“The core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources. A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste.” – From Lean Enterprise Institute (http://www.lean.org/whatslean/).
A company needs process improvements when there is a realization that to be ‘the best it can be’, there must be a commitment to being lean in every aspect of business operations. This commitment includes optimizing resources (people), value streams (process), and systems (technology).
Being lean requires a commitment to the elimination of waste in the entire value stream of the organization. Key processes need to be analyzed and optimized for efficiency and effectiveness. Efficient processes incorporate the optimal balance between automated systems and human resources. People should be provided technology to automate their workflows wherever it is feasible, cost justified, and doesn’t impede throughput or creativity. The goal needs to be to create effective processes that generate maximum value without incurring unnecessary waste. As such, the concepts of “waste walks” should be applied to eliminate any steps in a process that is unnecessary to produce the output; the customer is unwilling to pay for; or is not required for regulatory or corporate compliance.
Lean methodologies, such as some suggested above can be applied to companies in all industries and of all sizes. Continuous process improvement is critical to achieve and maintain a lean organization. Therefore, there should be ongoing formalized process improvement initiatives that are part of a lean organization’s DNA. In most organizations this requires a significant transformation of thought and operations. Ultimately, for transformation to succeed it requires formal and informal transformational leaderships at all levels across the organization. There are clear clues that make the need for transformation / process improvement evident.
The following are six broad areas, existing / mitigating factors, and the desired outcomes that are valid for transformation and process improvement considerations:
Having the right governance structure is critical for a company to be successful. The company’s operational and support processes need to be well aligned with executive management goals, vision and strategies.
Process improvement is needed in the area related to governance if the following factors exist:
- Corporate vision is not known throughout the organization
- Strategic goals are not supported by operational processes
- Metrics and KPIs are not being captured and / or mapped to processes
The desired outcome is a clear corporate vision and strategy.
The products and services of a company are created using the people, processes, and technologies that a company develops. This value creation is done collectively by employees and others who bring individual skills to the table. Skills when acquired and / or enhanced through knowledge and experience gained on the job, as well as training needs to be recognized, rewarded and retained.
Process improvement is needed in the area related to skills if the following factors exist:
- High levels of turnover
- Inexperienced people
- Skills that are not being transferred adequately
The desired outcome is the enhancement and retention of high levels of skills.
Computerized systems are in place to augment and automate a company’s workplace and make it more productive. Automated systems should be used to augment and improve workflows. Systems should become intuitive and an extension of the people that use them. However, difficult to use and complex systems are counterproductive and potentially increase wasted time and effort.
Process improvement is needed in the area related to systems if the following factors exist:
- Systems are complex and difficult to use
- Low levels of automation
- No centralized system of record
- Manual files being used
The desired outcome is the automation and standardization of processes using systems.
To provide value the company’s output has to be well aligned with the customer’s requirements and expectations. Apply the philosophy that “the customer is why we are in business”, and value to them is only what they are willing to pay for. The caveat being that most customers are not willing to pay for waste.
Process improvement is needed in the area related to quality if the following factors exist:
- Processes are not documented and agreed to
- High level of customer dissatisfaction
- Output lacks quality
- Redundancy exists
The desired outcome is value creation that is aligned to customer expectations.
Efficiency generally describes the extent to which time, effort or cost is well used for the intended task or purpose. It is often used with the specific purpose of relaying the capability of a specific application of effort to produce a specific outcome effectively with a minimum amount or quantity of waste, expense, or unnecessary effort. (Source: http://en.wikipedia.org/wiki/Efficiency).
Process improvement is needed in the area related to efficiency if the following factors exist:
- Inefficient, unnecessary and duplicated processes
- Low margins and high operational costs
- Staff that has been at the company for long periods of time
- Processes are not standard
The desired outcome is profitability and cost containment.
The degree to which objectives are achieved and the extent to which targeted problems are solved. In contrast to efficiency, effectiveness is determined without reference to costs and, whereas efficiency means “doing the thing right,” effectiveness means “doing the right thing.”
Process improvement is needed in the area related to effectiveness if the following factors exist:
- Inaccuracies in processes
- Highly interrelated processes and procedures
- Lacking collaboration and coordination between departments
- Customer to cash value chain is not clearly defined
The desired outcome is value streams that are optimized for flow and throughput.
I hope that you enjoyed this bpmBASICS three part series. I welcome all comments, feedback and your consideration for process improvement initiatives. Please follow our company by finding additional information at www.KEDARit.com, and follow me personally on Twitter at: @nnobie and on LinkedIn.