Chapter 4: Business Process Management – Flashcards
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Why be so concerned with processes?
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Processes are how we work at the task level to build value Inefficient or ineffective processes will result in poor performance and possible business failure Excellence in processes will improve competitiveness and business performance
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Business Processes
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-Process -Primary Process -Support Process -Development Process
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Process
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A set of logically related tasks or activities performed to achieve a defined business outcome
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Primary process
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o A process that addresses the main value-added activities of an organization o Providing a service, educating customers, manufacturing
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Support process
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o A process that performs necessary, albeit not value-added activities o Evaluating suppliers, recruiting new works, developing a sales and operations plan (S&OP)
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Development process
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o A process that seeks to improve the performance of primary and support processes o Developing new products, performing basic research, training new workers
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Mapping
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The process of developing graphic representations of the organizational relationships and/or activities that make up a business process
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Purposes of Mapping
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o It creates a common understanding of the content of the process: its activities, its results, and who performs the various steps o It defines the boundaries of the process o It provides a baseline against which to measure the impact of improvement efforts
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Process Map
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A detailed map that identifies the specific activities that make up the informational, physical, and/or monetary flow of a process
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Process Mapping Rules
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o Identify the entity that will serve as the focal point o Identify clear boundaries and starting and ending points o Keep it simple
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Swim Lanes
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Swim lane process map - A process map that graphically arranges the process steps so that the user can see who is responsible for each step
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Measuring and Improving Business Process
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Quality o Performance quality, conformance quality, reliability Cost o Labor, material, quality-related costs Time o Delivery speed, delivery reliability Flexibility o Mix flexibility, changeover flexibility, volume flexibility
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Value Stream Mapping
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Associated with lean processes Ties process activities to customer value Identifies waste in process Attention on material, information and people flows
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Measuring and Improving Business Processes
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Productivity Index - A measure of process performance Productivity = outputs/inputs
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Single-factor productivity
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A productivity score that measures output levels relative to single input
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Multifactor productivity
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A productivity score that measures output levels relative to more than one input
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Efficiency
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A measure of process performance; the ratio of actual outputs to standard outputs. Usually expressed in percentage terms o Efficiency = 100% (actual outputs / standard outputs)
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Standard output
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An estimate of what should be produced, given a certain level of resources
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Cycle time
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The total elapsed time needed to complete a business process also called throughput time (notice: slightly different definition than production line cycle time)
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Percent Value-Added Time
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The percentage of total cycle time that is spent on activities that actually provide value Percent value-added time = 100% (value-added time) / (total cycle time)
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Productivity Measurement
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The productivity index is a relative measure. It has to be compared with something else: o Benchmarking o Changes over time o Normalized Data The important thing is to be consistent with measurement
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Benchmarking
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The process of identifying, understanding, and adapting outstanding practices from within the same organization or from other businesses to help improve performance Competitive benchmarking o The comparison of an organization's processes with those of competing organizations Process benchmarking o The comparison of an organization's processes with those of noncompetitors that have been identified as having superior processes
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Continuous Improvement
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The philosophy that small, incremental improvements can add up to significant performance improvements over time Continuous improvement functions best on a stable process. It's very difficult to improve a process that is out of control!
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Business Process Challenges
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Business Process Reengineering o A produce that involves the fundamental rethinking and radical redesign of business processes to achieve dramatic organizational improvements in such critical measures of performance as cost, quality, service, and speed o Reengineering involves "heavy blasting" and is used when continuous improvement isn't sufficient
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Root Cause Analysis
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A process by which organizations brainstorm about possible causes of problems and, through structed analyses and data gathering efforts, gradually narrow the focus to a single or several root causes
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Tools used in Root Analysis
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Cause-and-effect (Ishikawa) Diagram Five whys Scatter plot Check sheet Pareto Chart
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Cause-and-effect (Ishikawa) Diagram
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A graphical tool used to categorize the possible causes for particular results. AKA fishbone diagram
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Five whys
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An approach used during the narrow in root cause analysis to brainstorm successive answers to the question "Why is this cause of the original problem?" The name comes from the general observation that the questioning process can require up to five rounds
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Scatter plot
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A graphical representation of the relationship between two variables
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Check sheet
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A sheet used to record how frequently a certain event occurs
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Pareto Chart
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A special form of bar chart that shows frequency counts from highest to lowest
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Six Sigma: DMAIC
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Defines: the projects purpose, scope, and outputs, identifies the required process information keeping in mind the customer's definition of quality Measures: the process and collects data Analyzes: the data ensuring repeatability and reproducibility Improves: by modifying or redesigning existing process and procedures Controls: the new process to make sure performance levels are maintained
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Sigma
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A measure of process capability calculated by identifying opportunities for defects in given product or process, counting the actual number of defects that occur per million opportunities for defect and translating that total into a Sigma rating using the Sigma table
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Six Sigma People/Roles
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Master Black Belt - Full-time Six Sigma expert Black Belt - fully trained Six Sigma expert Green Belt - individuals with basic Six Sigma training Team members - Six Sigma project members Champion - Senior-level executive - supporting
