Process Management: Why So Few Companies Get It Right
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Process Management: Why So Few Companies Get It Right Webinar May 9, 2013
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Recorded webinar: http://slidesha.re/1mRKSQw Subscribe: http://www.ksmartin.com/subscribe Karen’s Books: http://ksmartin.com/books In the 20+ years I've been working with companies of all types and sizes to improve their performance, proper process management is hands-down the weakest organizational capability I've seen. Poor process management is the root cause for excessive organizational chaos, interpersonal and interdepartmental tension, dissatisfied customers, and excess costs. Join me on a frank journey of what organizations need to do in terms of process management to greatly improve their performance on all fronts. It doesn't matter how sexy your product is, nor how hard well-meaning people are working. If you don't properly manage your processes, your organization will never excel.
Transcript of Process Management: Why So Few Companies Get It Right
Process Management: Why So Few Companies Get It Right
WebinarMay 9, 2013
Founder: The Karen Martin Group, Inc.
Consultant / Coach: Lead Lean transformations, facilitate improvement & develop workforce.
Teacher: University of California, San Diego’s Lean Enterprise program.
Author:Karen Martin, President
www.ksmartin.com
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Fall 2013
% Of Processes That Are Documented
17% 17% 17%
22%
27%
0%
5%
10%
15%
20%
25%
30%
0 - 10 11 - 25 25 - 50 51 - 75 76 - 100
3
Of those documented, % that are current
25%
15%
8%
42%
10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0 - 10 11 - 25 26 - 50 51 - 75 76 - 100
4
% Of Processes With 2-5 Clearly Defined KPIs
49%
15%20%
10%6%
0%
10%
20%
30%
40%
50%
60%
0 - 10 11 - 25 26 - 50 51 - 75 76 - 100
5
% of processes with KPIs that are measured regularly
0
5
10
15
20
25
30
35
40
45
50
0 - 10 11 - 25 25 - 50 51 - 75 76 - 100
12% 10%
18%
6
44%
16%
% Of Processes With Clearly Identified Owner
40%
10%13%
21%
16%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0 - 10 11 - 25 26 - 50 51 - 75 76 - 100
7
Process Owners –Level in Organization
37%
53%
6%2% 2%
0%
10%
20%
30%
40%
50%
60%
Supervisor Manager Director Vice President C-Level
8
3 Criteria for Proper Process Management
9
1. Defined and documented processes2. 2‐5 relevant KPIs for each process
a. Visually displayedb. Consistently measuredc. Consistently improved
3. Sole ownership / oversight
3 Criteria for Proper Process Management
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1. Defined and documented processes2. 2‐5 relevant KPIs for each process, visually
displayed3. Consistently measured4. Consistently improved5. Sole ownership / oversight
Granularity of Work – From Value Stream to Specific Work Tasks
Value Stream
Process Process Process
Step StepStep
Micro PerspectiveProcess Maps
Macro Perspective
Value stream maps
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Source Refrigeration & HVAC, Inc.Current State Value Stream Map
Serv ice Deliv eryCreated February 11, 2009
CONFIDENTIAL
Customer
Receive customer call
Call Center
PT = 2 mins.%C&A = 60%
Review & Post Invoices
Posting Admin
PT = 3 mins.%C&A = 98%Batch: 1x/day
0.0833 hours
2 minutes
2 hours
5 minutes
1.5 hours
90 minutes
1.25 hours
75 minutes
2 hours
120 minutes
4 hours
5 minutes
10.7 hours
10 minutes
48 hours
25 minutes
4 hours
3 minutes
10.7 hours
10 minutes
2 hours
4 minutes
480 hours Lead Time = 572 hours
Process Time = 349 minutes
Select & Dispatch Tech
Dispatcher & Service
Manager
PT = 5 mins.%C&A = 60%
Make Repair; Call to raise
the NTE
Tech
PT = 120 mins.%C&A = 40%
Complete Call in GP
Dispatcher
PT = 5 mins.%C&A = 80%
Review Service Call
Data
Service Manager
PT = 10 mins.%C&A = 50%Batch: 2x/day
Review Open Ticket Report
Billing Admin
PT = 25 mins.%C&A = 75%
Upload time card
Tech
PT = 0 mins.%C&A = 70%Batch: 1x/day
Close call in Verisae
Account Manager (West)
PT = 1 mins.%C&A = 90%Batch: 1x/day
Process Time Cards
Payroll Admin
PT = 10 mins.%C&A = 90%Batch: 1x/day
Process A/P
A/P Admin
PT = 15 mins.%C&A = 85%Batch: 1x/day
Tech
Assess Problem
PT = 90 mins.%C&A = 90%
Tech
Special Order Part
Tech
Pick up Part at Parts Store
PT = 75 mins.%C&A = 95%
Tech
Get Part from Truck
PT = 0 mins.120 m.
Great Plains
Verisae (Customer)
Review Invoices; Close in
Verisae (Pac)
Account Manager
PT = 10 mins.%C&A = 85%Batch: 3-5x per wk
Enter Invoices into Verisae &
Excel; Mail Invoices
Billing Admin
PT = 4 mins.%C&A = 95%Batch: 1x/week
Excel Spreadsheet (Customer)
40%
Receive
Cash; Post Payment
Collections
75 m. 120 m. 240 m. 640 m. 6 days 240 mins. 640 m. 120 m. 60 days90 m.5 m.
?%
?%
Supplier
%C&A %Complete and AccurateAR Activity RatioFTE Full Time EquivalentLT Lead TimePT Process TimeRFPY Rolled First Pass Yield
Acronym KeyLead Time to invoice = 86.2 hrs
Process Time =5.9 hrs. NOTE: Business hours
Activity Ratio = 6.8%RFPY = 1.1%
Lead time to cash = ? days
Value Stream Maps
0
10
156-1
0Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A
1 Fax PO to Sales Rep 0 0 45%
2
Review PO; clarify with
customer as needed
20 2 90% Fax PO to warehouse 10 4 90%
5
6
Check inventory levels; notify
Sales Rep re: status
5 4 95% Fax PO to Sales Rep 5 0.33 90%
0 20 10 5 50 2 4 4 0.33
45% 90% 90% 95% 90%0 20 10 5 5
Rolled %C&ACritical Path LT
Total PT
Critical Path PT
5431 2
Mary Townsend
Hours Worked per Day Sally DampierOccurrences per Year Sam Parks
Current State Metrics-Based Process Map
Dave Morgan25-Jun-088 Facilitator
Process Details
Michael Prichard
Order FulfillmentProcess NameSpecific Conditions Domestic orders through sales force
37,500
Date Mapped
Sean Michaels
Sales Rep
Ryan AustinDiane O'SheaMapping Team
LT Units
Function / Department
PT Units
Step # ►
Customer
Finance
Warehouse / Shipping
Seconds
Minutes
Hours
Days
Seconds
Minutes
Hours
Days
Metrics-Based Process Maps
Process Flow Charts
14
Standard Work Combination Sheet
15www.velation.com
3 Criteria for Proper Process Management
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1. Defined and documented processes2. 2‐5 relevant KPIs for each process
a. Visually displayedb. Consistently measuredc. Consistently improved
3. Sole ownership / oversight
Key Performance Indicators
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• Lean metrics (based on relevance)– Lead time (LT)– Process Time (PT)– % Complete & Accurate (%C&A)
• Other ‐ based on what problem you’re solving, customer expectations, etc:– % billed charges received w/in 30 days of service– Telephone hold times– Infection rates– % difference between estimate and actual cost– # errors (or % work with errors)
Correspondence Accuracy
Gray – Highest industry quality scoresPurple – Median industry quality scoresBlue – Our quality scores
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Balanced, Visual, Clear OwnershipMetric Description Owner FY12
TargetApr
TotalMay Total Status
Production Output Output in Units VS Mgr 75,000 81500 110300
Batch Deviations
% Batches are Right the First time VS Mgr 80.0% 81.8% 80.5%
Quoting Leadtime
Days from receipt of RFQ until sent to
customerDave 5.4 6.6 6.9
Promise Date Accuracy
% On time for Promise Date Dave 96.0% 85.0% 89.0%
Engineering Release Time
Days - receipt of PO until documentation
releasedVicky 4.7 5.6 4.7
Problem Resolution
Number of calls to resolve customer
issuesDave 2.1 2.4 2.3
Qua
lity Quality
Release Backlog
# of lots waiting for release by quality
engineersVS Mgr 80 99 77
Prod
uctio
nC
usto
mer
Ser
vice
Administrative MetricsEngineering Change Releases
36% 31%51% 48% 37% 30%
45%58%
76% 77%61%
0%
20%
40%
60%
80%
100%
Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06On-
Tim
e R
elea
se
4839
3239
33 3629
19 1611
17
0
10
20
30
40
50
60
Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 JAvg
. Day
s to
Rel
.
3 Criteria for Proper Process Management
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1. Defined and documented processes2. 2‐5 relevant KPIs for each process
a. Visually displayedb. Consistently measuredc. Consistently improved
3. Sole ownership / oversight
Who’s Minding the Store?
Value Stream
Value Stream
Value Stream
Function
Typical Vertical Structure vs. Horizontal Reality – Value Stream Level
FunctionFunctionFunction
Value Stream Manager
Process
Process
Process
Function
Typical Vertical Structure vs. Horizontal Reality – Process Level
FunctionFunctionFunction
Process Owner
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Process Owner ≈ Process Doctor
Process Owner Role
• Manager or below• NOT a third party (C.I. staff or external consultants)• Responsible for overall process performance
– Tracks performance against targets– Leads corrective action when negative trends appear– Leads continuous improvement to progressively
raise the bar• Granted authority to cross org chart “boundaries”
– And widely recognized to possess this authority
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Value Stream & Process Oversight
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Value Stream Value Stream Manager Process Process Owner
Outpatient Imaging Sally V Scheduling & Registration Bill G
Exam & Clinical Reporting Jose C
Reports to physician Maria J
Inpatient surgery Tonianne S Admission Tom M
Clinical stay Kathleen T
Discharge Mike M
Billing Sylvia S
Revenue Cycle Management Bruce T N/A N/A
Value Stream & Process OwnershipABC Medical Center
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Karen Martin, President7770 Regents Road #635
San Diego, CA 92122858.677.6799
For Further Questions
Blog & newsletter: www.ksmartin.com/subscribe
