Jeff Sipes, Process Improvement and Manufacturing Strategy Specialist (Lean and BPM), Back2Basics
BPM, when treated as a methodology for managing business processes, has the potential to be a significant “next wave” for business improvement. For most businesses in North America, BPM is an untapped source of improvement. I come to this conclusion as result of working with my client base, teaching BPM and Lean Sigma on-line courses for Villanova University (lots of opportunity to interact with students from broad range of companies), and participating in various forms of social media. This article will position BPM as a springboard to launch aggressive improvement, with particular emphasis on renewing Lean Sigma investments.
BPM is part of the evolution of overall business improvement approaches and methodologies. Throughout the 1900s, the improvement evolution has had a strong engineering influence. Even Henry Ford’s mass production (early 1900s), Lean and Toyota Production System (1950s), and Six Sigma (1980s) have strong engineering influences that focus on improvement of targeted operations and processes. Through this period there was development of charting/diagramming/modeling techniques that helped to illustrate and animate flow, but did little to address the management of broader business processes.
BPM emerged as a business improvement methodology in the 1990s. This is a relatively recent development in the bigger scheme of business improvement. BPM began to fill the void left by the other improvement methodologies. That void focused on process. More specifically it focused on business processes that cut across functions and addressed the bigger flow of information and product or service. As automation and information technology became drivers of business competitiveness, the need for a way to manage the business process (horizontal focus) emerged. BPM is positioned to fill this need.
Premise About LSS
Assuming my premise that Lean Sigma is used primarily on targeted processes that are limited in scope (within one or two functions) and centered around widget or service processes, then BPM is uniquely positioned to help take these companies to the next level of improvement. Even companies that have aggressively and successfully implemented Lean Sigma find that they reach a plateau where further improvement gets harder to achieve.
In these situations, BPM is a methodology that takes the end-to-end business process perspective that can weave in the Lean Sigma approaches a company has used. The plateau happens because the Lean Sigma projects are functionally based. Hence, the horizontal end-to-end business process orientation.
But I see a challenge that companies have experienced or will experience with Lean Sigma. Most of the Lean Sigma improvements happen within a function or two. In other words, the improvements are happening within a silo. Once improvements are made within the silo, the practitioner is left with the question “Where do I go from here?” The results begin to flatten out or plateau. The sizzle of Lean Sigma begins to wane.
Enter the BPM approach to improvement. The greatest benefit comes when BPM is treated as both strategic and tactical approaches to managing and improving the business by focusing on optimizing end-to-end processes. This is not something that happens in a silo. If anything, BPM is a silo “buster”.
“The greatest benefit comes when BPM is treated as both strategic and tactical approaches to managing and improving the business by focusing on optimizing end-to-end processes”
BPM-Driven Changes to the Business
Companies that are serious about BPM change the way they control the business. Instead of the vertical orientation they begin to operate with horizontal orientation. This affects the organization structure, the way people (from top floor to front line) relate with one another, and how information about processes is gathered, analyzed, and maintained. It has a revolutionary impact on a company’s performance measures.
The BPM-driven changes will challenge traditional ERP systems that are excellent at managing functions, but may not have the necessary flexibility to handle the horizontal business. Metrics will cut across functions, functions will be more collaborative, and data reconciliation between the front end and the back end of the “end-to-end” processes may necessitate system modification. As the need for on-going process documentation and maintenance increase, the role of BPMS (business process management systems or suites) becomes more prominent.
So how does this position BPM to be a springboard for Lean Sigma? Let’s take an example of a company that invests in improving its operations through Lean Sigma. Perhaps they have reduced cycle times by focusing on streamlined flow, improved quality by narrowing in on process deficiencies that cause defects. The operational results can be tremendous.
But here are some impacts that present opportunities or challenges, depending on your perspective. As throughput times decrease, you can reduce batch sizes and move towards “make-to-order” responding to customer demand rather than to forecast. Now what started out as improvements in a narrow part of the organization (think the fabrication shop) begins to impact a broader segment of the organization (scheduling, procurement, sales, and beyond). In short, the end-to-end business process emerges as a candidate for significant improvement.
This issue reinforces the idea that of “people, process, and technology”, get the process right. Then bring the right “people” (organization structure and reporting relationships) and right “technology” (software, hardware, integration points, and others). This is a contrast to the tendency companies have to make the “process” fit in with the technology and/ or organization. Get the process right, and let the other follow to support the process.
The BPM methodology is positioned to be the springboard for further Lean Sigma investment returns because it can “shake” the business out of complacency and open up new opportunities for Lean Sigma “reinvestment” as companies seriously address the “end-to-end” business process. Some ways BPM shakes the complacency include:
• Develops an intense business process focus that cuts across functions and delivers value to the customer
• Animates information-based and transactional processes that are hard to see but essential to successful business outcomes
• Creates methods and practices to manage, measure, and improve business processes to achieve optimization and avoid backsliding
• Aligns organization structure around business processes and workflows
• Designs and implements processes that are drivers of technology needs and solutions
As you can tell from this narrative, I have taken a position that BPM is a methodology to manage business processes. It addresses the way a company is organized, how processes are measured, definition of reporting relationships, how processes are documented and maintained, and much more. Note that I did not go down the path that defines BPM as “technology” in and of itself. But it is a methodology for business improvement that will drive technology needs.
For companies that have not started Lean Sigma or are at very early stages, the introduction of BPM can be a catalyst by approaching “process” from a more strategic position. For companies that have previously invested and have reached that plateau I described earlier, BPM will shake the complacency and open up new Lean Sigma opportunities. Regardless of the starting point, BPM rounds out the robust nature of the overall improvement methodology set.