Business Profitability Goal

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					Business Process Improvement




   A strategy for productivity
      and competitiveness


                                 1
Objectives

   Create a closer link between operational
    efficiency and profitability
    – Connect your role to business profitability
    – Introduce tools and techniques
 Create a culture/model to sustain
  operational improvements
 Make you laugh

                                                    2
Five steps…to link operations and
profit

   Understand how the business makes
    money, strategic intent and the value
    proposition
   Alignment with a core/enable business
    process (end-to-end understanding)
   Baseline (metrics and unit costs)—at a
    minimum go to the Balanced Scorecard
   Improve—voice of the customer
   Measure and control
                                             3
How the Business Makes
Money
    Revenue – Expenses = Profit




                                  4
Strategic Intent & Value
Proposition
   Business Strategy
     – Product, placement, promotion, price
     – Value Proposition
     – Performance Metrics and Goals
     – Initiatives – Value Identification
   Business Analysts connect to a Value
    Proposition through Value Delivery =
    Processes


                                              5
Alignment with core business
processes
 Core business processes (business
  acquisition, renewals, servicing)
 Enabling processes (HR, IT, Finance)
 What does it give you
    –   Holistic view
    –   End to End
    –   Inputs and Outputs
    –   Suppliers and Customers

                                         6
Process Improvement
Objectives
 Making processes effective. Have the
  right quality output, at the right
  time, at the right price.
 Making processes efficient.
  Minimizing the resources needed and
  eliminating waste (non-value activities)
  to focus on value.
 Making processes adaptable. Being
  able to adapt to changing customer and
  business needs.
                                         7
Good Business
Processes…..
 Enable you to make better
  business decisions and implement
  them faster
 Help to improve and control your
  operations
 Improve your production flow



                                     8
Common Characteristics of
Well-defined and Well-
managed Processes
   Accountability for how well the process
    performs (process owner)
   Defined boundaries and interfaces
   Known cycle times (consistent, repeatable and
    predictable)
   Measurement and feedback controls
   Customer-related measurements and targets
   Formal change procedures


                                                9
Quality Business Processes
   Eliminate errors
   Minimize delays
   Maximize use of assets—match capacity
    to demand
   Promote understanding
   Are easy to use
   Are customer focused and adaptive to
    changing needs
   Provide the organization with
    competitive advantage
                                        10
It’s all about the business
   Businesses need to make money (grow
    profitably)
   Best way to contribute is by addressing
    business process
   BA’s critical to analyzing the process—go
    beyond the human to system interactions
   Effect business change
   Change management
   Best way to prove your value is by delivering
    high quality metrics

                                                    11
Creating a baseline
   Functional reviews
   Objective to educate on all of the basics
   Focus on current state with a few aha’s
   Align capacity with demand
   Teaches
    – Holistic view
    – Management by fact
   Are not public performance reviews

                                                12
Creating a Functional Review
Process
 ―Standardized‖ template – unique story
 Creates a baseline (efficiency and
  effectiveness) and metrics
 Each functional area presents to Sr.
  Management
 Feedback memo with approvals and
  direction
 Inputs to Operational Plans and Goals
                                           13
Content
 Value Stream Alignment
 Organizational Design
 Performance Management
 Efficiency Snapshot
 High Level Process (SIPOC) (by output)
 Trend of demand and capacity (by output)
 Drivers, lead indicators and levers
 Performance metrics – productivity, quality, timing (by
  output), external benchmarks
 Customer requirements and metrics (by output)
 Unit costs and trend
 Budget and expense management
 Challenges, risks and opportunities
 Commitments to go forward—2008 Goal creation          14
Context of Organizational Fit
    Develop   Acquire   Install   Administer    Process*   Retain
    Product    Client    Client   and Service    Claims     Client




                        Enabling Processes



   Description of Services




                                                                     15
16
                                                                SIPOC
          Suppliers                Inputs                   Process                Outputs       Customers   Requirements
                                                      See Below                                         
                                                                                                         
                                                                                                         
                                                                                                         
                                                                                                         
                                                                                                         
                                                                                                         
                                                                                                         
                                                                                                         
                                                                                                         
                                                                                                         
                                                                                                         




Step 1:                           Step 2:                            Step 3:                 Step 4:             Step 5:




    http://www.isixsigma.com/library/content/c010429a.asp
                                           Capacity
   Drivers: Network
    Pricing
    Arrangements and                                                   Volume and Staffing
    Customization
   Lead Indicators:                       12                                                                                   3000

    None                                   10                                                                                   2500
   Taken staff out and
    team has continued                         8                                                                                2000
    to meet/exceed
                            Staffing




                                                                                                                                       Volume
                                               6                                                                                1500
    goals
   May be potential for                       4                                                                                1000
    additional efficiency
    gains                                      2                                                                                500

   June 2007 - a                              0                                                                                0
    capacity review of                             Q1 '05   Q2 '05   Q3 '05 Q4 '05   Q1 '06   Q2 '06   Q3 '06 Q4 '06   Q1 '07

    this team will begin               Staff        10       10       10      10       7        7        7      7        6
    – metrics, skill                   Volume      2848     2529     2057    2729    2248     2102     1767    2467    2064
    set, tracking of time
    & volumes – to right
    size team
Metrics – Provider Loads
                 Provider Loads - Service Timing

            100.00%
            98.00%
  Percent




            96.00%                                      Actual
            94.00%                                      Goal
            92.00%
            90.00%
                    5



                            5



                                    6



                                            6



                                                    7
                  '0



                          '0



                                  '0



                                          '0



                                                  '0
                1Q



                        3Q



                                1Q



                                        3Q



                                                1Q
                                   Time



 •Service timing goal is 96% loaded within 14 days
 •Quality goal is 98.5% for 2007
 •Timing and quality goals are a focus area for 2007
                                                                 19
Global Opportunities
   Performance Metrics – daily
    measures, inventory management (work in
    progress), team and individual
    productivity, quality and controls, unit costs
   Performance Goals (too low)
   Service levels – same day, good order and bad
    order (reduce work in progress)
   Mature staffing models
   Process improvements – eliminate hand offs
    and variation and improve the flow through
    the value stream
                                                20
Introducing Bursts

   2 day events
   Scope and goal set
   Prep with leaders and team members
   Value stream mapping – identify missing data
    points
   Data collection
   Improvement session
   Report out and action plan
                                              21
Identify Opportunities
 Cost/unit cost (esp. if trending up)
 Duplicate steps
 Rework
 Complaints
 Missed deadlines
 Inconsistent results
 Many hand offs
 Long training curves
 Variation
 No work standard

                                         22
Best Practices—Lean
   Once and done
   No redundant work; minimum touch
   Right the first time
   Match capacity to demand
   Rational handoffs vs. specialization
   Workforce Engagement
   Scalable to variance in demand
   Visibility
   Team measures, goals and accountabilities

                                                23
The Importance of Culture and
People

 Emphasis on the people – great people
  can execute a bad process
 How we do work is personal
 Workforce engagement
 Strong change management




                                      24
Sustainable Operational
Excellence Culture

 It’s all about the people
 ―The soft stuff is the hard stuff‖
 Top down and bottom up
 Quick wins




                                       25
Sustainable Operational
Excellence—Culture Shift
 Counter-intuitive to conventional
  wisdom
 ―Learning to see‖
    – New thinking
    – New skills
    – New tools, sources of knowledge



                                        26
Parting comments
   Operational Efficiency
    – Metrics (measures and controls)
    – Goals
   Process Design
    – Use voice of the customer
    – Don’t automate an inefficient or ineffective process
    – Don’t fix at point of error when the right answer is to prevent
      upstream
    – Observe the process—interview to identify variation
    – Look end-to-end during analysis
    – Use data (time track if no data available)
    – Get user input and feedback
    – Eliminate waste to add value
    – Production flow – no batch and queue (wait times)


                                                                        27
Closing

   Questions and answers




                            28
Resources

 www.bptrends.com
 ―Lean Enterprise Value,‖ Murman et. Al
 ―Business Process Change,‖ Paul
  Harmon
 ―Business Process Management,
  Profiting from Process,‖ Roger T.
  Burlton
 http://lean.mit.edu
                                       29
                                                                   Competitive Positioning
                  Strategic
                                                                         Strategy
                   Theme
    Strategic
     Theme

                                             Productivity Activities                               Growth Strategy
                  Strategic
                   Theme
    Strategic                                           Internal                                        External
                                                       Measures                              Enhance    Measures       Expand
     Theme                                                         Performance
                                    Budget Guidance                                          Customer                  Revenue
                                                                   Management
                                                                                              Value                  Opportunities

                                                      Automation




                                                                                                    Improve
                                                                                                                             Expand
                                                                                                    Product /
                                                                                                                             Market
                                                                                                     Service




                    Functions
                                                                                                          Market
     Product
                      Sales         Claims
   Development

                                                                   Product or Service
     Enabling
                   Underwriting                                                                                 Customer
    Processes




Source: Modified from BT Trends, Paul Harmon
                                                                                                                                      30
                                                                    Competitive Positioning
                    Strategic
                                                                          Strategy
                     Theme
Strategic
 Theme

                                               Productivity Strategy                                Growth Strategy
                    Strategic
                     Theme
Strategic                                               Internal                                         External
                                                       Measures                               Enhance    Measures       Expand
 Theme                               Improve Cost                   Increase Asset
                                                                                              Customer                  Revenue
                                       Structure                      Utilization
                                                                                               Value                  Opportunities




                                                                                                     Improve
                                                                                                                              Expand
                                                                                                     Product /
                                                                                                                              Market
                                                                                                      Service

Integrate & Align                                       Improve
  Value Chain                                         Value Chain
   Processes                                           Processes



                    Value Chains
                                                                                                           Market
  Product             Business
                                   Retention
Development          Acquisition

                                                                     Product or Service
  Enabling              Care
 Processes            Advocacy                                                                                   Customer




     Source: Modified from BT Trends, Paul Harmon
                                                                                                                                       31

				
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