Process Management - V.G.
Transcript of Process Management - V.G.
Process Management - V.G.
Process Management - V.G. 2
▪ Name: Velimir Gojnic, MSc ME
▪ Occupation: Business Excellence & Restructuring
Interim Management Consultant
▪ Experience:
Introduction
Principles of process organisation – part 1
3
Companies: „Rade Končar” – „Siemens”
„The Coca-Cola Company”
„Pliva” – „Teva”
„Wienerberger AG”/– „Tondach”, „Semmelrock”
SME Companies: SAP, IBM, Microsoft, Pfizer, Philips, Siemens, banks
Consulting Companies: E&Y; KPMG; Arthur Andersen, BCG
Area Covered: 12 countries in Europe, Australia and USA
4 languages, 2 scripts
Introduction
Principles of process organisation – part 1Process Management - V.G.
Process Management - V.G. 6
Part 1
9.00 – 10.30 → Principles of Business Process Management
10.30 - 11.30 → Coffee Break + Group Work
11.30 - 13.00 → Lecturing
Training Schedule
Principles of process organisation – part 1
Process Management - V.G. 7
▪ Make your business more competitive
▪ Ensure business longevity
▪ Increase flexibility of your business processes (and company)
▪ Define and focuse on the core business processes
▪ Add value to the business
▪ Reduce learning curve
▪ Increase data quality
▪ Increase total profitability of the business
▪ You will be presented with the methodes/concepts and tools of Business Process & Quality Management
Key Benefits and Objectives
Principles of process organisation – part 1
Process Management - V.G. 8
Positioning of Process Management
Principles of process organisation – part 1
PROJECT
PROCESS
CHANGE
Agenda
Process Management - V.G.
Principles of process organisation
Constructing a process management system
Process optimisation methods
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▪ The traditional view of organisations
▪ Processes – the organisational perspective
▪ What is a process?
▪ Distinguishing between processes and projects
▪ Points of contact
▪ Matrix organisations
▪ Process management roles
▪ The continuous improvement cycle (CIC)
▪ Strategic process management
▪ Process maps
▪ Process levels
1. Principles of process organisation
Principles of process organisation – part 1
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What is an ORGANISATION?
An organisation is the ENTITY with the
particular purpose.
It can be also defined as the ACT of
taking an efficient and orderly
approach to TASKS comprising
multiple people.
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What is an ORGANISATION STRUCTURE?
Organization structure is a setup or a framework which determines the hierarchy of people, its function, workflow and the reporting system in an organization.
It regulates STATIC relationship between jobs.
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Four Types of Organizational Structures Today
1. Administrative Structure➢ Highly regulated
➢ Suitable for the larger multifaceted organizations (government,
education)
2. Traditional/Functional Structure➢ Includes undertaking like supervision, direction, management and
allocation of responsibilities
➢ Quick decision making and easy interconnection among employees
➢ Easy learning from each other
3. Divisional/Product Structure➢ Arrangement of a business that breaks down the organization into
geographical, market/product and service groups
4. Matrix Organization➢ This structure bonds employees by both FUNCTION as well as the
DIVISIONAL/PRODUCT
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Administrative Structure
Principles of process organisation – part 1
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Traditional/Functional Structure
Board of directors
Department
A
Department
B
Department
C
Department
D
Department
E
Department
F
Customer
???
Customer
???
Work flows vertically
Source: A. Tenner
Principles of process organisation – part 1
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Traditional/Functional Structure
Principles of process organisation – part 1
Process Management - V.G. 17
Traditional/Functional Structure
FORD Assembly Line –arround 1913
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Main drawbacks of the traditional view:
▪ Assumes that employees must be given instructions and monitored
when carrying out their work
▪ No consideration of relationships between staff in a particular function,
between different functions or with customers
▪ Focus is internal, not on the customer
Source: Arthur R. Tenner
Principles of process organisation – part 1
Traditional/Functional Structure
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Divisional/Product Structure
Principles of process organisation – part 1
Process Management - V.G. 20
Divisional/Product Structure
Principles of process organisation – part 1
▪ The divisional structure is a type of organizational structure that groups each
organizational function into a division. These divisions can correspond to
either products or geographies
▪ Each division contains all the necessary resources and functions within it to
support that product line or geography (for example, its own finance, IT, and
marketing departments)
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▪ Awareness of relationships between sections
▪ Active target-based process management
▪ Special roles
▪ Cooperation with line managers
Matrix Organisation
Managing Director
Division
A
Division
B
Division
C
Division
D
Division
E
Division
F
Process manager
Process owner
Process team
Principles of process organisation – part 1
PRODUCT 1
PRODUCT 2
PRODUCT 3
FUNCTIONS
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Matrix Organisation
Principles of process organisation – part 1
In a matrix structure, the organization is grouped by both product and function
Product lines are managed horizontally and functions are managed vertically
This means that each function—e.g., research, production, sales, and finance—
has separate internal divisions for each product
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Due to significant market changes in the last 60 years (globalisation and
increased competition) – from PULL to PUSH market - customer
appreciation/understanding starts to be crucial factor for company's
success.
▪ CUSTOMER focused organization – STRUCTURE follows PROCESS
▪ Therefore the companies’ organization had to change as well!
Principles of process organisation – part 1
The Organisational TRANSITION
Process Management - V.G. 24
Board of directors
Department
A
Department
B
Department
C
Department
D
Department
E
Department
F
Customer Customer
Work flows horizontally
PROCESS (based Organisation) – the organizational perspective
Source: A. Tenner
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▪ Aligning PROCESS with the CORPORATE STRATEGY
▪ Being aware of organisational processes – have PROCESS MAP
▪ Define ROLES within organisation – process
responsibility
Managing PROCESS means:
Principles of process organisation – part 1
▪ Identify CORE PROCESSES
▪ Process performance – process measurement
▪ Introduce Continuous Process Improvement
▪ Determing new and removing outdated processes
Process Management - V.G. 26
▪ improved effectiveness (doing the right things) –
focusing on markets, customers and results
▪ improved efficiency (doing right things right) –
harmonising points of contact and reducing coordination
activities
• continuous improvement – creating a learning
organisation
Objectives of process management
Principles of process organisation – part 1
▪ to encourage interdepartmental thinking and behaviour
instead of a focus on the employee’s own department
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▪ Improved process transparency
▪ Clear definition and allocation of responsibility for individual activities
▪ Creating awareness of internal customer-supplier relationships
▪ Adapting processes to customer needs
▪ Measurability and auditability of process performance
▪ Increasing productivity with continuous process improvement
▪ Clearly defined points of contact
Corporate benefits
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▪ A business process can be defined as the premeditated collection
of interlinked tasks which find their end in the delivery of the service
or product which was whished/demanded by the client.
▪ This is a set of different activities and tasks, once completed, will
accomplish an organizational goal.
… but WHAT is the BUSINESS process
Principles of process organisation – part 1
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▪ It is initiated from the OUTSIDE of the organisation!
… but WHAT is the BUSINESS process
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▪ All business processes have to be synchronized and optimised in
order for organisation to function successfully
▪ One has to understand links among processes and to differentiate
them according to different types (i.e. legal requirements, business
core processes, supporting processes,…)
▪ Rightly chosen business processes are fundamental for creation of
organisation’s strategy
▪ Organisation’s strategy is vital for the survival and longevity of the
whole organisation, security of jobs for the employees and return of
investment for the investors
How to manage the business processes in the organisation?
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▪ Would be good to have some kind of the SCORECARD to monitor
efficassy and efficiency of business processes and their strategy
alignment.
▪ In 1992 Kaplan and Norton introduced research results of
performance measurement of intangible assets.
▪ The point was that if the companies want to improve management of
their intangible assets, they have to integrate the measurement of
intangible assets into their management system.
▪ To actively support efforts of the companies, the concept of BSC was
broadened and extended into management tool for describing,
communicating and implementing strategy.
Would be good to have tools!
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Financial perspective
What are our objectives, based on the financial expectations of our investors?
Customer perspective
Regarding structure and customer needs, which objectives should be set in order to
achieve our financial targets?
Business process perspective
Which business process objectives should be set in order to fulfil the targets of the
financial and customer perspectives?
Learning and growth perspective
Which learning and growth objectives should be set to enable us to deal with
current and future challenges? ..\B S C\BSC svih PJ.xls
Source: Kaplan / Norton
The four perspectives of the balanced scorecard (BSC)
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The cause and effect chain
Source: Kaplan / Norton
Financial perspective
Customer perspective
Business process
perspective
Learning and growth perspective
Return on
equity
Customer
loyalty
Prompt
delivery
Staff
qualifications
Process
quality
Process
cycle time
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Business process perspective
Source: Kaplan / Norton
▪ Important for long design /
development cycles
▪ New product sales
▪ Time to market
▪ From order to delivery
▪ Often already highly efficient
▪ Cycle times, quality, cost
▪ Guarantee
▪ Invoicing
▪ Support
▪ First-time resolution
Customer
need fulfilled
Identify customer
need
Identify
market
Product /
service
design
Product /
service
production
Product /
service
delivery
Customer
service
Innovation Production After-sales service
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Business process perspective – Vaccine
development stages – draft presentation
Source: Kaplan / Norton
Customer
need fulfilled
Stage 1.
Exploratory
Stage
Stage 2.
Pre-clinical
Stage
Stage 3.
Clinical
Development
(3 Phases)
Stage 4.
Regulatory
Review
and Approval
Stage 5.
Manufacturing
Stage 6.
Quality Control
and Side
Effects
Tracking
Innovation Production After-sales service
Principles of process organisation – part 1
• Quality control in Pharmaceutical industry is on the highest standards prescribed by authorities(i.e. FDA in the USA)
• Every process step is depicted in details• Education of staff is crucial to the whole process• Process duration for vaccine production is from 2-5 years and constant improvement is required• New drug development requires 8 – 10 years and some billions of euros/dollars!
Process Management - V.G. 36
Examples of strategic objectives:
▪ improving sales process efficiency
▪ eliminating duplication
▪ reducing response times for new requests
▪ shortening development cycles
▪ speeding up offer issue
▪ reducing costs
▪ improving the supply chain
Source: Horvath und Partner
Business process perspective
Principles of process organisation – part 1
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CustomerCustomer
Process owner
Business process
Process owner
Business process
Process owner
Business process
HRmanagement
IT
Facilitymanagement
Legal
Support processes
Processes – the organisational perspective
Source: A. Tenner
Principles of process organisation – part 1
Process Management - V.G. 38
Definition:
▪ Customer + customer demand
▪ Input-output ratio
▪ Permanent, complex tasks
▪ Trigger
▪ Key success factors
▪ Points of contact
▪ Roles & responsibilities
Customer Customer
ProcessInput Output
Wishes
Demands
FeedbackFeedback
What is a process?
Source: A. Tenner
Principles of process organisation – part 1
Process Management - V.G. 39
..occurs n times…
A PROCESS is a series of planned activities to transform
defined inputs into defined outputs
..occurs once…
Tasks
Control
function
Plan
Process
Procedure
Measures
Project
▪ Customer contact
▪ Complex
▪ Changing responsibility
▪ Internal
▪ Simple
▪ Individual responsibility
▪ Internal
▪ Simple
▪ Inter-departmental
▪ Complex
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▪ Service
▪ Quality
▪ Cost
▪ Speed
▪ Communication
Process-focus means customer-focus
Customer
Explicit and implicit
wishes
Recommendation, repeat purchase, change
of supplier without notification,
renegotiation, regress, etc.
Source: Tenner
Principles of process organisation – part 1
Customer Customer
ProcessInput Output
WishesDemands
FeedbackFeedback
Process Management - V.G. 41
Points of contact
DivisionA
DivisionB
DivisionC
DivisionD
DivisionE
DivisionF
Customer Customer
Information loss
between divisions
up to 60%
Information lossbetween departments
up to 25%
Information loss within departments
up to 12%
Source: Tenner
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▪ Awareness of relationships between sections
▪ Active target-based process management
▪ Special roles
▪ Cooperation with line managers
MATRIX organisationsManaging Director
Division
A
Division
B
Division
C
Division
D
Division
E
Division
F
Process manager
Personal loans
Securities transactions
Budgeting
Assessment of creditworthiness
Process owner
Process team
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Process owner
▪ Responsible for overall
performance of the process
management system
▪ Occasional involvement in
process team meetings
▪ Conflict resolution (escalation)
▪ Promoting the process
management system (power
based on hierarchical
position)
▪ Process management expert
Process manager
▪ Responsible for ongoing
process performance
regarding contents and
deadlines
▪ Chairs internal team meetings
and motivates the team
▪ Introduces and implements
improvements
▪ Documentation support
Process team
▪ Process specialist
▪ Active participation in process
team meetings
▪ Acceptance and careful
execution of allocated tasks
Process management roles
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Process Management - V.G. 44
Continuous improvement of processes and products – the process
management cycle
Process
Process evaluation, e.g.:
▪Customer satisfaction
▪Cycle time
▪Error rate
Data analysis by process owner
and team:
· Discover causes
· Develop solutions
· Proposed improvements
· Implementation plan
Decision making:
▪Report to decision maker
▪Coordination with functional
organisation
▪Strategic alignment
▪Communication
▪Resource allocation
Implementation:
· Planning
· Dry run
· Controlling effectiveness
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Process Management - V.G. 45
▪ Strategic management of processes
▪ Alignment of processes with corporate strategy
▪ Implementing process organisation
▪ Identifying processes
▪ Determining new and removing outdated processes
▪ Defining process documentation standards
Operational process management
▪ Process analysis and design
▪ Process documentation
▪ Developing support measures for process implementation
▪ Operational processes roll-out
▪ Process optimisation
▪ Process controlling
▪ Continuous process improvement
Strategic process management
ProzessProzess
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Identifying Core Process
Principles of process organisation – part 1
Process Management - V.G. 47
Process categoriese.g.:
▪ budgeting▪ strategic planning▪ HR development
e.g.: ▪ handling loan transactions▪ implementing customer
projects▪ providing support services
e.g.: ▪ IT helpdesk▪ payroll▪ accounting▪ implementing IT projects
Management
processes
…support management of the
company
Business
processes
…produce value-adding goods or
services for customers
Support
processes
Improvement
processes
…support other processes to
maximise performance
…to promote continuous
improvement
e.g.: ▪ complaint management▪ internal auditing
Principles of process organisation – part 1
Process Management - V.G. 48
Case study: Process map for a retail bank
Strategic
planningBudgeting
Strategiccontrolling
HR
developmentRevision
Customer
relationship
management
Commercial
Lending
Commercial lending (Regular management)
Commercial lending (Asset-based management)
Internet banking
Syndicated loans
Consumer lending (Small personal loans)
Non-standardised personal loans
Integration of
new employees
Branch renovation/
constructionIT support
Facilitymanagement
Projectmanagement
Internal
auditing
Measuringcustomer
satisfaction
Complaint
management
Measuring
employee
satisfaction
Continuous
improvement
Management processes
Business processes
Support processes
Improvement processes
Principles of process organisation – part 1
Process Management - V.G. 49
1. Process levels
Level 1
Process map and main processes
Level 2
Sub-processes
Level 3
Guidelines, manuals, work
instructions
Management processes
Business processes
Support processes
Improvement processes
Verantwortlichkeiten
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Ja
Rechnung
trifft ein
E2
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und ggf.
Reklamationsbearb.
E6
Vollständigkeit der Einträge
im Stempel prüfen
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RE gemäß Pouvoir
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NeinLtg150
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Sek151
Sek151
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D=
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E = Entscheidung
M = Mitarbeit
I = Informationsrecht
En =
Verweis auf
Erläuterung
Konsortialkredit abwickeln
Principles of process organisation – part 1
Process Management - V.G. 50
Management processes
Management review Project managementAnnual marketing plan
HR managementRisk management Auditing
Sales managementOperative planning
and budgetingStrategic planning
Process map – level 1
Principles of process organisation – part 1
Process Management - V.G. 51
Business processes
Current accounts,
overdrafts
Consumer loans,
small personal loans
High-volume
residential construction
Commercial lending
Regular managementCommercial lending
Commercial lending
Asset-based management
Non-certificated
SME loans
Non-standardised
personal loans
Syndicated loans
Foreign currency loans
MBS
Capital market transactions
incl. fund-based savings plans
Internet banking
Home & office banking
Process map – level 1
Principles of process organisation – part 1
Process Management - V.G. 52
Support processes
Repairing faults
with domestic installationsRepairing machine faults
Preparing workspaces for
new employees
Rectifying IT faults
Staff exitNew employee induction
Project managementBranch renovation
and new branch construction
Process map – level 1
Principles of process organisation – part 1
Process Management - V.G. 53
Improvement processes
Measuring employee
satisfactionComplaint management
Measuring customer
satisfaction
Event management Internal auditing Process measurement
Corrective measures
and improvements
Process map – level 1
Principles of process organisation – part 1
Agenda
Process Management - V.G.
Principles of process organisation
Constructing a process management system
Process optimisation methods
Process Management - V.G. 55
▪ Phases in developing Process Management System projects
▪ Questions in the introductory phase
▪ Process identification and delineation
▪ Representation of current situation
▪ Analysis of current situation (measurement)
▪ Target situation
▪ Alignment with corporate strategy
▪ Indicators and parameters
▪ Implementation and controlling
2. Constructing a Process Management System
Principles of process organisation – part 1
Process Management - V.G. 56
▪ Senior management
mandate and
commitment
▪ Project structuring
▪ Determination of roles
and responsibilities
▪ Definition of relationship
between process
management system and
functional organisation
▪ Development of process
map
▪ Selection of processes
for optimisation
▪ Define
▪ Measure
▪ Analyse
▪ Implement
▪ Control
▪ Develop measured data
history
▪ Inspection of results by
functional organisation
▪ Implementation of
measures
▪ Documentation
▪ Ensure communication of
results to functional
organisation
▪ Knowledge transfer
▪ Controlling
▪ Secure resources for
system
▪ Outline and communicate
successes
▪ Coordinate training
activities
▪ Staff motivation
System
design
Roll-out-
Phase
Functioningprocessmanagementsystem
Introduction
Project
Process Management Design - Overview
Process Management - V.G. 57
▪ What is the objective of Process Management?
▪ What should the system eventually look like?
▪ How many people and positions can be / do I want to be involved?
▪ How much time can I / do I want to take?
▪ How detailed can / should the system be? How can exceptions be handled?
▪ What is the relationship between new and existing responsibilities?
▪ What should be the incentives associated with the process management system in future?
▪ Which “marketing” activities should be carried out in advance?
▪ Which instruments / tools can I / do I want to apply?
Questions in the introductory phase
Constructing a process management - introductory phase
Introductory
phase
Process Management - V.G. 58
Project objectives and structures are defined
and communicated in the introductory phase
Constructing a process management - introductory phase
Participants Contents
Detailed
discussion
Board of directorsProject managerClient
Details of upcoming project procedures
Kick -off
Board of directorsProject managerHead of the department
Internal auditWorks council
General project information
Start-up
workshop
Board of directorsProject manager
Head of the department
Process mapProject organisationProject definition
PO-tourProcess owner Process required?
Process delineationTeam members?
1st teammeeting
Process teamProcess managerProject manager
TrainingProcess identification
Introductory
phase
Process Management - V.G. 59
▪ Planning/controlling
▪ MS-Project
▪ PSP
▪ Excel
▪ Data storage
▪ h:\............process owner
▪ v:\............team members
▪ Intranet....all employees
▪ Templates for process owner
▪ Marketing
Precise planning and predefined cooperation structures simplify project coordination
Constructing a process management - introductory phase
Introductory
phase
..\Project Management\3. PRMS Budget -detailed,people & money 99.xls
..\Project Management\Ex4. Project Charter.doc
..\Project Management\Maximo-Orgchart-local-team1.ppt
Process Management - V.G. 60
Five steps to process optimisation
Process
management
Representation of
current situation
Analysis of current
situation
(measurement)
Target situation
Implementation
and controlling
Process identification
&
delineation
12
3
4
5
Process identification
System
design
Process Management - V.G. 61
Process identification
&
delineation
1
Process identification
Representation of
current situation
Analysis of current
situation
(measurement)
Target situation
Implementation
and controlling
System
design
Process
management
Process Management - V.G. 62
Process Profile
Principles of process organisation – part 1
Process Management - V.G. 63
Objective description of key process attributes based on analysis of current situation
CUSTOMER:• Who is the process customer?
• What are the customer’s process quality expectations?
Process:• What is the purpose of the process?
• Where does it being/end?
• What is the input / trigger?
• Which products and services are outputs?
• Where are the most important point of contact? To whom?
KEY SUCCESS FACTORS:• Under which conditions does the process function
smoothly?
Process identification
Customer Customer
ProcessInput Output
Customer needs
Requirements
FeedbackFeedback
System
design
Process Management - V.G. 64
▪ Hasty solutions – collect facts instead
▪ Clear delineation of processes
▪ Overambitious targets, limited time resources
▪ Wordy descriptions instead of focus on data
▪ Weak project management
▪ Confusing communication and information
Obstacles in this phase:
Process identification
System
design
Process Management - V.G. 65
2
Representation of current situation
Process identification
&
delineation
Process
management
Representation of
current situation
Analysis of current
situation
(measurement)
Target situation
Implementation
and controlling
System
design
Process Management - V.G. 66Representation of current situation
System
design
RESOURCES
FONDS €€€€€
HUMANS/EMPLOYEES
TIME/DURATION
Process Management - V.G. 67
▪ Outline the individual process steps
▪ Validate problem / process
▪ Refine problem / objective definition
Individual process stages are depicted (FLOW CHART)
Representation of current situation
Decision
Process
step/activity
Document/
output
Other process
Database/
input
System
design
Verantwortlichkeiten
D E M IInput Ablauf / Aktivitäten Output
Rechnung erfassen
Monats-
ARZ- oder KSV-
Rechnung?
Eingangsrechnung
RE inhaltlich (fachlich) prüfen
und pouvoirmäßig unterfertigt
retoursenden
Nein
Ja
Nein
Sek
151/155
IAV-DB
Bestellung /
Lieferschein ggf.
IT-
Komponenten
bestellen
Spezielle Aufbereitung
der Rechnung
E1
E3
Sek151
Monats-
ARZ- oder KSV-
Rechnung?
Ja
Rechnung
trifft ein
E2
Rückmeldeprüfung
und ggf.
Reklamationsbearb.
E6
Vollständigkeit der Einträge
im Stempel prüfen
(ggf. ergänzen),
RE-Info in DB eintragen
E7
Mail, AV,
Kopie der RESek151
Rechnungen an Prüfer
weiterleiten
E4
Prüfer
ggf.
Lief.
E5
ggf.
Lief.
ggf.
Prüfer
ÖVAG-RE
> 7.500 EuroJa
Div. Unterlagen zur
Aufteilung an
Prüfer
Sek
151/155
PrüferSek
151/155
Sek151
Sek151
Sek
151/155
Sek
151/155
D=
Durchführungsverantw.
E = Entscheidung
M = Mitarbeit
I = Informationsrecht
En =Verweis aufErläuterung
Process Management - V.G. 68
ProzessschrittProzessschrittProzessschritt
Process
DokumentDocument
DBDB
Entsch.Entsch.Entsch.
As few as possible, as many as necessary
Rules for use of symbols:
Representation of current situation
Process step/activity (verb + noun)
Decision
Document (input/output)
Data storage (database/intranet)
Reference to another process
Process step
DecisionYes
No
System
design
Process Management - V.G. 69
SWIMLANE DIAGRAMS shows
clearly transitions of responsibilities
Representation of current situation
System
design
Process Management - V.G. 70
Analysis based on depiction of processes
<Prozessname>
GF
MF
AL
eite
r P
KK
UB
EK
un
de
▪ Data-based
▪ Documented
▪ Coordinated (shared view)
▪ Optimum use of tools
Representation of current situation
System
design
Process Management - V.G. 71Representation of current situation
System
design Capability Maturity Model Integration
Process Management - V.G. 72Representation of current situation
System
design
Attribution-ShareAlike 4.0 International – Oleg Garipov
DRAKON Algorithm
Process Management - V.G. 73Representation of current situation
System
design
By DanielPenfield - Own work, CC BY-SA 3.0
Value Stream Mapping
Process Management - V.G. 74Representation of current situation
System
design Value Stream Mapping
Value-stream mapping is a lean-management method
for analyzing the current state and designing a future
state for the series of events that take a product or
service from its beginning through to the customer with
reduced lean wastes as compared to current map.
A value stream focuses on areas of a firm that add
value to a product or service, whereas a value chainrefers to all of the activities within a company.
Process Management - V.G. 75Representation of current situation
System
design Value Stream Mapping
The purpose of value-stream mapping is to identify and
remove or reduce "waste" in value streams, thereby
increasing the efficiency of a given value stream.
Waste removal is intended to increase productivity by
creating leaner operations which in turn make waste
and quality problems easier to identify.
Process Management - V.G. 76Representation of current situation
System
design Value Stream Mapping
Process Management - V.G. 77Representation of current situation
System
design Types of Waste
1.Faster-than-necessary pace: creating too much of a good or service that damages production flow, quality, and
productivity. Previously referred to as overproduction, and leads to storage and lead time waste
2.Waiting: any time goods are not being transported or worked on.
3.Conveyance: the process by which goods are moved around. Previously referred to as transport, and includes
double-handling and excessive movement.
4.Processing: an overly complex solution for a simple procedure. Previously referred to as inappropriate
processing, and includes unsafe production. This typically leads to poor layout and communication, and
unnecessary motion.
5.Excess Stock: an overabundance of inventory which results in greater lead times, increased difficulty identifying
problems, and significant storage costs. Previously referred to as unnecessary inventory.
6.Unnecessary motion: ergonomic waste that requires employees to use excess energy such as picking up
objects, bending, or stretching. Previously referred to as unnecessary movements, and usually avoidable.
7.Correction of mistakes: any cost associated with defects or the resources required to correct them.
According to Daniel T. Jones
Process Management - V.G. 78Representation of current situation
System
design Waste removal Operations
According to Monden
Identified three types of operations:
1.Non-value adding operations (NVA): actions that should be
eliminated, such as waiting
2.Necessary but non-value adding (NNVA): actions that are
wasteful but necessary under current operating procedures
3.Value-adding (VA): conversion of processing of raw
materials via manual labor
Process Management - V.G. 79Representation of current situation
System
design Business Architecture
Policies & Rules &
Regulation
Capabilities Vision & Strategies &
Tactics
InformationOrganization
Initiatives & Projects
Value StreamsProducts & Services
Decisions & Events
Metrics & Measures
Stakeholders
?
?
?
?
?
??
?
??
Process Management - V.G. 80
▪ Describe details of activities
▪ Document exceptional cases which occur infrequently
▪ Graphic representation reduces complexity
Example: instructions
Representation of current situation
Prepare
customer
meeting
System
design
No.
1
Process step Description
Preparing documents needed for the meeting:
•Prepare available customer documents (customer/company
data, financial statements, balance sheets)
•Evaluate customer’s business environment (market, financial
situation)
•Analyse any customer accounts (data, figures)
•Collect/process relevant customer information, use of latest
customer ratings
•Evidence of active customer service – how can I secure an
appointment with the customer?
•Evidence of customer support – arrange appointment;
examination of amounts outstanding recommended (information
from ???)
•Analyse current evidence (previous loans, audit reports, etc.
New customers: collect external information (association for
protection of creditors, debt collection organisations, etc.
Step II: Analysis of current process /
depiction and description of current process steps
Process Management - V.G. 81
▪ Input side
▪ Output side
▪ Between departments / individuals
▪ Customer-facing
Who
participates?
What is
provided?
How often? When? In which form?
Points of contact
Representation of current situation
System
design
Process Management - V.G. 82
Process identification should reveal potential for improvement. These
should be centrally recorded and kept up to date.
Process nameProcess owner Weaknesses Options for improvement Measures Tasks for Deadline? Status Comments
Potential for improvement
Representation of current situation
System
design
Process Management - V.G. 83
3
Analysis of current situation (measurement)
Process identification
&
delineation
Process
management
Representation of
current situation
Analysis of current
situation
(measurement)
Target situation
Implementation
and controlling
System
design
Process Management - V.G. 84
Which parameters can be used to
measure the current situation?
Verantwortlichkeiten
D E M IInput Ablauf / Aktivitäten Output
Rechnung erfassen
Monats-
ARZ- oder KSV-
Rechnung?
Eingangsrechnung
RE inhaltlich (fachlich) prüfen
und pouvoirmäßig unterfertigt
retoursenden
Nein
Ja
Nein
Sek
151/155
IAV-DB
Bestellung /
Lieferschein ggf.
IT-
Komponenten
bestellen
Spezielle Aufbereitung
der Rechnung
E1
E3
Sek151
Monats-
ARZ- oder KSV-
Rechnung?
Ja
Rechnung
trifft ein
E2
Rückmeldeprüfung
und ggf.
Reklamationsbearb.
E6
Vollständigkeit der Einträge
im Stempel prüfen
(ggf. ergänzen),
RE-Info in DB eintragen
E7
RE einscannen
und weiterleiten
E8
Kontrollierte,
freigegebene und
zugeordnete RE
OE 820
bzw.
Tochter
-BuHa
Mail, AV,
Kopie der RESek151
Rechnungen an Prüfer
weiterleiten
E4
Prüfer
ggf.
Lief.
E5
ggf.
Lief.
ggf.
Prüfer
1
ÖVAG-RE
> 7.500 Euro
RE gemäß Pouvoir
unterfertigen
Ja
NeinLtg150
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Div. Unterlagen zur
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Prüfer
Sek
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Sek151
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D=
Durchführungsverantw.
E = Entscheidung
M = Mitarbeit
I = Informationsrecht
En =
Verweis auf
Erläuterung
Konsortialkredit abwickelnVerantwortlichkeiten
D E M IInput Ablauf / Aktivitäten Output
Rechnung erfassen
Monats-
ARZ- oder KSV-
Rechnung?
Eingangsrechnung
RE inhaltlich (fachlich) prüfen
und pouvoirmäßig unterfertigt
retoursenden
Nein
Ja
Nein
Sek
151/155
IAV-DB
Bestellung /
Lieferschein ggf.
IT-
Komponenten
bestellen
Spezielle Aufbereitung
der Rechnung
E1
E3
Sek151
Monats-
ARZ- oder KSV-
Rechnung?
Ja
Rechnung
trifft ein
E2
Rückmeldeprüfung
und ggf.
Reklamationsbearb.
E6
Vollständigkeit der Einträge
im Stempel prüfen
(ggf. ergänzen),
RE-Info in DB eintragen
E7
RE einscannen
und weiterleiten
E8
Kontrollierte,
freigegebene und
zugeordnete RE
OE 820
bzw.
Tochter
-BuHa
Mail, AV,
Kopie der RESek151
Rechnungen an Prüfer
weiterleiten
E4
Prüfer
ggf.
Lief.
E5
ggf.
Lief.
ggf.
Prüfer
1
ÖVAG-RE
> 7.500 Euro
RE gemäß Pouvoir
unterfertigen
Ja
NeinLtg150
E9
Div. Unterlagen zur
Aufteilung an
Prüfer
Sek
151/155
PrüferSek
151/155
Sek151
Sek151
Sek
151/155
Sek
151/155
Sek
151/155
D=
Durchführungsverantw.
E = Entscheidung
M = Mitarbeit
I = Informationsrecht
En =
Verweis auf
Erläuterung
Konsortialkredit abwickeln
▪ All key success factors
▪ Time (waiting time, cycle time,
processing time, etc.)
▪ Costs
▪ Types and frequency of
errors
▪ Everything which the
customer can also
measure
Analysis of current situation (measurement)
System
design
Process Management - V.G. 85
▪ Confusing current and target situations
▪ Insufficient, unrepresentative or imprecise data
▪ Forgetting the customer – always consider impacts on the customer
▪ Measuring everything which is measurable
▪ Lack of focus on key objectives/statements
▪ Clean slate instead of tried-and-tested approaches
Obstacles in this phase:System
design
Analysis of current situation (measurement)
Process Management - V.G. 86
4Target situation
Process
management
Representation of
current situation
Analysis of current
situation
(measurement)
Target situation
Implementation
and controlling
Process identification
&
delineation
System
design
Process Management - V.G. 87
▪ Process identification and delineation
▪ Customers / expectations / success factors
▪ Analysis of weaknesses and catalogue of measures
▪ Classification of weaknesses
▪ Point-of-contact analysis
▪ Depiction and description of current process steps
▪ Current flow chart
Present outcomes
Target situation
System
design
Process Management - V.G. 88
The target situation illustrates the desired future process, based on information collected on the current situation and performance
▪ Strategic objectives
▪ Technological requirements
▪ HR requirements
▪ Cost objectives
▪ Local requirements
▪ Potential for improvement identified in analysis of current
situation
Verantwortlichkeiten
D E M IInput Ablauf / Aktivitäten Output
Rechnung erfassen
Monats-
ARZ- oder KSV-
Rechnung?
Eingangsrechnung
RE inhaltlich (fachlich) prüfen
und pouvoirmäßig unterfertigt
retoursenden
Nein
Ja
Nein
Sek
151/155
IAV-DB
Bestellung /
Lieferschein ggf.
IT-
Komponenten
bestellen
Spezielle Aufbereitung
der Rechnung
E1
E3
Sek151
Monats-
ARZ- oder KSV-
Rechnung?
Ja
Rechnung
trifft ein
E2
Rückmeldeprüfung
und ggf.
Reklamationsbearb.
E6
Vollständigkeit der Einträge
im Stempel prüfen
(ggf. ergänzen),
RE-Info in DB eintragen
E7
RE einscannen
und weiterleiten
E8
Kontrollierte,
freigegebene und
zugeordnete RE
OE 820
bzw.
Tochter
-BuHa
Mail, AV,
Kopie der RESek151
Rechnungen an Prüfer
weiterleiten
E4
Prüfer
ggf.
Lief.
E5
ggf.
Lief.
ggf.
Prüfer
1
ÖVAG-RE
> 7.500 Euro
RE gemäß Pouvoir
unterfertigen
Ja
NeinLtg150
E9
Div. Unterlagen zur
Aufteilung an
Prüfer
Sek
151/155
PrüferSek
151/155
Sek151
Sek151
Sek
151/155
Sek
151/155
Sek
151/155
D=
Durchführungsverantw.
E = Entscheidung
M = Mitarbeit
I = Informationsrecht
En =
Verweis auf
Erläuterung
Konsortialkredit abwickelnVerantwortlichkeiten
D E M IInput Ablauf / Aktivitäten Output
Rechnung erfassen
Monats-
ARZ- oder KSV-
Rechnung?
Eingangsrechnung
RE inhaltlich (fachlich) prüfen
und pouvoirmäßig unterfertigt
retoursenden
Nein
Ja
Nein
Sek
151/155
IAV-DB
Bestellung /
Lieferschein ggf.
IT-
Komponenten
bestellen
Spezielle Aufbereitung
der Rechnung
E1
E3
Sek151
Monats-
ARZ- oder KSV-
Rechnung?
Ja
Rechnung
trifft ein
E2
Rückmeldeprüfung
und ggf.
Reklamationsbearb.
E6
Vollständigkeit der Einträge
im Stempel prüfen
(ggf. ergänzen),
RE-Info in DB eintragen
E7
RE einscannen
und weiterleiten
E8
Kontrollierte,
freigegebene und
zugeordnete RE
OE 820
bzw.
Tochter
-BuHa
Mail, AV,
Kopie der RESek151
Rechnungen an Prüfer
weiterleiten
E4
Prüfer
ggf.
Lief.
E5
ggf.
Lief.
ggf.
Prüfer
1
ÖVAG-RE
> 7.500 Euro
RE gemäß Pouvoir
unterfertigen
Ja
NeinLtg150
E9
Div. Unterlagen zur
Aufteilung an
Prüfer
Sek
151/155
PrüferSek
151/155
Sek151
Sek151
Sek
151/155
Sek
151/155
Sek
151/155
D=
Durchführungsverantw.
E = Entscheidung
M = Mitarbeit
I = Informationsrecht
En =
Verweis auf
Erläuterung
Konsortialkredit abwickeln
NEW
Target situation
System
design
Process Management - V.G. 89
Source: H. Thompson
Strategic alignment of processes with corporate objectives
Strategies
Strategic objectives
Operative
objectives
processes
Staff
VorstandVorstand
COC
Z
COC
Z
COC
Y
COC
Y
COC
X
COC
X
COC
W
COC
W
COC
V
COC
V
COC
U
COC
U
Bereich
A
Bereich
ABereich
B
Bereich
BBereich
C
Bereich
CBereich
D
Bereich
DBereich
E
Bereich
EBereich
F
Bereich
F
Departmens
Projects
Vision
Mission
Customer perspective Company perspective
▪ Medium to long-term planning
and management
▪ Business plan
▪ Balanced scorecard
▪ Company “DNA”
▪ Self-perception
▪ Values
• Short-term planning and
management
▪ Budget
▪ Annual plans
▪ Discussion of objectives
Target situation
System
design
..\Vision and Mission\Vision and Mission.pptx
Process Management - V.G. 90
Source: Horvath und Partner
Very
gen
era
l
Very
specific
StrategyStrategic
objectiveParameters Targets Strategic projects
Retain existing
customers
Deal with customer
requirements more
quickly
Improve service
quality for existing
customers
Turn secondary
customers into key
customers
Time from order to
payment
Customer
satisfaction index
Number of new
customers
-10%
+25%
+50%
Relieving sales
staff of
administrative
work
Use of
discussion
guidelines and
controlling
Using
controlling to
manage
targeted
discussions
Service quality as
a source of
differentiation
Increase
proportion of new
customers
Putting strategy into action
Target situation
System
design
Process Management - V.G. 91
The target situation defines the framework for
future process management approaches
▪ Who is the process owner?
▪ Who works in the process team?
▪ Who is the process manager?
▪ Who is the system sponsor?
▪ Who reports to whom on process performance?
▪ How often are reports made?
▪ Which process indicators will
be measured in future?
▪ How should measurement take place?
▪ Have resources been earmarked for data
generation?
▪ How much time is available
for process improvement
Roles and responsibilities Reporting
Measurement Resources
▪ What form do the reports
take?
process
▪ How should resources be allocated between
projects, processes and functional organisation?
Target situation
System
design
Process Management - V.G. 92
Process indicators
Source: Wagner
No. Process objective Indicator Target Measurement method Frequency Responsibility
1
Restoring IT
services as quickly
as possible in the
event of faults
1st level support:
<= 4 hours
2nd level support:
<= 24 hours
Automatic
measurement
via ticketing
system
Weekly,
evaluation and
discussion during
jour fixe
Helpdesk
manager
Indicators define the parameters
which make up the content of
measurements
How often are
measurements taken?
Avoid manual measurement (cost,
precision!)
Who is responsible for measurement,
evaluation and analysis?
Targets based on experience and
management specifications
Time from user call
to helpdesk to
closure of ticket
Target situation
System
design
Process Management - V.G. 93
Requirements for good indicators
▪ Measurement should not be excessively difficult (in the best case automated)
▪ Not in conflict with other corporate targets
▪ Compatible with goals of departments affected by the process
▪ Must be realistic
▪ Content, scope and timeframe should be clearly defined
▪ Achievement of process targets should have management implications
(incentive system)
▪ Management should receive the main process measurement results and
analyses through a reporting system.
Target situation
System
design
Process Management - V.G. 94
1. Specify what is being measured
feasible / valuable?
2. Develop precise definitions
Avoid misunderstandings (E.g. red vehicles)
3. Identify data sources
Staff / systems
4. Draw up a data-collection plan
Checksheets, characteristics
5. Implement and refine the indicators
Test, data-collection procedures
Source: Pande / Neumann / Cavenaugh
Target situation
System
design
Process Management - V.G. 95
▪ Processing applications
for commercial loans in
four weeks
Bad: Good:
▪ Maximum seven days between
initial contact and arrangement
of appointment with assessor
▪ Maximum one working day to
on-site appointment
▪ Maximum three working days
from loan approval to transfer of
required sum
Target situation
Example: formulating indicators –commercial lending
System
design
Process Management - V.G. 96
▪ Specific
▪ Measurable
▪ Action oriented/Achievable
▪ Realistic/Relevant
▪ Timebound
Target situation
System
designGoals/Indicators Characteristics
▪ Ecological
▪ Rewarding
Process Management - V.G. 97
▪ Have customer expectations been fulfilled?
▪ Have weaknesses influencing the process been considered?
▪ Where should documentation/inputs be integrated into the process?
▪ Where are explanations necessary?
▪ Can process quality really be measured?
▪ Have measures been outlined in full (who/deadline)?
▪ Are the costs of the measures transparent?
Final checks before process inspection
Target situation
System
design
Process Management - V.G. 98
▪ Links to strategy overlooked
▪ Line managers forget to record results
of improvements
▪ Too much bureaucracy
▪ Cost of implementing improvements not
considered
▪ Sticking too rigidly to method – do the
sensible thing (use common sense)
Obstacles in this phase:System
design
Target situation
Process Management - V.G. 99
5
Implementation and controlling
Process
management
Representation of
current situation
Analysis of current
situation
(measurement)
Target situation
Implementation
and controlling
Process identification
&
delineation
System
design
Process Management - V.G. 100
Implementation: Pilot (dry run)
▪ Trying out new ideas on a small scale
▪ Learning from mistakes – collect experience
▪ Minimise cost of errors
▪ Small number of process cycles / limited scope
▪ Document results
2. Constructing a process management system
Implementation and controlling
System
design
Process Management - V.G. 101
Training Measuring
Documentation Fine tuning
Troubleshooting
Critical ingredients
Implement changes to the process
Implementation: key success factors
Implementation and controlling
System
design
Process Management - V.G. 102
Controlling: before “go live”
5 ▪ Approval by line organisation
4
3 ▪ Plan roll-out
2 ▪ Update project storyboard and list of potential improvements
1 ▪ Finalise process documentation
▪ Approval of project by client (if end of project)
Implementation and controlling
System
design
Process Management - V.G. 103
Drafting of
measures
(documentation)
Approval by line
organisation
Electronic
publicationTechnical
roll-out
Methodical
roll-out
Appro
val
Implementation and controlling
Einleitungs-
Phase
System
designIntroduction
Functioningprocessmanagementsystem
Roll-out
phase
Process Management - V.G. 104
▪ Underestimating time required for
implementation
▪ Lack of or unclear approval can lead to
constant backsliding
▪ Forgetting people and their attitudes (importance
of change management)
▪ Ignoring resistance
Obstacles in this phase: System
design
Implementation and controlling
Process Management - V.G. 105
▪ Senior management
mandate and
commitment
▪ Project structuring
▪ Determination of roles
and responsibilities
▪ Definition of relationship
between process
management system and
functional organisation
▪ Development of process
map
▪ Selection of processes
for optimisation
▪ Define
▪ Measure
▪ Analyse
▪ Implement
▪ Control
▪ Develop measured data
history
▪ Inspection of results by
functional organisation
▪ Implementation of
measures
▪ Documentation
▪ Ensure communication of
results to functional
organisation
▪ Knowledge transfer
▪ Controlling
▪ Secure resources for
system
▪ Outline and communicate
successes
▪ Coordinate training
activities
▪ Staff motivation
System
design
Roll-out-
phase
Functioningprocessmanagementsystem
Introduction
Project
Roll-out phase
Roll
out
Process Management - V.G. 106
Activities in the roll-out phase(1)
Roll-out phase
▪ Determine exact process for identifying indicators with the process owner,
i.e. organising data provision => fine tuning
▪ Develop history of measurement data and objectives
▪ Identify essential measures to be implemented before approval
▪ Examine list of measures and allocate responsibilities to specific individuals
▪ Pass on general process management information (flows, process map,
website, etc.) to centre manager level at least
Roll
out
Process Management - V.G. 107
▪ Create organisational structures which support flow of technical information
to people influenced by the process (line communication)
▪ Pushing and coaching process team members (supporting data collection,
arranging meetings, etc.) => independence
▪ Hold meetings with process owner, e.g. corrective measures and
improvements, reporting, comparing notes, etc.
▪ Knowledge transfer process map => process manager
Activities in the roll-out phase(2)
Roll-out phase
Roll
out
Process Management - V.G. 108
▪ Senior management
mandate and
commitment
▪ Project structuring
▪ Determination of roles
and responsibilities
▪ Definition of relationship
between process
management system and
functional organisation
▪ Development of process
map
▪ Selection of processes
for optimisation
▪ Define
▪ Measure
▪ Analyse
▪ Implement
▪ Control
▪ Develop measured data
history
▪ Inspection of results by
functional organisation
▪ Implementation of
measures
▪ Documentation
▪ Ensure communication of
results to functional
organisation
▪ Knowledge transfer
▪ Controlling
▪ Secure resources for
system
▪ Outline and communicate
successes
▪ Coordinate training
activities
▪ Staff motivation
System
design
Roll-out-
Phase
Functioningprocessmanagementsystem
Introduction
Project
Functioning process management system - overview
Process Management - V.G. 109
FocusPrinciples of Process Organisation and Quality Management
Process Management - V.G. 111
9.00 – 10.30 → Process Optimization Methods
10.30 - 11.30→ Coffee Break + Group Works
11.30 - 13.00 → Lecturing
Training Schedule
Principles of process organisation – part 1
Agenda
Process Management - V.G.
Principles of process organization
Constructing a process management system
Process optimization methods
Process Management - V.G. 113
▪ Customer analysis▪ Interviews
▪ Focus groups
▪ Surveys
▪ Process analysis▪ Value creation
▪ Failure mode and effects analysis (FMEA)
▪ Moments of truth
▪ Points of contact
▪ Process measurement▪ Selecting performance indicators
▪ Interpreting performance measurements
3. Process optimisation methods
Process optimisation methods
Process Management - V.G. 114
Integrating customer requirements
Product / service
definition
Market volume
Market characteristics
Purchasing motives
Product / service
features
Market research
Focus on customer
requirements
Process design
Identify potential customers
Define customer expectations
Determine customer requirements
Process design based on
customer requirements Product / service
manufacturing process
Process optimisation methods
Process Management - V.G. 115
▪ How do I ask the customer?
▪ Interviews
▪ Focus groups
▪ Surveys
▪ What do I ask the customer?
▪ Purchasing motive
▪ Expectations
▪ Quality of contact (processes)
3.1 Customer analysis methods
Process optimisation methods
Process Management - V.G. 116
▪ Purpose
To reveal customer views on quality of service, product and/or service features and
indicators of success.
▪ When is it used?
When the company needs to know what is important for the customer and why,
and to check any assumptions (confirming/testing hypotheses)
Process optimisation methods
3.1 Customer analysis – Interviews
Process Management - V.G. 117
▪ Flexible
▪ Complex questions
possible
▪ High reply rate
▪ High costs
▪ Results can be influences
▪ Difficult to analyse
▪ Sample representative enough?
Advantages Disadvantages
Process optimisation methods
3.1 Customer analysis – Interviews
Process Management - V.G. 118
▪ Purpose
To collect information from a group of customers
who are representative of a particular segment.
▪ When are they used?
To discover what is important for the customer, whether any particular demands
have priority, and to check any assumptions (confirming/testing hypotheses)
Process optimisation methods
3.1 Customer analysis – Focus groups
Process Management - V.G. 119
▪ confirming segmentation
decisions
▪ testing hypotheses on customer
needs
▪ rectifying communication
problems between company and
market
▪ conflict situations
▪ quantitative analysis
▪ Situations where confidentiality is
important
▪ Sales situations
Suitable for… Unsuitable for...
Process optimisation methods
3.1 Customer analysis - Focus groups
Process Management - V.G. 120
▪ Purpose
To measure customer requirements of the importance of or customer
satisfaction with a product, service or attribute in one or more segments.
This method produces quantitative data.
▪ When they are used?
To collect information efficiently from a large group of respondents. Reliable
statistical analysis is possible. Measuring the current situation (and any
changes over time)
Process optimisation methods
3.1 Customer analysis – Surveys
Process Management - V.G. 121
3.1 Customer analysis – Surveys
▪ suggestive questioning
▪ examples
▪ over-/underspecification
▪ sequence of questions
▪ lack of criteria, etc
Can be influenced by…
Process optimisation methods
Process Management - V.G. 122
The most common measurement and optimisation criteria for business processes
Source: Studie Geschäftsprocessmanagement
in der produzierenden Industrie, Bach, Lehrstuhl für
U-Führung und Organisation, 2004.
Process optimisation methods
3.1 Customer analysis
Cycle time
Reliability
Error rate/down times/defects/error
costs
Costs (processes, HR)
Productivity/efficiency
Income/revenue/growth
Process quality
Process expertise
Product quality
Transparency
Points of contact/information flow
Staff motivation
Capacity utilisation
Inventory reduction
Frequency (%)
Process Management - V.G. 123
1. Systematic identification of weaknesses:
Determine ownership
Structuring and prioritising potential improvements ensures their systematic and understandable implementation
Weakness Cause(s)Proposed
solutions
Solution
approved by/on
Responsible for
implementation until
Implementation
costs
1-4
Importance for
process
1-4
2. Prioritise and categorise
Identify quick wins (what can be changed immediately?)
Consider project criteria
Process optimisation methods
3.2 Process analysis
Process Management - V.G. 124
▪ Value creation analysis
▪ Process failure mode and effects analysis
(FMEA)
▪ Moments of truth
▪ Point-of-contact analysis
➢ Long-term potential for improvement
➢ Continuous process improvement
Process optimisation methods
3.2 Process analysis methods
Process Management - V.G. 125
Preparation:Preparatory activities for subsequent steps(e.g. tidying workplace, retrofitting)
Controlling:Internal process controlling activities (e.g. checking, approval)
Delay/maintenance/storage:Activities which must be completed before work can continue (e.g. temporary storage, stockkeeping)
Malfunction:Activities resulting from errors in a particular process step(e.g. reworking, recall)
3.2 Process analysis – Value creation analysis
Process optimisation methods
Process Management - V.G. 126
▪ Purpose?
Identify process stages which incur costs and take up time
without creating additional value for the customer
▪ Where is it used?
To identify parts of a process where improvements could be
made
3.2 Process analysis – value & cycle time worksheet
Source: Pande/Neumann/Cavenaugh, The Six Sigma Way
Process optimisation methods
Process Management - V.G. 127
Process stage 1 2 3 4 5 6 7 8 9 10 Total Total %
Value 10 100%
Value-adding 1 1 2 20%
Supporting 1 1 1 1 4 40%
Non value-adding 1 1 1 1 4 40%
Time 180 100%
Processing VA 10 20 30 17%
S 20 10 20 20 70 39%
NVA 20 10 30 20 80 44%
Down time
(maintenance) 120 330 0 20 180 10 20 180 20 0 880
Cycle time 130 350 20 30 190 30 40 200 50 20 1060
Value-adding total time 30
Value-adding total time in % 17%
Source: Pande/Neumann/Cavenaugh, The Six Sigma Way
Process optimisation methods
3.2 Process analysis – value & cycle time worksheet
Total Capacity (24h x 7days a week)
Idle
Time
Other
Activities
Paid Time (Base for Efficiency)
Earned Time
(Theoretical Hours)
unrec.
Down
Times
Continuous Operation
(Prod. Running)
recorded
Down- and
Stoptimes
Paid vs. Earned Time
Process Management - V.G. 128
Process Management - V.G. 129
➢ Long-term potential for improvement
➢ Continuous process improvement
3.2 Process analysis
Process optimisation methods
▪ Value creation analysis
▪ Process failure mode and effects analysis (FMEA)
▪ Moments of truth
▪ Point-of-contact analysis
Process Management - V.G. 130
▪ Systematic, semi-quantitative risk-analysis method
▪ Tool for preventive examination of process, product and system
weaknesses
▪ Preventive elimination of errors by…
➢ identifying potential causes of errors
➢ evaluating errors with regard to potential risk
3.2 Process analysis – Process FMEA
Process optimisation methods
Process Management - V.G. 131
Process stage Risk ImpactProbability
(1-10)
Impact
(1-10)
Likelihood of
identification
(1-10)
Risk
potentialMeasures
Input of the
customer detailsDouble input
Orders and invoices cannot be
clearly assigned
Incorrect customer history
(incorrect CRM analysis)
Customers incorrectly categorised
2 5 8 80
Identical or similar
customer names
displayed
automatically
Process optimisation methods
3.2 Process analysis– Process FMEA
Process Management - V.G. 132
▪ Value creation analysis
▪ Process failure mode and effects analysis (FMEA)
▪ Moments of truth
▪ Point-of-contact analysis
➢ Long-term potential for improvement
➢ Continuous process improvement
3.2 Process analysis
Process optimisation methods
Process Management - V.G. 133
Customer evaluation of quality takes place before, during and after
service consumption
Source: Fließ, Dienstleistungsmanagement (2004)
Potential-
quality
(expected)
Result
quality
(retained)
Process
quality
(experienced)
TECH dimension
WHAT?
TOUCH dimension
HOW?
Building/room facilities,
technical equipment,
education, certification
Duration, procedure,
level of customer
integration
Satisfaction,
communicative
after-sales service
Atmosphere, climate,
method of customer integration,
interactive behaviour
Prominence,
appearance, staff
personalities
Function, durability,
consequences, supplementary
services
Process optimisation methods
Process Management - V.G. 134
Moments of truth – it is all about creating EXPERIENCE!
“The point where a customer has contact with any aspect of the company –
regardless of distance – is a chance to leave an impression.”- Jan Carlzon
e.g.:
▪ initial contact
▪ problem solving
▪ initial use
3.2 Process analysis – Moments of truth
Process optimisation methods
▪ ongoing support
▪ repeat purchase
▪ recommendation
It is about INVOLVING CUSTOMERS in one’s business.
Process Management - V.G. 135
3.2 Process analysis – Moments of truth
Process optimisation methods
Zero Moment of Truth (ZMOT). Introduced by Google, it's what people search for and find after encountering the stimulus that directs their next steps. As Google itself puts it, this is "that moment when you grab your laptop, mobile phone or some other wired device and start learning about a product or service you’re thinking about trying or buying.”
First Moment of Truth (FMOT). Introduced by Proctor & Gamble (P&G), it's what people think when they see your product, and the impressions they form when they read the words describing your product. "It is in these precious moments that P&G believes marketers must focus efforts on converting shoppers into customer.”
Second Moment of Truth (SMOT). Furthering P&G's thinking, it's what people feel, think, see, hear, touch, smell and (sometimes) taste as they experience your product over time. It's also how your company supports them in their efforts throughout the relationship.
Ultimate Moment of Truth (UMOT). A stage that Solis introduces brings to light the importance of shared experiences and why organizations must first design them rather than just react. It's that shared moment at every step of the experience that becomes the next person's ZMOT.
by A.G. Lafly CEO P&G and Brian Solisthe author of What's the Future of Business: Changing the Way Businesses Create Experiences
Process Management - V.G. 136
▪ Value creation analysis
▪ Process failure mode and effects analysis (FMEA)
▪ Moments of truth
▪ Point-of-contact analysis
➢ Long-term potential for improvement
➢ Continuous process improvement
3.2 Process analysis
Process optimisation methods
Process Management - V.G. 137
Contact partners: Person : Person
Person : Machine (AI?)
Machine : Machine
Point of contact between Subject Method of transfer
Customer advisor and back office Loan application Electronic
Back office staff and back office
manager
Credit rating Presentation in weekly back office
meeting
Process: Commercial lending
3.2 Process analysis – Point-of-contact analysis
Process optimisation methods
Process Management - V.G. 138
3.2 Process analysis – Point-of-contact analysis
Process optimisation methods
Advantages of human beings (HB) over the Artificial Intelligence (AI) – at least for now:
- Creativity- Thinking „out of the box”; identifying new ways of solving problems; true creativity is
exclusively human characteristic
- Compassion- Ability to empathize with people and to „step into their shoes”; Finding points of connection
- Connection- People are social beings. They connect to each other; Building relationships; Discovering what
makes people tick
- Social Intelligence- Social intelligence belongs to humans only! Ability to understand non-verbal cues, ton of voice,
sarcasm, humor. More than 90% of communication is made of body language
Process Management - V.G. 139
Examples
▪ Quality: Proportion of errors, level of goal attainment
▪ Time: Cycle time, execution time, defined end point
▪ Cost: Production, breakdowns
Quality
CostTime
3.2 Process analysis –process objectives should meet three criteria:
Process optimisation methods
Process Objective Criteria
Process Management - V.G. 140
How can I identify reliable indicators?
1. Link to moments of truth
(evaluation by the CUSTOMER!)
2. Define on basis of key success factors
3. Use observable and measurable factors
4. Create pass/fail standards
5. Process requirements must correspond to customer needs
3.2 Process analysis
Source: Pande/Neumann/Cavenaugh, The Six Sigma Way
Process optimisation methods
Process Management - V.G. 141
▪ Observe, then measure
▪ Can’t do won’t do
▪ Measure for a good reason
▪ Measuring demands resources, energies, etc.
▪ Discrete and continuous data
▪ Attributes (red, yellow, green), indivisible units (e.g. people),
▪ artificial scales (agree … disagree), etc. = discrete
▪ Measured on an infinitely divisible scale,
e.g. weight, height, time, temperature, etc. = continuous
Source: Pande/Neumann/Cavenaugh, The Six Sigma Way
3.2 Process analysis –evaluating and interpreting process performance
Process optimisation methods
Process Management - V.G. 142
Supplier Input Process Output Customer
Source: Pande/Neumann/Cavenaugh, The Six Sigma Way
Where in the process should indicators be put in place?
3.3 Process measurement
Process optimisation methods
Process Management - V.G. 143
Efficiency
▪ Resources used in the
process relative to best
possible usee.g.:
▪ cost per transaction
▪ duration of each activity
▪ cycle time
Supplier Input Process Output CustomerSupplier Input Process Output Customer
Process effectiveness
▪ Ability of process to produce
products/services in line with
specifications e.g.:
▪ number of rejects
▪ reaction times
▪ punctuality
▪ service levels
Customer relevance
▪ Ability of outputs to meet
customer expectations
e.g.:
▪ satisfaction with product/service
▪ usefulness in customer processes
Source: Pande/Neumann/Cavenaugh, The Six Sigma Way
Process optimisation methods
3.2 Process measurement methods –the position of indicators determines their significance
Process Management - V.G. 144
Continuous data
▪ Measured on an infinitely divisible
scale, e.g. weight, height, time,
temperature, etc.
Source: Pande/Neumann/Cavenaugh, The Six Sigma Way
Discrete data
▪ Attributes (red, yellow, green), indivisible
units (e.g. people), artificial scales (agree
… disagree), etc.
▪ Highlighting variance in processes
▪ Diluted “average”
NORMALVERTEILUNG
LSL USL
Firmenzugehörigkeit
9
12
7
5
0-1 Jahre
1-5 Jahre
> 5 Jahre
k.A.
3.2 Process analysis –process performance evaluation and interpretation
Process optimisation methods
Normal distribution
Quality management – Part 2
Methods, benefits, practical applications
Agenda
Process Management - V.G.
Principles of quality management
Principles and scope of quality management
Quality philosophy
Quality management methods
Additional explanations
147
Principles and scope of quality management
▪ Definition
▪ Scope
▪ Pillars
▪ Quality philosophy
▪ Kaizen and quality circles
▪ TQM
▪ EFQM
▪ ISO 9000
▪ Establishing quality management in companies
..\Motivation\MOTIVACIJA.ppt
The Principles of Quality managementProcess Management - V.G.
Process Management - V.G. 148
Principles of quality management
The Principles of Quality Management
Process Management - V.G. 149
Definition
▪ Quality management is designed to ensure that proper consideration is
given to quality issues in an organization.
Quality is relevant for a company’s products and services and internal
processes. It is defined as the extent to which products or processes meet
customer requirements.
These requirements may be either explicitly or implicitly defined.
The Principles of Quality Management
Process Management - V.G. 150
System and Tools Teamwork
Customer focus
Quality triangle
The Principles of Quality Management
Process Management - V.G. 151
Scope
Focus on results
Customer-focus
Leadership and
goal consistency
Management with processes and
facts
Staff development and participation
Continuous learning,
innovation and improvement
Building
partnerships
Responsibility to the public
The Principles of Quality Management
The Pillars of Quality Management
„Customer is the king!”
▪ Customer satisfaction is the most important fact for
the company success (not for the monopolists!)
▪ Company must measure it!!!
▪ … but – there is a problem! One has to measure hard
facts but also SOFT success factors!
Process Management - V.G. 152The Principles of Quality Management
Management Concepts - Tools
Some of existing tools are:
▪ Balanced Score Cards (BSC)
▪ EFQM Excellence Model (European Foundation for Quality Management)
▪ Service-Profit Chain
These tools are measuring not only financial impact but also soft
success factors.
Process Management - V.G. 153The Principles of Quality Management
Quality PhilosophyContinuous Improvement of Processes and Products
Process Management - V.G. 154The Principles of Quality Management
Quality PhilosophyContinuous Improvement of Processes and Products
Process Management - V.G. 155
CPI - Continuous
Process
Improvement =
KAIZEN
The Principles of Quality Management
The Objectives of CPI
▪ Increased productivity (i.e. reducing down time)
▪ Cost savings (i.e. inventory reduction – JIT principle)
▪ Increased flexibility (i.e. flexible organisation)
▪ Quality improvement (i.e. reducing rework or waste)
▪ Increase job satisfaction and staff motivation (i.e. better
working conditions)
▪ Raising customer satisfaction (i.e. satisfying customers’
demand)
Process Management - V.G. 156The Principles of Quality Management
Meaning of Quality Management
Quality is the result of
PREVENTION, not CONTROL!
The ultimate goal of good quality management
is to AVOID mistakes in every process step!
Process Management - V.G. 157The Principles of Quality Management
Meaning of Quality Management
Today in the most successful companies exists position of Quality
Manager (Company or Corporate Quality Manager)
His/Hers priorities are:
▪ With a team to provide systematic suport to top management
▪ To administer quality management (introducing new processes,
laws…)
▪ To position the QM topic as the key aspect of the organizational
politics
Process Management - V.G. 158The Principles of Quality Management
Meaning of Quality Management
Quality management systems are:
▪ Structured descriptions of models
▪ Quality is a part of the overall management (TQM)
▪ Top corporate function
▪ System involving tasks and the allocation of functions – structures,
measures, checks and balances
▪ This is the fact-based management
▪ TQM has holistic view of the whole company (all processes!)
Process Management - V.G. 159
Quality Management is defined by ISO 9001 as LEADERSHIP FUNCTION
The Principles of Quality Management
Quality Philosophy
Kaizen
Process Management - V.G. 160KAIZENThe Principles of Quality Management
Meaning of Kaizen
▪ Kai → change
▪ Zen → better
161
Kaizen
„Change for the better” with the goal of Continuous Improvement
. The Principles of Quality ManagementProcess Management - V.G.
Beginning
▪ 1936 Kaizen Improvement teams – Toyota Motor Corporation▪ During the WW II - in the USA production plants – focus on small-step work
improvements – existing technologies and workforce
▪ After WW II - USA developed scientific approaches to optimizing production processes – focus on quality
▪ TWI Job Methods (Training Within Industry)
▪ W. Edwards Deming introduced Statistical Process Control in QC
▪ Those methods were transferred to Japan in 1950-60▪ TWI → KAIZEN
▪ 1950 – 1960 – post-war Japan miracle
▪ Japan starts to take over in the USA developed ideas (among others) of QM and significantly improved them
▪ Using PULL method for production planning → JIT was born!
▪ Eliminating waste → lean manufacturing
162Process Management – V.G. The Principles of Quality Management
Meaning of Kaizen
➢ Kaizen is NOT the METHODOLOGY
➢ Kaizen is PHILOSOPY/State of mind
This philosophy was adopted by Japanese industry
TOYOTA PRODUCTION SYSTEM
(TPS)
163Process Management – V.G. The Principles of Quality Management
Champions of Kaisen
▪ Dr. Shigeo Shingo
▪ Production cycle optimisation
▪ Consultant to Toyota Company
▪ Taiichi Ohno
▪ Shop flor & production optimisation
▪ Toyota executive
▪ With Dr. Shingo helped created TPS
Process
Management -
V.G.
164Process Management – V.G. The Principles of Quality Management
Kaisen characteristics
▪ Continuous improvement process
▪ Quality enhancing drive – product quality and the quality of the whole
Company
▪ Has impact on the WHOLE Company on EVERY management and
hierarchy level
▪ Inter-disciplinary cooperation and cross-functional management (no
SILO effect!)
▪ Supporting Company’s ultimate goal – meeting CUSTOMER’s
needs
Process
Management -
V.G.
165Process Management – V.G. The Principles of Quality Management
Kaizen Structure
▪ Flow Kaizen
▪ Reorganisation of entire production area/company
▪ Process Kaizen
▪ Improvement of the individual workstand/single process
Process
Management -
V.G.
166Process Management – V.G. The Principles of Quality Management
Continuous Improvement
▪ Both Kaizens are used to continuously improve functionality of the
company
▪ Focus on meeting customers’ needs
▪ Ensuring Company's’ longevity
Process
Management -
V.G.
167Process Management – V.G. The Principles of Quality Management
Kaisen Umbrella
Process
Management -
V.G.
168Process Management – V.G. The Principles of Quality Management
Business Optimisation Tools
▪ Kanban
▪ Kaizen
▪ TPS
▪ TQM
▪ CI
▪ Lean Management
▪ 6 Sigma
▪ Just-in-Time
▪ Bata-Poka → Poka-yoke
▪ ……
Process
Management -
V.G.
169Process Management – V.G. The Principles of Quality Management
Total Capacity (24h x 7days a week)
Idle
Time
Other
Activities
Paid Time (Base for Efficiency)
Earned Time
(Theoretical Hours)
unrec.
Down
Times
Continuous Operation
(Prod. Running)
recorded
Down- and
Stoptimes
Paid vs. Earned Time
170Process Management – V.G. The Principles of Quality Management
Other QM Tools
Quality Circles
▪ In house working groups
▪ Employees come together voluntarily every 2-3 weeks to discuss
different topics and to search for the improvement
▪ Meeting during the working hours
▪ Topics are from their working environment
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Other QM Tools
Total Quality Management (TQM)
▪ This is the philosophy but also the tool transferring KAIZEN to
actions
▪ This is organizational leadership method/philosophy
▪ Does not involve revolutionary ideas
Key areas of TQM:
▪ Methods and Processes
▪ Behaviors and Attitudes
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Other QM Tools
Total Quality Management (TQM)
▪ Total:▪ Whole organization is involved!!!
▪ Quality:▪ Defined in DIN 55350 part 11: „QUALITY referres to the characteristic of
a unit regarding its ability to satisfy defined and derived requirements”.
▪ Good quality means satisfying requirements
▪ The customer decides whether requirements have been satisfied
▪ Requirements are becoming ever greater
▪ Management▪ The process is actively managed.
▪ Entire company is involved with all employees
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Other QM Tools
Five elements of TQM
▪ Training
▪ Teamwork
▪ Quality Improvement/Excellence Teams
▪ Problem Solving Teams
▪ Natural Work Teams
▪ Leadership
▪ Communication
▪ Recognition
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Other QM Tools
European Foundation for the Quality Management (EFQM)
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PEOPLEInvolment of all employees
EVENTSTo achieve improved results
PROCESSESAs part of CIP
The pillars of TQM
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European Foundation for the Quality Management (EFQM)
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PDCA Deming
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Source: Wikipedia.de
Process Management – V.G. The Principles of Quality Management
Deming Key Principles
1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive, to stay in business and to provide jobs.
2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for massive inspection by building quality into the product in the first place.
4. End the practice of awarding business on the basis of a price tag. Instead, minimize total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust.
5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
6. Institute training on the job.
7. Institute leadership (see Point 12 and Ch. 8 of Out of the Crisis). The aim of supervision should be to help people and machines and gadgets do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.
8. Drive out fear, so that everyone may work effectively for the company. (See Ch. 3 of Out of the Crisis)
9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and usage that may be encountered with the product or service.
10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
➢ Eliminate work standards (quotas) on the factory floor. Substitute with leadership.
➢ Eliminate management by objective. Eliminate management by numbers and numerical goals. Instead substitute with leadership.
11. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
12. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objectives(See Ch. 3 of Out of the Crisis).
13. Institute a vigorous program of education and self-improvement.
14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.
W. E. Deming book „Out of the Crisis” p. 23-24
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6 Sigma (DMAIC)
▪ Based on the statistics work of Joseph Juran
▪ Meaning:
▪ Illustrates how far the given process deviates
from perfection (standard deviation)
▪ The higher the value of sigma, the closer is the
process to perfection
▪ The highest value – Six Sigma – is defined as
3,4 defects per million units produced
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6 Sigma (DMAIC)
181
1. DEFINE- Identify the problem- Define requirements- Set objectives
2. MEASURE- Validate problem- Refine problem/objective
definition- Measure main steps/inputs
3. ANALYZE- Develope hypothesis for causes- Identify main causes- Validate hypothesis
4. IMPROVE- Validate problem- Refine problem/objective
definition- Measure main steps/inputs
5. CONTROL- Establish standard
measurements to maintainperformance
- Correct where required
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6 Sigma (DMAIC)
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SERVQUAL
183
▪ This is technique for analysing gaps between company’s service
quality and customer requirements
▪ It is empirical method
▪ Interview with the customer related to a selection of key services
dimensions:
▪ Tangible
▪ Reliability
▪ Responsiveness
▪ Competence
▪ Courtesy
▪ …
Process Management V.G. The Principles of Quality Management
SERVQUAL Model
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5 S Method
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Other Tools
▪ Fault list
▪ Histogram
▪ Control Chart
▪ Trend
▪ Portfolio
▪ Pareto Principle
▪ Correlation Chart
▪ Ishikawa (Fishbone) Diagram
▪ Relationship Diagram
▪ Decision Matrix
▪ Comparing Pairs
▪ Brainstorming
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PORTFOLIO
Pareto Diagram
188
Source: www.sixsigmablackbelt.de/pareto-diagramm-excel/
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Pareto Diagram
189
Source: http://www.whatissixsigma.net/pareto-chart-and-analysis/
Process Management – V.G. The Principles of Quality Management
Pareto Diagram
190
Source: http://www.whatissixsigma.net/pareto-chart-and-analysis/
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191
Ishikawa – Fishbone or Cause-and-effect Diagram
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192
Ishikawa – Fishbone or Cause-and-effect Diagram
1.Define the problem to be solved
2.Identify key causes and enter on the main branches on the diagram
3.Identify secondary causes and enter on the secondary branches
4.Discuss and assess the diagram
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