Business Plicy with TQM 1

Process Management

Module 007
Process Management
This module discusses the philosophies and approaches for
designing and managing important processes in an
organization.

At the end of this module, you will be able to:

1. Understand the significance of process management in an

organization.

2. Explain the use of different processes

3. Gain new strategies on how to improve quality of products and

services

The scope of Process Management

In previous modules, process is noted to be an essential part in an organization.
Acquiring customer, market knowledge, strategic planning, conducting research and
development, purchasing, developing new products or services, fulfilling customer
orders, managing information, measuring and analyzing performance, and training
employees are some of the common business processes.
In running a business and in achieving a sustainable
competitive advantages, Value-creation processes (sometimes
called core processes) are very essential. This process typically
includes design, production/delivery, and other critical business
processes. Product Design processesencompasses all activities that
are done to incorporate customer requirements, new technologies,
and past learning into the functional specifications of a product (i.e.,
manufactured goods and services), and thus define its fitness for use.
This process begins with identifying and documenting the process.
Documenting a process includes describing how it is performed. It will
likely include developing process flow chart and writing standard
operating procedures and work instructions. A good process design
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Process Management

focuses on the prevention of poor quality by ensuring that goods and

services manufactured attained external and internal customers’
requirements and that the process is capable of achieving the
requisite level of performance. Once a process is designed and
operational, it must be controlled on a short-term basis and improved
in the long run.
Safety in consumer products represents a major issue in design and
definitely an important part of a company’s public responsibilities.
Attention to design quality can greatly reduce the possibility of
product liability claims as well as provide supporting evidence in
defense arguments. Liability makes documentation of quality
assurance procedures a necessity. A company should record all
evidences that shows the designer established a test and monitoring
procedures of critical product characteristics. Managers should be
guided by the following questions to ensure design quality.
 Is the product reasonably safe for the end of the user?
 What could possibly go wrong with it?
 Are any needed safety devices absent?
 What kind of warning labels or instructions should be included?
 What similarities does the product have with others that may have
encountered previous problems?
 What are some extreme climate or environment conditions for which
the product should be tested?
 What would attorneys call “reasonable foreseeable use?”
In addition to legal issues, environmental concerns have an
unprecedented effect on product and process designs. For an instance,
records show that there are hundreds of millions of home and office
appliances are disposed of each year. Growing design and
technological waste problem in our society today is of what to do with
the obsolete computers. A Carnegie Mellon University study
estimated that there are 1650 million dead but not decaying personal
computers (PCs) were buried in U.S. landfills last 2005. In Europe, the
European commission proposed a ban on materials such as lead-
based solder in Pcs and the imposition of recycling responsibilities on
manufacturers beginning of January 2004. The environment groups,
states and municipalities, customers, all cause designers and
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Process Management

managers clamoring for “social responsive “designs, should look

carefully at the concept of design-for-environment or DfE.
DfE offers the potential to produce more desirable products at lower
costs by reducing disposal and regulatory costs, increasing the end-of-
life value of the products, reducing he material use and minimizing
the liabilities. Recyclable products are designed to be taken apart and
their components repaired, refurbished, melted down, or otherwise
salvage for reuse. Recyclability appeals in the eyes of everyone who
are fighting for the effects of waste disposal.
Repairable products are not new a new idea, but the concept lost
favor when, in 1960s and 1970s the United States became known as
the “throwaway society.” Many products are thrown away due to cost
of maintenance or repair is too high when compared to the cost of
new item. Thus, reparability has a great potential of pleasing
customers, who opt to repair their product rather than dispose it.
Also, companies are challenged to think of fresh approaches to
produce a product that are both cost-effective and quality.
Designing Process for Quality The design of the processes that
produce and deliver goods and services can have significant effect on
cost (profitability), flexibility (the ability to produce a product that
customer demands or prefers), and the quality of the output. For
example, in producing a very small CD player, Sony Company
developed entirely new manufacturing process for there was no
process in existence that can develop small and as accurate as the
designed required. Standardize processes established consistency of
the output. On the other hand, standardized process may not be able
to meet the needs of different customer segments instead, many
companies use a strategy of mass customization– providing
personalized, custom-designed products to meet individual customer
preferences at price comparable to mas-produced items. Mass
customization requires significant changes to old way manufacturing
process that focused on either customized, crafted products or mass-
produced, standardized products. These products consist of flexible
manufacturing technologies, just-in-time systems, information
technology, and an emphasis on cycle time reduction.
The design process starts with the process owner. A process
owner might be an individual, a team, a department, or some cross-
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Process Management

functional group. A basic approach to process design is proposed by

Motorola:
1. Identify the product or service: What work do I do?
2. Identify the customer: Who is the work for?
3. Identify the supplier: What do I need and whom do I get it?
4. Identify the process: what steps or tasks are performed? What are the
inputs and outputs for each step?
5. Mistake-proof the process: How can I eliminate or simplify the tasks?
What “poka-yoke” (i.e., mistake-proofing) devices can I use?
6. Develop measurements and controls and improvement goals: How do I
evaluate the process? How can I improve further?
Steps 1 to 3 speak such questions as “What is
Process Control has too much variation can be detrimental to
customer satisfaction and financial performance. For an instance,
research in the airline industry has shown that lack of service
consistency (with respect to arrival of times) has a definite impact on
customer dissatisfaction. Process consistency was found at least as
important as average performance for better-performing firms, where
customer expectations are high. Thus, improvement can mean
upgrading the level of performance to the next level or reducing
variation around the current average performance. These two are the
principal objectives of Six Sigma.
To apply the techniques of process management, process must
be (1) repeatable and (2) measurable. Repeatability means to recur
over time. The cycle may be long, as with product development
process or patent applications; or short, as with a manufacturing
operation or an order entry process. Measurement on the other hand
provides the ability to capture important quality and performance
indicators to bring out the patterns of processes performance. Each
measurement must have the aim of achieving the standard or target
that is driven by customer requirements. Sufficient data can be
collected to reveal the useful information for evaluation and control
and for learning that will lead to improvement and maturity if these
two conditions were met.
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Process Management

Production/delivery processes create or deliver the actual product;

examples are manufacturing, assembly, dispensing medical
medications, teaching a class and many more. To ensure product will
conform to specifications (the manufacturing definition of quality)
and also to produce product economically and efficiently, these
processes must be designed. Product design greatly influence the
efficiency of manufacture as well as the flexibility of the service
strategies and therefore must be coordinated with
production/delivery processes. The value of the product or service,
as the quality perceived by the consumer, will strongly depend on
these types of processes.
In an organization’s value-creation processes, employees, and
daily operations, support processes are those that are most
important. They provide infrastructure for value-creation processes
but do not add direct value to the product or service. A process such
as order entry that might be consider as value-creation process for
one company (i.e., a direct mail distributor) but might be thought as
support process to another (e.g., a custom manufacturer). In general,
value-creation processes are driven by external customer needs,
while support processes are driven by the internal customer needs.
Since value-creation processes definitely add value to the products
and services, they need to have a higher level of attention than
support processes.
For many organizations, the most important business process
is the supply chains. This can be viewed as many key value-creation
and support processes. They help firms or companies develop
competitive advantages in delivery, flexibility, and cost reduction. In a
research, it is mentioned that companies that excel in supply chain
operations also perform better in other financial measures of success.

Process Improvement
Process improvement is an important business strategy in
competitive market due the following reasons:
 Customer loyalty is driven by delivered value.
 Delivered value is created by business process.
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Process Management

 Sustained success in competitive markets requires a business to

continuously improve its value creation processes.
Kaizen
This is a Japanese word that means gradual and orderly continuous
improvement. This is a philosophy that encompasses all business
activities and everyone inan organization. In Kaizen, improvement in
all areas of business- cost, meeting delivery schedules, employee
safety and skill development, supplier relations, new product
development, or productivity-serves to enhance the quality of the
firm. Thus, any activity diected toward improvement falls under the
Kaizen umbrella.
Three things are required for successful Kaizen program:
operating practices, total involvement, and training. First, operating
practices expose new improvement opportunities. Second, in Kaizen,
every employee strives for improvement. Finally, workers can
enageinan improvement through suggestion systems and small group
activities, self-development programs that teach practical problem-
solving techniques, and enhanced job performance skills. All these
improvements require significant training, both in the philosophy and
in tools and techniques.
Breakthrough Improvement
This referes to discontinuous change, as opposed to the gradual,
continuous improvement philosophy of kiazen. This improvement
results from innovative and creative thinking; thse are motivated by
stretch goals, or breakthrough objectives.For stretch goals to be
successful, they must derive unambiguously from corporate strategy.
Organizations must not set goals that result in unreasonable stress to
employees or punish failures. Two approaches for breakthrough
improvement that help companies achieve stretch goals are the
benchmarking and reengineering.
Benchmarking
Is defined as “measuring your performance against the best-in-class
companies; determining how the best-in-class achieve those
performance levels; and using information as a basis for your
company’s targets, strategies, and implementation,” or more simply,
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Process Management

“the search of industry best practices will lead to superior

performance.”
Three Major Types of Benchmarking
1. Competitive Benchmarking – involves studying the products,
processes or business performance of competitors in the same
industry to compare the pricing, technical quality, features, and other
quality or performance characteristics of products and service.
2. Process benchmarking – it involves identifying the most effective
practices in companies that perform similar functions, in different
industry. If benchmarking are adopted from outside industry, a
company may learn ideas and processes as well as new applications
that allow it to surpass the best within its own industry and achieve
distinctive superiority.
3. Strategic Benchmarking – examines how companies compete and
seeks the winning strategies that have led the competitive advantage
and market success.

Process Management in the Baldrige Criteria ISO 9000, and Six

Sigma
This process management examines how an organization identifies
and manages its key processes for creating a customer value and
achieving business success and growth. This also includes how an
organization identifies its key value-creation processes and
incorporates customer and supplier input into determining its key
process requirements; how processes are designed to meet these
requirments; and how new technology, organizational learning, cycle
time, productivity, cost control, and other efficiency and effectiveness
factors are designed into process. This criteria item also seeks to
understand how key performance measures and indicators are used
for controlling and improving processes; how cost associated with
inspections, tests, and audits are minimized; and how defects and
reworks are prevented. Finally, it calls for information on how
improvements are shared with other organizational units to drive
organizational learnings and innovations.
Six Sigma is based on understanding and improving processes
on a project-by-project basis. Two o the advantages of the Six Sigma
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Process Management

are that projects are clearly linked to strategic needs and

organizational objectives and that projects are managed under a
common framework. This linkages enables projects to be timely and
relevant and ensures that controls are set in place to leverage the
improvements that are identified.
This approach provides a natural fit with the requirements of
product and process design, control, and improvement. To effectively
design or improve a process you must first understand it. It will be
only difficult if an organization does not have any ongoing system of
process management. Some keys are important in impleneting Six
Sigma and these are the following:
 Project selection and definition
 Final review
 Training
 Leadership for project leaders
 Project leader mentoring
 Certification for Six Sigma specialists
 Project tracking and reporting
 Information management and dissemination
It is important to note that Six Sigma is not a substitute for continuous
improvement. Because of its reliance on specialists – the “black belts”
who lead the high profile projects – it becomes quite easy to ignore
simple improvements that can be achieved at the process owner level.
Process owners should be trained in Six Sigma methods and be
involved in formal Six Sigma projects but still have responsibility for
continuous improvement on a daily basis.