Process Change Management Lecture 10 PDF

Process Change Management Dr Petya Koleva ©copyright, Heriot-Watt University, 2024  Week 10 Key Points Process Mapping Influence of Scientific Management – Taylorism and Fordism Process Redesign Business Process Reengineerin...

Process Change Management Dr Petya Koleva ©copyright, Heriot-Watt University, 2024  Week 10 Key Points Process Mapping Influence of Scientific Management – Taylorism and Fordism Process Redesign Business Process Reengineering (BPR) Total Quality Management (TQM) Six Sigma Lean Operations ©copyright, Heriot-Watt University, 2024  Pre-Work: Ford Account Payable Process 1. What were the issues with Ford accounting payable process before the BPR implementation? 2. Explain how Ford managed to resolve the issues with its account payable process by implementing BPR? 3. What are the business process management lessons from the case? ©copyright, Heriot-Watt University, 2024  BPR Examples: Ford Motors ©copyright, Heriot-Watt University, 2024  Defining ‘processes’ Processes (or Business Processes): Bundles of routine tasks (the operational mechanics of day-to-day business) Concerned with identifying and improving the sequence, location and timing of routine tasks Underpinning literature: Operations management (Beech and MacIntosh 2012) ©copyright, Heriot-Watt University, 2024  Process Analysis Based on Gilbreth’s “Process Charts—First Steps in Finding the One Best Way” Start / Proces Analysing processes often End s involves structured techniques: breaking complex systems and processes down into a Decision Information series of simpler ones or Point Flow sub-processes. Flow Charts ©copyright, Heriot-Watt University, 2024  Business Processes Flow Start A Representation of Receive request for product delivery a Simple Process No Current Go to customer? create account Ye s Check stock availability Deliver goods End ©copyright, Heriot-Watt University, 2024  A more complex example: ©copyright, Heriot-Watt University, 2024  Process Analysis Levels of processes and nesting of processes A business process analysis is a method to review the processes that govern business operations. This process includes five steps: reviewing processes, collecting data, analyzing processes, identifying opportunities for improvement, and making changes. Top level A C B B1 B2 B5 Lower level B3 B4 ©copyright, Heriot-Watt University, 2024  Influence of Scientific Management - Frederick Winslow Taylor Scientific management theory is a method of improving efficiency in the workforce. As its name implies, this management theory uses scientific methods to assess work processes. The scientific method consists of three steps: observation, experimentation, and analysis. When properly implemented, scientific management theory improves productivity. It is an evidence-based method that prioritizes efficiency and reliability. Having scientifically rigorous work methods in place creates clear expectations for employees because it establishes a single right way to do things. It also gives managers a unified standard against which to evaluate their employees. Mass production techniques. ©copyright, Heriot-Watt University, 2024  The Principles of Scientific Management 1.Choose methods based on science: Use the scientific method to determine the most efficient way to complete a task. Focus on increasing productivity and profits. 2.Assign workers to tasks based on their natural skillset: Get to know your workers, discover what they’re good at, and place them where their skills will be the most useful. 3.Monitor your workers’ performance: Observe what your workers are doing while they are on the clock so that you can quickly address any problems. If some workers are confused or unproductive, it is up to their managers to step in and fix the issue. 4.Divide workloads appropriately between workers and managers: Make sure that managers understand how to plan and train workers and that workers understand how to implement those plans. ©copyright, Heriot-Watt University, 2024  Taylorism – Job Design A task can be best defined as a piece of assigned work expected to be performed within a certain time. Job designers must strictly and thoroughly identify tasks that need completion. Motivation describes forces within the individual that account for the level, direction, and persistence of effort expended at work. Individuals need to be compelled, excited, and passionate to do their work. Managers should design jobs that motivate employees. Resource allocation occurs when an organization decides to appropriate or allocate certain resources to specific jobs, tasks, or dilemmas facing the organization. In job design, it is necessary to identify and structure jobs in a way that uses the company’s resources efficiently. Appropriate resource allocation allows large organizations to foster and develop innovation in their workforce and underscores strategy through distribution. Reward systems also play a role in job design. Reward systems include compensation, bonuses, raises, job security, benefits, and various other reward methods for employees. An outline or description of reward packages should be established when constructing jobs. ©copyright, Heriot-Watt University, 2024  Fordism Fordism is characterised by: The introduction of an interlinking system of conveyor lines that feed components to different workstations to be worked on The standardization of commodities to gain economies of scale. Initially it took 14 hours to assemble a Model T car. By improving his mass production methods, Ford reduced this to 1 hour 33 minutes. Between 1908 and 1916 the selling price of the Model T fell from $1,000 to $360. ©copyright, Heriot-Watt University, 2024  Modern Fordism ©copyright, Heriot-Watt University, 2024  Process Redesign So why focus on process redesign? Processes tend to ossify over time and become outdated Experience suggests that there are many efficiency (and effectiveness) gains that can be achieved through process redesign New technologies can enable a radical redesign of existing processes Changing customer expectations and capacities require and/or enable process change ©copyright, Heriot-Watt University, 2024  Processes and Re-engineering Re-engineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as cost, quality, service and speed. A focus on business processes rather than manufacturing processes alone. Hammer and Champy, 1993 ©copyright, Heriot-Watt University, 2024 Breakpoints and New Processes Breakpoint Diminishing returns force Improvement new process development Degree of Tim e  A Generic Approach to Process Redesign: Identify customer (external and/or internal) requirements Collect and analyse data on work processes Use process mapping and process management heuristics (flow charts, cause-and-effect diagrams, statistical process control, activity times, resource flows, etc) to understand and analyse processes Eliminate wasted steps in processes Identify and address bottlenecks Improve quality (particularly by reducing variability in quality) ©copyright, Heriot-Watt University, 2024  Two Underlying Approaches to Process Redesign Systematic Clean Sheet Re-design, identify and Re-think the delivery of understand existing the product or service processes and use them starting from scratch to systematically create new processes to deliver the desired outcomes ©copyright, Heriot-Watt University, 2024  Four broad improvement approaches Total quality management (TQM) – puts quality and improvement at the heart of everything that is done by an operation. Lean Synchronisation – an approach that emphasizes the smooth flow of items synchronized to demand so as to identify waste. Business process reengineering (BPR) – a radical approach to improvement that attempts to redesign operations along customer-focused processes rather than on the traditional functional basis. Six Sigma – a disciplined methodology of improving every product, process, and transaction. All these improvement approaches share overlapping sets of elements. ©copyright, Heriot-Watt University, 2024  Approach-1: Total Quality Management (TQM) Making processes Operations better process improvement Managing operations process Total quality improvement management Failure prevention and recovery Preventing processes Total quality management is a structured approach becoming worse to overall organizational management. The focus of the process is to improve the quality of an organization's outputs, including goods and services, through the continual improvement of internal practices Total Quality Management Approach 2 – Lean Synchronization Lean’s fundamentals can be traced back to Toyota Production Systems (TPS). The Japanese Taiichi Ohno is the founder: 1.Lean starts with determining the added value for the customer; a product or service that meets certain conditions. 2.The process that produces this value, the so- called value stream, is then mapped out. 3.By carrying out this exercise, it becomes clear where wastes are and an improved process with “flow” can be made. These wastes become transparent through the collection of data around this and together with the people in the process the process improves step by step. 4.Then you look at how you can set up the process so that it starts when the customer asks for it and then delivers exactly on time, when the customer wants it. ©copyright, Heriot-Watt University, 2024 5.People in the organization will see where improvements can be made and work on their own  Lean Synchronisation Synchronised approach: the demand pulls the correct supply response in which all processes are ‘in sync with the demand’ Orders Orders Stage A Stage B Stage C Deliveries Deliveries Synchronisation means that the flow of The key principle of lean synchronisation products and services always deliver is exactly what customers want, in exact moving towards the elimination of all quantities, exactly when needed and waste which in turn leads to an operation exactly where required. Lean that is faster, more dependable, produces synchronisation is to do all this at the higher quality products and services and, lowest possible cost. above all, operates at low cost. ©copyright, Heriot-Watt University, 2024  Approach-3: Business Process Re-engineering (BPR) Business Process Reengineering is the radical redesign of business processes to achieve dramatic improvements in productivity, cycle times, quality, and employee and customer satisfaction. Companies start by assessing what work needs to be done to deliver customer value. Rethink business process across functions Radical rethinking and redesigning of the process Have those that use the output of processes perform the processes Put decision points where the work is performed ©copyright, Heriot-Watt University, 2024  How Is Business Process Reengineering Implemented? Business Process Reengineering is a dramatic change initiative that contains seven major steps: 1. Refocusing company values on customer needs and eliminating low-value work 2. Simplifying and standardizing overly complex work, and automating repetitive work 3. Enabling processes with modern systems and data 4. Locating work in the most efficient and effective environment (departmentalization) 5. Reorganizing a business into cross-functional teams with end-to-end responsibility for a process 6. Rethinking basic organizational and people issues 7. Determining appropriate roles for third parties or outsourcers, focusing on where they truly add value ©copyright, Heriot-Watt University, 2024  BPR advocates re-organising processes to reflect the natural processes that fulfill customer needs Functionally-based processes Function 1 Function 2 Function 3 Function 4 End-to-end process Customer needs fulfilled 1 Business processes Customer needs End-to-end process 2 End-to-end process 3 ©copyright, Heriot-Watt University, 2024  Six Sigma was developed by Motorola (1980) and widely and very successfully Approach 4 - Six Sigma applied by General Electric. The structured project approach Define, Measure, Analyze, Improve and Control (DMAIC) ensures that the root cause of a problem is first found before a solution is implemented. By applying the DMAIC Model you use the capacities of your employees within the organizational structure in an efficient and intelligent way to create as much value for the customer as possible. ©copyright, Heriot-Watt University, 2024  Approach 5 – Lean Six Sigma What is Lean Six Sigma? The combination of two globally proven methodologies The two methods are very complementary because they both start from the wishes of the customer, the process and improve it together with employees. Lean Six Sigma tackles business problems at the core and ensures continuous improvement. ©copyright, Heriot-Watt University, 2024 How the 5 approaches relate to the elements Emphasis on rapid change Business process Radical/ reengineering breakthrou (BPR) gh End-to- improveme Six end nt Sigma processe s Process Evidence- Emphasis based based Emphasis on on analysis Custom decisions Synchroniz methods: solutions: er Reduce ed flow Systems how to do it what to do centric variatio Waste Emphasis and n Perfectio identificatio on procedure education n is the Improveme s n Customer Include goal Continuous nt cycles relationshi all Lea ps people improveme Total quality nt managemen n Emphasis on t (TQM) gradual change  Conclusions Streamlining work processes can lead to improved efficiency A customer and quality focus can lead to better products and services But achieving these benefits is not a technocratic exercise The process approach adopted needs to be a suited to the organisation Attention needs to be paid to organisational culture and people issues when redesigning processes. BPR/TQM, etc: significantly different approaches or mainly ‘old wine in new bottles’? ©copyright, Heriot-Watt University, 2024  References BEECH, N. & MACINTOSH, R. 2012. Managing Change: Enquiry and Action, Cambridge University Press. Chapter 10 Hammer, M. 1990. Re-engineering work: don’t automate, obliterate. Harvard Business Review, 68(4), pp. 104–12. MacIntosh, R. 2003. BPR: alive and well in the public sector. International Journal of Operations and Production Management, 23(3), pp. 327–44. Cummings, T.G. and Worley, C.G. 200.) Organization Development and Change (7th edn). Cincinnati, OH: South Western. Hammer, M. and Champy, J. 1993. Reengineering the Corporation: A Manifesto for Business Revolution. London: Nicholas Brealey. Slack, N., and Brandon-Jones, A. 2019. Operations Management (9th Ed), Pearson ©copyright, Heriot-Watt University, 2024