1. business and industrial
2. business operations
3. management
4. business process

Chapter 7
Process
Management
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Wisdom from Texas
Instruments
“Unless you change the process, why
would you expect the results to change”
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Key Idea
Process management involves planning
and administering the activities necessary
to achieve a high level of performance in
key business processes, and identifying
opportunities for improving quality and
operational performance, and ultimately,
customer satisfaction.
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AT&T Process Management
Principles
•
•
•
•
•
•
Focus on end-to-end process
Mindset of prevention and continuous
improvement
Everyone manages a process at some level
and is a customer and a supplier
Customer needs drive the process
Corrective action focuses on root cause
Process simplification reduces errors
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Key Idea
Leading companies identify important
business processes throughout the value
chain that affect customer satisfaction.
These processes typically fall into two
categories: value-creation processes and
support processes.
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Types of Processes

Value-creation processes – those most
important to “running the business”



Design processes – activities that develop
functional product specifications
Production/delivery processes – those that
create or deliver products
Support processes – those most important
to an organization’s value creation
processes, employees, and daily operations
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Control vs. Improvement
Out-of-control
Controlled
process
Improvement
New zone
of control
Time
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Leading Practices (1 of 2)

Define, document, and manage important
value creation and support processes
 Translate customer requirements and internal
capabilities into product and service design
requirements early in the process
 Ensure that quality is built into products and
services and use appropriate tools during
development
 Manage product development process to
enhance communication, reduce time, and
ensure quality
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Leading Practices (2 of 2)

Define performance requirements for suppliers
and ensure that they are met
 Control the quality and operational
performance of key processes and use
systematic methods to identify variations,
determine root causes, and make corrections
 Continuously improve processes to achieve
better quality, cycle time, and overall
operational performance
 Innovate to achieve breakthrough performance
using benchmarking and reengineering
 Plan and ensure continuity of operations
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Product Development Process
Idea
generation
Concept
development
Product &
process design
Full-scale
production
Product
introduction
Market
evaluation
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Key Idea
Product design can significantly affect the
cost of manufacturing (direct and indirect
labor, materials, and overhead), redesign,
warranty, and field repair; the efficiency by
which the product can be manufactured,
and the quality of the output.
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Design for Manufacturability
– the process of designing a
product for efficient production at the
highest level of quality
 DFM
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Key Idea
DFM is intended to prevent product
designs that simplify assembly operations
but require more complex and expensive
components, designs that simplify
component manufacture while
complicating the assembly process, and
designs that are simple and inexpensive
to produce but difficult or expensive to
service or support.
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Designing Processes for
Quality
1.
2.
3.
4.
5.
6.
Identify the product or service: What work do I do?
Identify the customer: Who is the work for?
Identify the supplier: What do I need and from
whom do I get it?
Identify the process: What steps or tasks are
performed? What are the inputs and outputs for
each step?
Mistake-proof the process: How can I eliminate or
simplify tasks? What “poka-yoke” (i.e., mistakeproofing) devices (see Chapter 13) can I use?
Develop measurements and controls, and
improvement goals: How do I evaluate the process?
How can I improve further?
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Service Process Design
 Three
basic components:
 Physical
facilities, processes and
procedures
 Employee behavior
 Employee professional judgment
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Key Service Dimensions
Customer contact and interaction
Labor intensity
Customization
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Key Idea
Service process designers must
concentrate on doing things right the first
time, minimizing process complexities,
and making the process immune to
inadvertent human errors, particularly
during customer interactions.
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Projects as Value-Creation
Processes
 Projects
- temporary work structures
that start up, produce products or
services, and then shut down.
 Project management – all activities
associated with planning, scheduling,
and controlling projects
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Key Idea
Successful project managers have four
key skills: a bias toward task completion,
technical and administrative credibility,
interpersonal and political sensitivity, and
leadership ability.
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Process Control
– the activity of ensuring
conformance to requirements and
taking corrective action when necessary
to correct problems and maintain stable
performance
 Control
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Key Idea
Process control is important for two
reasons. First, process control methods
are the basis for effective daily
management of processes. Second,
long-term improvements cannot be
made to a process unless the process
is first brought under control.
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Components of Control
Systems

Any control system has three
components:
a standard or goal,
2. a means of measuring accomplishment,
and
3. comparison of actual results with the
standard, along with feedback to form the
basis for corrective action.
1.
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Key Idea
In manufacturing, control is usually
applied to incoming materials, key
processes, and final products and
services.
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Effective Control Systems

documented procedures for all key
processes;
 a clear understanding of the appropriate
equipment and working environment;
 methods for monitoring and controlling critical
quality characteristics;
 approval processes for equipment;
 criteria for workmanship, such as written
standards, samples, or illustrations; and
 maintenance activities.
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Importance of Process
Improvement

Customer loyalty is driven by delivered value.
 Delivered value is created by business
processes.
 Sustained success in competitive markets
requires a business to continuously improve
delivered value.
 To continuously improve value creation ability,
a business must continuously improve its
value creation processes.
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Kaizen
Kaizen – a Japanese word that means
gradual and orderly continuous improvement
 Focus on small, gradual, and frequent
improvements over the long term with
minimum financial investment, and
participation by everyone in the organization.
 Kaizen “events” - a focus of Lean

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Flexibility
– the ability to adapt quickly
and effectively to changing
requirements.
 Flexibility
 rapid
changeover from one product to
another,
 rapid response to changing demands,
 the ability to produce a wide range of
customized services.
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Cycle Time
time – the time it takes to
accomplish one cycle of a process
 Reductions in cycle time serve two
purposes
 Cycle
 First,
they speed up work processes so
that customer response is improved.
 Second, reductions in cycle time can only
be accomplished by streamlining and
simplifying processes to eliminate nonvalue-added steps such as rework.
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Breakthrough Improvement
 Discontinuous
change resulting from
innovative and creative thinking,
motivated by stretch goals, and
facilitated by benchmarking and
reengineering
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Key Idea
Stretch goals force an organization to
think in a radically different way, and to
encourage major improvements as well
as incremental ones.
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Benchmarking
Benchmarking – “the search of industry best
practices that lead to superior performance.”
 Best practices – approaches that produce
exceptional results, are usually innovative in
terms of the use of technology or human
resources, and are recognized by customers
or industry experts.

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Types of Benchmarking

Competitive benchmarking - studying
products, processes, or business
performance of competitors in the same
industry to compare pricing, technical quality,
features, and other quality or performance
characteristics of products and services.
 Process benchmarking – focus on key work
processes
 Strategic benchmarking – focus on how
companies compete and strategies that lead
to competitive advantage
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Reengineering
– the fundamental
rethinking and radical redesign of
business processes to achieve dramatic
improvements in critical, contemporary
measures of performance, such as cost,
quality, service, and speed.
 Reengineering
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Key Idea
Reengineering involves asking basic
questions about business processes:
Why do we do it? and Why is it done
this way?
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Process Management in the
Baldrige Award Criteria
The Process Management Category examines
the key aspects of an organization’s process
management, including key product, service,
and business processes for creating customer
and organizational value and key support
processes, encompassing all key processes
and work units.
6.1 Value Creation Processes
6.2 Support Processes and
Operational Planning
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