Process Management

Question 1

What are the 5 categories of business process mgmt activities?

Answer 1

Design- the ID of existing processes and the conceptual design of how processes should function once improved. The original process is defined as a baseline for current processing

Modeling- introduces variables to the conceptual design for what-if analysis. Various simulations or models are used to determine the targeted or optimal improvement

Execution- design changes are implemented and key indicators of success are developed. Indicators that will show a change to the process are determined

Monitoring- info is gathered and tracked and compared with expected performance. Dashboards and other measurement reports are used to monitor the improvement in real time and apply the data to the model for improvement

Optimization- using the monitoring data and the original design, the process manager continues to refine the process. improvements are selected and implemented

Question 2

What are the four stages of the Deming Cycle?

Answer 2

Plan- design the planned process improvement. maps to the design and modeling activity

Do- implement the process improvement. maps to the execution activity

Check- monitor process improvement. maps to monitoring activity

Act- continuously commit to the process and reassess for improvement. maps to the optimization activity

Question 3

What are the 4 common categories of KPIs?

Answer 3

Financial metrics- gross revenue margin, profit margin, costs as a % of revenue, EPS, PE ratio, EBITDA

Customer metrics- number of new customers, customer satisfaction ratings, number of repeat purchases, nmber of up-sell/cross-sell purchases, customer order fulfillment rates

Internal process metrics- % of manufacturing waste, number of units manufactured, number of service hours delivered, raw materials reorder times, % change in units of carbon emissions, % of costs attributed to renewable energy

Organizational growth metrics- number of training sessions completed, ratings on employee satisfaction surveys, employee turnover rate, employee growth rate

Question 4

What are the benefits of process management?

Answer 4

Efficiency- fewer resources are used to accomplish organizational objectives

Effectiveness- objectives are accomplished with greater predictability

Agility- responses to hange are faster and more reliable

Question 5

What is the Business Process Modeling Notation (BPMN)?

Answer 5

• standardized system of diagrams, symbols, and visuals used to depict business processes
• enables people to use a common set of concepts and principles to communicate business processes so that they can be documented, improved and managed

Question 6

What are shared services?

Answer 6

• seeking out redundant services, combining them and then sharing those services within a group or org
• they are shared within an org or group of affiliates

Question 7

Consolidation of redundant services might result in the following issues:

Answer 7

Service flow disruption- the consolidation of work to a single location can create waste in the transition, rework, and duplication as well as increases in time it takes to deliver a service

Failure demand- the demand for a shared service caused by a failure to do something or to do something right for a custom. When a task must be performed for a second time because it was incorrectly performed the first time

Question 8

What are offshore operations?

Answer 8

• relate to outsourcing of services or business functions to an external party in a different country
• most common types include: info technology, business process (call centers, accounting operations, tax compliance), software development, knowledge process
• risks: lac of controls with proximity and language barrier

Question 9

What are irrational methods when launching an initiative to improve company processes?

Answer 9

• intuitive and emotional
• lack structure and systematic evaluation
• based on fashion, fad or trend
• may result from an immediate need for cost reduction and stem from a very ST viewpoint

Question 10

What are rational methods when launching an initiative to improve company processes?

Answer 10

• structured and systematic
• Strategic gap analysis- external and internal assessments performed to help determine the gap between an org’s objectives and its status quo
• review of competitive priorities
• review of production objectives
• selection of an improvement program

Question 11

What are features of successful implementation activities?

Answer 11

• internal leadership
• inspections
• executive support
• internal process ownership

Question 12

What is Business Process Reengineering (BPR)?

Answer 12

• techniques that orgs can implement that radically reform business processes to achieve strategic objectives, such as improving customer satisfaction and service, cutting operational costs, and enhancing competitiveness
• development of sophisticated information technology systems and networks have driven many reengineering efforts
• business process mgmt seeks incremental change
• business process reengineering seeks atypical changes that result in revolutionary shifts in the way a company performs a process

Question 13

What is a just in time improvement technique and its benefits/limitations?

Answer 13

• anticipates achievement of efficiency by scheduling the deployment of resources just in time to meet customer or production requirements
• inventory does not add value & the maintenance of inventory on-hand produces wasteful costs
• flow of goods is controlled by a “pull” approach, where an item is produced only when it is needed

Benefits:
- synchronization of production scheduling with demand
- arrival of supplies at regular intervals throughout the production day
- improved coordination and team approach with suppliers
- more efficient flow of goods between warehouses and production
- reduced setup time
- greater efficiency in the use of employees with multiple skills

Limitations:
- a shortage of one key component within a manufacturing process coul put the entire production schedule at risk and cause product outages

Question 14

What is Total Quality Management (TQM) and its 7 critical factors?

Answer 14

• represents an organizational commitment to customer-focused performance that emphasizes both quality and continuous improvement
  1. customer focus (internal and external customers)
  2. continuous improvement
  3. workforce involvement (quality circles)
  4. top mgmt support
  5. objective measures
  6. timely recognition
  7. ongoing training

Question 15

What are quality audits and gap analysis?

Answer 15

• a technique used as part of the strategic positioning function in which mgmt assesses the quality practices of the org
• quality audits produce 1. an analysis that identifies strengths and weaknesses and 2. a strategic quality improvement plan that identifies the improvement steps that will produce the greatest return to the org in the ST and LT

Question 16

What is lean manufacturing?

Answer 16

• requires the use of only those resources required to meet the requirements of customers
• seeks to invest resources only in value added activities

Waste reduction:
- the focus of lean is on waste reduction and efficiency
- the concept of preserving value while expending only the effort necessary is not uncommon and has a long history in business and economics
- kaizen and activity based mgmt initiatives are waste reduction methodologies that use empirical data to measure and promote efficiencies

Kaizen:
- continuous improvement efforts that improve the efficiency and effectiveness of orgs through greater operational control
- occurs at the manufacturing stage where the ongoing search for cost reduction takes the form of analysis of production processes to ensure that resource usage stays within target costs

Activity Based MGMT/Process Improvements:
- ABC and ABM are highly compatible with process improvements and TQM
- cost identification (ABC costing highlight the costs of activities. the availability of cost data by activity makes the identification of costs of quality and value added activities more obvious)
- implementation (orgs with ABC and ABM programs are more likely to have the information they need to implement a TQM program

Question 17

What are Demand Flow Systems?

Answer 17

• manage resources using customer demand as the basis for resource allocation instead of using sales forecasts or master scheduling
• manufacturing is driven by customers not by an orgs forecast

Question 18

What is the Theory of Constraints?

Answer 18

• states that orgs are impeded from achieving objectives by the existence of one or more constraints or bottlenecks
• the org must be consistently operated in a manner that either works around or leverages the constraint
• a constraint is anything that impedes the accomplishment of an objective
• internal constraints (when the market demands more than the system can produce): equipment may be used ineffectively or inefficient; ppl may lack the necessary skills or mind set necessary to produce required efficiencies; policies may prevent the efficient use of resources
• external constraints exist when the system produces more than the market requires

Question 19

What are the 5 steps of TOC?

Answer 19

1. identification of the constraint
2. exploitation of the constraint
3. subordinate everything else to the above decisions
4. elevate the constraint
5. return to the first step

Question 20

What are buffers used throughout TOC?

Answer 20

• managers add buffers before and after each constraint to ensure that enough resources to accommodate the constraint exist
• eliminate the effect of the constraint on work flow

Question 21

What is Six Sigma?

Answer 21

• a continuous quality-improvement program that strives to reduce product or service defects to near zero levels, with 3.4 occurrences per million units of product
• this defect frequency is 6 standard deviations from the mean
• the program expands on the plan-do-check-act model of process mgmt and outlines methodologies to improve current processes and develop new processes
• uses 2 five step processes: DMAIC (existing products/processes) and DMADV (new products/processes)

Question 22

What is DMAIC (existing product and business product improvements)?

Answer 22

Define the problem- based on customer comments, failed project goals or other issues, determine the existence of a problem

Measure key aspects of the current process- collect relevant data

Analyze data- examine the relationships between data elements

Improve or optimize current processes- use models and data to determine how the process can be optimized

Control- develop a statistical control process to monitor results

Question 23

What is DMADV (new product or business process development)?

Answer 23

Define design goals- consistent with customer demands

Measure critical to quality issues (CTQ)- analyze the value chain to determine the features that provide value to the customer and the production capabilities that are available

Analyze design alternatives- develop different methodologies to produce the new product

Design optimization- use modeling techniques to determine optimizationof the proposed process

Verify the design- implement and test the plan