The Process Enterprise: How Process Transformation Changes the Business Tom Coleman Chief...

The Process Enterprise:How Process Transformation Changes the Business

Tom ColemanChief Information and Process OfficerProcess Owner, Strategic PlanningSloan Valve Company

ABPMP Chicago Chapter MeetingOctober 14, 2009

Sears Holding CorporationHoffman Estates

AgendaSloan OverviewStrategic FocusThe Strategic ChallengeThe Path to ChangeThe ResultsThe ImpactQ&A

http://waterefficiency.com/

SloanOverview

4

Sloan Company Overview103 year old companyPrivately held, mid-sizedMfr. of specialized plumbing

productsSystems:

Business Suite Business Process Analysis

http://www.igrafx.com/index.html

http://www.sap.com/index.epx

5

Major Sloan Locations Illinois (HQ, Design Center, Mfg, DC) China (Design Center, Mfg) Arkansas (Foundry) Massachusetts (Design Center, Mfg) Michigan (Design Center, Mfg) Mexico ( Mfg, DC) California (DC) Pennsylvania (DC)

6

Sloan Products

http://www.sloanvalve.com/index_2347.htm



http://www.sloan.com.cn/images/Croped/faucet2.jpg

http://www.sloan.com.cn/images/Croped/ESD250.jpg

http://www.sloan.com.cn/images/Croped/OPTIMA%EF%BC%8D1.jpg

http://www.sloan.com.cn/products/catalog/Sensor.htm

http://www.sloan.com.cn/images/Croped/Shower-1.jpg




Strategic Focus

8

What Are We Trying To Do?CashA/R

InventoryEquipmentPropertyGoodwill

Human CapitalInformation CapitalOrganization Capital

Tangible Assets

Intangible Assets

Liqu

idity

Read

ines

s

Adapted from: Kaplan and Norton 2004

Strategy and Process

What? How?

9

Sample Strategic Planning Process

CoreIdeology

SWOTValuePlan

StrategicGoals

EmployeePerformanceManagement

• Core Values• Mission• Vision• BHAG

• SWOT • Value Discipline• Value Prop (VP) - Financial Val Prop - Customer Val Prop

• Financial• Customer• Process• Resource

• Functions• Teams• Individuals

What is our visionof today & the future?

To achieve our visionhow should we appearto our customers& stakeholders?

How shall we achieve ourfinancial andcustomer goals?

What resourcesdo we need andhow is ourReadiness?

What can we discover about the market, competitors, and ourselves?

What must functions, teams, and individuals do?

Discovery

10


CoreIdeology

SWOTValuePlan

StrategicGoals












Discovery

11

• Creating a unique and sustainable competitive position

• Assimilating, attaining, and extending best practices

OperationalEffectiveness

ValueDiscipline(StrategicPosition)

Run the same races faster Choose to run a different race

Achieving Superior Performance

Operational Effectiveness is Not Strategy

12

Strategy is not only about ways to get

better…more importantly, strategy formulation is about finding ways to get…

differentSource: Michael Porter

13

“Undifferentiated products and services allow the customer to capture most of the

value.”

Michael PorterAuthor and Professor

Harvard Business School

http://www.amazon.com/gp/reader/0684841460/ref=sib_dp_pt#reader-link

14

Value DisciplineLow Cost

Differentiation

Adapted from: Michael Porter (1980)

Achieve the low cost position on products

and services

Solve the customer’s broader problem

through differentiation Approach one: Broad market

Approach two: Market segmentation

15

Value DisciplineBest Total Cost

Best Total Solution Best Product Innovation

Adapted from: Michael Treacy and Fred Wiersema 1995

Achieve the low cost position on product and service support

Solve the customer’s broader problem and share in the benefit

Build a better product for which

customers will pay a premium

16

Value DisciplineBest Total Cost

Best Total Solution Best Product Innovation

Adapted from: Norton and Kaplan 2003/2004

Achieve the low cost position on product and service support

Solve the customer’s broader problem and share in the benefit

Build a better product for which

customers will pay a premium

Lock-in

17

Delta Model (Value Discipline)

PositioningStrategy

System Lock-in

Total CustomerSolutions

BestProduct

Proprietary Standard(Microsoft, Intel)

Low Cost(Southwest Airlines)

Differentiation(Sony)

Dominant Exchange(eBay)

Horizontal Breadth(Fidelity)

Redefining the Customer Relationship(Saturn)

Adapted from: Arnoldo Hax, MIT Sloan School of Management

18

Strategy Vs Customer Value Attributes

Michael Treacy and Fred Wiersema

Image

Price Quality Time Selection Functionality Service Relationships Brand

Best TotalCost

n n n n o o o n SmartShopper

Best CustomerSolution

o o o o o n n n TrustedBrand

Best ProductInnovation

o o n o n o o n BestProduct

n Differentiator Strategy

o General Requirement

Adapted from Kaplan and Norton 2001

Product and Service Attributes Relationship

19

Aligning Strategy to ProcessesStrategy

InnovationProcesses

CustomerManagementProcesses

OperationalProcesses

BestProduct

Innovation

- Invention- Product Development- Exploitation- Speed to market

o o

Best TotalCustomerSolution

o

- Solution Development- Customer Service- Relationship Mgt- Advisory Services

o

Best TotalCost

o o- Supply Chain Mgt- Operations Efficiency- Capacity Management

Adapted from Kaplan and Norton 2001 / Treacy & Wiersema 1995

= Meets general requirements

20


CoreIdeology

SWOTValuePlan

StrategicGoals












Discovery

21

Wheels of Competitive Strategy

1980 Source: Michael E. Porter (Competitive Strategy)2007 Source: T. Coleman

GoalsStrategy

Objectives

Finance

Mfg Mktg

Sales

Service

HREngineering

Other

1980 2007

22

Strategic Focus Areas

Vision &Strategy

Products& Services

SupplyChain

Customer

Information Capital & Technology

Financial Resources

Human Resources

Six focus areas(AKA “strategic themes”)

Note: Alfred Chandler: Structure follows strategy

23

Wheels of Competitive Strategy

1980 Source: Michael E. Porter (Competitive Strategy)2007 Source: T. Coleman

GoalsStrategy

Objectives

Finance

Mfg Mktg

Sales

Service

HREngineering

Other

1980 2007

OrderTo

CashProcess

Demand GenerationProcess

New ProductDevelopment

Process

SloanStrategy

andGoals

CustomerSupportProcess

FunctionsFu

nctions

Funct

ions Functions

24

Old Functions Vs Processes

Information Technology (IT)

Finance

Human Resources (HR)

Marketing Sales Mat Mgt Mfg QA Research Des EngTech Support

Demand Generation

Product Development & Lifecycle Mgt

Order Acquisition

Cust Support

Order-to-Cash

Strategic Planning

Source-to-Pay

25

New Functions Vs Processes

Information Technology & Process Mgt (IT & BPM)

Financial Capital Mgt

Human Resource Mgt (HR)

Customer Relationships Supply Chain Product Dev & Lifecycle Mgt

Demand Generation

Product Development & Lifecycle Mgt (Domain Divided)

Order Acquisition

Cust Support

Order-to-Cash

Strategic Planning

Source-to-Pay

Note: Alfred Chandler: Structure follows strategy

26

New Functions Vs Processes

Information Technology & Process Mgt (IT & BPM)

Financial Capital Mgt

Human Resource Mgt (HR)

Customer Relationships Supply Chain Product Dev & Lifecycle Mgt

Demand Generation

Product Development & Lifecycle Mgt (Domain Divided)

Order Acquisition

Cust Support

Order-to-Cash

Strategic Planning

EPO’sEPOEPO’s

Source-to-Pay

EPO’sEPO’sEPO’s

27

FinancialPerspective"To sustainour mission,

on what mustwe focus?"

CustomerPerspective“To achieveour vision,how shouldwe appear

to ourcustomers?”

ProcessPerspective“To satisfy

ourcustomers

whichprocessesmust weexcel?”

ResourcePerspective"How will wesustain ourability tochange &improve?"

Organization Capital

skills

training

knowledge

teamwork

Human Capital

key positions & skills

education & training

knowledge mgt

Supply ChainProcesses

processes that produceand deliver products and

services

CustomerManagement

Processes

processes that supportand enhance customer

value

Product DevelopmentProcesses

processes that createnew products and

services

Customer ValueProposition

price quality Time selection functionality service partnership brand

Product/Service Attributes Relationships Image

Sloan Vision & MissionProductivity Strategy Revenue Growth Strategies

Improve CostStructure

Increase AssetUtilization

EnhanceCustomer Value

Expand RevenueOpportunities

+ +

Information Capital

systems

databases

networks

collaboration

Mission and Vision

The financial value proposition goals go here

The customer value proposition goals go here

The process goals go here

The IT, HR, and the corporate enabling goals go here

28

FinancialPerspective"To sustainour mission,

on what mustwe focus?"

CustomerPerspective“To achieveour vision,how shouldwe appear

to ourcustomers?”

ProcessPerspective“To satisfy

ourcustomers

whichprocessesmust weexcel?”

ResourcePerspective"How will wesustain ourability tochange &improve?"

Organization Capital

skills

training

knowledge

teamwork

Human Capital

key positions & skills

education & training

knowledge mgt

Supply ChainProcesses

processes that produceand deliver products and

services

CustomerManagement

Processes

processes that supportand enhance customer

value

Product DevelopmentProcesses

processes that createnew products and

services

Customer ValueProposition

price quality Time selection functionality service partnership brand

Product/Service Attributes Relationships Image

Sloan Vision & MissionProductivity Strategy Revenue Growth Strategies

Improve CostStructure

Increase AssetUtilization

EnhanceCustomer Value

Expand RevenueOpportunities

+ +

Information Capital

systems

databases

networks

collaboration

Mission and Vision

29

Pro

ces

s Core Processes Belong Here(Not mere tasks/projects)

30

Strategic Planning Balanced Scorecard Matrix

Enabling Theme: _______________________

Executive Process Owner: ________________

ScorecardPerspective

Objective MeasureBaseline

2007Target2008

Target2009

Target2010

Target2011

Target2012

Responsible

FinancialPerspective

CustomerPerspective

ProcessPerspective

ResourcePerspective

ROI

Customer Satisfaction

KPI: OTC/STP CoQPCM: OTC Cycle Time

BPR OTC/STP TeamsSAP SCM installedHire SCM VP

EXAM

PLE

Note: The Sloan slide is proprietary and has been substituted by this generic BSCNote: A real BSC is completely linked to the strategy map (strategic theme)

31


CoreIdeology

SWOTValuePlan

StrategicGoals












Discovery

32

The Challenge

33

Strategic Order-to-Cash Goals

1. Develop avg. delivery from X days to X days

2. Improve inventory turnover from X turns to X

3. Achieve X% perfect order performance

4. Improve quality from X sigma to X sigma for OTC

5. Improve DSO from X days to X days

6. Develop a program to better transition of NPDI to

OTC

7. Develop a rigorous education and training program

for OTC process performers

8. Look for ways to change our operational practices to

become more eco-friendly (lighting, packaging, and

cradle-to-cradle program, etc.)

34

. Terms today do not facilitate the timely receipt of cash / - ( . ., 1 ) - . Credit policy consumes significant available OAP OTC lead time e g day OAP

- . Possible lack of correlation between orders on credit hold and invoice collections which affects total customer lead time ( ?). Mexico has different terms and they are informal with respect for handling China

There is a disconnect between commission payouts and cash receipts ( ) Scrap process informal without ownership reporting issue - ( . ., ) Union contract a problem for perceived to be vision for OTC e g Midwest DC @ FKP Orders that have shipped and even delivered are not deemed to be closed today and may be modified ( ) -- - Mixing of standard product and special orders special finish lead time issue

Customers return products without an RMA number Existence of obsolete or seldom used parts

Wrong people making decisions affecting orders , , , . Invoicing problems associated with pricing quality quantity expedited shipments . Inventory is not accurate

- . Weak handling of the returns sub process of OTC ( ) Reject Matl for Rework RMR is not followed

( ) Inaccurate bill of materials BOM ( . ., , ) Discipline is not uniformly applied e g union contract other Customer shipping errors unacceptable

.No perfect order performance tracking and metric - / ( . ., , - , .).Lack of comprehensive under standing about profits benefits versus what it cost in OTC to do it e g old low volume product etc

No global common metrics for OTC No global common reporting tool for OTC metrics Lack of variance analysis

( . ., - )We have very limited automation for information processing e g bar codes ( . ., ) . China is not on SAP e g China resulting in lack of information and synchronization

, - Due to WIP processing methods scrap material cannot be processed in real time . A need for automated SAP processing for foundry scrap

( )Manually updating prices in Augusta every Monday morning time consuming No visibility of overseas items coming in or promise dates

Manifests are manually intensive 9 Manifests are sending only tracking numbers back to SAP

( , .)No integration between tracking numbers and handling units weights etc - ( - : )Delivery processing is not real time post goods issue PGI

Customers are requiring detailing packing for advanced notification Innovation ( . ., , ). Communications problems within sites e g quality problems production schedules ( . ., , ). Communications problems with other Sloan sites e g quality problems production schedules

. Inventories build at times when large volume deliveries occur from China versus JiT , , Substandard collaboration between Operations Quality and Customer Service -- ( ) Engineering changes lack of communication lines with all parties affected including customers

Lack of communications with Credit on order handling plans Lack of understanding of who is responsible and accountable for information and resolution - ( / - )Each location's prod schedule is not synchronized for published lead times especially slow moving non stock and old parts , -When demand exceeds supply we keep promising the customer the same lead time- Lead times are too long

Accuracy of promise dates- Lead times are misrepresented to customers

’ We don t ask customers what delivery dates they would like to have Lack of a quick change set up program to support OTC objectives Lack of product knowledge on the floor Lack of work instructions and training TQM principals are not being used in the process . Need for continuing education and training to support continuous improvement

. No corporate sales and operations planning for new and existing products - ( ) Lack of rough cut capacity planning resource requirements planning

-- - No forecasting must anticipate long lead items Not doing real forecasting to include integration with promos and supply chain ( ) No total productive maintenance system TPM ( ) . Lack of statistical process controls SPC knowledge and controls - .New product lead times are such that orders go past due and are sold before OTC can fulfill Lack of coordination of new products into OAP and OTC

- We take orders with standard lead times for new products not available ’ ; .We don t know the customers requested delivery date we may not deliver products timely to their need

.Frequent problems having clean orders in OTC ’ ; . OTC doesn t always know what the customer wants it appears that the customer does not know what they want & . PTP is not controlling purchase at the raw materials and S OP level causing surplus inventory ( . ., ) No vendor mgt program e g receive product from vendors with wrong counts but not caught until too late

, Vendors deliver materials late creates shortages ( / )Raw material availability is a problem for certain commodities AMI substitutes

Purchase material shortages 2 ( ). We cannot take a clean order and deliver it in four days ATO and days MTS on average or whatever the customer and competitive situations dictates - . All product are promised to customers with the same lead time

/ / ( . ., , . ). Collections DSO AR is not collecting ASAP e g disputes terms vs actual . Sloan does not have one face to the customer / . Lack of order coordination driven into assembly fulfillment ( )Lack of capacity planning CRP

/ & Kanban QR levels not dynamically set based on S OP plans and OTC constraints/ - Kanban QR use needs to be re reviewed to meet strategic plan

. Expedited customer orders adversely affect other previously promised orders -- Multiple shipping locations customer gets multiple shipments Customer returns material and we lose it

Too many materials shortages Finished good inventory strategies lacking that prevent complete shipments

; Inaccurate promise dates cause us to spend a lot of money on expedited shipments no way of calculating accurate promise delivery dates The returns goods process at all locations is inadequate Lack of supply management MTS items intended for DC are sent to regular customers instead Too much rework No way to verify customer claims about order inaccuracies - ( ) We take orders with standard lead times for products under revision ECM not available

( , , )Length of time for documentation to get through the system MDM cost of products BOM's Process Change Mgt in shop not engaged

( , - - , ).Lack of product lifecycle mgt discontinuations end of life product rationalization ( )Tool Mgt System is not used as part of a solution

Tactical Order-to-Cash

Problems List

35

OTC Metric Laggard* Avg* BIC* Sloan ’07

Perfect Order Performance 81% 88% 95% X%

A. Orders in Compliance to quality 85% 94% 98% X%

B. Orders complete/on-time 89% 91% 96% X%

C. Orders with correct doc 89% 91% 96% X%

Finished Goods Inventory turns 3 turns 13 turns 28 turns X turns

Inventory costs as share of revenue 30%($76M)

14%($35M)

5%($12M)

X%($X M)

Quality 1.81 σ($XM)

3.68 σ($XM)

5.04 σ($XM)

X σ($XM)

Order-to-cash cycle time * * * X to X days

Order-to-Cash KPI Benchmarks

* Aberdeen

36

OTC Metric Laggard* Avg* BIC* Sloan ’07

Inventory Record Accuracy (not $) 81% 91% 97% X% (FG)

First Pass Yield 62.2% 98.6% 99.9% X%

Defects per Mil. Opportunities (DPMO) 382,000 13,000 200 X

Overall Equipment Effectiveness 68% 84% 93% X%

Productivity at Constraint Work Centers - - - X%

Efficiency at Constrain Work Centers - - - X%

Utilization of Direct Labor 61% 74% 88% X%

Manufacturing Schedule Compliance 75% 88% 95% X%

Logistics Costs as % of Sales 20% 14% 5% X%

Order-to-Cash PCM Benchmarks

* Tolerances used to calculate accuracy vary widely and do not comply with APICS recommended best practices or best practice cycle count policies

* Aberdeen

The Path

Gartner defines BPM as a management

discipline that treats processes as assets that directly

contribute to enterprise performance by

driving operational excellence and business agility.

What’s wrong with this?

BPM is a managementdiscipline that treats

processes as assets that directly drive enterprise

performance through operational excellence,

business agility, and strategic differentiation.

40

Process Enterprise

“An enterprise in which all work is thought of, designed, performed,

and managed as process work by

everyone”Sloan 2002

41

“An organized group of related tasks that

work together to create value for

customers.”

Source: Michael Hammer

Process Definition

A “Process” is end-to-end

42

Process Direction at Sloan1. Easy To Do Business With (ETDBW)2. Focus on customers and outcomes3. Define goals in customer terms4. Use metrics for improving, not just accounting5. Form a collaborative, team-based organization6. Embrace a vision beyond enterprise boundaries7. See work and design work in end-to-end terms

(governance, core, and enabling processes)8. Continuously learn9. Think outside the box10. Focus beyond improvement to design

Source concepts adapted from The Agenda (Dr. Michael Hammer)

43

DGPDemand

GenerationProcess

OAPOrder

AcquisitionProcess

STPSource-to-Pay

Process

OTCOrder-to-Cash

Process

CSPCustomerSupportProcess

SPPStrategic Planning Process

EPMEmployee

PerformanceMgt Process

BPPBusiness PlanningProcess

QAPQuality

AssuranceProcess

S&OPSales & Oper

PlanningProcess

MDMMaster

DataMgt Process

ECMEngineering

ChangeMgt Process

PCMShop Process

ChangeMgt Process

NPDNew ProductDevelopment

Process

AOPAnnual

Oper PlanProcess

BPMBusiness

Process MgtProcess

StrategicProcess

GovernanceProcesses

CoreProcesses

EnablingProcesses

Sloan Enterprise Process Model

44

DGPDemand

GenerationProcess

OAPOrder

AcquisitionProcess

STPSource-to-Pay

Process

OTCOrder-to-Cash

Process



EPMEmployee



QAPQuality

AssuranceProcess

S&OPSales & Oper

PlanningProcess

MDMMaster

DataMgt Process

ECMEngineering

ChangeMgt Process

PCMShop Process

ChangeMgt Process


Process

AOPAnnual

Oper PlanProcess

BPMBusiness

Process MgtProcess

StrategicProcess

GovernanceProcesses

CoreProcesses

EnablingProcesses


45

DGPDemand

GenerationProcess

OAPOrder

AcquisitionProcess

STPSource-to-Pay

Process

OTCOrder-to-Cash

Process



EPMEmployee



QAPQuality

AssuranceProcess

S&OPSales & Oper

PlanningProcess

MDMMaster

DataMgt Process

ECMEngineering

ChangeMgt Process

PCMShop Process

ChangeMgt Process


Process

AOPAnnual

Oper PlanProcess

BPMBusiness

Process MgtProcess

StrategicProcess

GovernanceProcesses

CoreProcesses

EnablingProcesses


46

DGPDemand

GenerationProcess

OAPOrder

AcquisitionProcess

STPSource-to-Pay

Process

OTCOrder-to-Cash

Process



EPMEmployee



QAPQuality

AssuranceProcess

S&OPSales & Oper

PlanningProcess

MDMMaster

DataMgt Process

ECMEngineering

ChangeMgt Process

PCMShop Process

ChangeMgt Process


Process

AOPAnnual

Oper PlanProcess

BPMBusiness

Process MgtProcesses

StrategicProcess

GovernanceProcesses

CoreProcesses

EnablingProcesses

(many more)


2007 2008

2004 2003

2005

WIPWIP

2009 2009 2006 20072008

2004

WIP

Pillars of Strategic Focus – Core

FocusCustomer

Main ProcessesDemand Generation

Order AcquisitionCustomer Support

Main SystemCRM, SD

Functional DeptBusiness

Development

KPI’sRevenue

Market ShareDGP/OAP/CSP Cycle TimeCustomer Response Index

CSP Call Abandon RateSales Forecast Accuracy

DSO (with CFO)

FocusSupply Chain

Main ProcessOrder-to-CashSource-to-Pay

Main SystemSCM, MM, PP

Functional DeptSupply ChainOperations

KPI’sPerfect Order Perf.

Cost of QualitySigma PerformanceInventory TurnoverCost of Goods Sold

OTC/STP cycle timesDPO (w/CFO)

FocusProducts

Main ProcessesNew Product Dev

Engineering Change MgtMaster Data Mgt

Main SystemPLM, BOM, CAD

Functional DeptResearch &

Development

KPI’sTime-to-Market

Project Delivery PerfProject Budget Perf

New Product Gap (w/BD)Innovation Rate (w/BD

Pillars of Strategic Focus – Enabling

FocusBusiness Technology

Main ProcessesBPM, BPR, CIIT Dev/Ops

Main SystemBPM, NetWeaver

Functional DeptBusiness Technology (IT)

KPI’sProject On-time PerfProject Budget Perf

IT budget as % SalesCustomer Response Index

SLA ComplianceProcess KPI Achievement

FocusHuman Capital

Main ProcessPerformance Mgt

Change Mgt

Main SystemHCM

Functional DeptHR

KPI’sRevenue Per EmployeeJob Satisfaction IndexTraining $ Vs BudgetEmployee Turnover

Recruitment Cycle TimeRecruitment CostsEPM Compliance

FocusFinancial Capital

Main ProcessesBusiness Planning

Risk Mgt

Main SystemSEM, FI, CO

Functional DeptFinance

KPI’sDSO (w/BD)

DPO (w/SCO)Cash Mgt Vs Revenue

What else?

49

Sloan Process Governance Organization

ProcessTransformation

Facilitator

Chief ProcessOfficer(CPO)

ExecutiveCommittee

(Process Council)

ProcessTeam A

ProcessTeam B

ProcessTeam C

ExecutiveProcessOwner(EPO)

ProcessOwner

(PO)

Customer ProcessesSupply Chain ProcessesProduct Dev ProcessesHCM ProcessesICM ProcessFCM Processes

Demand Generation ProcessOrder-to-Cash ProcessNew Product Dev ProcessEmployee Perf Mgt ProcessSystems Dev ProcessBudgeting ProcessEtc.

Process Lifecycle Mgt ProcessBusiness Process Redesign Process

Sustaining Improvement Process

Process Lifecycle Mgt ProcessBusiness Process Redesign Process (BPR)

Sustaining Improvement Process (SI)

Strategic Planning Process

Order-to-Cash Process Demand Generation Process Global Quality Assurance Process

50



Facilitator


ExecutiveCommittee

(Process Council)

ProcessTeam A

ProcessTeam B

ProcessTeam C


ProcessOwner

(PO)









51



Facilitator


ExecutiveCommittee

(Process Council)

ProcessTeam A

ProcessTeam B

ProcessTeam C


ProcessOwner

(PO)









52



Facilitator


ExecutiveCommittee

(Process Council)

ProcessTeam A

ProcessTeam B

ProcessTeam C


ProcessOwner

(PO)









53

The Proliferation of Change Initiatives and Programs

M&A

BSC

Reengineering

SoPK

54

TOC: Theory of Constraints (Goldratt) Manage constraints (bottlenecks) in a process Identify, exploit, subordinate, elevate, …

Lean (Toyota TPS, Womack & Jones) Manage the 7 wastes, pull system, cycle time (takt),

autonomation, 5S, … 6σ : Six Sigma (Motorola)

Manage defects, reduce variation in a process Statistical methods DMAIC, DMADV/DFSS

SoPK: System of Profound Knowledge (Deming) Knowledge of variation, systems thinking,

knowledge/learning, motivation An understanding that all the parts of a business are related

in such a way that if you focus on optimizing one part, other parts may suffer

Plan, do, check, act (PDCA) BPR: Business Process Reengineering

(Hammer) Fundamental rethinking & radical redesign of business

processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, speed, & service

Design/re-design methodology

55

Process Design

Process Im

plementation

Proc

ess

Impro

vem

ent

BPM

Business Process Management(Process Lifecycle Mgt)

Monitor & M

easure

Mon

itor &

Mea

sure

Monitor &

Measure

Mon

itor &

Mea

sure

56

1 2 3 4 5 6 7 8 9 0 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Business Process Lifecycle

Sustaining Improvement

ProcessRedesign

TIME

IMPR

OV

EM

EN

T

COMPETITIV

E ADVANTA

GE

A. Tenner & I. DeToro

Sustaining Improvement

Sustaining ImprovementProcess

Redesign

New Design

57

Business Process Management (BPM)

ProcessGovernance

Process

BusinessProcess

RedesignProcess

SustainingImprovement

Processes

Similar Names:Kaikaku

Business Process ReengineeringReengineering

Radical ImprovementDMADV: Define, Measure, Analyze, Design, Verify (DFSS)

Similar Names:Kaizen

Continuous Improvement (CI)Incremental Improvement (II)Plan, Do, Check, Act (PDCA)

DMAIC: Define, Measure, Analyze, Improve, Control

ProcessRedesign

ProcessImprovement

58

Performand Improvethe Process

1 Measure Performance

and Understand

Needs

2

DoesProcess

Meet StrategicNeeds?

3

Yes

Set Performance ImprovementTargets,

Understand Nature of Performance Gap,

Develop Intervention Plan

4

No DecideImprovement

Approach

6

ImproveProcess

7

TransformProcess

8

Improve

Design

Sloan Process Lifecycle Mgt Process

StrategicPlanningProcess

LEVEL 0DIAGRAMVERSION

59

Continuous Improvement Process

(Incremental and Sustaining Improvement)

DefineProblem

MeasureProblem

AnalyzeProblem Improve Control


FromBPM

Process

D M A I C(also TOC, Lean, …)

Ad hocImprove-

ment

60

Sloan Lesson

OutboundLogisticsSub-process

Order-to-Cash

Order Acquisition

New Product Dev

Customer Support

DemandGeneration

Strategic Planning

EngineeringChg Mgt

Master DataMgt

Plant Maintenance

EmployeePerf Mgt

Procure-to-PaySourcing

Business ProcessMgt

61

Sloan Lesson

OutboundLogisticsSub-process

Order-to-Cash

Order Acquisition

New Product Dev

Customer Support

DemandGeneration

Strategic Planning

EngineeringChg Mgt

Master DataMgt

Plant Maintenance

EmployeePerf Mgt

Procure-to-PaySourcing

Business ProcessMgt

12 Processes 6 Sub-processes each (avg.) 72 sub-processes------------------------------------------------- 5 months dev each (avg.)-------------------------------------------------360 month effort (1 team) 30 years of work (1 team)

62

Performand Improvethe Process

1 Measure Performance

and Understand

Needs

2

DoesProcess

Meet StrategicNeeds?

3

Yes

Set Performance ImprovementTargets,

Understand Nature of Performance Gap,

Develop Intervention Plan

4

No DecideImprovement

Approach

6

ImproveProcess

7

TransformProcess

8

Improve

Design

Sloan Process Lifecycle Mgt Process

StrategicPlanningProcess


63

Sloan Business Transformation Process

(Business Process Design/Redesign)

Stage 1Mobilization

1.0

Stage 2Diagnosis

2.0

Stage 3Design

3.0

Stage 4Development

4.0

Stage 5Implementation

5.0

Stage 6Post Implement

6.0-N

FromBPM

Process

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5Gate 6

ToBPM

Process

BPRAlso DMADV/DFSS…Symptoms, diagnosis, cure

64

Sloan Levers of Transformation Integrated with Sloan’s Strategic Plan Process Redesign as well as

Improvement Policies, Rules, Procedures Computing & Technology Organization Structure Change Management Roles & Job Changes Paradigm Shifts Communications Knowledge Facilities

Results

66

Distribution CenterCycle

Counting


Counting

FK

P F

PI S

to

ckro

om

FK

P F

PI S

to

ckro

om

FK

P S

hip

pin

g

FK

P S

hip

pin

g

FK

P W

IP

FK

P W

IP

Start when doing pure

cycle counting

Identify ABC Criteria & Indicator

-N Run SAP report every two weeks

defining items to count

Count selected items

Staff research discrepancies

D/C Mgrposts physical

counts

Run SAP report showing

accuracy of inventory

-N

Stop

Start when part not found

during order


Research discrepancies

Post physical counts

Stop

If bad shipment is identified

Contact Customer Service

FK Cust Serv issues RMA to

return equipment

Issue correct equipment

RMANeeded?

Yes

Adjust billing to customer for

shipment

No

Sales Order

Entered


cycle counting

Run SAP report to

generate ABC Listings

-NManually determine

which items to count

-N

Count ItemsWithin

tolerance?

-N

Manually Track accuracy

Yes

Dep-endant

demand?

No

Contact matls mgr

YesGo to WIP

cycle counting process


No



return equipment

RMAProcess

RMANeeded?

Yes


shipment

No

Sales Order

Entered

Shippingerror?

Yes

<$2000?

No

Post countYesMatl mgr

posts

No

Data integrity auditor verifies(one time only)

SameResults?

Yes

No

Generateweekly cycle count report

-N

Stop


during order


during order




Stop


RMANeeded?

Adjust billingto customer for

shipment

No

Sales Order

Entered

Shipping error?

No

Yes

<$2000Yes

Matl mgrposts

No

To RMA process

Yes

Start when customer

shortage claim




RMAProcess

Inventory accurate?

No

Contact customer service

Yes

Stop

P2P Process

P2P Process


cycle counting

Run SAP report to




-N

Count Items and retrieve count sheets

-NManual schedule sent out weekly on items to count

Inventory is reconciled & adjusted if

needed

-N

Inventory results memo

published

Unfreeze inventory

before or by 8:00 AM

Inventory posted?

Yes

Schedule recount

No

Receive backflush

discrepancy

Start when having

inventory discrepancy

Change inventory using

various methods

-N

Initiate cycle count

-N

Count items


needed

Stop

Stop

Start when having

subcontractedvendor

inventory

Run vendor inventory report at beginning of

year

We publish a yearly schedule

by month for vendor

-N Each month we supply

purchasing sheets per

vendor

Vendor countsPurchasing

gives matls the results

Reconcile & adjust

inventoryStop

Me

xico

Op

era

tion

Me

xico

Op

era

tion

Start for sales orders

Receive PO from customer

at the office

Enter sales order into SAP

Auto credit check in SAP

CreditOK?

Is Matl Avail?

-NYes

Create SAP delivery

Yes

Pick matl for shipping

Pick verify

Picklist delivered & packing slip

created

Sales performs post goods issue (PGI)

Manually invoice

customer

-N

Invoice delivered to

shipping clerk

Tracking No. and ship prep

Load truck & ship

Collect proof of delivery

Send statement to

customer

Receive payment in SDM bank

DepositClears?

Payment is applied in SAP

Yes New statement sent to

customer

Partialpayment?

NoStop

Contact customer for balance due,

partial payment, or promissary

note

-N

Paymentreceived & cleared?

Yes

Order remains on hold

No

No

Contact Supplier for an

expected delivery date

No

DateAcceptable?

Yes

Contact customer with

ETA

NoCancel

No

Notify customer that deposit did

not clear

No

Payment requested & return check bill generated

Yes

Paid in full?

Yes

No

If necessary, pick, assemble,

backflush material

Start for forecasted

material

Procure-to-pay

processStock material

SV

WT

(C

hina

)

Start(From

Domestic cust)

-N

Receive PO from FKP

-NStart

(From FKP or WDC)

Establish cust contract

Wait for money

-NMoney

received & deposited

Desire expressed

Have matl?

Yes

No

Contractaccepted?

Yes

Check with suppliers

Stop

No

Stdorder?

Yes

Eng reviewof customer

requirements

No

Mfgreview & estab

lead-time

Matlreview &

establish lead-time

Release Mfg Order (MO)

Makeproduct

Ship product& generate

invoice

Component inventory relieved

Record revenue& Stop

New part needed?

Create test procedure or

BOM as needed

NoDesign new

part

-N Yes

Manual matls planning process

-N

Enter order into Fourth-Shift

Establish a 3 mo. shipping

sched

Enter schedule into fourth-shift

& run MRP

Generate component

reqmts

Componets Avail?

Issue Mfg Order (MO)

Yes

Procure-to-pay

process

No

Pickmatl

Purch item?

Yes

No

Produceitem

-N

Prepare items for shipment

Store items for later shipment

-NPrepare

documents for shipment

-N

Schedule Load & ship

Receive shipment

-N

StopPayment made

to SVWTDrop ship to cust?

No

Yes

OTC As-Is ProcessM

achin

e S

hop

Machin

e S

hop

Tool R

oom

Tool R

oom

Polis

hin

g

Polis

hin

g

Pla

ting

Pla

ting

FK

P A

ssem

bly

FK

P A

ssem

bly

StartIs

machineavail?

Outsource?No Manual sched

for future prod

No

Are prints on floor?

Yes

Manually acquire prints

from print room

No

Manually request

inspection gages

Yes

Beginsetup

ToolsAvail?

Completesetup/ make adjustments

Yes Run partsfor first piece

inspection

Run all reqdpieces until super says

stop

-N

Passfirst pieceinspec?

Yes

No

Trx to nextdept/operation

Is itemcomplete?

Yes

No

Move to next depart or to

stock

Areparts

good?

Yes

Can parts be reworked

No

Performnecessary

rework(RMR Proc)

Yes

Toscrap

process

No

No

Procure toPay

Yes

Tool MgtProcess

-N

StartIs

machine avail?

Outsource?No Manual sched

for future prod

No

Procure toPay

Yes

Beginsetup

Yes

FixturesAvail?

No

Completesetup

Yes

Run partsfor first piece

inspection

Passfirst pieceinspec?

Run all reqdpieces until super says

stop

-N

Yes

No

Trxto next dept

Arepartsgood?

Yes

Can parts be reworked

No

Performnecessary

rework(RMR Proc)

Yes

No Toscrap

process

Start Rack parts Plate partsPartsgood?

Move to tally desk

YesUnrackParts

ForStores?

Make out manual move ticket & move

to proper stores

Yes

Trxmatl

No

TrxProcessed?

Move matl to next dept

Yes

Notify supervisor

No

Supervisor corrects?

Yes

Notifymatls dept

No Cycle countingprocess

Notifysupervisor &

QC

No

Canparts bereworked

Yes

Move parts to scrap area

within plating

RMR (rework) process

-N

No

Sort and fill out manual scrap

log

Move parts and log to

scrap/salvage area

To Scrap Process

-N

TrxProcessed?

Move matl to next dept

Yes

Notify supervisor

No

Supervisor corrects?

Yes

Notifymatls dept

No Cycle countingprocess

Yes

Move to tally desk

For stores?

Fill out manual move ticket &

move matl

Yes

No

Trxprocessed?

Yes

Notifymatls

No

Cycle counting process

MTO StartRun MTO production downloads

-N

Manually evaluate the downloads to figure out how to sequence and schedule

assembly

Print travellers and labels

Allocate workforce to

support assembly

Prepare area with parts and

build

Move tofront of grid

Complete

MTS StartRun MTS product

downloads

-N

Manually evaluate the downloads to figure out how to sequence and schedule

assembly

-N

Start packaging process

From small parts area?

Print traveller or manual

move ticket

Yes Move to staging areafor stocking

Complete

Move to tally desk

No

Ensure proper documentation

is on matl

Visual QR Start

Supervisor or lead person

visually checks QR

levels

Schedule matl to be made

Setup matl for assembly or

kitting

Run parts through

assembly

Move to QR storage area


Counting


Counting

FK

P F

PI S

tockro

om

FK

P F

PI S

tockro

om

FK

P S

hip

pin

g

FK

P S

hip

pin

g

FK

P W

IP

FK

P W

IP


cycle counting

Identify ABC Criteria & Indicator

-N Run SAP report every two weeks

defining items to count


Staff research discrepancies

D/C Mgrposts physical

counts

Run SAP report showing

accuracy of inventory

-N

Stop


during order




Stop

If bad shipment is identified



return equipment

Issue correct equipment

RMANeeded?

Yes


shipment

No

Sales Order

Entered


cycle counting

Run SAP report to




-N

Count ItemsWithin

tolerance?

-N

Manually Track accuracy

Yes

Dep-endant

demand?

No

Contact matls mgr

YesGo to WIP

cycle counting process


No



return equipment

RMAProcess

RMANeeded?

Yes


shipment

No

Sales Order

Entered

Shippingerror?

Yes

<$2000?

No

Post countYesMatl mgr

posts

No

Data integrity auditor verifies(one time only)

SameResults?

Yes

No

Generateweekly cycle count report

-N

Stop


during order


during order




Stop


RMANeeded?

Adjust billingto customer for

shipment

No

Sales Order

Entered

Shipping error?

No

Yes

<$2000Yes

Matl mgrposts

No

To RMA process

Yes

Start when customer

shortage claim




RMAProcess

Inventory accurate?

No

Contact customer service

Yes

Stop

P2P Process

P2P Process


cycle counting

Run SAP report to




-N

Count Items and retrieve count sheets

-NManual schedule sent out weekly on items to count


needed

-N

Inventory results memo

published

Unfreeze inventory

before or by 8:00 AM

Inventory posted?

Yes

Schedule recount

No

Receive backflush

discrepancy

Start when having

inventory discrepancy

Change inventory using

various methods

-N

Initiate cycle count

-N

Count items


needed

Stop

Stop

Start when having

subcontractedvendor

inventory

Run vendor inventory report at beginning of

year

We publish a yearly schedule

by month for vendor

-N Each month we supply

purchasing sheets per

vendor

Vendor countsPurchasing

gives matls the results

Reconcile & adjust

inventoryStop

Out

bo

und L

og

istic

s &

Dis

trib

utio

n C

ente

rs

Out

bo

und L

og

istic

s &

Dis

trib

utio

n C

ente

rs

Sa

les

Sa

les

FK

P M

fg

FK

P M

fg

So

urc

ing

So

urc

ing

Fin

ance

Fin

ance

Receive Sales Order

-N

Finished Good Line/Item Created

MRP Code No. Regeneration(3 times day)

-NAre all reqmnt regen?

Someone notices that there is no demand for

item

No

Matls tells MRP to run item

MRP generates all components

reqmnts

Yes Shop runs shop reqmnts

reports

-N

Is matl avail?

Run purch reqmnt reports

Put material on manual hot list

No

Manual coordination

between internal Mfg

depts

-N

Manual expedite

vendor matls

P2PProcess

Make

Produceitem

Is demand stocked

No

Is Order Complete

Is needed materialFound?

Notify Matls of matl

discrepancyNo

Cycle Count Process

Yes

Yes

Is Matl ready for External

cust?

Trx & move to next dept for

more processing

No

Move to shipping location

Yes

Trx matl

SAP trx processed?

Yes

No

SAP trx processed?

No

Yes

Run report manually

throughout day

-N

Yes

Create delivery/picklist

Yes

Backorder?No Yes

No

Sort orders by priority & by

day

Customerservice

expedites sales order

Validate info on delivery

Are parts in stockroom?

Begin pick and pack process

No

Take delivery to stockroom

office

Yes Start picking process

Are parts found?

Cycle count process

No

Deliver to packing area

Yes

Canceldelivery

Consolidate MTO & MTS

Matl as needed

MTOonly

Yes

No

ManifestNeeded?

Are parts found?

Yes

No

Manually create manifest

or UCC128and input SAP

Yes

Small parcels?

No

Send through small parcel

area

Yes

Send to LTL area

No

Create packing list

-N

Place order on truck

Enter trx into ADSI/ConnectShip system

Post good issue(PGI)

Orderships to

customer(once a day)

-N

Billing run at 7:00 PM

Hardcopied invoices are folded and

mailed

EDI invoices transmitted

Customer receives invoice or

credit memos

Billing run posts revenue & receivables

Manual review of watch list

Statements are produced at

start of month for customers

past due to pay

-N

Follow-up with deliquent customer

Paid in full?

Close openAR

Yes

Some customers

pay

Upload bank file for

deposits

Apply cash to customer accounts

Is there a debit

memo?

-N

No No

Run OTC metrics Stop

Investigatecust debit memo or concern

Yes

Is debit memo valid or

needed?

Issue credit cust credit

Yes

IssueResolved

with payment

Yes

No

Sales takes position on

issue

No

Verify & transact matl

Distribution Centers Distribution Centers

For a D/C?

No

Yes

Non-SalesorderDemand

-N

Start OTC

1. Swim Lanes = 21

2. Distinct Activities = 415

- AUG = 37

- FKP = 267

- SDM = 37

- SVWT = 43

- WN = 31

3. Handoffs = Large numbers!

67

OTC To-Be Main ProcessS

upp

ly C

hai

n T

eam

OAPprocess

1Collections

ManagementProcess

8Outbound logisticsProcess

6

ProductionProcess

4

STP

3

S&OP

2

CycleCountingProcess

5

Order Scheduling

Process

10

Customer

7

Cas

h

TPO: Third-Party Shipment

Trigger to collect for TPO (only)

MTS & BTS

MTOor ATO

NPDI

11

Planning& MTSproductionorders

BTS

OTC KPIReporting

9

Process Cntrl Metric

Reporting

12

From OTC subprocesses

13

68

. Terms today do not facilitate the timely receipt of cash / - ( . ., 1 ) - . Credit policy consumes significant available OAP OTC lead time e g day OAP

- . Possible lack of correlation between orders on credit hold and invoice collections which affects total customer lead time ( ?). Mexico has different terms and they are informal with respect for handling China

There is a disconnect between commission payouts and cash receipts ( ) Scrap process informal without ownership reporting issue - ( . ., ) Union contract a problem for perceived to be vision for OTC e g Midwest DC @ FKP Orders that have shipped and even delivered are not deemed to be closed today and may be modified ( ) -- - Mixing of standard product and special orders special finish lead time issue

Customers return products without an RMA number Existence of obsolete or seldom used parts

Wrong people making decisions affecting orders , , , . Invoicing problems associated with pricing quality quantity expedited shipments . Inventory is not accurate

- . Weak handling of the returns sub process of OTC ( ) Reject Matl for Rework RMR is not followed

( ) Inaccurate bill of materials BOM ( . ., , ) Discipline is not uniformly applied e g union contract other Customer shipping errors unacceptable

.No perfect order performance tracking and metric - / ( . ., , - , .).Lack of comprehensive under standing about profits benefits versus what it cost in OTC to do it e g old low volume product etc

No global common metrics for OTC No global common reporting tool for OTC metrics Lack of variance analysis

( . ., - )We have very limited automation for information processing e g bar codes ( . ., ) . China is not on SAP e g China resulting in lack of information and synchronization

, - Due to WIP processing methods scrap material cannot be processed in real time . A need for automated SAP processing for foundry scrap

( )Manually updating prices in Augusta every Monday morning time consuming No visibility of overseas items coming in or promise dates

Manifests are manually intensive 9 Manifests are sending only tracking numbers back to SAP

( , .)No integration between tracking numbers and handling units weights etc - ( - : )Delivery processing is not real time post goods issue PGI

Customers are requiring detailing packing for advanced notification Innovation ( . ., , ). Communications problems within sites e g quality problems production schedules ( . ., , ). Communications problems with other Sloan sites e g quality problems production schedules

. Inventories build at times when large volume deliveries occur from China versus JiT , , Substandard collaboration between Operations Quality and Customer Service -- ( ) Engineering changes lack of communication lines with all parties affected including customers

Lack of communications with Credit on order handling plans Lack of understanding of who is responsible and accountable for information and resolution - ( / - )Each location's prod schedule is not synchronized for published lead times especially slow moving non stock and old parts , -When demand exceeds supply we keep promising the customer the same lead time- Lead times are too long

Accuracy of promise dates- Lead times are misrepresented to customers

’ We don t ask customers what delivery dates they would like to have Lack of a quick change set up program to support OTC objectives Lack of product knowledge on the floor Lack of work instructions and training TQM principals are not being used in the process . Need for continuing education and training to support continuous improvement

. No corporate sales and operations planning for new and existing products - ( ) Lack of rough cut capacity planning resource requirements planning

-- - No forecasting must anticipate long lead items Not doing real forecasting to include integration with promos and supply chain ( ) No total productive maintenance system TPM ( ) . Lack of statistical process controls SPC knowledge and controls - .New product lead times are such that orders go past due and are sold before OTC can fulfill Lack of coordination of new products into OAP and OTC

- We take orders with standard lead times for new products not available ’ ; .We don t know the customers requested delivery date we may not deliver products timely to their need

.Frequent problems having clean orders in OTC ’ ; . OTC doesn t always know what the customer wants it appears that the customer does not know what they want & . PTP is not controlling purchase at the raw materials and S OP level causing surplus inventory ( . ., ) No vendor mgt program e g receive product from vendors with wrong counts but not caught until too late

, Vendors deliver materials late creates shortages ( / )Raw material availability is a problem for certain commodities AMI substitutes

Purchase material shortages 2 ( ). We cannot take a clean order and deliver it in four days ATO and days MTS on average or whatever the customer and competitive situations dictates - . All product are promised to customers with the same lead time

/ / ( . ., , . ). Collections DSO AR is not collecting ASAP e g disputes terms vs actual . Sloan does not have one face to the customer / . Lack of order coordination driven into assembly fulfillment ( )Lack of capacity planning CRP

/ & Kanban QR levels not dynamically set based on S OP plans and OTC constraints/ - Kanban QR use needs to be re reviewed to meet strategic plan

. Expedited customer orders adversely affect other previously promised orders -- Multiple shipping locations customer gets multiple shipments Customer returns material and we lose it

Too many materials shortages Finished good inventory strategies lacking that prevent complete shipments

; Inaccurate promise dates cause us to spend a lot of money on expedited shipments no way of calculating accurate promise delivery dates The returns goods process at all locations is inadequate Lack of supply management MTS items intended for DC are sent to regular customers instead Too much rework No way to verify customer claims about order inaccuracies - ( ) We take orders with standard lead times for products under revision ECM not available

( , , )Length of time for documentation to get through the system MDM cost of products BOM's Process Change Mgt in shop not engaged

( , - - , ).Lack of product lifecycle mgt discontinuations end of life product rationalization ( )Tool Mgt System is not used as part of a solution

Tactical Order-to-Cash

Problems List

69

Weaknesses In The As-Is1. Commitments are made by Sloan to deliver products to customers without ’ systematic consideration of the customer s desired delivery requirements2. Commitments are made to deliver products to customers without , , -consideration for product availability capacity or actual product lead time3. Other processes contaminate OTC with bad data ( . ., e g Inaccurate information on sales orders causes incomplete or wrong pricing requiring a debit

)process to occur at time of payment4. - OTC has clean up processes to make up for ongoing discipline and transaction quality problems ( . ., - ; e g discrepancy based process cycle counting

[ ]; ; [ ])Rejected Material for Rework RMR scrap and reclaim process Return Materials Authorization RMA5. Lack of process documentation6. Lack of OTC process controls ( . ., [ ]; ; [ ])e g statistical process control SPC capacity planning Design for Manufacturability DFM7. ( . ., .)Too many steps needed to correct for inherent inaccuracies in the process e g inventory adjust8. ( )Orders flow for inactive or internal products FD9. , Due to our highly variable product configurations we lack repetitive production focus in some factories and in the supply chain10. ( . ., 9:00)There is a dependence on manual expediting to make up for a deficient process e g11. ( . ., , )Planning cycles and other transactions are sometimes weekly rather than daily e g In WN MRP runs weekly PGI is daily12. / Multiple product variations and old obsolete products make it difficult to be able to offer all products within std lead times13. Our distribution strategy does not support our corporate strategy14. Planning cycles and other transactions are sometimes weekly rather than daily ( . ., , )e g In WN MRP runs weekly PGI is daily15. The process lacks the ability to utilize a forecast for demand planning and a production plan for operations planning16. OTC is reactive rather than proactive ( . ., - - - )e g trying to inspect quality in Vs quality at the source17. ( ) Kanban QR levels are not planned and reviewed on a regular basis nor are they always used properly18. - Commitments are made to deliver products to customers without an on going consideration real costs and true product profitability19. There is no global inventory management and control structure and related policies20. , / , Payment terms cause poor order flows in FKP for the factory D C and collections processing21. ( ) Kanban QR levels are not planned and reviewed on a regular basis for appropriate quantities22. We negotiate an additional discount for customers with problems paying without ramifications23. Sloan entities are not viewed as parts of a global Sloan supply chain24. , , , OTC does not mandate global coordination communication facilitation and focused leadership25. Mgt has historically been undisciplined and informal26. We use one process to make another process work ( . ., ; )e g credit processing Vs collections cycle counting Vs inventory control27. There is poor utilization of other processes to help OTC ( . ., [ ], , 2 )e g statistical process control SPC quick change methods P P28. . Sub processes within OAP and OTC are poorly mixed ( . ., e g It appears we use the credit group at the time of new order credit processing for

).enforcement of collections rather than have a process that enforces credit as a part of a collection sub process29. Missing policies that determine who makes decisions about what products are saleable30. , , While Sloan has a premier business system SAP there is a lack of automation throughout the process ( . ., [ ], - , , .)e g reporting BI bar coding costing etc31. , The way SAP is configured in some areas it is difficult to automate certain metrics consistent with BIC ( . ., )e g sales order performance32. There is no process or automated linkage from Sloan entities to Sloan suppliers33. . . There are poor automated linkages to customers EDI linkages are minimal and they are suspect for poor quality ISA linkages use manual entry of

– . ( ).data the old fashioned way by hand There is no use of vendor managed inventory VMI

70

Unknown customer

request dates

Widespread shortages

(make & buy)

Bad promise dates to

customers

Past duesales orders

Truecapacityunclear

Inventoryis not

accurate

Lack of viable"schedules"

(make & buy)

Poor process controls

(SPC, InvAcc, Sched)

Time to deliver many products

too long

Large amount of manual expediting

Implementpull system

No activesales forecast or production

plan

No effective final assy schedule

Poor disciplines

Turn onATP then gATPfor sales order

scheduling

Implement best practice cycle

counting

ImplementbasicS&OP

Implement a final assembly

schedule

Hold people accountable for KPI's & PCM's

Implement STP supplier

scheduling

Poorquality

Lack of direct& indirect

productivity

Ineffective cycle counting

Constraints are not known &

exploitedImplement

basic TOC to prioritize all CI

activities

People not heldaccountable(answerable)

-N

Monitor & react to KPI & PCM

charts

Symptoms

Lack of leadership

Causes Root Cause Actions Actions

High overhead & variances

Implement KPI/PCM

process control charts

No effective shop pull system

Reactiveexpediting& reactivemind sets

Expeditingrules

Poorly executed

quality program

Put KPI & PCM charts at each

work center

Herosyndrome

Create & enforce BIC

policies

Eliminate need for heroes

Develop accountabilities

-N

Culture & Change Mgt Provide

leadership

71

Unknown customer

request dates


(make & buy)


customers


Truecapacityunclear

Inventoryis not

accurate


(make & buy)




too long




plan


Poor disciplines


scheduling


counting

ImplementbasicS&OP


schedule



scheduling

Poorquality


productivity



exploitedImplement


activities


-N


charts

Symptoms

Lack of leadership



Implement KPI/PCM




Expeditingrules

Poorly executed

quality program


work center

Herosyndrome


policies



-N


leadership

72

Unknown customer

request dates


(make & buy)


customers


Truecapacityunclear

Inventoryis not

accurate


(make & buy)




too long




plan


Poor disciplines


scheduling


counting

ImplementbasicS&OP


schedule



scheduling

Poorquality


productivity



exploitedImplement


activities


-N


charts

Symptoms

Lack of leadership



Implement KPI/PCM




Expeditingrules

Poorly executed

quality program


work center

Herosyndrome


policies



-N


leadership

73

Unknown customer

request dates


(make & buy)


customers


Truecapacityunclear

Inventoryis not

accurate


(make & buy)




too long




plan


Poor disciplines


scheduling


counting

ImplementbasicS&OP

Implement FAS/MPS &

shop schedules



scheduling

Poorquality


productivity



exploitedImplement


activities


-N


charts

Symptoms

Lack of leadership



Implement KPI/PCM




Expeditingrules

Poorly executed

quality program


work center

Herosyndrome


policies



-N


leadership

74

Unknown customer

request dates


(make & buy)


customers


Truecapacityunclear

Inventoryis not

accurate


(make & buy)




too long




plan


Poor disciplines


scheduling


counting

ImplementbasicS&OP

Implement FAS/MPS &

shop schedules



scheduling

Poorquality


productivity



exploitedImplement


activities


-N


charts

Symptoms

Lack of leadership



Implement KPI/PCM




Expeditingrules

Poorly executed

quality program


work center

Herosyndrome


policies



-N


leadership

75

Sample Sloan Process Results Strategic Planning Process (SPP)

Product strategy to a full mgt process with the BSC Employee Performance Mgt (EPM)

SPP driven goals & appraisal throughout the company Customer Support Process (CSP)

XX% call abandon rate reduced to X% New Product Development (NPD)

Silos to breakthrough “tiger team” development with gates; ideation

Order Acquisition Process (OAP) Automate pricing/approvals; reworked credit process; to be

reorg. Quality Assurance Process (QAP)

ID sigma/COQ levels; formal methods/processes (e.g., DMAIC) Master Data Mgt (MDM)

3.7 day SAP MDM loads to <3 hour MDM loads Engineering Change Mgt (ECM)

Everything goes mentality to ECO business case analysis

76

How Does Process Transformation Change the

Business?1. Focus is on strategic differentiation not just oper. excellence

2. The strategy process drives structure3. Strategy and structure drive process, resources, &

metrics4. Methods are clear: Zoom in to improve / zoom out to

design5. Design work is end-to-end work6. Cross-functional “process” teams are the best teams7. For transformation, engage all the levers of holistic

change8. The role of top management shifts to EPO

responsibilities9. The role of middle management shifts to coaching10.BPM engages learning & growth during process

design11.IT, HR, and Finance become enabling groups for core

areas12.Process design sets the stage for business model

innovation13.You don’t implement systems; you implement

processes

Thank you!

The Process Enterprise: How Process Transformation Changes the Business Tom Coleman Chief...

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