Business Process Reengineering
- On 05/10/2009
By Shree Phadnis and Aditya Bhalla
There is a misconception that the Theory of Inventive Problem Solving (TRIZ) is applicable only in technological processes or products. This case study will showcase the use of problem flow technology as a way to identify a list of key problems that if solved improve business processes. Using S-curve analysis one can identify the current state of processes and then use the recommendations of the S-curve analysis to identify appropriate strategic directions for the processes. The team involved was able to use flow analysis and the law of completeness to identify various problems in the processes. The team then used a special technique to prioritize key problems for solving and using TRIZ to generate solutions and concepts for deployment.
When an organization embarks on an improvement initiative to improve its business processes the use of Six Sigma is the first improvement initiative used in order to identify important projects that the organization needs to embark on to ensure that such strategic initiatives lead to success.
What makes a good Six Sigma project? This question is commonly asked by people in Six Sigma initiatives. Some feel that project selection is the key element of Six Sigma. One quickly learns that if projects are not selected properly the Six Sigma initiative can be put at risk. Projects do not deliver the expected bottom line results, the organization becomes frustrated with the effort and slowly attention and resources are focused on other initiatives.
Six Sigma is about improving business processes by solving problems. Typically problems fall into two categories:
- Solution known and;
- Solution unknown
Typically Six Sigma is aimed at the problem where the solution is not known. In order to use Six Sigma, one also needs more measurements that quantify the magnitude of the problem and can be used to set project goals and monitor progress.
Such problems include:
- Decreasing invoice errors
- Increasing the yield of Process XX
- Decreasing the defect rate of Product P
- Decreasing the end of day sales outstanding of accounts receivables
In 1989, management consultant, J. M. Juran, pointed out that: “A project is a problem scheduled for solution.”
The characteristics of a good Six Sigma project include:
- A project that is clearly connected to business priorities.
- A project that is linked to strategic and annual operating plans.
- A project where the problem is of major importance to the organization.
- A project that represents a major improvement in process performance.
- A project that represents major financial improvement.
- A project that has a reasonable scope of accomplishment (three to six months).
- A project that defines a clear quantitative measure of success.
- A projects importance is clear to the organization.
- A project has the support and approval of management.
There are many approaches that are used in identification of such projects. The most popular ones are based on a consulting organization meeting where different people in the company discuss various problems within its organization and then use a logic-based prioritization model to focus on those projects that would provide the most significant value for the organization.
One such prioritizing template is shown in Figure 1.
The process depicted in Figure 1 is one of the most common approaches used in the identification of Six Sigma projects. One of the problems that is seen in this approach is one does not see cause and effect linkages among projects and as a result there is a higher chance of several projects overlapping one another. This method also does not guarantee that the core issues that are plaguing the organization are chosen as the projects. In order to avoid the problem the team used the network of problem approach formulated by professor of science and technology at INSA Strasbourg, Nikolai Khomenko, based on the OTSM-TRIZ framework with some minor modifications.
Overview of the Process
A team of consultants met with approximately 30 different people in the organization at different levels.
The consultants probed various people on various problems and also solutions that either they had for the existing problems or solutions that they had tried in the past for the various problems.
- The consultants created a laundry list of the various problems and solutions.
- The consultants linked the various problems and solutions into a network diagram.
- The consultants analyzed the chains of the networks and its topography.
- The consultants identified board issues that needed to be effectively resolved.
- The consultants selected projects for the team to work on.
One project is represented in Figure 2. The arrows leading from one box to another box indicate cause and effect links or produce links. Links that are shown with a dash on them indicate a counteracting effect. For example, the rehab process helps counteract or reduce high delinquency. Similarly, high cheque bounces produce high delinquency.
By representing various problems in networks the team was able to identify the critical root causes and also see the impact of various proposed solutions within the organization. The team as a result was able to quickly discard various initiatives taken in the organization from a systems perspective view.
Once the team identified the problem areas and the core issues that needed to be solved, they used the S-curve analysis to identify the process stage on the S-curve to identify the kind of actions that might be needed for acting on the processes.
The high level steps used for conducting the S-curve analysis include:
- Define the engineering system to be analyzed
- Define the main function
- Define the project goal
- Define the CPV (critical parameter of value) and its current value
- Ascertain the action principle
- Ascertain the scale of production
- Ascertain how quickly the CPV is changing
- Ascertain the most restrictive development limit
- Construct and analyze the S-Curve; draw conclusions
- Repeat for all CPVs
- Repeat for competing systems
Take, for example, the process of loan disbursement when viewed for the law of system completeness in Figures 3 and 4:
Based on this result the team was able to study all the processes using this model as a guideline and they were able to identify many opportunities for improvement along with establishing the position on the S-curve, which helped the team better understand whether there was a need for change in the business model.
Flow analysis was conducted using the approach of value stream mapping as in Lean manufacturing, which helped the team to conduct substance and information flows using a diagrammatic technique that is easily adaptable for application in business processes. It was during this stage that the team realized how lean manufacturing is connected to the laws of system evolution. For example, the static laws of evolution, law of system completeness, law of energy flow and law of rhythm coordination coupled with the law of increasing ideality are the basics on which the manufacturing works.
After this stage various problems to solve were identified and root conflict analysis was used effectively to develop solutions to contradictions. The entire problem solving approach is shown in Figure 5.
An extract example of the root cause analysis (RCA) diagram along with the contradiction identified is shown in Figure 6.
Using this approach some of the deliverables achieved in one of the projects were as follows:
Outcome of the Project
- Timely presentation of post dated cheques for all locations; from 78 percent improved to 98 percent.
- Increase collection updating first time resolution from 82 percent to 95 percent.
- Increase the collection time window for branches by 10 days thus enabling more collection.
The team demonstrated how complete business process re-engineering of an organization can be achieved by systematically using the approach detailed.
The approach can be summarized as:
- Meet various people in organizations and collect complete lists of all problems and partial solutions.
- Develop the problem network diagram that includes problems and partial solutions.
- Study the topography of the network diagram to identify the core projects to work on.
- Scope and define projects with their charters.
- Use laws of evolution on projects to identify strategic directions for projects.
- Use the system approach of problem solving as detailed in Figures 4 and 5.
- Pilot solutions and evaluate results.
Note: This paper was originally presented at The Altshuller Institute’s TRIZCON2009.
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