Lean Business Process Organizational Level Lean Process Innovation

Business processes at the organizational level have been variously listed as the 9 to 18 processes of the process innovation movement of the recent past, as well as the 55 "GE" processes, and the 62 processes described by the software vendor SAP. Other software vendors package their implementation methodologies around a set of organizational processes specific to their process architecture. These processes include many of those illustrated in Figure 3.2.

Value stream mapping is a process innovation tool derivative of material information flow analysis (MIFA), developed by Toyota and others in the industrial community. MIFA is and has been in the toolkit of Western industrial engineers for many years. Value stream mapping has been primarily concerned with organizational value streams, at the organizational process level, although later explications of value stream mapping have emphasized "looking" for process improvement application. From the Eastern perspective, kaizen is almost solely focused on the activity-level processes, although quality function deployment (QFD) is proposed at the organizational process level by leading proponents of kaizen, including Masaaki Imai, who provides an overview in his book Gemba Kaizen (p. 38).

Womack and Jones propose value stream mapping as the lean tool to apply to the value stream to accomplish a lean transformation. The value stream is the sequence of tasks that is performed to provide service or product value (i.e., delivery). The organizational process level is not the level at which lean transformation is accomplished. The products that most often result from value stream mapping activities are complex maps of the enterprise at the organizational process level. They are interesting and useful in the evaluation of improvement projects and their enablers t/1

BUSINESS PROCESSES

BUSINESS PLANNING

STRATEGIC DIRECTION SETTING

SALES FORECASTING

BUDGETING

DEMAND AND PRODUCTION INVENTORY

LABOR REQLÏÏREMENTS

PRODUCTION

AND OPERATIONS

CAPACITY PLANNING

TOOLING CAPABILITY

EQUIPMENT AND FACTORY LAYOUT

PRODUCTION SCHEDULING

MATERIALS SUPPORT

CUSTOMER RELATIONSHIP

CUSTOMER FORECASTING

CUSTOMER

ORDER PROCESSING

CUSTOMER RETURNS

CUSTOMER BILLING

PRODUCT ENGINEERING

PRODUCT RESEARCH

PRODUCT DESIGN

PRODUCT MAINTENANCE

DOCUMENT MANAGEMENT AND STORAGE

CUSTOMER INFORMATION RETRIEVAL

FINANCIAL MANAGEMENT

FIXED ASSET ACCOUNTING

COST ACCOUNTING

ACCOUNTS RECEIVABLE

ACCOUNTS PAYABLE

INVENTORY MANAGEMENT AND LOGISTICS

COMPONENT WAREHOUSING

PRODUCTION FINISHED GOODS WAREHOUSING

DISTRIBUTION WAREHOUSING

SUPPLY CHAIN MANAGEMENT

SUPPLY PLAN PREPARATION

SUPPLIER SOURCING AND QUOTATIONS

IMPORT/ EXPORT PLANNING

PURCHASE

ORDER PROCESSING

VENDOR INFORMATION RETRIEVAL

PERFORMANCE MEASUREMENT

BILL OF MATERIAL ACCURACY

ROUTINGS ACCURACY

INVENTORY ACCURACY

SHOP DELIVERY ACCURACY

BILLING

ACCURACY

MATERIAL REQLÏÏREMENTS

CAPITAL BUDGETING

PLANT AND MACHINE MAINTENANCE

REPORTING

AND ANALYSIS

SHIPPING CLAIMS

SALES REPORTING AND ANALYSIS

SAMPLE BUILD AND SHIP

PROTOTYPING

FINANCIAL TRANSACTIONS PROCESSING

FINANCIAL REPORTING

AND ANALYSIS

MATERIALS SUPPORT

INTERNATIONAL TRADE

REPORTING

AND ANALYSIS

CUSTOMER RETURNS

Figure 3.2 Lean Business Processes: Organizational Level but are not useful at the process activity level for lean implementation. Many value stream mapping results have been less than stellar. Many organizations have terrific value stream maps, yet have made little or no progress toward lean transformation or implementation of lean processes at any level—including at Delphi. There, value stream mapping is not working to implement lean in the activity processes. This is especially true in the physical (factory) processes, but also in the management decision and information/support processes. A map or picture of MUDA or the desired MUDA-free future state vision is nice to have but it doesn't get anything changed. That doesn't advance the lean transformation in a company. A value stream map does not implement a new lean activity process—it isn't designed to. Finally, value stream mapping does not develop lean culture, critical to lean transformation.

Some of the confusion and lack of success of value stream mapping is the result of the various techniques that are employed by the academics and consultants who practice value stream mapping with less than adequate methodology. In addition to value stream mapping as championed by Womack and Jones, there are many other flavors of value stream mapping in use, and they are not all the same.

One important element of value stream mapping that should not be ignored is that management personnel are included in the activity. Management and supervisory personnel add innovation and ideas to process management and lean transformation, and they should not be discounted. Innovation is especially important in removing MUDA from the management decision and information/support processes. Paramount, however, is the Lean Performance principle "The Process Owners and Operators Are the Process Experts." Embracing that principle will accomplish a major shift in culture and energize the lean transformation. Endorsing this cultural principle establishes the managers and supervisors as the process owners/experts at the organizational process level, and the process operators as the experts at the activity process level.

The basis of value stream mapping is MIFA, a lean diagnostic tool developed by Toyota (and others—see Ford Value Engineering, circa 1948) more than 60 years ago to analyze material and information flow. Value stream mapping is not always the same as MIFA. MIFA was not developed to replace SDCA/PDCA; rather it evolved out of the desire to link process improvements across departments and work locations that were not easy to "see" together.

MIFA is not meant to be a process identification tool, and it is certainly not a perfect tool for identifying a process at the level at which an operator performs it. A MIFA is an overall flow of a process stream, whether that particular stream of processes is of a product, a product family, or a complex product group or job shop flow of processes. The MIFA is utilized to illustrate the entire flow and to provide insight into how multiple process streams belonging to multiple process areas of the enterprise such as manufacturing and logistics can be improved to flow together.

MIFA is utilized to generate process improvement ideas, when process standards have already been produced that illustrate the process as all participants in improvement activity agree it is performed. This is the missing ingredient in the majority of lean value stream—based improvement efforts. As the lean pioneer Ishakawa said, "There can be no discussion without a Process Standard." The value stream mapping discussions that take place in the absence of Process Standards risk poor results due to the lack of effective communication about the process, which is the case when the process is verbally described rather than visually illustrated. A Process Standard is a visual representation of the process activities required to transform a data or material input into an output needed or desired by a customer. A Process Standard is the result of the SDCA (standardize, do, check, act) cycle. The S task of SDCA is the documentation step that produces the Standard (S), which is then Done, or Demonstrated (D), Checked (C), or Implemented or Acted upon (A). Acting upon is certainly not Adjusting, as has been proposed by some Lean Thinkers. If an improvement is desired, make a new Plan (P) and proceed, It's as simple as that. There is no need to change the SDCA/PDCA tool now. It worked for Toyota, and that's good enough.

Lean thinkers propose that value stream mapping will expand the perspective of traditional Western industrial engineering process thinking to the broader activities of manufacturing "value." The Japanese GEMBA thinkers have already defined this approach with the aforementioned Quality Function Deployment (QFD). QFD is a process organizational matrix that positions traditional "vertical" structures of processes and departments into a "horizontal" structure. QFD connects processes and their tasks in the stream of process value flowing from suppliers, through the organization, and on to customers.

Although Imai does not emphasize MIFA, he expresses no opposition. For this Eastern proponent of lean, it is clearly the case that Process Standard development is completed first, utilizing SDCA.

Lean Performance agrees with the GEMBA Thinkers that it is too difficult for most companies to begin with a value stream perspective, mapping a value stream of the entire flow from raw materials coming out of the earth all the way through to the hands of the consumer. Toyota didn't start to get lean that way and Toyota-trained lean sensei don't start there either. They start the lean transformation by establishing one-piece flow, or as near to it as possible. Lean Performance utilizes lean tools to develop Practical Flow. Practical Flow results from two accomplishments. First, each process owner/operator team must identify and "lean" their own individual process(es), and second, with Process Standards in hand, process teams must identify and "lean" the processes that comprise their process stream.

The Lean Thinkers propose that the value-adding physical process flow is the primary customer that the organization level processes must serve. GEMBA thinkers would agree. In fact, they never saw it any other way. The processes found in the QFD are the organizational-level processes for the GEMBA approach. Most GEMBA Thinker process improvement or Lean Thinker value stream improvement projects have as goals the reduction of lead-time and inventory.

Perhaps the most useful contribution of the Lean Thinkers are the five lean transformational principles: value, value—added, flow, pull, and pursue perfection

(Womack and Jones, Lean Thinking). These five principles are useful at both the organizational process level (in MIFA or Process stream mapping) and the activity process level. Lean Performance applies these five principles within the Lean Performance Analysis. Imai delineates five principles as well: the five GEMBA principles for problem identification and resolution. They are designed to be useful at the process activity level but also can be applied in some cases to the process organizational level. They are check the thing itself (machine, tool); take temporary measures; after temporary measures are in place, then find the root cause of defect or problem; standardize to prevent recurrence (also 8Ds); and get to GEMBA (make it quiet) (Gemba Kaizen).

One GEMBA Thinker position that illustrates the difference in thinking between the Eastern and Western proponents of lean is the proposition by Imai that the removal of one part of MUDA in a process that includes one part "value-added" and nine parts MUDA effectively doubles productivity. Contrast this with the statement by Womack and Jones that 80 percent of the value stream is MUDA, but we should go ahead and map it anyway. Lean Performance proposes that the MUDA be identified and removed at the process activity level prior to beginning mapping at the organizational process level. It is a fact that this is how Toyota accomplished lean, and the way lean sensei go about it (at least the sensei who worked where I was employed).

The Lean Thinkers posit that concentrating on overall flow means focusing on overall process efficiency rather than on just the efficiency of an individual process. Lean Performance agrees, with one caveat: a single process that flows connected to another single process that flows, etc., is foundational to the overall flow. Lean Performance agrees with TPS—make each process flow, then work on overall flow.

When analyzing a process with Lean Performance, start by looking for inventory of parts or paper. Inventory tells you where a flow is interrupted. Once you have found these spots in your process stream, the next question is "Why does the flow stop here?" Then get the team to suggest a way to get the process material or data to flow. Inventory reduction results when less WIP is needed to maintain delivery in a process stream that flows faster. As the processes in a process stream become more closely linked, there is progressively less buffer between them. Although this improves D, it makes a process stream sensitive to problems. Also, wherever a process is not one-piece flow, inventory buffers must support process variations.

In Lean Performance analysis, we assume that if an administrative process is necessary (i.e., value added or nonvalue added but required by management or regulation), then we should apply process lean diagnostic tools in order to "lean" these administrative processes and improve the QCD (quality, cost, and delivery).

Lean Performance assumes that, in order to be effective in leaning administrative (management decision and information/support) processes, the customer value-added question must be answered from the perspective of all of the stakeholders, not just the ultimate customers. Otherwise, we would classify most of these processes as NVA (nonvalue added). Taken from the point of view of the owner, or all employees, the processes that keep us in business are value added.

The Lean Thinkers, GEMBA thinkers, and Lean Performance all agree that a significant amount of the order cycle time occurs in management decision and information/support processes, before the order even reaches the shop floor. This process stream is the "administrative," "service," or "white-collar" process stream. Here, too, WIP material (orders, specifications, directions, labels, etc.) sits in inventory (in-baskets, desks) and doesn't flow.

All organizational level processes can be analyzed and "leaned" to improve QCD by starting with one key question: How should this process or stream of processes enable the shortest possible lead-time? An example of the process stream view of manufacturing can be illustrated by measuring the lead-time of two different process streams: physical process cycle time, which is the time it takes to go from raw material to shipment (or from "our dock to the customer's dock"), and customer order cycle time, or the time it takes to go from a customer order entry to fulfillment, including paper flow.

Lean Performance utilizes process stream mapping to analyze the organizational level processes and to identify the activity level processes within them. Process Standards are developed, and team members evaluate process control points where key software features or other enablers can be applied. Process stream mapping is utilized in the Lean Performance methodology for management decision processes as well as information/support processes. MIFA is utilized by Lean Performance to document physical processes and their information/support linkages.

Process stream mapping is the documentation of the flow of information and material through the stream of processes that produces a good or service. Lean Performance takes the view that value stream mapping is the wrong tool to utilize first in a lean transformation. The first lean practice to be utilized in lean transformation is Process Standard development and documentation. Why? Because the development and documentation of a properly accomplished Process Standard delivers a "MUDA-free" process to be then documented in the process stream map and further improved. As Womack and Jones state in Lean Thinking, 80 percent of any process is nonvalue added. So why document or map the "MUDA stream"? Starting lean transformation here wastes time and doesn't address the two critical elements of lean transformation: lean culture and lean Process Standards. Lean Performance recognizes that process stream mapping is a valuable tool, just not the only or even most critical tool in lean transformation. Lean Performance ERP project management completes process stream mapping in the evaluation/selection of a software module but considers these process stream maps to be inadequate for system implementation. Although process stream maps are good input to process identification, Lean Performance utilizes the input of the process owners and operators to fully develop the implementation process listing. Lean Performance then develops Process Standards at the process activity level. After Process Standards are completed, process stream mapping is a useful tool to evaluate and develop linking

CURRENT PROCESS NEW PRODUCT INTRODUCTION

CURRENT PROCESS NEW PRODUCT INTRODUCTION

Figure 3.3 Business Process Example: Organizational Level

lean practices in pursuit of lean flow. In Lean Performance ERP Project Management, process stream mapping is utilized to map the management decision/information support process stream in the enterprise, and develop and present the key lean features for implementation.

A process stream map is also extremely useful when used with process owners and operators to identify opportunities for lean improvement, and the activity level processes where those improvements might be implemented. In Figure 3.3, an organizational level process is illustrated.

There are two key elements in the illustration. The first is that the boxes are developed and presented in a "flow"—this is the order in which the process is designed to be performed in the organization. The second key element is to recognize that each box illustrates either an organizational process that can be and is performed "as shown," without any other activity processes being performed. For example, "MFG release meeting, materials coordinator receives 'release folder.'" There is nothing more to be said (or done) here. Generally, the boxes do not illustrate that, and most organizational processes are in fact collections of activity level processes. An example of this is "materials coordinator passes 'release folder' to fabrication supervisor, to complete new components." No mention is made of the activity level processes that complete the new components. Developing a process stream map does not get the following activity level processes lean. Another issue with process stream maps is that management and supervisors usually develop these process stream maps without the involvement of the process operators. The

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