Artur Wegrzynowicz

October, 2014

What is a process and a process
improvment?
Methods of business process improvment:
Six sigma
Benchmarking
Re-engineering
Conclusion


A planned series of actions or operations (e.g. mechanical,
electrical, chemical, inspection, tests) that advance a
material or procedure from one stage of completion to
another.




A structured approach to performance improvement that
centres on a disciplined design and careful execution of a
companys end-to-end business processes.

50-70% of the PI initiatives fail to achieve their objectives (Hammer and
Chamby, 1993)
Six sigma a structured method that drives continues
improvement of product, processes, service delivery to
meet or exceed customers requirements.
4 Cornerstones of Six Sigma
Key Performance Metrics (KPMs) to measure things on a common
scale
(process sigma level)
Structured Improvement DMAIC
Define and quantify the problem
Measure performance and determine defect levels
Analyse data and perform root cause analysis
Improve number of defects
Control the process to insure improvements are sustained
Implement as fast as you can but as slow as you must; get your
projects done
Use best practise tools AS, JiT, TQM

GE, Motorola, Citibank significant improvement
Citibank (Rucker, 2000)
Performance measures: time to complete manual funds
transfers, time to open an account
Sources of variation: the number of handoffs, the internal call
back procedure
Tool: Pareto chart
Results: reduced process timelines, improved cash
management, increased customer satisfaction

Success attributed to:
Management involvement
Adjustment in culture and employee's attitude
Organisation infrastructure
Training on six sigma methodology and tools
Project management skills
Linking six sigma to business strategy, customers, human
resources, suppliers (Antony and Banuelas, 2002)
Failure factors in other companies (Velocci, 2002)
Lack of direct impact on customers
Failing to involve both suppliers and customers
Lack of linkage to overall business objective

Other problems with six sigma
Concentration on functional areas might not improve profit
margin
Assuming that process is sound while it might need to be
redesigned

Benchmarking a systematic and continues
measurement process; a process of continuously
measuring and compering an organisations business
process against business process leaders anywhere on
the world to gain information which will help the
organisation take action to improve its performance
Different benchmarking types: internal, external,
competitive, generic
5 steps
Planning
Data gathering
Analysis and Integration
Implementation and execution
Recalibration

Boots the Chemist Internal benchmark
Area the promotion of new merchandise line
How? find the best practise among all stores ; set a target;
communicate to store managers (Simpson et al., 1999)

Success factors
Easy of monitoring one dimensional gap analysis
Sharing forums among comparative firms proves very effective for
improving practice
Linking best practice to the delivery of corporate objective
Emphasise of knowledge and communication

Failure factors
One dimension gap may overlook main relationships
that are key to the underlying business success
Limited ambition by the best practice leader market
might change every year
It requires the cooperation among varies companies
issue of proprietary information and anti-trust laws

Reengineering the fundamental rethinking and radical
redesign of business processes to achieve dramatic
improvement in critical, contemporary measures such as
cost, quality, service and speed.
It focuses on what should be
What processes are necessary? What is the better way to do
things?
Key principles (Peppard, 1999):
Ambition
Process focus
Questioning fundamental assumptions of the process
Integration of business process redesign (BPR) and the corporate
strategy of the underlying business
Breadth a broadly defined process should include more
activities so the improvement is more likely to extend
throughout the entire business

Depth measured by the change in six elements:
Role and responsibilities
Measurements and incentives
Organisational structure
Information technology
Shared values
Skills

AT&T (Hall et al., 1993)
Process type - Global business communications system
Improvement result - reduced time; reduced handoffs; increased
profit
How?
Assign team members from a wide range of functions; create
training program of the new skills

Banca di America e di Italia
Process type - The bank transaction process >create paperless
bank
Improvement result - reduced cost; improved customer service;
increased front office efficiency
Critical success factors Failure factors
Questioning the fundamental
assumptions of a process
Integration of BPR with the Corp.
Strategy
Total commitment of the leadership
Strong communication among the
participating team
The ambitious goals of the
reengineering process
Deployment of the most talented,
competent and creative people in
the project
The process chosen for
reengineering should be in the
centre of the organisation for the
improvement to be felt
The effective use of information and
communication technology
Negligence of the work environment
aspects of the design process
The importance of BPR projects
The rigidity of the infrastructure
system
Consideration of human factors as
cost that needs to be reduced,
rather than a resource to be
developed
Key determinants of Business Process
Improvement outcome:
Top management
Strategic alignment
Process improvement project
Human resources
Business environment
Performance measures
Sustainability
Antony, J. and Banuelas, R. (2002), Key ingredients for effective
implementation of six sigma program, Measuring Business Excellence,
Vol. 6 No. 4, pp. 20-7.
Hall, G., Rosenthal, J. and Wade, J. (1993), How to make
reengineering really work, Harvard Business Review, November-
December, pp. 119-31.
Hammer, M. and Champy, J. (1993), Reengineering the corporation: a
manifesto for business revolution, Canadian Business Review, Vol. 20
No. 3, p. 37.
Peppard, J. (1999), Benchmarking, process re-engineering and
strategy: some focusing frameworks, Human Systems Management,
Vol. 18, pp. 297-313.
Rucker, R. (2000), Citibank increases customer loyalty with defect-free
processes, The Journal for Quality & Participation, Fall, pp. 32-6.
Simpson, M., Kondouli, D. and Wai, P.H. (1999), From benchmarking to
business process reengineering: a case study, Total Quality
Management, Vol. 10 No. 4/5, pp. S717-24.
Velocci, A.L. (2002), Full potential of six sigma methodology, Aviation
Week & Space Technology, Vol. 157 No. 14, pp. 56-60.