CHAPTER 5
Process Focus
By: Kyzaj Gwyn U.
Hernando
Rhea Fe T. Pelayo
PROCESS - a sequence of linked activities that is intended to achieved
some result such as producing a good service for a customer within or outside
the organization.
• Processes involve combinations of people, machines, tools, techniques, materials, and
improvements in a defined series of steps or actions.
• We typically think of processes in the context of production: the collection of activities
and operations involved in transforming inputs (physical facilities, materials, capital,
equipment, people, and energy) into outputs (products and services).
• Common types of production processes include machining, mixing, assembly, filling
orders, or approving loans. However, nearly every major activity within an
organization involves a process that crosses traditional organizational boundaries.
• For example, an order fulfillment process might involve a salesperson placing the
order; a marketing representative entering it on the company's computer system; a
credit check by finance; picking, packaging, and shipping by distribution and
logistics personnel; invoicing by finance; and installation by field service engineers.
• A process perspective links together all necessary activities and increases one's
understanding of the entire system, rather than focusing on only a small part.
Key Process- Focused Practice for Quality Management
• Identify vital work processes, that relate to core competencies and deliver customer value,
profitability, orga-nizational 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, product excellence, the need for agility, cycle time
reduction, productivity, cost control, and other efficiency and effectiveness factors.
• Seek ways to prevent defects, service errors, and rework and minimize costs associated
with inspections. tests, and process or performance audits.
Key Process- Focused Practice for Quality Management
• 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. keep processes current with business needs and directions, and
share improvements with other organiza tional units and processes to drive
organizational learning and innovation
• Incorporate effective process management practices in the overall supply chain.
Process management involves planning and administering the activities
necessary to achieve a high level of performance in key organizational processes, and
identifying opportunities for improving quality and operational performance, and
ultimately, cus-tomer satisfaction.
Process management consists of three major activities: design, control and
improvement.
Design- focuses on ensuring that the inputs to the process, such as materials,
technology, work methods, and a trained workforce are adequate, and that the process
can achieve its requirements.
Control-focuses on maintaining consistency in output by assessing performance and
taking corrective action when necessary.
Improvement- focuses on continually seeking to achieve higher levels of
performance, such as reduced variation, higher yields, fewer defects and errors,
smaller cycle times, and so on.
- Cycle time refers to the time it takes to accomplish one cycle of a
process (e.g., the time from when a customer orders a product to the time that it is
delivered, or the total time needed to introduce a new product). Cycle time is one of
the most important metrics in process management.
Individuals or groups, known as process owners, are accountable for process perfor-mance and
have the authority to control and improve their process.
Nearly every leading company views process management as a fundamental business activity. AT&T,
for example, identified the following principles to guide their process management activities:
• 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 quality management
principles.
Identifying Processes and
Requirements
Nearly everything an organization does can be viewed as a process. Common processes
include acquiring customer and market knowledge, strategic planning, research and
devel-opment, purchasing, developing new products or services, manufacturing and
assembly. fulfilling customer orders, managing information, measuring and analyzing
performance, and training employees, to name just a few. Leading organizations identify
important pro-cesses throughout the value chain that affect their ability to deliver
customer value. These processes typically fall into two categories: value-creation
processes and support processes.
Value-Creation
• Processes
According to AT&T, a process is how work creates value for customers.
• Value-creation processes (sometimes called core processes) are those most important to "running
the business" and maintaining or achieving a sustainable competitive advantage. Value-creation
processes frequently align closely to an organization's core competencies and strategic objectives.
They drive the creation of products and services, are critical to customer satisfaction, and have a
major impact on the strategic goals of an organization.
• Value-creation processes typically include product design and production/delivery processes.
Product design processes involve all activities that are performed to incor-
porate customer requirements, new technology, and organizational knowledge into the functional
specifications of a manufactured good or service.
Value-Creation
Processes
Production/delivery processes create or deliver the actual
product.
• In many organizations, value-creation processes take the form of projects-
temporary work structures that start up, produce products or services, and then
shut down. Some organizations focus exclusively on projects because of the
nature of their work. They tend to deliver unique, one-of-a-kind products or
services tailored to the specific needs of an individual customer.
Support Processes
• Support processes are those that are most important to an organization's value-creation
processes, employees, and daily operations. They provide infrastructure for value-creation
processes, but generally do not add value directly to the product or service.
• Support processes might include processes for finance and accounting, facilities manage-ment,
legal services, human resource services, public relations, and other administrative services. In a
school system, for example, support processes might include transportation, custodial, central
stores, information technology, and maintenance.
• A process such as order entry that might be thought of as a value-creation process for one
company (eg, a direct mail distributor) may be considered a support process for another (eg.a
custom manufacturer).
Process
•
Requirement
Understanding the requirements that processes should meet is vital to designing them.
• Given the diverse nature of value-creation processes, the requirements and perfor-mance
characteristics might vary significantly for different processes.
• In general, value-creation process requirements are driven by consumer or external customer
needs. For example, if hotel customers expect fast, error-free check-in, then the check-in process
must be designed for speed and accuracy.
• Support process requirements, on the other hand, are driven by internal customer needs and must
be aligned with the needs of key value-creation processes. For example, information technology
processes at a hotel must support the check-in process requirements of speed and accuracy, this
would require real-time information on room availability.
Process
Design
• The goal of process design is to develop an efficient process that satisfies both internal and
external customer requirements and is capable of achieving the requisite level of quality and
performance.
• Process design begins with understanding its purpose and requirements, who the cus-tomer
is, and what outputs are produced.
• Technology is an integral part of process design that makes today's service and
manufacturing processes operate productively and meet customer needs better than ever.
Process
• Mapping
Designing a process requires a systematic approach. For most processes, this includes
defining the sequence of steps that need to be performed, along with formal documentation
of procedures and requirements.
• To describe the specific steps in a process and their sequence, we generally develop a
process map or flowchart, along with standard operating procedures and work instructions.
• The process defines the steps and decision points required to achieve certification, and
ensures that all requirements are met. As design tools, flowcharts enable management to
study and analyze processes prior to implementation in order to improve quality and
operational performance.
Process Design for
Services
• Most business value-creation and support processes are service-oriented.
• Outputs are less defined than in manufacturing.
• Customer interaction is greater in services.
• Customers often can’t define needs until after they experience the service.
Key Service Dimensions
• Tangibles & Reliability → focus on technology
• Assurance, Empathy & Responsiveness → focus on employee behavior
Dimensions in Designing Services
• Customer contact and interaction
• Labor intensity
• Customization
In designing service processes, the following questions should be considered:
• What service standards are required to be met?
• What is the final result of the service to be provided?
• At what point does the service begin, and what signals its completion?
• What is the maximum waiting time that a customer will tolerate?
• How long should it take to perform the service?
• Who must the consumer deal with in completing the service?
• What components of the service are essential? Desirable? Superfluous?
• Which components can differ from one service encounter to another while still
meeting standards?
Design for Agility
• As customer needs change, processes must be increasingly agile.
• Agility- the term commonly used to characterized flexibility and short cycle times.
• Flexibility- the ability to adapt quickly and effectively to changing requirements.
Mistake-Proofing Processes
-Human beings tend to make mistakes inadvertently. Typical mistakes in production are omitted
steps in a process, setup errors, missing parts, wrong parts, or incorrect adjust-ments. Such errors
can arise from the following factors:
• Forgetfulness due to lack of reinforcement or guidance
• Misunderstanding or incorrect identification because of the lack of familiarity with a process
or procedures
• Lack of experience
• Absent mindedness and lack of attention, especially when a process is automated
Blaming workers not only discourages them and lowers morale, but usually does not address the
source of the problems, which, as Deming and Juran often stated, is usually in the system.
Preventing mistakes can be done in three ways:
1. Designing potential defects and errors out of the process. Clearly, this approach is the best
because it eliminates any possibility that the error or defect will occur and will not result in
rework, scrap, or wasted time.
2. Identifying potential defects and errors and stopping a process before they occur. Although this
approach prevents defects and errors, it does result in some non-value-added time.
3. Identifying defects and errors soon after they occur and quickly correcting the process. This
can avoid large amounts of costly defects and errors in the future, but does result in some scrap,
rework, and wasted resources.
Poka-yoke (POH-kah YOH-kay) - an approach for mistake-proofing process using automatic
devise or simple methods to avoid human errors or remove human element completely.
Two aspects are:
[Link]- or recognizing that a defect is about to occur and providing a warning.
[Link]- or recognizing that a defect has occured and stopping the process.
Typical Types of Service Errors
[Link] Errors- doing work incorrectly, like work on the wrong order.
[Link] errors- arise in the contact between the server and the customer, such as failure to
acknowledge or listen.
[Link] errors- those in physical elements of service.
[Link] errors in preparation- the failure to bring necessary materials to the
encounter.
[Link] errors during an encounter- failure to remember steps or follow
instructions to the process.
[Link] errors at the resolution stage of service- failure to signal
Process Control
• Control- the activity of ensuring conformance to
the requirements and taking corrective action
when necessary to correct problems and maintain
stable performance.
- should be the foundation for
organizational learning.
• Process control- responsibility of those who
directly accomplish the work
Any control system has four elements:
1. a standard or goal
2. a means of measuring accomplishment
3. comparison of results with the standard to provide
feedback
4. the ability to make corrections as appropriate
Process Control in Manufacturing
• control in manufacturing starts with purchasing and receiving processes.
Process Control in Service
• For many services, process control follows the same paradigm as in manufacturing:
define a standard or goal, measure accomplishment, compare results with the standard.
and make corrections as needed. In services with high customer contact, labor intensity.
and/or customization, control can be challenging. Human behavior-both the customer's
and the service provider's-is more difficult to control than mechanical or automated
processes.
Process Improvement
Continuous Improvement- refers to both incremental changes, which are small and
gradual, and breakthrough improvements, which are large and rapid. Continuous improvement
is one of the foundation principles of total quality.
It is an important business strategy in competitive markets because:
• 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.
Breakthrough Improvement- refers to discontinous change, as opposed to the
gradual continuous improvement philosphy.
- results from innovative and creative thinking: often these are
motivated by stretch goals or breakthrough objectives.
Stretch goals- force an organization to think in a radicaly different way and to
encourage major improvements as well as incremental ones.
Two approaches for breakthrough improvement that help companies achieve goals are
benchmarking and reengineering.
Benchmarking is defined as "measuring your performance against that of best-in-class
companies, determining how the best-in-class achieve those performance levels, and using the
information as a basis for your own company's targets, strategies, and implementation," or
more simply, "the search for industry best practices that lead to superior performance."
- The term best practices refers to approaches that produce exceptional
results, are usually innova-tive in terms of the use of technology or human resources, and are
recognized by custo-mers or industry experts.
• Competitive benchmarking-studying products or business results against
competitors to compare pricing, technical quality, features, and other quality or
performance characteristics.
• Process benchmarking identifies the most effective practices in key work
processes in organisations that perform similar functions, no matter in what industry.
Reengineering is a systematic starting over and reinventing the way a firm or a business
process gets its work done.
MANAGING SUPPLY CHAIN PROCESSES
Suppliers include not only companies that provide materials and components,
but also distributors, transportation companies, and information, health care, and education
providers.
Effective supply chain management is based on three guiding principles:
1. Recognizing the strategic importance of suppliers in accomplishing business
objectives, particularly minimizing the total cost of ownership,
2. Developing win-win relationships through long-term partnerships rather than as
adversaries, and
3. Establishing trust through openness and honesty, thus leading to mutual advantages.
Supplier Certification
- Many companies use some type of supplier certification process to help manage
their supply chain.
- These processes are designed to rate and certify suppliers who provide quality
materials in a cost-effective and timely manner.
- Certification provides recognition for high-quality suppliers, which motivates
them to improve continuously and attract more business.
Thank You
