minimize warranty costs or customers’ productivity
losses, as appropriate.
Key Process Management Principles
for Performance Excellence (2 of 2)
 Implement work processes and control their day-to-day operation to
ensure that they meet design requirements, using appropriate
performance measures along with customer, supplier, partner, and
collaborator input as needed.
 Improve work processes to achieve better performance, reduce
variability, improve products and services, and keep processes current
with business needs and directions, and share improvements with
other organizational units and processes to drive organizational
learning and innovation.
Key Idea
Leading companies identify important
business processes throughout the value
chain that affect customer satisfaction.
These processes typically fall into two
categories: value-creation processes and
support processes.
Types of Processes
 Value-creation processes – those most
important to “running the business”
 Design processes – activities that develop
functional product specifications
 Production/delivery processes – those that create
or deliver products
 Support processes – those most important to
an organization’s value creation processes,
employees, and daily operations
Key Idea
In many companies, value-creation
processes take the form of projects—
temporary work structures that start
up, produce products or services,
and then shut down.
Process Requirements
 Value creation process requirements
 Usually depend significantly on product
and service characteristics.
 Support process requirements
 Usually depend on internal requirements,
and they must be coordinated and
integrated to ensure efficient and effective
linkage and performance.
Example: Pal’s Sudden Service
Key Idea
Process management involves planning
and administering the activities necessary
to achieve a high level of performance in
key business processes, and identifying
opportunities for improving quality and
operational performance, and ultimately,
customer satisfaction.
AT&T Process Management
Principles
 Process improvement focuses on the end-to-end process.
 The mind-set of quality is one of prevention and continuous
improvement.
 Everyone manages a process at some level and is simultaneously a
customer and a supplier.
 Customer needs drive process improvement.
 Corrective action focuses on removing the root cause of the problem
rather than on treating its symptoms.
 Process simplification reduces opportunities for errors and rework.
 Process improvement results from a disciplined and structured
application of the quality management principles.
Process Management Activities
 Design
 ensuring that the inputs to the process, such as materials,
technology, work methods, and people are adequate, and that the
process steps are well-defined, mistake-proofed, sequenced
properly, lean, and understood for consistent and effective
execution.
 Control
 assessing whether the process performed as planned and the
process output is on target.
 Improvement
 continually seeking to achieve higher levels of performance in the
process, such as reduced variation, higher yields, fewer defects and
errors, and so on.
Requirements for Process
Management
 Processes must be repeatable
 Process must be measurable
Meeting these two conditions ensures that

sufficient data can be collected to reveal
useful information for evaluation and
control, as well as learning that leads to
improvement and maturity.
Designing Work Processes
 Process design can have a significant impact
on
 Cost
 Agility
 Quality
Key Idea
The goal of process design is to
develop an efficient procedure to
satisfy both internal and external
customer requirements.
Agility
 Agility refers to flexibility and short cycle times.
 Enablers of agility include
 close relationships with customers to understand
their emerging needs and requirements,
 empowering employees as decision makers,
 effective manufacturing and information
technology,
 close supplier and partner relationships, and
 breakthrough improvement.
Key Idea
Flexibility refers to the ability to adapt
quickly and effectively to changing
requirements. It might mean rapid
changeover from one product to
another, rapid response to changing
demands, or the ability to produce a
wide range of customized services.
Process Design
1. Identify the product or service: What work do I do?
2. Identify the customer: Who is the work for?
3. Identify the supplier: What do I need and from whom do I get
it?
4. Identify the process: What steps or tasks are performed?
What are the inputs and outputs for each step?
5. Mistake-proof the process: How can I eliminate or simplify
tasks? What “poka yoke” (i.e., mistake-proofing) devices can I
use?
6. Develop measurements, controls, and improvement goals:
How do I evaluate the process? How can I improve further?
Example: The Ritz-Carlton Three
Steps of Service Process
Service Process Design
 Three basic components:
 Physical facilities, processes and procedures
 Employee behavior
 Employee professional judgment
Key Service Dimensions
Customer contact and interaction
Labor intensity
Customization
Mistake-Proofing Processes
 Typical reasons for mistakes and errors:
 Forgetfulness due to lack of concentration
 Misunderstanding because of the lack of familiarity with
a process or procedures
 Poor identification associated with lack of proper
attention
 Lack of experience
 Absentmindedness
 Delays in judgment when a process is automated
 Equipment malfunctions
Key Idea
Poka-yoke (POH-kah YOH-kay)
is an approach for mistake-proofing
processes using automatic devices
or methods to avoid simple human
error.
Poka-Yoke
 Poka-yoke is based on:
 Prediction, or recognizing that a defect is about to occur
and providing a warning
 Detection, or recognizing that a defect has occurred and
stopping the process.
 Three levels:
 Designing potential errors out of the process.
 Identifying potential defects and stopping a process
before the defect is produced.
 Finding defects that enter or leave a process.
Service Errors (1 of 2)
 Task errors include doing work incorrectly, work not
requested, work on the wrong order, or working too
slowly.
 Treatment errors in the contact between the server
and the customer, such as lack of courteous behavior,
and failure to acknowledge, listen, or react
appropriately to the customer.
 Tangible errors, such as unclean facilities, dirty
uniforms, inappropriate temperature, and document
errors.
Service Errors (2 of 2)
 Customer errors in preparation such as the failure to bring
necessary materials to the encounter, to understand their
role in the service transaction, and to engage the correct
service.
 Customer errors during an encounter such as inattention,
misunderstanding, or simply a memory lapse, and include
failure to remember steps in the process or to follow
instructions.
 Customer errors at the resolution stage of a service
encounter include failure to signal service inadequacies, to
learn from experience, to adjust expectations, and to
execute appropriate post-encounter actions.
Process Control
 Control – the activity of ensuring
conformance to requirements and taking
corrective action when necessary to correct
problems and maintain stable performance
Key Idea
Process control is important for two
reasons. First, process control methods
are the basis for effective daily
management of processes. Second,
long-term improvements cannot be
made to a process unless the process
is first brought under control.
Components of Control
Systems
 Any control system has three components:
1. a standard or goal,
2. a means of measuring accomplishment,
and
3. comparison of actual results with the
standard, along with feedback to form
the basis for corrective action.
Control versus Improvement
Control and Improvement
 Control should be the basis for organizational
learning and lead to improvement and
prevention of defects and errors.
 After-action review
 What was supposed to happen?
 What actually happened?
 Why was there a difference?
 What can we learn?
Key Idea
In manufacturing, control is usually
applied to incoming materials, key
processes, and final products and
services.
Effective Control Systems
 Documented procedures for all key processes;
 A clear understanding of the appropriate
equipment and working environment;
 Methods for monitoring and controlling critical
quality characteristics;
 Approval processes for equipment;
 Criteria for workmanship, such as written
standards, samples, or illustrations; and
 Maintenance activities.
Quality Control in Services
 Example: The Ritz-Carlton Hotel Company
 Self-control of the individual employee based on their spontaneous
and learned behavior.
 Basic control mechanisms, which are carried out by every member
of the workforce. The first person who detects a problem is
empowered to break away from routine duties, investigate and
correct the problem immediately, document the incident, and then
return to their routine.
 Critical success factor control for critical processes. Process teams
use customer and organizational requirement measurements to
determine quality, speed, and cost performance. These
measurements are compared against benchmarks and customer
satisfaction data to determine corrective action and resource
allocation. In addition, The Ritz-Carlton conducts both self-audits
and outside audits.
Importance of Process
Improvement
 Customer loyalty is driven by delivered value.
 Delivered value is created by business processes.
 Sustained success in competitive markets requires
a business to continuously improve delivered
value.
 To continuously improve value creation ability, a
business must continuously improve its value
creation processes.
Kaizen
 Kaizen – a Japanese word that means gradual
and orderly continuous improvement
 Focus on small, gradual, and frequent
improvements over the long term with
minimum financial investment, and
participation by everyone in the organization.
Key Idea
A kaizen blitz is an intense and rapid
improvement process in which a team
or a department throws all its resources
into an improvement project over a
short time period, as opposed to
traditional kaizen applications, which
are performed on a part-time basis.
Cycle Time Improvement
 Cycle time – the time it takes to accomplish one
cycle of a process
 Reductions in cycle time serve two purposes
 First, they speed up work processes so that
customer response is improved.
 Second, reductions in cycle time can only be
accomplished by streamlining and
simplifying processes to eliminate non-value-
added steps such as rework.
Key Idea
Improvement should be a proactive
task of management and be viewed
as an opportunity, not simply as a
reaction to problems and competitive
threats.
Process Improvement Methodologies
 Redefining and analyzing the problem: Collect and
organize information, analyze the data and underlying
assumptions, and reexamine the problem for new
perspectives, with the goal of achieving a workable
problem definition.
 Generating ideas: “Brainstorm” to develop potential
solutions.
 Evaluating and selecting ideas: Determine whether the
ideas have merit and will achieve the problem solver’s
goal.
 Implementing ideas: Sell the solution and gain
acceptance by those who must use them.
The Deming Cycle
Act Plan
Study Do
Plan (1 of 2)
1. Define the process: its start, end, and what it does.
2. Describe the process: list the key tasks performed and
sequence of steps, people involved, equipment used,
environmental conditions, work methods, and
materials used.
3. Describe the players: external and internal customers
and suppliers, and process operators.
4. Define customer expectations: what the customer
wants, when, and where, for both external and internal
customers.
5. Determine what historical data are available on process
performance, or what data need to be collected to
better understand the process.
Plan (2 of 2)
6. Describe the perceived problems associated with the
process; for instance, failure to meet customer
expectations, excessive variation, long cycle times, and
so on.
7. Identify the primary causes of the problems and their
impacts on process performance.
8. Develop potential changes or solutions to the process,
and evaluate how these changes or solutions will
address the primary causes.
9. Select the most promising solution(s).
Do
1. Conduct a pilot study or experiment to
test the impact of the potential
solution(s).
2. Identify measures to understand how
any changes or solutions are successful in
addressing the perceived problems.
Study
1. Examine the results of the pilot study
or experiment.
2. Determine whether process
performance has improved.
3. Identify further experimentation that
may be necessary.
Act
1. Select the best change or solution.
2. Develop an implementation plan: what
needs to be done, who should be involved,
and when the plan should be accomplished.
3. Standardize the solution, for example, by
writing new standard operating procedures.
4. Establish a process to monitor and control
process performance.
Key Idea
The Deming cycle focuses on both
short-term continuous improvement and
long-term organizational learning.
Creative Problem Solving
 Mess Finding – identify symptoms
 Fact Finding – gather data; operational
definitions
 Problem Finding – find the root cause
 Idea Finding – brainstorming
 Solution Finding – evaluate ideas and
proposals
 Implementation – make the solution work
Key Idea
How one approaches problem solving is
not as critical as doing it in a systematic
fashion, whether one uses the Deming
cycle, FADE, Juran’s approach, CPS, or
some hybrid variation.
Breakthrough Improvement
 Discontinuous change resulting
from innovative and creative
thinking, motivated by stretch
goals, and facilitated by
benchmarking and reengineering
Key Idea
Stretch goals force an organization to
think in a radically different way, and to
encourage major improvements as well
as incremental ones.
Benchmarking
 Benchmarking – “the search of industry best
practices that lead to superior performance.”
 Best practices – approaches that produce
exceptional results, are usually innovative in
terms of the use of technology or human
resources, and are recognized by customers or
industry experts.
Types of Benchmarking
 Competitive benchmarking - studying products,
processes, or business performance of
competitors in the same industry to compare
pricing, technical quality, features, and other
quality or performance characteristics of
products and services.
 Process benchmarking – focus on key work
processes
 Strategic benchmarking – focus on how
companies compete and strategies that lead to
competitive advantage
Reengineering
 Reengineering – the fundamental rethinking
and radical redesign of business processes to
achieve dramatic improvements in critical,
contemporary measures of performance,
such as cost, quality, service, and speed.
Key Idea
Reengineering involves asking basic
questions about business processes:
Why do we do it? and Why is it done
this way?
Process Management in the Baldrige
Award Criteria
 The Process Management Category examines how an
organization designs its work systems and how it designs,
manages, and improves its key processes for implementing
those work systems to deliver customer value and achieve
organizational success and sustainability, and prepare for
emergency readiness.
6.1 Work Systems
a. Work System Design
b. Key Work Processes
c. Emergency Readiness
6.2 Work Processes
a. Work Process Design
b. Work Process Management
c. Work Process Improvement
Process Management in ISO 9000
 Planning and controlling the design and development of products and
managing the interfaces between different groups involved in design
and development
 Management of inputs and outputs for design and development
activities, and use of systematic reviews to evaluate the ability to meet
requirements, identify any problems, and propose necessary actions;
purchasing processes; control of production and service, including
measurement and process validation; control of monitoring and
measuring devices used to evaluate conformity; analysis and
improvement; monitoring and measurement of quality management
processes; and continual improvement, including preventive and
corrective action.
 Use quality policy, objectives, audit results, data analysis, corrective and
preventive actions, and management reviews to continually improve its
quality management system’s effectiveness
Process Management in Six Sigma
 Understanding and improving processes on a project-by-
project basis. Projects are clearly linked to strategic needs
and organizational objectives, and that projects are
managed under a common framework.
 The Six Sigma team-project approach provides a natural fit
with the requirements of product and process design,
control, and improvement.
 Process owners should be trained in Six Sigma methods
and be involved in formal Six Sigma projects, but still have
responsibility for continuous improvement on a daily basis.

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Process

Meeting these two conditions ensures that

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