MIST 5750 Exam 2

challenges of process discovery

- Fragmented process knowledge - Domain experts think on an instance level - Knowledge of process modeling is uncommon

advantages of simulation

-Can explore alternative models without implementing them (thus, cost savings) -Can handle variability -Easy to explain to others

process specialization

-Differentiate by customer classes, geographical locations, time periods (winter, summer), ... -Different activities, different resource pools

Seven sources of waste (sometimes 8)

Defects Overproduction Waiting (Non-Utilized talent) Transportation Inventory Motion Extra-Processing

DMAIC: the 5 step six sigma problem solving process

Define, Measure, Analyze, Improve, Control

kaizen

Japanese term for continuous improvement kai- take apart or change zen- make better, improve means small improvements

WARNING against technology and automation

One of the worst things an organization can do is take the "as-is" flowchart and lay technology on top of it; this is bad for two reasons: • IT can be expensive • Despite the investment, the problem might not be solved and automating it could magnify the issue

5 categories of stakeholders

customers participants external parties (suppliers, sub-contractors) process owner and operational managers sponsor of improvement effort and other executives

over-do waste

defects over-processing over-production

interview strengths (1)

detailed inquiry into process

workshop strength

direct resolution of conflicting vies

lean improves...

efficiency (good process flow)

goals of lean

eliminate waste reduce cycle time (be more effective and efficient in everything we do!)

Non-value-adding activities

everything else besides VA and BVA. activities customers are unwilling to pay for includes 1. handovers 2.waiting times, rework loops, 3. rework or defect correction

process discovery methods

evidence based - document analysis - observation - automatic process discovery Interview based workshop based

transport losses

excess movement of paperwork and or materials

milieu

factors outside the scope of the process • Delays caused because of unresponsive external actors • Sudden increases of workload due to special circumstances

material

factors stemming from input materials or data -missing, incorrect, or outdated data

measurement

factors stemming from reliance on: • Inaccurate estimations • Miscalculations

machine

factors stemming from the technology used • Lack of suitable functionality in the supporting software applications • Poor User Interface (UI) design • Lack of integration between systems

method

factors stemming from the way the process is designed, understood, or performed • Unclear assignments of responsibilities • Unclear instructions • Lack of timely communication

man

factors stemming from wrong assessments or incorrect performance of steps attributable to: • Lack of training and clear instructions • Lack of motivation • Too high demands towards process workers

You would choose the service that is...

faster, better, and cheaper

lean focus

flow focused

stakeholder analysis

gathering data from multiple sources by interviewing stakeholders of different types and reconciling their viewpoints

process simulator

generates a large number of hypothetical instances of a process, executes these instances step-by-step, and records the results of each action

six sigma applied by itslef can result in

good products being made with non-value added steps (bad flow)

assuring the process mdoel quality

guarantee that the resulting process model meets different quality criteria. This phase is important for establishing trust in the process model.

External parties are concerned about

having a steady or growing stream of work from the process, being able to plan their work ahead, and being able to meet contractual requirements.

Two-Dimensional Prioritization: PICK Chart

high payoff, hard difficulty- challenge high payoff, easy difficulty- implement low payoff, hard difficulty- kill low payoff, easy difficulty- possible

waiting losses

idle time of a person, process, or machine waiting for a task to finish or an upstream activity to begin

to calculate cycle time with a rework loop...

if the activity is reworked 80% of the time, divide by 20%. If the activity is reworked 10% of the time, divide by 90%

six sigma as a quality control methodology/ approach

improving a process via reducing defects and improving quality of outputs

process analysis provides

insights on weaknesses and their impact

hold waste

inventory waiting

what is the six sigma numerical goal?

less than 3.4 defects per million (DPM) 0.0003% defect rate

Categories of causes- the 6 Ms

machine method material man measurement milieu

lean applied by itself can result in

making poor products fast

six sigma as a statistical measure

measure of the performance of a process or product (that is, a measure of the process' ability to minimize defects)

customer satisfaction

measured by customer feedback score

product quality

measured by defect rate

three categories of waste

move, hold, over-do

unnecessary movement losses

movement by a person more than required

Business value-adding activities

necessary or useful for the business to operate criteria -is this step requires in order to collect revenue, to improve of grow the business? -would the business suffer in the long-term if this step is removed? -does it reduce the risk of business losses? is it required for compliance? MINIMIZE

fat curve v skinny curve

not capable process v very capable process

WIP (Work in process)

number of cases that are running (started but not yet completed); for example the number of active and unfilled orders in an order to cash process

conducting the modeling task

organize the creation of the process model. the modeling methodology gives guidance for mapping out the process in a systematic way.

issue documentation and impact assessment

pareto chart issue register two-dimensional prioritization: PICK Chart

American productivity and quality control (APQC)

performance measures and benchmarks for processes in the process clarification framework (PCF)

IT Infrastructure Library (ITIL)

performance measures for IT service management processes

supply chain operations reference model (SCOR)

performance measures for supply chain management processes

process owner is usually concerned with

performance, be it high cycle times or high processing times. Also be concerned about common defects and wastes, and compliance with internal policy and external regulations.

automatic discovery weakness

potential quality issue

six sigma focus

problem focused

who is involved in process discovery

process analyst, domain experts

process performance =

process model + performance of each activity

different waves

process redesign slide 5

per instance cost =

processing cost + cost of waste

cycle time =

processing time + waiting time

cycle time efficiency =

processing time / cycle time

Value adding activities

produce value or satisfaction to the customer criteria -is the customer willing to pay for the step? -would customer agree that this step is necessary to achieve their goals? -if step is removed, would customer perceive the end product to be less valuable? MAXIMIZE

roadmap

question-> data extraction -> data analysis -> presentations

six sigma goal

reduce variation

lean goal

remove waste

workshop weakness

requires availability of several stakeholders at the same time

customers are often concerned about...

slow cycle time, defects, lack of transparency, lack of traceability

3 simulation modes

step-by-step one-case multiple-cases

syntactic quality

structural correctness and behavioral correctness

variants analysis

take two event logs (corresponding to two variants of a process) and produce list of differences

in the simplest case a process consists of a sequence of activities on a sequential path

the average cycle time is the sum of the average activity times

process redesign

the creation of a new process (the to-be) that aligns the business with its strategy -must consider the results from a process analysis and then utilize the process modeling techniques to develop an improved process

waste

the elements of a process that add no value to the product or service. Waste only adds cost and time. -points to problems within the system -need to find an address the cause of waste

six sigma as a goal/outcome

the higher the sigma level, the better

The sponsor and other high-level managers are generally concerned with

the strategic alignment of the process and the contribution of the process to key performance indicators. Also concerned about the ability of the process to adapt to evolving customer expectations, competition, and market conditions.

cycle time analysis

the task of calculating the average cycle time for an entire process or process fragment

cycle time

the time between the start and completion of a process instance

resource utilization =

time spent per resource on process work / time available per resource for process work

waiting time

time taken by non-value-adding activities

processing time

time taken by value-adding activities

the devil's quadrangle

time, cost, flexibility, quality. a compromise is often required

how is a simulation used in business?

to determine how many/ how much

performance mining

to find bottlenecks and help answer questions "Why is the process slow?", or "Where do we waste the largest amount of time in a business process?"

conformance checking

to highlight differences between the business process model and what really happens. Help to uncover exceptions.

automated process discovery

to produce a business process model that matches the behavior observed in the event log

move waste

transportation motion

pragmatic quality

understandability and maintainability; usability -how well does the user understand the model

Process modeling quality assurance

validation- semantic quality certification- pragmatic quality verification- syntactic quality

semantic quality

validity and completeness

six sigma reduces

variation and improves quality in outputs

WIP is a form of

waste

processing cost

cost of value-adding activities

weaknesses of document analysis (2)

-outdated material -wrong level of abstraction

observation weaknesses (3)

-potentially intrusive -stakeholders likely to behave differently -only few cases

quantitative process analysis techniques

-quantitative flow analysis -queuing theory -process simulation

interview weakness

-requires sparse time of process stakeholders -several iterations required before signoff

Six Sigma

-statistical measure -goal/ outcome -quality control methodology/ approach (DMAIC)

Document analysis strengths (2)

-structured information -independent from availability of stakeholders

process performance reference models

-supply chain operations reference model (SCOR) -American productivity and quality control (APQC) -IT Infrastructure Library (ITIL)

input measures for simulation

-task duration -variation -resources -costs (per task, per resource) -etc

Qualitative process analysis techniques

-value-added analysis and waste analysis -stakeholder analysis -root-case analysis --cause-effect -why-why -issue documentation and impact assessment --pareto analysis --issue register

Product specification

-what the customers want in terms of product attributes -upper and lower specification limits

disadvantages of simulation

-May require detailed data collection -May oversimplify

process standardization

-Often, a significant variation in output is caused by many people doing the same process in different ways. -Aim to treat all cases equally (as much as possible) -Resources are pooled together

technology/automation

-Physical constraints in a business process may be removed by applying new technology. -Tasks may be automated with technology, e.g.:

Origins of lean

-Toyota production system (TPS) -term lean coined by jim womack in "lean thinking"

observation stregth

-context rich insight into the process

output measures from simulation

-cycle time -costs -bottlenecks -workloads -etc

document analysis

-documents point to existing roles, activities and business objects - may not be process-oriented and trustworthy -could be used to gather information before approaching domain experts

automatic discovery strengths (2)

-extensive set of cases -objective data

observation

-follow directly the processing of individual cases -trace business objects in the course of their lifecycle -active role: no big picture -passive role: participants' bias

workshops

-gather all key stakeholders together -interact to create shared understanding

Simulation does not work with

-inclusive gateways -non interrupting boundary events (simple models only)

process variability

-inherent variation in processes -limits on what can actually be achieved -defines and limits process capability

delivery quality

-on-time delivery rate -cycle time variance

ten basic kaizen principles

1. Discard conventional thinking about production 2. Think of how to do it not why it can't be done. 3. Don't make excuses. Question current practices. 4. Don't seek perfection. Do it right away even for only 50% of target. 5. Correct mistakes immediately 6. Do not spend capital 7. Hardship brings out wisdom 8. Find root causes. Use Why Why and other tools 9. Use the wisdom of the group 10. Kaizen opportunities are infinite

Process Discovery

1. defining the setting 2. gathering information 3. conducting the modeling task 4. assuring process model quality

organizing gathered material (5)

1. identify process boundaries 2. identify activities and events 3. identify resources 4. identify the control flow 5. identify additional elements

six sigma application guidelines

1.Define 2.Measure 3.Analyze 4.Improve 5.Control

lean application guidelines

1.Identify Value 2.IdentifyValue Stream 3.Flow 4.Pull 5.Perfection

value-added analysis

1.decortitate the process into steps 2. classify each step and VA, BVA, NVA

a non-manufacturing definition of lean

A Non-Manufacturing Definition: A philosophy that accelerates the speed of "any" process by eliminating waste in all its forms.

a manufacturing definition of lean

A philosophy that shortens the lead time between the customer order and the shipment by eliminating waste.

inventory losses

Any form of batch processing. • Goods awaiting further processing or consumption • All inventory above what the customer needs for an order. • Any goods that are being retained for any length of time, inside or outside a designated area.

defining the setting

assemble a team in a company that will be responsible for working on the process

issue register structure

Can take the form of a table with: • Issue identifier • Short name • Description • Assumptions • Impact: Qualitative and Quantitative • Possible improvement actions Larger process improvement projects may require issue trackers

Discovery and Culture

before starting with process discovery, it is important to understand the culture and sentiment of an organization (open culture vs strictly hierarchical organizations)

capture information once at the source

If a process requires entering the same data more than once, then applying this design principle is appropriate. Remove • Data redundancy • Re-keying • Reconciliation • Errors

business process reengineering

Michael Hammer collected the following insights: • No successful organization relies on piecemeal improvement of what was already carried out. Rather, strong ambition leads to huge rewards • While information technology is a crucial asset in redesigning business processes, it is necessary to go beyond pure automation of what is already being done

gathering information

build an understanding of the process. different discovery methods can be used to acquire information in the process

overproduction losses

Producing more, sooner, or faster than what is required by the next process. •Any production above what is required to meet customer needs (Pre-built inventory) •Extra production to "get through the weekend." •Overstaffing

outsourcing

can free the organization to focus on other more strategic processes that add greater value to the organization

Root-cause analysis

cause-effect (fishbone) diagram why-why diagram

"All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the time line by reducing the non-value-adding wastes"

Taiichi Ohno, toyota

cost of waste

cost of NVA activities

resource cost

cost of person-hours employed per process instance

process mining

The use of exploratory data analysis to provide insights about a business process and identify potential improvements

material cost

cost of tangible or intangible resources used per process instance

little's formula

WIP= lambda X Cycle time

unnecessary processing losses

Work or activities that does not add value to the customer or meet the customer needs.

Process Mining

about discovering processes based on logs available in most IT systems • An advantage is that event logs capture the execution of a process very accurately • A disadvantage is that some log information can be misleading

the redesign orbit

ambition -transactional -transformational nature -analytical methods -creative methods perspective -inward-looking -outward-looking

simulation

an imitation of a system as it progresses through time

defect losses

any form of correction needed in a process flow (ex: data entry errors, incomplete paperwork, damaged cases)

lambda

arrival rate

provide a single point of contact

• A common symptom of not having a single point of contact is multiple transfers of customers' calls. • A single point of contact can be • A project manager • Process consultant • Customer service representative

transformational methods

• Aim to achieve breakthrough innovation • Put into question the fundamental assumptions and principles of the existing process structure

process model canvas

• Allows firms to reason about the value proposition behind their business processes.

why does waste occur

• Because we do not ask the question Whyoften enough • Why do we have an increase in defects? • Why did we not have enough last time? • Why are we getting customer complaints? • Why is that person not busy right now? • Why do we need to run three different reports?

outward-looking methods

• Consider the process from an outsider's perspective • Are driven by external opportunities and developments

inward-looking methods

• Consider the process from the perspective of the internal organization • Draw fromobje

parallelism

• More parallelism leads to improved performance • Reduction of waiting times • Better use of capacity • IT infrastructures which allow for the sharing of data and work enable parallelism

resequencing

• Order tasks based on cost/effect • Put "knock-out checks" first -identify problems early • Postpone expensive tasks until the end

redesign heuristics

• Parallelism • Task elimination • Capture information once at the source and share It • Reduce handoffs • Provide a single point of contact • Ensure quality at the beginning • Resequencing • Specialization and standardization • Outsourcing • Technology / Automation

task elimination

• Print • Copy • Archive • Store • More generally: non-value adding (NVA) activities

ensure quality at the beginning

• Quality problems encountered in the first several steps of a process will create exponentially negative effects downstream. • The time spent to fix inefficiencies by the downstream people can be excessive.

creative methods

• Rely on human creativity and ingenuity • Embrace group dynamics

transactional methods

• Seek to identify problems and resolve them incrementally, one step at a time • Do not challenge the current process structure

origins of six sigma

• Started at Motorola during the 1980's • -Resulted in significant improvements and ultimately a Baldrige Award • Made famous at General Electric • Success stories (results $) has lead to the interest spreading in most large companies and many small ones

analytical methods

• Tend to have a strong mathematical and quantitative focus • Embrace tools and technology

pareto chart

• Useful to prioritize a collection of issues • Bar chart where the height of the bar denotes the impact of each issue • Bars sorted by impact • Superposed curve of cumulative percentage impact

sic sigma assumptions

•A problem exists •Figures and numbers are valued •System output improves if variation in all process inputs is reduced

process participants are concerned about...

•High resource utilization, working under stress. •Defects arising from handoffs in the process and wastes.

the essence of six sigma

•Inputs and processes activities (X) have a profound affect on the output (Y) •Controlling the inputs, their interactions and the activities will improve the output •Attempting to manage results (Y) only causes increased costs due to rework, test and inspection (early quality control efforts)

why use simulation

•To obtain a better understanding and identify needed improvements to a system •To compare and contrast several scenarios, which can be developed quickly and cheaply

lean assumptions

•Waste removal will improve business performance •Many small improvementsare better than system analysis