Lean Introduction 1 © 2010 RLM & Associates LLC 8/13/2015

Lean Introduction

1© 2010 RLM & Associates LLC04/19/23

© 2010 RLM & Associates LLC 2

Seven Wastes

Instructor Bios

04/19/23

Bruce DeRuntz is a Professor in the Department of Technology at Southern Illinois University. He received his Ph.D. in Workforce Education and Development. Bruce was a Quality Professional inindustry working for A.O. Smith Automotive Products, Emerson Electric Company and the Illinois Manufacturing Extension Program. He teaches classes in Manufacturing Processes, Quality, Industrial Metrology, and Project Management.

He is a Fellow with the American Society for Quality and holds certifications for Six Sigma Black Belt and Quality Engineer.


Seven Wastes

Instructor Bios

04/19/23

Sam Hoskins comes from the manufacturing sector and has extensive hands-on experience in Lean principles as well as Mistake-Proofing. He spent 12 years as a manufacturing quality engineer and quality manager for an international commercial explosives manufacturer. Sam is a certified Mistake-Proofing trainer and facilitator. He authored the Mistake-Proofing portion of the Ensign-Bickford Company’s successful application for the 2002 Shingo Prize for Excellence in Manufacturing. He has led dozens of successful Mistake-Proofing events which resulted in large gains in quality, productivity, and safety. Sam is an American Society for Quality certified Lean/Six Sigma Black Belt.


Seven Wastes

Instructor Bios

04/19/23

Ron Meier has held faculty positions at Iowa State University and Illinois State University. He teaches Master's Degree level courses in project and quality management.

During the 1980’s and 90’s he managed projects for IBM Global Business Services, Microsoft, and XL Capital Insurance.

Ron is an American Society for Quality Certified Manager of Quality/ Organizational Excellence (CMQ/OE) and Project Management Institute Program Management Professional (PgMP).

Competition

Whether you are the lion or a gazelle - when the sun comes up,

you had better be running!(author unknown)


04/19/23 © 2009 RLM & Associates LLC 6

LSS Company Stock Performance Research

52 Publicly Traded Organizations with Company-Wide 6 Deployments

Source: Proficiency Systems Research


10 Year Stock Price Increase*

LSS CompaniesNASDAQS&P 500Dow Jones Industrial Average

41.8%

61.2%

50.7%

188.0%Lean Six Sigma

Companies Outperform the Major Indices by More than 300%!!

*January, 1998 – January, 2008


10 Year Stock Price Increase* LSS Companies

0 2.5X 5.0X 7.5X 10.0X 12.5X 15.0X 17.5X

Lean Six Sigma is NOT a Panacea

It is NOT a Substitute for Poor Strategy

15% (8 of 52) Companies Saw a Decrease in Stock Value

…but 85% Saw an Increase!

Course Overview

Participant Expectations: After successful completion of this course you will be able to assist your organization in their continuous improvement efforts by applying your analytical and problem solving skills to enhance organizational efficiencies and effectiveness.

Participant Expectations: After successful completion of this course you will be able to assist your organization in their continuous improvement efforts by applying your analytical and problem solving skills to enhance organizational efficiencies and effectiveness.


Course Purpose: These materials have been developed specifically to create an understanding of the impact of a Lean Six Sigma initiative as a Business Process Improvement program.

Course Purpose: These materials have been developed specifically to create an understanding of the impact of a Lean Six Sigma initiative as a Business Process Improvement program.

The Goal of this Training is to: a) Enhance your understanding of Lean Six Sigma techniques as a

tool of continuous improvement.b) Provide self-awareness of the impact you can have on your

organizations continuous improvement effortsc) Increase your understanding of the role you play in the success of

this Lean Six Sigma initiative.

The Goal of this Training is to: a) Enhance your understanding of Lean Six Sigma techniques as a

tool of continuous improvement.b) Provide self-awareness of the impact you can have on your

organizations continuous improvement effortsc) Increase your understanding of the role you play in the success of

this Lean Six Sigma initiative.

Course Objectives


1. Obtain an understanding of and be able to work within a Lean Six Sigma culture

2. Realize daily work is a systematic process-oriented activity

3. Understand the relationships between business functions and processes

4. Implement control mechanisms and monitoring processes to maintain existing processes.

5. Get ready to implement Lean Six Sigma

Defining Lean Six Sigma

What is Lean Six Sigma?

Lean: eliminates WASTE while improving process flow to achieve speed and agility at lower cost

Six Sigma: eliminates DEFECTS and VARIATION

Lean Six Sigma: is an approach to IMPROVE the PERFORMANCE of your organization


Lean & Six Sigma in the Food Production Industry

Why Lean/Six Sigma are not being implemented

1) Organizations claim to not have the time, money, or the labor resources

2) Education – lack awareness of the benefits

3) Lack of baselines and poor measurement systems

FoodProcessing.com 2009


Status of Lean Six Sigma Deployment

Survey on Consumer and Industrial Products Practice

45% of Food Processing organizations were employing some Lean thinking and practices

10% were using Six Sigma

Grant Thorton LLP 2009



Survey on Consumer and Industrial Products Practice

For many food processing organizations 70% of their costs are in raw materials and other direct costs. That leaves only 30% you can control.

Areas to target include: 1. Freight2. Information Technologies 3. Procurement4. Contractual Maintenance

Grant Thorton LLP 2009



FDA & USDA Regulatory Issues5S can be used as a tool to maintain cleanliness

and order – which meshes well with the food industry’s regulatory focus on preventing contamination

5S embodies organization and visualization tools therefore empowering employees to self-manage their working environment

Are You Playing the Lean Game? www.foodmanufacturing.com



http://www.foodmanufacturing.com/

Continuous Improvement Opportunities

The Food industry is facing an explosion of product variation, serious food safety concerns, and increasing raw materials and transportations costs

Lean is a tool to help organizations cut costs

Are You Playing the Lean Game? www.foodmanufacturing.com



http://www.foodmanufacturing.com/

Team Work


Lean and Six Sigma are not something extra to add to

your daily roles and responsibilities!

Lean and Six Sigma ARE your daily responsibility.


The Goals of the Lean Enterprise

Team Work

Team Work - Process improvement efforts are undertaken by teams of people. Below is a list of benefits to utilizing teams:

1. Learning opportunity for employees

2. Sharing of the workload

3. Broader range of input relative to the process

4. Buy-in by all those impacted

5. Increased employee satisfaction



Goal 4: Reduce Total Costs – direct and indirect costs associated with a product or service

Lean Goals

Goals of the Lean Enterprise

Goal 1: Improve Quality – both product and service

Goal 2: Eliminate Waste – eliminate activities that do not add value

Goal 3: Reduce Lead Times – focus on quicker response to changes in customer demand


7. Establish performance metrics to evaluate effectiveness

Lean Goals

How to Achieve Improved Quality

1. Document customer expectations and requirements

2. Review characteristics of service or product design to verify that they meet the customers’ requirements

3. Review your process metrics to verify capability to meet customers’ requirements

4. Identify processes where errors can create defects

5. Conduct problem solving activities to identify root causes

6. Apply error proofing techniques to prevent defects


Lean Goals

How to Eliminate Wastes1. Identify a product or service that is inefficient

2. Identify associated processes that perform poorly – start with an operation that has the lowest production output

3. Create a Value Stream Map (VSM)

4. Review the VSM and identify wastes

5. Determine metrics for identifying the frequency and severity of the wastes

6. Periodically review the metrics to continue eliminating wastes


Lean Goals

How to Reduce Lead Times1. Create a Value Stream Map (VSM)

2. Calculate the times required for the value-added steps

3. Review the VSM to identify where you can reduce lead times

4. Identify the constraints in the process and develop a plan to eliminate them or mitigate them

5. Determine metrics to identify the location, duration and frequency of the lead times within the process

6. Once the plan is implemented measure and document the improvements


Lean Goals

How to Reduce Total Costs1. Determine if improvement efforts will start with new or

existing production lines

2. If the focus is on new products use target pricing, target costing and value engineering

3. If the focus is on existing products – identify the high cost products and apply Kaizen costing and cost maintenance

4. Identify the constraints in the process and develop a plan to eliminate them or mitigate them


Food Processing Obstacles

Organizational Obstacles to Adopting Lean

1. Lack of persistent and challenging leadership

2. Lack of a clear vision of the future and what can be achieved

3. Failure to link Kaizen processes to everyone’s formal work

4. Lack of patience and follow through

5. Failure to perceive LEAN as a viable strategy for competitive advantage

6. Failure to engage and involve employees at an early stage

7. Lack of constant visibility by management on the shop floor

Author: Brian Heymans Lean Manufacturing and the Food Industry “Continuous Systems Improvement” 2009.

8. CULTURE CULTURE CULTURE CULTURE


Food Processing Specific Obstacles

Marketplace Obstacles to Adopting Lean

1. Extraordinary long procurement lead times – agricultural products long growing seasons and maturing cycles – not uncommon for procurement cycles to be over a year (dairy, coffee, cocoa, wheat, corn products, soybean and vegetable oils, nuts, meat products, and sugar and other sweeteners)

2. Short shelf life

3. Production lead times are very short

Author: Brian Heymans Lean Manufacturing and the Food Industry “Continuous Systems Improvement” 2009.

Cost of Poor Quality


What is Quality?

What is Quality – Historical Definition?

Quality: has two meanings:

1. the characteristics of a product or service that bear on its ability to satisfy stated or implied needs;

2. a product or service free of deficiencies. http://www.asq.org/glossary/q.htm

According to Juran, quality means “fitness for use;”

According to Crosby, it means “conformance to requirements.”


http://www.asq.org/glossary/q.htm

What is Quality?

What is Quality in 2010?

Quality is defined in terms of first pass yields – or in other words the efficiency in which a product comes down the production line. The question is no longer whether the product shipped to the customer will be good but rather, what is the cost of attaining first pass yields of greater than 90% without inspection.

Six Sigma and Leadership. Columbia Business School 2009


Definition of COPQ

Cost Of Poor Quality COPQ consists of those costs which are generated as a result of

producing defective material

This cost includes the cost involved in fulfilling the gap between the desired and actual product/service quality. It also includes the cost of lost opportunity due to the loss of resources used in rectifying the defect

This cost includes all the labor cost, rework cost, disposition costs, and material costs that have been added to the unit up to the point of rejection

COPQ does not include detection and prevention cost

http://www.isixsigma.com/dictionary


http://www.isixsigma.com/dictionary

Definition of COPQ

Cost Of Poor Quality

The Cost of Quality category codes are the following:

1. Prevention Costs (P)

2. Appraisal Costs (A)

3. Internal Error Costs (I)

4. External Error Costs (E)


Definition of COPQ



Prevention costs are investments made ahead of time in an effort to ensure conformance to requirements.

Examples: New product review, Quality planning, Supplier capability surveys, Process capability evaluations, Quality improvement team meetings, Quality improvement project, Quality education and training

Appraisal costs are costs incurred to identify defects after the fact.

Examples: Incoming and source inspection/test of purchased material, In-process and final inspection/test, Product, process or service audits, Calibration of measuring and test equipment, Associated supplies and materials

Definition of COPQ



Internal error costs are the costs of rework and repair before delivery to a customer.

Examples: Scrap, Rework, Re-inspection, Re-testing, Material review, Downgrading

External error costs are the costs of rework and repair after delivery to a customer.

Examples: Technical support calls, Preparation of support answer books, Investigation of customer complaints, Refunds and recalls, Shipping of updated product, Lost sales, Lost customer goodwill, Discounts to resellers to encourage them to keep selling the product, Warranty costs, Liability costs, Government investigations, Penalties, All other costs imposed by law

COPQ “Iceberg”


Technical Product Quality Costs (5-10% of Sales)

Available or easy to measure costs from:• Inspection• Rework• Warranty• Inventory

• Obsolescence• Scrap• Customer complaints • Legal

Interpersonal Process Quality Costs (20-40% of Sales)

Difficult to measure costs from:

• Lost sales• Expediting• Redundancies• Late payments• Frustrated

employees

•Idle time - people and equipment •Lost customer loyalty•Long cycle times•Excess facilities•Lost reimbursements

Lean Principles


“Lean production is aimed at the elimination of waste in every area of production including customer relations, product design, supplier networks and factory management. Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible.”

http://lean2.mit.edu/

Lean Principles



Need for Evaluating the Management System

1.How does Kraft engage and align people to determine which problems are important?

2.How does Kraft tackle the important issues, solve the problems, and evaluate proposals rising from the bottom of the organization where the greatest amount of knowledge of the problems exist?

3.How well is work standardized? How are supervisors and managers held accountable?

4.How is Kraft creating the next generation of managers? Especially, Lean and Six Sigma management.

Lean for the Long Term http://lean2.mit.edu/

Lean Management Systems



Kraft Foods 2011 Sustainability Goals:

Reduce plant energy usage by 25%

Reduce plant energy related carbon dioxide emissions 25%

Reduce plant water consumption by 15%

Reduce plant waste by 15%

Eliminate 150,000,000 lbs of packaging materials

Support agricultural sustainability on key commodities – e.g. coffee and cocoa

Lean Principles


Wastes

Seven Areas of WASTE

1. Defects

A defect is a product or service that does not conform to the customers’ specifications.

Correcting or repairing a defect in materials or parts adds unnecessary costs because of additional equipment and labor expenses. An example is the labor cost of scheduling employees to work overtime to rework defects.


Wastes

Examples of Defect Wastes

1. ___________________________________________

2. ___________________________________________

3. ___________________________________________

4. ___________________________________________

5. ___________________________________________


2. Overproduction Producing more product than is required by the

customer. Producing parts at a faster rate than processed

customer orders. Doing this requires more raw product inventory than necessary, over uses machines and people and requires more storage area.

Wastes


Wastes

Examples of Overproduction Wastes

1. ___________________________________________

2. ___________________________________________

3. ___________________________________________

4. ___________________________________________

5. ___________________________________________


Wastes

Demand-Based Production Decisions

Kraft must create a focus on understanding product demand.

How are demand signals received and passed on to suppliers? There needs to be COLLABORATION. There needs to be a “Smooth” flow of both information and materials to facilitate Lean production.

Demand based signals can eliminate the need for forecasting. There needs to be real-time visibility to deliver the right products – to the right places – at the right times – in the right quantities.


3. Extra or Over Processing

Wastes

Extra or Over Processing - work that has no relationship to advancing the production line or improving the quality of a product or service.

Example: When an inside sales person must obtain customer information that should have been obtained by the outside salesperson handling the account.


Wastes

Examples of Extra/Over Processing Wastes

1. ___________________________________________

2. ___________________________________________

3. ___________________________________________

4. ___________________________________________

5. ___________________________________________


Wastes

4. Transportation

Transportation is a secondary required action that does not directly contribute value to the product.

It’s essential to avoid unnecessary transportation of products – (1) transportation adds time to the process and (2) the products can be damaged during transportation.


Wastes

Examples of Transportation Wastes

1. ___________________________________________

2. ___________________________________________

3. ___________________________________________

4. ___________________________________________

5. ___________________________________________


Wastes

Kraft Reducing Transportation Wastes

Kraft is using software provided by Transportation Warehouse Optimization at its 20 largest plants and distribution centers to optimize outbound truckloads, maximize weight and cube and put more products on fewer trucks.

1500 less trucks on the road and 1,000,000 miles less traveled.

www.kraftfoods.com 2009


http://www.kraftfoods.com/

5. InventoryInventory is a drain on an organization’s capital. The more inventory - the higher the carrying costs.

If quality issues arise defective material may be hidden in finished goods.

To remain flexible to ever changing customer requirements and to control product variations inventory must be minimized.

Inventory hides unacceptable change-over times, excessive downtimes and production scheduling inefficiencies.

Wastes


Wastes

Examples of Inventory Wastes

1. ___________________________________________

2. ___________________________________________

3. ___________________________________________

4. ___________________________________________

5. ___________________________________________


Wastes

Kraft Inventory Wastes?


Kraft Inventories Dec 31, 2009 –

Raw Materials $1,410,000,000Finished Product $2,365,000,000Total $3,775,000,000

Is this a PROBLEM ?

The total level of inventory was down slightly from $3,881,000,000 on December 31, 2008

Wastes

6. MotionMotion waste refers to people

moving within and outside of their immediate work area to find tools or materials. Any movement of people or machinery that does not contribute added value to the product; i.e., programming delay times and excessive walking distance between operations or operator’s having to walk back and forth to retrieve materials not available in the immediate work area.


Wastes

Examples of Motion Wastes

1. ___________________________________________

2. ___________________________________________

3. ___________________________________________

4. ___________________________________________

5. ___________________________________________


7. Waiting or Queuing

Idle time between operations or events, i.e. an employee

waiting for machine cycle to finish or a machine waiting for the operator to load new parts.

Periods of inactivity in a downstream process that occur because an upstream activity does not deliver product on time.

Wastes


Wastes

Examples of Waiting Wastes

1. ___________________________________________

2. ___________________________________________

3. ___________________________________________

4. ___________________________________________

5. ___________________________________________


Applying the5S Principles


5S means there is a place for everything and everything is in its place

04/19/23

5S

The organization must remain committed to maintaining these improvements

Start with a firm foundation to ensure improvements are sustainable

5S is the starting point for improvements to a process

57© 2010 RLM & Associates LLC

The Bad and the Ugly

04/19/23

5S


The Good

04/19/23

5S


Sorting

Definition: Seiri - Clearing Up – Sorting

To sort out necessary and unnecessary items

To store often used items at the work area, infrequently used items away from the work area and dispose of items that are not needed Things to remember

Start in one area, then sort through everything

Discuss removal of items with all persons involved

Use appropriate decontamination, environmental, and safety procedures

Items that cannot be removed immediately should be tagged for later removal

Things to rememberStart in one area, then sort

through everythingDiscuss removal of items with

all persons involvedUse appropriate

decontamination, environmental, and safety procedures

Items that cannot be removed immediately should be tagged for later removal


Why:Removes wasteSafer work areaGains spaceEasier to visualize the process

Straightening

Definition:Seiton - Organizing – Straightening

To arrange all necessary items To have a designated place

for everything A place for everything and

everything in its place Easily visible and accessible

Things to remember Things used together

should be kept together Use labels, tape, floor

markings, signs, and shadow outlines

Sharable items should be kept at a central location (eliminated excess)

Things to remember Things used together

should be kept together Use labels, tape, floor

markings, signs, and shadow outlines

Sharable items should be kept at a central location (eliminated excess)


Why:Visually shows what is required or is out of placeMore efficient to find items and documents (silhouettes/labels)Saves time by not having to

search for itemsShorter travel distances

Shining

Definition:Seiso - Cleaning – Shining

Clean everything and find ways to keep it clean

Make cleaning a part of everyday work

Things to remember

“Everything in its place” frees up time for cleaning

Use an office or facility layout as a visual aid to identify individual responsibilities for cleaning. This eliminates “no man’s land”

Cleaning the work area is like bathing. It relieves stress and strain, removes sweat and dirt, and prepares the body for the next day

Things to remember

“Everything in its place” frees up time for cleaning

Use an office or facility layout as a visual aid to identify individual responsibilities for cleaning. This eliminates “no man’s land”

Cleaning the work area is like bathing. It relieves stress and strain, removes sweat and dirt, and prepares the body for the next day


Why:A clean workplace indicates a quality product and processDust and dirt cause product contamination and potential health hazards.A clean workplace helps identify abnormal conditions

Standardizing

Definition:Seketsu – Standardizing –

Standardizing

To maintain the workplace at a level that uncovers problems and makes them obvious

To continuously improve your office or facility by continuous assessment and action

Things to rememberWe must keep the work place

neat enough for visual identifiers to be effective in uncovering hidden problems

Develop a system that enables everyone in the workplace to see problems when they occur

Things to rememberWe must keep the work place

neat enough for visual identifiers to be effective in uncovering hidden problems

Develop a system that enables everyone in the workplace to see problems when they occur

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Why:To sustain sorting, storage and shining activities every day


Sustaining

Definition:Shitsuke - Training &

Discipline – Sustaining

To maintain our discipline, we need to practice and repeat until it becomes a way of life

Things to Remember Develop schedules and check

lists

Good habits are hard to establish

Commitment and discipline toward housekeeping are essential first steps toward being world class

Things to Remember Develop schedules and check

lists

Good habits are hard to establish

Commitment and discipline toward housekeeping are essential first steps toward being world class


Why:To build 5S into our everyday process

Poka-Yoke Methods


Poka-Yoke

Pronounced POH-kah YOH-kay “To make mistakes impossible” Plain English: “Mistake Proofing”

04/19/23

Poka-Yoke has two parts: Making mistakes impossible (prevention) Making mistakes immediately obvious (detection)

Why is Poka-Yoke important? One of the simplest tools to learn Extremely high impact - often at little cost

Developed by S. Shingo of Toyota


Examples of Poka-Yoke

1

6

5

432

7 8

04/19/23 67© 2010 RLM & Associates LLC

The Dual Focus of Poka-Yoke

DefectsMistakesProcess

PreventionPoka-Yoke that focuses here works on mistake prevention or making mistakes impossible.

DetectionPoka-Yoke that focuses here works on mistake

detection or making sure mistakes do not turn into

defects.

People and systems do make mistakes. A portion of those mistakes turn into defects.


Poka-Yokes All Around Us

Modern automobiles have many Poka-Yokes built into them. How many can you identify?

Physical geometry, such as guide pins or stops, makes incorrect geometry impossible – P or D?

Automated vision inspection – P or D? Limiting mechanisms on equipment controls – P or D? Inspection checklists – P or D?

Examples (Which are Prevention, Which are Detection):


Summary

What Poka-Yoke IS NOT: Retraining people Disciplining people who make mistakes Work instructions Improving the attentiveness of people Increased human attention or intervention

What Poka-Yoke IS: Poka-Yoke means “mistake proofing” Poka-Yoke focuses on preventing and detecting mistakes Poka-Yoke is directly connected with the occurrence and

detectability tasks of FMEA Poka-Yoke is classified as a control method but can be

considered as a solution to a problem as well if it prevents a problem from occurring



What Happens in a Lean Event?

1. Meet with Leadership


Pre-Event

2. Walk the Process

3. Leadership Kicks off the Event

Team Operating Guidelines

Cell phones, Blackberries, iPhones, etc. turned off

Be on time

Limit side conversations – Only one person speaking at a time

Listen for understanding - Let the person finish before you speak

Have respect for one another – Attack issues and facts…not people or their ideas!


During the Event

4. Document the Current State


During the Event

5. Describe/Map an Ideal State – One where there are no constraints inhibiting the flow of work

Non Value-Added ActivitiesActivities that consume resources but create no value in the eyes of the Customer Pure wasteIf you can’t get rid of the activity, it turns to yellow

Non Value-Added – Necessary ActivitiesActivities causing no value to be created but which cannot be eliminated based on current state of technology or thinkingRequired (regulatory, customer mandate, legal) Necessary (due to non-robustness of process, currently required; current risk tolerance)

Value-Added ActivitiesAn activity that transforms or shapes material or informationAnd the customer wants it and is willing to pay for itAnd it’s done right the first time


Identify Waste

6. Develop a Future State


Future State Diagram

7. Create an Implementation Plan

8. Implement & Sustain


Implementation

9. Continuously Improve

Lean Value Stream Analysis


Lean Value Stream Map

I

Materials5 days

C/T =Uptime =Run Hrs=Breaks=Hrs Avail=Sec. Avail=





Stamping


I I I I I

500 Ft Rolls

Tues &Thurs

Pieces/Mo

Tray=

Shifts=

Delivery DPMO=

Quality DPMO=

Kraft FoodsWal-Mart

Mon & Wed


Viewing the Value Stream, from supplier to customer on

one sheet of paper.

Value Stream Analysis

1. Value Stream Analysis helps you visualize the entire system; i.e. order entry, invoicing, shipping, assembly, test, etc


6. Value Stream Analysis is good for describing what you will do to change business-performance levels

5. Value Stream Analysis conceptualizes Six Sigma projects as well as other improvement efforts

4. Value Stream Analysis forms the basis of an improvement vision and plan by helping understand how door-to-door flow should be performed to optimize costs, cycle times & quality

3. Value Stream Analysis helps you see sources of inefficiency and problems in the delivery of your service or product

2. Value Stream Analysis is a qualitative process allowing you to visualize how your organization should operate

Value Stream Analysis


Value Stream Analysis puts the relevant information with regard to the total work effort on one sheet of paper - the current-state map

Map information flow; i.e., customer and supplier ordering, material flows, and production control to complete the picture

Overall performance and process-specific problems become visible and analysis can be done as a part of the overall representation of the process

Identify efficiency and effectiveness targets

The final result is a future-state map with a plan that is achieved through Lean Six Sigma projects

Process Management


Process Management

A Functional Business Unit represents a major group of business processes, which together completely support a stand-alone unit. A Functional Business Unit is static in nature, and has no definite beginning or ending points. A Functional Business Unit is a logical, related, sequential (connected) set of activities and tasks that takes an input from a “supplier,” adds value to it and produces an output that goes to a “customer.” Examples of Functional Business Units include Procurement, Asset Management, Human Resources and Finance Management.

A Functional Business Unit represents a major group of business processes, which together completely support a stand-alone unit. A Functional Business Unit is static in nature, and has no definite beginning or ending points. A Functional Business Unit is a logical, related, sequential (connected) set of activities and tasks that takes an input from a “supplier,” adds value to it and produces an output that goes to a “customer.” Examples of Functional Business Units include Procurement, Asset Management, Human Resources and Finance Management.


A Business Process is a description of a series of Supporting Activities or sub-processes that together produce a tangible result, usually in support of a function. It manipulates (transforms, controls or manages) information and/or physical things in the business. It is typically described in terms of its inputs, outputs, and/or controls and can be composed of additional processes. An example of a Business Process would be Procure Raw Materials, which supports the overall Business Function of Procurement. Another example would be Recruit & Hire Employees, which supports the overall Business Function of Human Resources.

Process Management

A Supporting Activity or Sub-Process is a portion of a major process that accomplishes a specific objective in support of the major process. A Supporting Activity or Sub-Process is a breakdown of a Business Process and represents a specific activity within the process. An example of a Supporting Activity within Procure Raw Materials would be the creation of a Purchase Order. On the Recruit & Hire Employees side an example of a Supporting Activity would be to make a job offer and negotiate details.

A Supporting Activity or Sub-Process is a portion of a major process that accomplishes a specific objective in support of the major process. A Supporting Activity or Sub-Process is a breakdown of a Business Process and represents a specific activity within the process. An example of a Supporting Activity within Procure Raw Materials would be the creation of a Purchase Order. On the Recruit & Hire Employees side an example of a Supporting Activity would be to make a job offer and negotiate details.


A Supporting Step walks one through a Supporting Activity and identifies the decision points one will have to make to complete the task. This really defines the flow of how one will do a job.

A Supporting Task is a step involved in performing a specific Supporting Activity or Sub-Process and is a subset of an overall Business Process. They are usually performed by a single unit (a person, a machine or a department). An activity is usually documented in an instruction. An example of a Supporting Task would be the creation of a Purchase Order for a consumable versus stock item. Using a Payroll example for a Supporting Task would be paying employees by direct deposit versus generating a check. Steps in a Supporting Activity are defined to the transaction level, (which become business steps).

A Supplier is an external entity that provides common off the shelf or standard products or servicesA Supplier is an external entity that provides common off the shelf or standard products or services

Process Management


A Key Process is defined as a process that is important to the success of the business or the customer

Enabling Processes support processes such as order processing, accounts payable and hiring processes

Product/Service Business Processes are involved in producing the delivered product or service such as manufacturing a car or processing an ATM withdrawal

A Customer is any entity, person or another process that receives an output from the process under investigation

Process Management

A Process Management System ensures the outputs of work is:

1. predictable2. meets customer requirements3. performed quickly and at low cost4. aligned to deliver value to the customer5. capable of quickly changing to meet market and customer demands

A Process Management System ensures the outputs of work is:

1. predictable2. meets customer requirements3. performed quickly and at low cost4. aligned to deliver value to the customer5. capable of quickly changing to meet market and customer demands


Process Member’s are key supporters for the deliverables from the process

Process Owner’s manage a process from end-to-end to ensure an acceptable level of overall performance

Process Architecture

1. Obtain …2. Add …3. Move to …

Sub-Process B

Tasks

Activities

Sub-Process A

We all perform tasks at various levels and are therefore quite familiar with this concept.

Often people think of what they do as a set of repeated activities. To be more effective, their thoughts must transform from activity thinking to process thinking.


F(X)F(X)YYCause and Effect

is equal to is equal to

The work done or value added by the process.

The work done or value added by the process.

The performance of an output is a function of the process inputs. These inputs are called (X’s) and the manner in which the process combines them provides the resultant output (Y). The function is written as Y = f(X).


Y Dependent Output from the

Process The Effect It is a Symptom Can Only be

Monitored

X1 . . . Xn Independent Input to the

Process The Cause of a

Problem What Needs to

be Controlled

SuppliersInternal/External

CustomersInternal/External

Process

Transformation(Creating Value)

Requirements and Feedback Requirements and Feedback

Inputs (X’s) Outputs (Y’s)Process

ActivityTasks

Blending of Inputs

Materials InformationPeopleEnergyTools and Equipment

MethodsProceduresProcess rulesCustomer requirements

Definition of a Process

Step AStartIn

spec

tFinishStep B Step C Step D

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Process A Process B Process C Process D Process E

Senior Management Owned

Middle Management

Owned

Process Member and

Process Owner Responsibilities

Process Hierarchy

The many detailed activities, tasks and decisions involved in satisfying a process output.

A core process is directly related to generating revenue, providing services to the customer or creating a strategic advantage for the organization.

Enabling Processes Core Processes Enabling processes do not directly impact the customer. They enable and support the execution of the organizations core processes.

PM SummaryPM Summary PM SummaryPM Summary


Documents

Lean Introduction 1 © 2010 RLM & Associates LLC 8/13/2015