17 October 2013

Adopting BPM for Continuous Process Improvement - Part 1

Business process improvement (BPI) aims at improving the effectiveness, efficiency and adaptability of the day-to-day business operation. BPI initiatives that focus on individual business function ignoring the end-to-end business process may end up having detrimental effect on the overall business performance. In addition, it is not uncommon to see BPI projects running in isolation to other business and technology transformation efforts. Such BPI initiatives could achieve short term improvement but a challenge to maintain and sustain continuous process improvement in the organization. The adoption of business process management (BPM), a collection of methods, policies, metrics, roles and technologies, is critical both as an operational and technology strategies to meet the dynamic environments business is in today. These methods, policies, metrics, roles and technologies can be grouped into four key categories of building blocks for adopting BPM – organisational transformation, process improvement, performance measurement, and BPM technologies. As building blocks, they are interdependent and work in synergy. This article explore one of these building blocks, the process improvement methods and the challenges.


Introduction

The four key pillars of adopting business process management includes, organisational transformation (from functional centric to process centric), continuous process improvement (innovating with better practices), performance measurement (can’t manage what you are not measure), and lastly BPM technologies (enterprise application that enable change).

Figure 1: Four Building Blocks of BPM

Business Process Improvement Methods

There three main methodologies widely used today for process improvement initiatives – Six Sigma, Lean and Theory of Constraints. Six Sigma and Lean are methods that originated from streamlining of manufacturing processes – Six Sigma in Motorola and Lean in Toyota. The following are short introduction for each of these methods.

Six Sigma

Six Sigma was developed by Motorola and focuses on reducing variation in products and processes to solve business problems. Its desired outcomes include reduced defects, reduced cycle time, and increased throughput. It uses statistical methods and structured investigations to comprehend the fluctuation of a process and its determining elements. It is based on the assumption that the outcome of the entire process can be improved by minimizing the variation of these elements. Consequently by reducing the variation of all processes, an organisation can improve its overall performance.

Lean

Lean is based on Toyota Production System (TPS). It has evolved and widely adapted as a business improvement practice outside manufacturing sector. Lean focuses on removal of waste, i.e. anything not necessary to produce the product or service, i.e. anything not adding value to the product or service should be removed. A very common measurement used in lean is “touch time” measuring the duration a product is actually being worked on by the workers. Hence its emhasis is on the flow of the work item. According to Taiichi Ohno (1988), the goal of TPS is to ‘reduce the timeline from order to cash by removing muda or non-value added waste.’

Figure 2: Goal of TPS

Theory of Constraints

Although commonly practiced, unlike Six Sigma and Lean, the Theory of Constraints is not so well documented as a methodology. Its focus is system improvement based on system thinking. A system is defined as a collection of interdependent processes. Using the analogy of a chain as a system, the constraint in this case is where the weakest link is. In improving process, the method contemplates on the process that slows down the flow of the entire system, or the bottleneck. It is based on the assumption that there is constraint or bottleneck in every system, and the constraint dictates the output of the system. The goal is to produce positive effects on the flow time of a work item through a system. A common example is changing a series of sequential activities to parallel activities to improve overall flow time.

Functional Process Improvement

There are many challenges for a business to maintain focus on continuous process improvement. One of them is a bias on improvement of functional processes. The process improvement methods mentioned earlier are commonly used for improving business processes within singe business function and worked well on improving the individual processes. Having a siloed approach in improving of individual processes could have a detrimental effect on the overall ability of the organization to meet and satisfy its customer’s needs.

Scenario: An improvement within a business function (A) was achieved by moving the problem outside that function to a downstream business function (B). Although A managed to improve its performance, B’s performance dropped as it has to cope with a new problem.

One of the main reasons is the lack of accountability for the enterprise process or end-to-end flow of business activities. Process owners are normally identified for the individual functional processes, i.e. the business unit manager of the business functions assigned as the process owners. Hence, there is no person being responsible for the end-to-end business process. No responsibility also means no monitoring of the performance of the end-to-end business process in satisfying the customers. With business unit managers sorely entrusted with improvement, it could potentially lead to improving the wrong things for the organization.

“In many organizations, the traditional functional view of the enterprise remains the predominant perspective. In this paradigm, activities and success are perceived in terms of power and authority defined by the organization chart. This is largely due to the simple fact that most leaders have a strong functional bias, which has been nurtured by both their academic and business experience.” Andrew Spanyi (2008)

As a result of this siloed view, many business process improvement efforts have a strong tendency of focusing at a micro procedural level rather than the improvement of the large cross-functional enterprise processes. The functional focus also leads to another short coming – the white spaces between the business units and functions are ignored. Consequently potential solutions are also buried away.

In order to achieve an improvement outcome that meet customer’s needs, the efforts must be more than one off process improvement or reengineering initiatives but a concerted and collaborative effort in managing the organisation’s large, cross functional, enterprise processes – management of end-to-end business processes.
The next section introduces two key concepts of Toyota Production System (TPS) that formed an important part of process improvement in TPS.

More on TPS's Concepts

There are two concepts that are seldom applied in many business process improvement projects - the Jidoka and Andon cord of TPS.

Jidoka in Toyota Production System (TPS)

One of the wastes in TPS or Lean is defects. In TPS defects can be prevented by implementing ‘fool-proofing’ operations, i.e. by making mistakes physically impossible (poka-yoke) in assembly operations. In TPS manufacturing, components are designed in a way that there exists one single way of assembling them. If a problem occurs, it has to be discovered and isolated as quickly as possible. This is realized through the Jidoka concept where a process is stopped immediately when a problem is detected and the supervisor alerted.

Jidoka (Japanese 自働化) is a TPS concept which means autonomation or automation with human intelligence. It is one of the two main pillars of Toyota Production System. It refers to the ability to stop production lines, by man or machine, in the event of problems. Jidoka helps prevent the passing of defects, helps identify and correct problem areas using localization and isolation, and makes it possible to “build” quality at the process. In short it is a mechanism for continuous monitoring that triggers process improvement.

Andon

A well-known method of Jidoka is the Andon cord, a cord running adjacent to assembly lines that enables workers to stop the operation if a problem is detected. Again it helps to focus on the problem and acts as a trigger for process improvement initiatives. Rather than identifying defective work items as the final inspection step in an assembly line, in TPS work items are inspected and checked at every step to prevent defective items from flowing downstream.

The Jidoka concept of detect–stop–alert is one of the critical success factors for achieving a continuous process improvement. Without an Andon cord in a business process or real time monitoring of day-to-day business operation, it is a challenge to implement continuous process improvement. The autonomation concept emphasizes on having an automated mechanism for a fool-proof process control and real time monitoring that triggers continuous process improvement.

What's Next?

After the brief introduction to these process improvement methods, seeing some of the challenges faced and also critical concepts that are misplaced in many projects, the next article will look into the other building blocks for adopting business process management to overcome these challenges.

Reminder
The four building blocks are interdependent and not isolated individuals.


References

  • Motorola University. Six Sigma.
  • Ohno, Taiichi. 1988. Toyota Production System: Beyond Large-scale Production. Productivity Press.
  • Spanyi, Andrew. 2008. More for Less: The Power of Process Management. MK Press.