Process Improvement - A How To Guide

By Paul Deis
This paper first defines key terms, then discusses how to improve inputs to the process, the improvement process itself, and wraps up with some “lessons learned” advice.
INTRODUCTION

Objective:

To help enable process improvement for better performance do it better, cheaper, faster.

Would you like a simple, effective approach to process improvement? This is a generic method for almost any type of process and is intended as a guide of things to do, rather than an in-depth tutorial. Because it’s generic, it doesn’t contain discipline-specific technical advice. While it outlines a methodical approach, we also encourage creativity in concert with it, because the biggest breakthroughs happen when method and creativity find a way to co-exist.

This article first defines key terms, then discusses how to improve inputs to the process, the process itself, and wraps up with some lessons learned advice. Although production and manufacturing terms are employed, nearly everything herein works for service businesses and office operations. It is currently fashionable to say that value is only added on the factory floor, but little would happen on its own without the intelligence value-added of such non-value- added activities as marketing, selling, planning, designing, contracting, buying, shipping, etc. The value-added concept needs expansion beyond the narrow realm of production that it is now so myopically focused upon.

DEFINITIONS

Process

A process is a collection of related activities that adds value to a product or service, that a customer would be willing to pay for. A process accomplishes specific objectives. Products consume processes, which consume activities, which consume resources, such as money, manpower, material, and machine. They may also require information, in the form of specifications, instructions and schedules. George Miller, PROACTION

A collection of activities that takes one or more kinds of input and creates an output that is of value to the customer. Hammer and Champy, in Reengineering the Corporation

Typical potential process improvement areas are:

• Speed
• Cost/Return on Investment/Assets
• Quality
• Flexibility
• Product Innovation/Improvement
• Compliance/Safety

And will help enhance:

• Profitability/asset return/shareholder value
• Customer service
• Market share
• Reputation

Select from the targeted improvement areas above to support your company/project strategies. The most critical areas should have metrics to track performance and possibly, targets.

Excellent processes have or utilize:

• Mission
• Objectives, Metrics
• Responsibility– who is in charge of process to see that it is right
• Resources, such as:
• Material
• Manpower
• Energy
• Equipment- machinery, tools, technology
• Information- specs, direction, instructions, procedures, software, schedules
• Activities
• Cycle Time
• Inputs
• Outputs– Products, by-products, waste
• Defects (even excellent processes usually have)
• Policies/Procedures
• Tools/Technology

Do yours have these? Make sure their availability and quality are addressed in your process review.

VALUE-ADDED ACTIVITY (VAA)

Activity/cost that actually increases the value of a product or service in a customer’s eyes. Fabrication and assembly are examples of this category. The ideal process consists of only Value-Added Activities

NON-VALUE-ADDED ACTIVITY (NVAA)

Activity/cost that does not increase the value of a product or service in the customer’s eyes. Example: storage. Decide if the activity is needed at all, is it duplicated anywhere, can it be done better or differently? Can the timing, method, material, equipment, speed, training, technique, setup, specification be altered to improve the results? An activity may be all value-added, all non-value-added, or a mixture. Certain non-value-added activities may still be needed, such as a storage requirement due to a capacity imbalance or a wait for a required inspection. Customers may see value in some of these activities, if only to Band-Aid a weak process.

NON-VALUE-ADDED ASSET

Non-productive asset. Assets kept working are more productive, but only if the output is actually needed and soon. The classic asset misuse is keeping machines or people busy even though the results aren’t needed. This wastes investment by inflating inventory, tying up material, space, capital, manpower and equipment resources. It is often aggravated by misapplication of metrics. For example a production manager who is measured by raw unit production efficiency measures is likely to commit this sin. If assets cannot be kept productive under this rule, then divestiture, replacement or outsourcing should be considered, as feasible. New metrics may also be needed.

CYCLE TIME

The total elapsed time to produce one unit. This includes all delays including elapsed set-up, queue, move, inspection, rework and also the actual processing time. Typical processes have 60-95% idle time, while product is not actually being worked on. Therefore the greatest cycle time reduction opportunities are normally, but not always, in delay time. Lost time may be recovered by balancing operations, reducing: storage time, handling, waiting for approvals, queues, handoffs, inspection, etc. Shorter cycle times usually improve competitiveness by cutting costs and response time.

WORK TIME

Time required or spent actually working on the product.

TAKT TIME

Interval of time for each unit to be completed the rate of production. A product may have a 2-hour cycle time, but have three 20-minute operations and one 30-minute operation. One unit comes off the line an average of every 30 minutes. Resources and work content should be allocated to adjust Takt Time to the desired rate of production.

DEFECT

Anything about the product which is legitimately not acceptable to the customer or internal authorities (normally, but not always, documented in specifications). Defects result in added cost, lost time or lost utility of the product to the customer, as well as delays in response time, wasted inventory and capacity.

PROCESS CAPABILITY

The ability of the process to meet the desired quality and speed at an acceptable cost.

METRIC

Important performance indicator to be measured. Examples: Inventory turns, cycle time. Metrics should be meaningful to the level of the people held accountable. For instance, average plant level cycle time is not meaningful to a team responsible for assembling a certain model computer disc drive. They need their own metric.

CELL

Production unit designed to make one product/service line or process. Ideally, all resources needed to complete a product or process are contained in the cell. Cells may be arranged as component/assembly feeders to final assembly test cells. Functionally-oriented cells have resulted in improvements, but product or process cells have generally shown superior results.

WASTE

Any portion of an activity performed, resource assigned or utilized that is not absolutely essential to meeting the mission/objectives of a legitimate process.

LEAN MANUFACTURING

Manufacturing process with as much waste as possible eliminated. A Lean Manufacturing manifesto and body of knowledge has been created and is available through the Agility Forum. This is having a profound influence on current thinking.

INPUTS TO THE PROCESS

External to the Process

Don’t jump right into the detailed guts of the process. Start at the top, with the product or service to be provided. Make sure it is defined to meet customers expectations technical specifications, service requirements, quality and pricing. First make sure you’re working on the right process, with the right objectives! The biggest, easiest improvements often occur right here, before even getting into the actual process in question.

Frame the process Look at things external to the process first. Before you do anything, make sure you know what you need the process to do. There should be a clear, simple, strong overall mission statement. Examples: Eyeglasses in one hour, (Lenscrafters) or… When it [your package] absolutely, positively has to be there overnight. (FedEx). Don’t waste time improving the wrong process with the wrong mission or approach. As you break the process down into lower levels of detail, each piece may not satisfy the overall mission statement, but itcompany to properly redirect its energies on improving this critical upstream activity first. Redo Figure 6 when you are done, including the additional how-to write-ups.

Focus on eliminating defects, problems and constraints.

Rather than detail planning, followed by a big bang implementation of changes, it is desirable to test and incrementally implement new changes. In the case of radical process change, this is not always possible, although prototyping and parallel operation can help alleviate the risk and pain of major change.

The performance of a process may often be improved without a change to the process itself, but just by better clarification, training, measurement or emphasis on it.

Tips for organizing a process: Determine WHAT is to be accomplished and WHY first, before determining HOW, WHEN, WHO and with WHAT, pretty much in that sequence. This can best done correctly by putting the process in perspective with the overall enterprise, business unit and workflow.

Internal Process Improvement Checklist Here is a list of improvement ideas to help out. Keep in mind that some of these are radical and may require planning and coordination. For example: don’t eliminate inspections of nuclear pressure vessels without some overarching quality strategy in place, along with customer and regulatory approvals!

Selectively Employ:

• Policies/Procedures
• Checkpoints
• Controls
• Auditing, Checking
• Metrics
• because these are non-value-added activities that should only be used as needed.

LESSONS LEARNED

A. 80% of the improvement task is selling it and getting peoples support.

B. Organizations resist change, no matter what they say. Certain individuals may help or even lead, but many people will slow down, stop or even reverse improvements unless they are properly trained, motivated and led. Focus on education and change management more than technical improvements.

C. Talk to people first. Soften them up before the big push. People who are your friends are more likely to help you, simply because you are familiar and they like you. Find out what thy want/need and help them if possible.

D. Try to hire, transfer, or borrow like-minded people. It’s often easier than trying to convert them.

E. Simple systems usually work better than complex ones.

F. People are more accepting of change when you take the mystery out of it and show them what’s in it for them.

G. People are much more accepting of change when you can show it working somewhere else, preferable nearby and full-scale.

H. Teams and consensus are great, but strong leadership still has its uses.

I. Constant repetition and leadership by example are needed. Don’t think that you can simply state the mission, objectives, conduct a brief training session, then come back in a couple of months and reap rich rewards. This war will consist of multiple campaigns and many battles. There will be resistance, indifference, confusion, conflicting priorities/philosophies, even outright opposition, or worse yet, covert opposition. Persistence and determination are called for!

J. The process improvement methodology can be straightforward. There are other approaches besides this one. Some will yield better results, but may require much more skill and complexity. The methodology is only a framework. Technical expertise and creativity are also needed. Beware of either letting industry experts drive the solution down the same old roads and also letting those ignorant of industry lessons learned move into naive approaches.

K. Imagination and creativity are needed for best results. The folks who were determined to deliver packages overnight, provide a computer for the rest of us, sell books over the Internet, invent the Internet, provide eyeglasses in one hour, had real vision (no pun intended) and enriched life for many.

Process Improvement Examples

When this session is presented live, workshops/examples are offered to illustrate the points made herein. If you’re reading this, why don’t you try the ideas out on your own with an actual case, preferably a simple one to start with–one that people agree needs great improvement?

REFERENCES

Reengineering: 40 U$eful Hints, George J. Miller, APICS XX International Conference Proceedings, APICS, Falls Church, VA
The Process Reengineering Workbook, Jerry L. Harbour, 1994, Quality Resources, NY, NY
Reengineering Your Business, Morris & Brandon, 1993, McGraw-Hill, NY
Reengineering the Corporation, Hammer & Champy, 1993, Harper-Collins Publishers, NY, NY
Business Process Improvement, James H. Harrington, 1991, McGraw-Hill, NY

This article is also available on our website: PROACTION Generating Best Practices. It is an excerpt of a paper originally written by George Miller, Founder of PROACTION. It has been modified and updated by Paul Deis, PROACTION CEO.

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