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Dealing with Business Process Complexity&mdash;The "No Frills" Lean Six Sigma Way

Posted: 12/15/2009
Avijit Paul and Dr. Prasad Chitimalla
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These days it is hard to miss articles on the merits of Lean Six Sigma, but not many offer how to apply these in a complex business process management setting. Most articles propound beautifully the various aspects of Lean but often leave you high and dry from an applicability standpoint. The goal of this article is to give you a high level idea about how to quickly build a value stream view of complex business processes that cannot be mapped in the traditional value stream way.

Take this real life scenario: A major electricity and gas retailer was facing a similar challenge. It was gearing up for a full scale strategic solution like SAP or CRM for its larger customer base, while a smaller portion of its customer base (large account customers) was already on SAP. The challenge was two-fold: one, to see if Lean process could help to accelerate the "SAP solution" implementation process, and two, to quickly uncover "opportunities" to improve the current state. This was not easy given the fact the larger customer base, its industrial and commercial customer base, was being serviced by Sales and Operations through a spaghetti of manually intensive, disparate systems and processes. This was further complicated by the challenge of having too many products flowing through the value stream, and above all, not enough process visibility (Visio, work instructions, training, etc.) to bank on either.

Breaking It Down to Work-Streams and Workgroups

From a single value stream perspective, it is often difficult to find a starting point in such exercises. Add to that the complexity of various product flows that traverse the value stream. However, a few key pointers can speed it up. First, knowing the business is supreme here—whether it’s a Make to Stock (MTS) value stream or Make to Order (MTO) value stream. Second, identifying all the work-streams under the end to end value stream—no matter what the "overlaps" are. Third, listing down all the work groups within each work-stream.

To illustrate, the overall value stream, as in Campaign to Payments (C2P), may be decomposed into four work-streams: Campaigns run for the customer, Customer agrees to sign up the Contract, Customer is Billed, and finally, Payments are received from the customer. Here again, under the "Billing" work-stream, there may exist several workgroups. A regular customer may be billed through a workgroup called "Cyclic Billing" whereas a first-time customer can be billed through "New Transfers" and then subsequently migrated to "Cyclic Billing". Again, an outgoing customer can be maintained through the "Final Billing" workgroup. Also bear in mind these workgroups also service other product requests as well.

Fact: The Gas retailer found 50 plus such workgroups spread across seven workstreams.

Taking a Mixed Model Approach

Next step is to understand how the products are flowing through the workgroups; this can become tricky here. When people are enmeshed in an existing system they have difficulty envisioning how a production flow of their workgroup would apply. As is with Lean, in order to create flow, we must be able to see it first. If we treat each workgroup as a mixed model value stream servicing a number of requests, this becomes easier—this also enables us to see not only the product family but also the suppliers, inputs, process, outputs, and customers (SIPOC) view of each of the workgroups, as shown: (Click on diagram to enlarge.)


Abbreviation Explanation
Supplier Identify the workgroup(s) that supply input to this workgroup
Customer Identify the workgroup(s) that receive output from this workgroup
FTR First time right for each step in percent (anecdotal is fine)
CTQ Critical to Quality
- Accuracy
- Completeness
- Correctness
Process Steps Keep it high level only (only four or five steps)
TT Touch time for each step (anecdotal idea about how long will it take assuming there is no waste in the process)
LT Lead time for each step (anedcotal idea about how long it takes considering the current waste in the process like backlogs, inspection, batching, waiting, work-in-process items, etc.)



Tip: If you see too many products, stick to a high volume, high frequency strategy for the workgroup SIPOCs. Also try to stay away from the tendency to build a perfect picture of the current state.

Fact: For the gas retailer, at this point, an inventory of all the high level SIPOC views across each workstream was built by conducting a series of workshops with the teams.

Seeing the Waste from a Lean Perspective

With all the metrics captured across the workstream, next step is to lay all the SIPOCs and question it from a Lean waste perspective and not to worry about whether it’s a people or process or system or a "mix" type opportunity. Here are a few pointers:

  1. Are there steps that are clearly Un-Lean? (inspection or over-processing steps)
  2. Are there counter measures that can improve the quality of Input and Output either at the workstream or workgroup level?
  3. Are there opportunities that can reduce batching or rework wastes within a process (in-process opportunities)?
  4. Are there ideas that can improve information flows or product flows across/within the workgroups?
  5. Are there opportunities that can dramatically reduce "motion" waste, i.e. reduce search time or retrieval time of data from systems?
  6. Are the SIPOC steps sequentially correct? (For e.g. there can be inspection steps both at the start and at the end of the process?)

Quantifying the Lean Waste

Once the high level opportunities and SIPOC diagram is complete, an opportunity register can be opened up to segment the opportunities into "people," "process" and "systems" type opportunities. To quantify each of the opportunities, a nine box grid can be used modeled on the lines of the book Selling Solutions by Keith Eades. This model structures the three types of questions that can be asked for every opportunity to deal with Lean waste. In the first session, all the opportunities are worked on from steps 1-6 as much as possible. A validation session (7-9) can be run later to confirm the numbers. (Click on diagram to enlarge.)


Fact: The gas retailer found 300 waste reduction opportunities—two thirds of them were directly related to people and process, and the remaining was parked as an input to the strategic solution.

Seeing It All Together

Finally, all workstreams can now be put together to visualize the end to end view of the business process with "lean out" opportunities clearly identified in the process. It may be relevant here to mention not all products will flow all the way through the core business process. To get a better view of the business process, one may choose to have two product flows—one that traverses the entire value stream and one that does the shortest travel. In addition, to build a better view, stick to a "core" value stream view—"trigger" work-streams need not be considered. In an ideal world, customers need not be chased for payments (e.g. Credit work-stream this way becomes a trigger) or customers would not call in for incorrect billing (e.g. Customer Service work-stream).

The final view should capture the following metrics for the longest flowing and shortest flowing product and an action plan on the Top 5/10 wastes. VAR (Value Added Ratio) indicates a high level quantification of the waste in the process (ΣTT VA steps / ΣLT All Steps ) whereas Final Yield (FTR multiplied across the workstreams) gives a mathematical idea as to the quality of the process steps.

ΣTT ΣLT # VA Steps # NVA Steps # Hand Offs VAR FTY (%) Top 5 Wastes
Product P
Product Q


Conclusion

The Process Landscape offers many tools to baseline and quantify processes—the most powerful of them being Lean Six Sigma in that it offers a perspective on both quality and speed of a process. Lean practitioners should not limit themselves to traditional Lean methods and muster as many tools possible to speed up the ground work often required to build value stream views of complex business processes. After all, Lean is about speed and simplicity.


Thank you, for your interest in Dealing with Business Process Complexity—The "No Frills" Lean Six Sigma Way.