The funny thing about Process Improvement, whether Six Sigma or Lean, is that not all Process Improvement efforts are equal to others.

Some are "More Equal" than others!

Efforts needed for different Process Improvement ideas may not be linearly proportional to their payoffs. Before jumping into Kaizen activities, it may be worthwhile to prioritize efforts with respect to effort needed vs payoffs.

Sometimes a simple, almost "effortless" improvement effort may lead to a disproportionate payoff while a very expensive improvement may result in a not so impressive payoff.

In processes, especially when it involves the public, delays in service cause more dissatisfaction than the actual services themselves. Everyone hates waiting. In as much as waiting can be eliminated in business processes, customer satisfaction metric registers increases.

Analysis and eliminating delays in business processes, invariably leads to better service and disproportionate payoffs. Funny thing is that some of these payoffs show up as better word-of-mouth recommendations and additional business; something not immediately recognizable and acknowledgeable.

However beautiful the strategy, you should occasionally look at the results - Winston Churchill

Process Improvement has never been more important or more needed during tough times. The kicker may be the lack of funds to take up new efforts at this time when budgets are pared to the bone. However, surveys of Fortune 500 CIOs the past few years have shown Business Process Improvement to be the #1 priority for the majority of them! Hope they still mean i, for their own sakes!

Process Improvement that leads to cost cutting has a very attractive value proposition at this time and could be taken up in earnest by many companies. Cutting out waste in effort and time leads to less resources being needed to accomplish the same quantum of tasks, and that’s a very compelling thing to sell during these tough times.

Process Improvement has never been more important to Outsourcing and Offshoring service providers than at this time. Many companies are renegotiating their contracts with their service providers because of the recession. In some cases, they are asking for a Per Transaction pricing rather than a Full Time Equivalent (FTE) kind of contract pricing.

Service providers, especially offshore providers have thrown people at the problem to meet Service Level Agreements (SLAs) in contracts. Now that the topline rates are negotiated down and the margins are shrinking, they may have to pay close attention to every employee’s efficiency and effectiveness and cannot afford to have more people than needed. When contracts are based on per transaction pricing, the pressure to make sure that every efficiency and effectiveness goal of every employee is met is even more pronounced.

Process Improvement has a very compelling need in tough times. Unfortunately, they may not ne taken up because of blanket bans on any new expenditures! Sad, but true in most companies!

The cure for Apple is not cost-cutting. The cure for Apple is to innovate its way out of its current predicament. - Steve Jobs

There are many Unmeasurables in Business Processes such as Customer Support Effectiveness, Customer Satisfaction, Service Excellence, etc. However, State of the Art in Business Process Measurement and Analysis is that many of these Subjective Factors are converted into some sort of Objective Scores.

For example, Customer Satisfaction Index (CSAT) may be on a scale of 1 to 10. For example, if a customer sends flowers to the CEO with a thank-you note, it may be a 10. If the customer sends a nasty note saying that they are terribly unsatisfied and will let everyone that they know about the poor service they got, may be a safe 1!

This is where sometimes, capturing Subjective Performance Information in the form of open ended text may convey more meaning than reducing everything to numbers and averaging them up and down. For example, outliiers, both positive and negative may need to flagged, counted and descriptions strored and readily made available! Analyzing these pieces of information and making effective use of them falls in the realm of art rather than a science!

If there were five positive outliers and five negative outliers, it may be worthwhile for the Process Folks to keep tab of the descriptions of what made these positive and negative outliers are and not assume that on whole, things are hunky-dory! The detailed open eneded information may be much more valuable to the organization than numbers themselves. Would the negative outliers be so negative that word of mouth from those can kill anything positive that may come out of the organization?

While what cannot be measured cannot be managed well, sometimes we may have to pay attention to Intangibles and accept them as intangibles, pay attention to them and get some useful actions out of them! This is especially useful in companies like Pharmaceutical companies where beyond a certain number of negative outliers, like side effects of drugs, the issue quickly escalates from statistical outliers to a full-blown crisis in no time, ironically, whether it is warranted or not! Perception overtakes reality!

Intangible factors may mean very good things or very harmful things, depending upon what they are, which industry you are in, what your products or services are. Unmeasurables can be quite tricky and may need to be handled better than measurables, sometimes!

There are intangible realities which float near us, formless and without words; realities which no one has thought out, and which are excluded for lack of interpreters. - Natalie Clifford Barney

We seldom think of Unused Capacity as a Wasted Resource! In fact, it can be a wasted resource that can be fatal to the long term survival of your company and even your industry!

The Wallstreet Journal ran this story last Saturday - More Car Plants at Risk. It talks about Overcapacity in Automobile Manufacturing for Light Vehicles. We all know the trouble the car makers are in because they ignored the small car segment in favor or gas guzzlers and the market for them suddenly collapsed in 2008.

They used the following graphic from IHS Global Insight in the above article showing the difference between current and Projected Capacity and Projected Utlization!

What is remarkable is the very strict management of Capacity and Production in the past and the future of Toyota Vs. the Big 3 American Automakers! Toyota is also making losses currently but they might recover sooner than the other ones, just looking at these projections.

If you think about it, Over Capacity has a lot of costs associated with it - Idling Plants, Idling Huge Investments in these Plants for which some of these companies may be paying interest, Idling workers that are paid not to produce, Idling workers that are maintaining these plants even when they are on Ice with no actual workers around (Security, Preventive Maintenance people), etc.

Over Capacity may prove to be a huge huge waste and could be sucking a lot of the profits of the company even when some of your plants at producing at full capacity and making enormous profits for you!

Something to pay attention to, not just in Manufacturing but also in Services! Keeping the Capacity very close to Production in services, can be done easily with Multi-Skilling and good workforce optimization! There are lots of algorithms and software based on those, to account for seasonality of demand by hour of the day (Evenings and Nighttime for cusomer service on the phone, for example) and , day of the week (Mid week is peak for many business services), month of the year (Summer Travel Season or Thanksgiving for AAA services, for example) or season of the year (like Christmas!).

Training people to perform multiple tasks at work could go a long way in balancing demand and supply for business processes and services, smoothing out the overcapacity problem at any time.

Over Capacity could be one of the biggest wastes whether in manufacturing or in services or in business processes. Keeping capacity very close to demand adaptively with multi-skilling and good workforce optimization.

Production is not the application of tools to materials, but logic to work - Peter F.Drucker

Fred Smith, CEO and President of Fedex is quoted to have said "Information about Packages are just as important, if not more important, than the packages themselves".

Thinking this way has allowed Fedex to use this information to create new premium services such as being able to withdraw a package that has been already sent through Fedex. For an additional fee, they can track the package enroute and reroute it back to the sender!

I bet that this is used a lot by business users who have had second thoughts about some documents that they sent in a package and want to redo them and send them along again.

Information about packages are available on the Internet for anyone to track precisely where their package is at any time. This is possible only because delivery services consider information about delivery as important as the packages themselves.

The same principle can be applied to great benefit in business processes. If you think about it, for any business process, information about the business process and making it transparent to all participants could have the same benefits.

In fact some of this may already be happening. If you order anything online like computers or anything else you will be able to see the status of that business process as "Order Accepted","In Process", "Shipped", etc. This can be applied to most other end-to-end business processes like Order to cash also. Anyone within the company should be able to track ths status of any order through their own systems - Order, Scheduled to be Assembled or Manufactured, Work In Progress status, Shipping Status, Invoice Raised Status, Accounts Receivables Status, etc.

Currently many of the Information Systems companies use, are all islands of functional automation. They may have made all of them work automatically with each other with convoluted stick and glue integration. Financial Accounting Systems talk to Sales Ordering Systems that talk to Manufacturing Planning and Scheduling systems with exchange of transactional information, at best. Getting clear and transparent views of where end-to-end business processes are at any time could go a long way in first getting visibility into them and eventually result in Process Improvements.

Information about business processes could be just as important as business processes themselves!

Information is a source of learning. But unless it is organized, processed, and available to the right people in a format for decision making, it is a burden, not a benefit. - William Pollard