excellence
Competitive solution 5: Ensure process workflows are easily reconfigurable to match inevitable changes in customer needs and values.
overview
The design of process workflows to build products or deliver services should be based on an organization’s marketing strategy. In other words, an organization should design its products and services to meet customer needs and value expecta- tions. However, there are many examples of products and services that have been very well designed from an internal viewpoint, but customers are disappointed when they purchase and use them. In these situations, there may be a feeling that some- thing is missing or should not be present. Examples include higher than expected purchase price, expected features are not present, or there are process breakdowns related to quality and delivery. These situations are unnecessary if an organization applies the concepts discussed in Chapters 1 to 4. In summary, a process workflow design should follow the design of a product or service because it is based on the voice of the customer (VOC) and marketing strategy. This simple concept will ensure that the design of a process workflow is aligned with the VOC and also meets an organization’s productivity goals.
The goal of process workflow design is to create workflows that will dynami- cally meet external demand, within ranges of capacity and at service levels designed into the process, using a minimum amount of required resources. Some important metrics that enable an organization to measure and manage to this goal are listed in Table 5.1. Reducing the throughput rate or cycle time of a process workflow helps reduce its required resources because the work is migrated toward unit flow production. This will be the subject of Chapter 6. Also, the number of changes that are required to finalize a process workflow design is an indicator of how well the workflow was designed up front by the concurrent engineering (CE) team. The per- centages of warranty, scrap, rework, and similar failure costs are also good indica- tors of how well a process workflow was designed. Failure costs impact direct labor and material usage and, as a result, the standard cost of a product or service. It is important that the new process workflow meet the original standard cost target set by the CE team. For this reason, failure costs must be prevented or minimized in the design of a process workflow. It is also important to measure process engineer- ing costs as a percentage of total revenue. These costs include indirect labor as well as all cumulative project costs of the process engineering team. Finally, if process workflows have been designed properly, the measured process capability of new equipment used in a process should meet customer requirements.
The specific workflow system used by an organization will vary by industry, available technology, and an organization’s internal work procedures and controls. Although the design of a product or service will have a major impact on the process workflow design, there are efficient ways to design workflows, which can signifi- cantly increase an organization’s operational efficiency. However, the exact design of a process workflow depends on the specific products and services an organization produces and the industry. Table 5.2 lists ten major steps necessary to efficiently design process workflows in today’s world. The first step coincides with a major theme of this book. This is to align the productive resources of an organization with the VOC based on strategic goals and objectives. In fact, this theme has been a major focus of Chapters 1 to 4. For this reason, it is critical that the VOC is
table 5.1 Competitive metrics: Process design
1. Throughput time of the workflow
2. Number of changes to final process design
3. Percentage of warranty, scrap failure, rework, or similar costs to standard cost based on process design issues 4. Actual standard cost versus target cost for the process 5. Process engineering costs as a percentage of total revenue 6. Process capability of new equipment
Using Lean Methods to Design for Process Excellence n 129
accurately translated into the product or service design in the new process work- flow. This implies process engineering should have been an integral part of the CE team. Also, there is an implication that design engineers have followed best-in-class methods, such as design for Six Sigma (DFSS), through their CE project activi- ties. In other words, they should have executed all design deliverables through the production and commercialization phases of the new product development process, which was shown in Figure 4.1.
An especially important part of the product or service design process is the use of design-for-manufacturing (DFM) tools, methods, and concepts. These were discussed in Chapter 4. DFM was shown to be a critical set of tools in creating easy-to-build, lower-cost, and higher-quality alternatives. Another important con- cept discussed in Chapter 4 was the use of design-failure-mode-and-effects-analysis (DFMEA). The DFMEA is important in translating the VOC into production operations because it provides process engineers with a clear line of sight to the
table 5.2 10 key Steps to design Workflows
1. Ensure the VOC has been effectively and accurately translated into the process design.
2. Ensure the product is designed using best-in-class methods, including design for manufacturing (DFM) and design failure mode and effects analysis (DFMEA) methods.
3. Focus on the key outputs of the process related to utility and functionality. 4. Create the simplest possible process design, ensuring it has high process
capability.
5. Create flexible and virtual transformation systems using best-in-class resources from across the world.
6. Ensure the work is organized so all the information necessary to perform it is localized at its source.
7. Ensure first-pass yields are high and the work is done only once, and a process failure mode and effects analysis (PFMEA) is created on the new process design.
8. Balance the system’s throughput using the calculated takt time, and ensure the bottleneck and capacity constrained resources meet the takt time requirements.
9. Use visual controls in the process and across the supply chain to ensure everyone has viability to system status.
10. Continuously improve process performance using Lean, Six Sigma, and related process improvement methodologies.
important design characteristics of a new product or service, including current risks related to fit, form, and function. In addition, a DFMEA provides recommended countermeasures to prevent product or service failures. Process engineering uses the DFMEA and other design and process engineering documentation to design pro- cess workflows. Once all the necessary information has been made available to the process engineering group, they will create process workflows to produce a product or service to consistently meet customer requirements.
A process workflow should be designed so it can be deployed across an orga- nization’s global supply chain in a way to increase system flexibility and provide sufficient capacity to meet customer demand. In other words, a process workflow should be designed so its work can be performed anywhere in the world and at any time. Another important consideration in the design of a process workflow is that it should be organized in a way in which the information necessary to deploy the process workflow is readily available to those who will use it and at a high reliabil- ity and easy maintenance levels. It should also be easily transportable. This means work instructions, testing procedures, and other documentation necessary to per- form the work must be translated into local languages and be culturally neutral. Additional considerations are that the documentation of the process workflow be visual and easy to understand without extensive training. Although more complex process workflows will have higher failure risks, these can be mitigated through careful planning by a CE team. In addition, risks will be higher when a new prod- uct or service design is pushing the limits of technology.
A process failure-mode-and-effects-analysis (PFMEA) is created by process engineering using the DFMEA. The PFMEA is critical in identifying potential fail- ure points within a new process workflow or where modifications may be required to achieve standard costs and yields. Once a process workflow has been designed using Steps 1 through 7 of Table 5.2, its throughput should be balanced across its operations or workstations based on the required takt time of the system. Takt time is calculated by dividing the available production time by the required number of units that must be produced during the available production time. As an exam- ple, if there were 480 available minutes in a day and 60 required units, then the takt time would be calculated as 1 unit every 8 minutes. Bottleneck resources may adversely impact a system’s takt time they are not available to produce at the required throughput rates. Although most balancing analyses focus within a single facility or takt time, balancing of workflows across operations or workstations can also be done across an entire system regardless of its location. In other words, if a process is geographically dispersed, then its takt time can be calculated through electronic means and controlled virtually across the system. In this scenario, process measure- ments and controls should be electronic and allow for easy interpretation of the sys- tem’s dynamic status anywhere in the world at any time. This information should also be readily available to all supply-chain participants. Finally, it is important to deploy initiatives such as Lean, Six Sigma, Total Productive Maintenance (TPM),
Using Lean Methods to Design for Process Excellence n 131
and related process methodologies to continually improve the newly designed pro- cess workflow over time.
A paradigm of process workflow design is that the complexity of a process is in many ways dictated by the degree of external customer interface. This para- digm is shown in Figure 5.1, in which a high degree of customer interface requires skills to meet operational requirements as measured by operational complexity at the organizational and customer interface. This implies that high-contact process workflows should be less efficient, less operationally flexible, and more costly than lower interfacial operations, i.e., backroom operations. Although this concept has been true over the past several decades, it has begun to change in some industries due to the convergence of several trends, including increases in technology, offshor- ing, changes in the global geopolitical environment, and increasing global com- petitiveness. These convergent trends have created a chronic situation of high labor capacity in areas such as software development, design engineering, call center management, and financial transaction processing. These trends have been enabled by increasingly highly skilled labor pools across the world in countries such as India and China. Also, offshoring has resulted in higher levels of product and process workflow standardization to facilitate the efficient deployment of work across the world. The resultant business benefits are seen as lower per unit transaction costs
Supplier Input Process Output Customer
Low Customer Interaction……High Customer Interaction
High Efficiency…………...……Low Efficiency High Standardization……….Low Standardization Low Cost………...High Cost Low Variation…….………...High Variation
Low Skills……….…High Skills Remote Operations……….Near Customers Work is Scheduled …………Work Not Scheduled
Sales Representative Financial Advisor Invoicing Call Center Operations Manufacturing Operations Check Processing Manufacturing: Service:
Level Capacity ………. ..Variable Capacity Operational Environment ….Customer Environment
than previously attainable in locations where material and labor costs have been higher. These trends were summarized in Chapter 1. In fact, it has been found that with enabling technology such as business process management, the opera- tional characteristics of many process workflows can be standardized to a degree unachievable several years ago. Chapter 15 discusses business process management (BPM) and workflow management (WM) from an information technology (IT) perspective. This discussion will include business process modeling and analysis (BPMA), business intelligence (BI), and business activity monitoring (BAM), as well as similar topics. These systems have directly impacted our ability to work anywhere in the world because many process workflows are now virtual.
In conjunction with enabling initiatives such as Lean and Six Sigma, process workflows should be analyzed relative to the VOC and in contrast to systems that exhibit isolated components; permeable systems should be created using business process management concepts to create virtual workflows that allow an entire sup- ply chain to interact with its customers and their suppliers dynamically and virtu- ally, but on a standardized basis. These permeable systems integrate backrooms with customer interfacing operations. As an example, an improvement project was initiated within a call center to reduce average handling time (AHT) of calls from customers. The process was characterized by a long AHT and a low customer ser- vice level. AHT is the time an agent spends on the phone providing information to a customer. The AHT also includes follow-up activities that are necessary to close out a customer inquiry. Service level is measured as the quality of the agent and customer interaction as specified by internal call center standards. It should be noted that AHT and service-level targets vary by customer market segment. In this example, the operational standards required that agents be assigned to differ- ent market segments based on their skill and experience levels. Also, in the more complicated market segments, customers were expected to ask detailed questions concerning their service package, so the allocated AHT was longer than that in other market segments. The project was focused on one market segment. The his- torical AHT, for this market segment, based on call center statistics, showed that the AHT was 120 seconds versus the 90-second target. It was found, through data collection and analysis, that the AHT sometimes exceeded 240 seconds for certain agents. It became evident that there were many process breakdowns after mapping and analyzing agent and customer interactions. This situation was caused by a lack of process workflow standardization, training, mistake-proofing, and other issues. As an example, it was found that agents did not have standardized scripts for the customer interaction. This forced them to answer the customer’s questions in a nonstandardized manner. This practice increased the length and variation of the customer call. Also, agents did not have easy access to the information necessary to answer the customer questions. This resulted in additional lost time. A third reason for the high AHT was poor training of agents due to high employee turnover at the call center. The solutions included standardizing the process workflows for each market segment through implementation of 5-S (sorting, simplifying, sweeping,
Using Lean Methods to Design for Process Excellence n 133
standardization, and sustaining) methods and mistake-proofing strategies. These and other Lean concepts will be discussed in Chapter 6. After completion of the project, the AHT was reduced by more than 20 percent. Of course, customer inter- actions that were more complicated due to their market segmentation would be expected to take longer on average than the simpler interactions, but standards could also be developed for these more complicated process workflows.
Sales force management is another example in which operational standardiza- tion could be deployed to increase operational efficiency as well as service qual- ity. As an example, in conjunction with the establishment of sales force goals and objectives, analysis of the process workflows associated with the sales process often shows breakdowns related to time, quality, and cost. The root causes of these process breakdowns can be analyzed to increase the process throughput and quality. As an example, the efficiency of a sales force, as measured by the number and types of its sales activities, can be studied using Lean or Six Sigma DMAIC (define, measure, analyze, improve, and control) methods, root causes for poor performance identi- fied and eliminated, and the process standardized to ensure that a sales organiza- tion increases its productivity. Alternatively, the sales process workflow could be designed optimally using a DFSS approach. These simple examples do not imply that operations at customer interfaces are not complicated or can be completely standardized, but only that much more can be done, given today’s technology, to improve productivity and service quality and increase organizational efficiency.
Figure 5.2 shows that in today’s world, a new paradigm is evolving, in which workflow standardization enabled through technology and process improvement initiatives creates lower process variation, increased flexibility for its users, and higher throughput rates. The resultant systems are characterized by higher opera- tional efficiencies, higher quality, and lower per unit transaction costs. However, there may be limitations to the concept of workflow standardization. As an example, in some industries, a point of customer contact must be user-friendly, as opposed to an environment that is designed from a perspective of operational efficiency. However, depending on the specific market segment, there are increasing examples in which customers serve themselves or purchase in environments that have been designed from an operational efficiency perspective. Sam’s Club, Costco, and BJ’s are all examples in which customers shop in a warehouse environment. The process workflows, in these environments, are characterized as highly efficient, but still have a high degree of customer interaction. Also, an increasing number of trans- actions are initiated and completed by customers from their homes. An example is shopping online, in which supplier organizations have entirely automated their sales process workflows to improve operational efficiencies.
Complicating the design of a process workflow is that different products or services are associated with specific production delivery systems based on available technology and cost per unit considerations. As an example, Figure 5.3 shows four basic types of production or transformation systems. These include job shops as well as batch, assembly, and continuous operations. Figure 5.3 breaks down the four
Batch Operations Continuous Operations No Operational Flexibility Operational Flexibility Variety Low High Low High Product Volume Job Shop Assembly Operations
figure 5.3 operations strategy based on volume versus variety (old paradigm).
Supplier Input Process Output Customer
High Efficiency High Standardization Low Cost Low Variation Sales Representative Financial Advisor Invoicing Call Center Operations Manufacturing Operations Check Processing Manufacturing: Service:
Low Skills……….…High Skills Remote Operations ….……….Near Customers Work Is Scheduled …………Work Not Scheduled
Level Capacity ……….……. ..Variable Capacity
Using Lean Methods to Design for Process Excellence n 135
systems into the classic dimensions of volume and variety, as well as a third dimen- sion related to the degree of operational flexibility associated with each system. A job shop-type transformation system is characterized by operations performed by dedicated machines and highly trained people. Products and services that move through a job shop require unique sequencing and combinations of work. This results in a diverse product mix. An example of a job shop would be visiting a hos- pital and then being moved from department to department based on the type of medical service you received from the system. Another example of a job shop would be the manufacture of a product that has been customized for a specific customer and as a result requires a separate machine setup every time the product is manu-