Optimum Process Improvement
A pharmaceutical company was engaged in a process improvement program but unfortunately the processes have not been identified following the principles of execution based organizational structure and value chain analysis, moreover they have been identified without a performance context. This means they were not connected to the business systems or business results.
The pharmaceutical company mapped processes based on its functional view of the organization and the process improvement efforts (mostly Six Sigma) were conducted within its few functions over the past two years. These projects had been initiated because there was a willing functional VP sponsor who was a Six Sigma believer. And, the outputs of the processes in question were relatively easy to measure. Also, there had been customer complaints emanating from some of these processes. Some of the improvement projects were defined by the Company personnel seeking certification.
At the same time when these process improvement projects were initiated, a strategy review by the executive management team concluded that the very survival of the company rested on new product development and a redirected and reenergized sales organization.
Looking from the horizontal or value chain view of the Company on top of the functional view of the Company, one could see that the process improvement efforts executed over the past two years were buried in the 'Delivered' segment of the value chain, while, at the same time, there were lost strategic opportunities for process improvement in areas of new product launching and new sales organization.
Identifying processes within a major functional silo can give the illusion of being linked to business results, but the potential for sub-optimization still looms large. Given this fundamental flaw of processes not being linked to business results via the value chain and organization structure as primary processing system, the following are some of the predictable problems with subsequent process improvement efforts:
First, the criterion for selecting processes for improvement is based on staff's particular interest which might be conflicting with specific business priorities. This will cause three unfortunate results: The first result will be that every improvement effort will have the potential to sub-optimize the business. The second result will be missed opportunity. The third result is the waste of time and money resulting from the projects that were being initiated primarily because there was a willing sponsor or just to demonstrate the power of new management concept by experimenting on a safe, but insignificant operation or someone can get his or her Black Belt accreditation due to such projects. The accumulation of a few projects initiated for reasons such as those mentioned above will soon begin to undermine the process improvement efforts.
In the absence of a connection to business results, the process improvement effort gravitates toward irrelevant process improvement goals. The improvement projects tend to get identified, defined, and shaped so as to best apply and demonstrate a particular methodology. It becomes a methodology in search of a project rather than a Critical Business Issue in search of a solution.
Vice president in the pharmaceutical company believed that the procedural level workflow documentation required by various certification efforts, such as ISO and SOX, is what process is all about. Whereas some in the organization thought that process documentations is similar to IT requirements documentation. Although software made it easier to manage documentation required for SOX and other certification, but this led to the delegation of process documentation to techies and clerks. TQM focused on processes as a tool, taking application of the process notion to the sub-process level within the functions and many staff resources were made process owners in silos increasing organizational conflicts and sub-optimisation. The Six Sigma movement proved to be a rigorous, precise, but costly analysis just to address some unimportant problems buried deep in the organization.
In contrast to the issues identified above, if the processes in a process improvement project to be linked to business requirements, process improvement should work as follows:
A process improvement team identifies an emerging or potential process performance problem. This problem is shared upward with the appropriate level of executive management team or perhaps directly with the value chain management team. The executive management team at the appropriate level assesses the significance of the problem identified by the process improvement team, does a preliminary analysis to determine likely causes and the scope of the problem, and, if merited, initiates an improvement project with a higher ROI. The executive management team uses the cross-functional value chain map to track the location and progress of all such performance improvement initiatives, ever vigilant for possible sub-optimization.
The pharmaceutical company mapped processes based on its functional view of the organization and the process improvement efforts (mostly Six Sigma) were conducted within its few functions over the past two years. These projects had been initiated because there was a willing functional VP sponsor who was a Six Sigma believer. And, the outputs of the processes in question were relatively easy to measure. Also, there had been customer complaints emanating from some of these processes. Some of the improvement projects were defined by the Company personnel seeking certification.
At the same time when these process improvement projects were initiated, a strategy review by the executive management team concluded that the very survival of the company rested on new product development and a redirected and reenergized sales organization.
Looking from the horizontal or value chain view of the Company on top of the functional view of the Company, one could see that the process improvement efforts executed over the past two years were buried in the 'Delivered' segment of the value chain, while, at the same time, there were lost strategic opportunities for process improvement in areas of new product launching and new sales organization.
Identifying processes within a major functional silo can give the illusion of being linked to business results, but the potential for sub-optimization still looms large. Given this fundamental flaw of processes not being linked to business results via the value chain and organization structure as primary processing system, the following are some of the predictable problems with subsequent process improvement efforts:
First, the criterion for selecting processes for improvement is based on staff's particular interest which might be conflicting with specific business priorities. This will cause three unfortunate results: The first result will be that every improvement effort will have the potential to sub-optimize the business. The second result will be missed opportunity. The third result is the waste of time and money resulting from the projects that were being initiated primarily because there was a willing sponsor or just to demonstrate the power of new management concept by experimenting on a safe, but insignificant operation or someone can get his or her Black Belt accreditation due to such projects. The accumulation of a few projects initiated for reasons such as those mentioned above will soon begin to undermine the process improvement efforts.
In the absence of a connection to business results, the process improvement effort gravitates toward irrelevant process improvement goals. The improvement projects tend to get identified, defined, and shaped so as to best apply and demonstrate a particular methodology. It becomes a methodology in search of a project rather than a Critical Business Issue in search of a solution.
Vice president in the pharmaceutical company believed that the procedural level workflow documentation required by various certification efforts, such as ISO and SOX, is what process is all about. Whereas some in the organization thought that process documentations is similar to IT requirements documentation. Although software made it easier to manage documentation required for SOX and other certification, but this led to the delegation of process documentation to techies and clerks. TQM focused on processes as a tool, taking application of the process notion to the sub-process level within the functions and many staff resources were made process owners in silos increasing organizational conflicts and sub-optimisation. The Six Sigma movement proved to be a rigorous, precise, but costly analysis just to address some unimportant problems buried deep in the organization.
In contrast to the issues identified above, if the processes in a process improvement project to be linked to business requirements, process improvement should work as follows:
A process improvement team identifies an emerging or potential process performance problem. This problem is shared upward with the appropriate level of executive management team or perhaps directly with the value chain management team. The executive management team at the appropriate level assesses the significance of the problem identified by the process improvement team, does a preliminary analysis to determine likely causes and the scope of the problem, and, if merited, initiates an improvement project with a higher ROI. The executive management team uses the cross-functional value chain map to track the location and progress of all such performance improvement initiatives, ever vigilant for possible sub-optimization.
Labels: Best Practices, Manufacturing, Process Improvement
posted by Narayan Mantri at
3:12 PM
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