Many organizations are busy implementing Master Data Management (MDM) solutions on top of all of their applications. Master Data Management unifies the concept of a Customer of a business or a Patient in a Healthcare System. MDM solutions unifies the data about a single Customer or a single Patient in one place. This picks up all the data regarding a patient from many databases that a healthcare system like a hospital may have, and makes it available when needed. Many compliance regulations like HIPAA may need the hospital to make this available when needed. Companies may use MDM solutions to gather up ALL the information about a single customer in one single place for doing marketing, cross-selling, up-selling, etc.

Service-Oriented Architectures (SOA) is used to stitch many disparate heterogeneous databases together to make this happen. The information about a patient in a hospital may be in Patient Records or the Pharmacy transactions database. Making them all available in one single place involves accessing many different applications and databases and SOA enables them.

Master Data Management could be so very useful in the context of Business Process Management also, End-to-end business processes involve many different applications and databases. Managing, measuring, analyzing and improving business processes involves pretty much the same kind of problem. MDM soolutions that help you keep track of a Customer or a Patient could just as easily keep track of an end-to-end business process like Order to Cash, tracking the order through the company and various departments and functions! Very intriguing idea!

Errors using inadequate data are much less than those using no data at all. - Charles Babbage

Measuring performance of one business process and comparing it to another, has always been a problem whether processes are in-house, or outsourced! How do you compare an Order Processing process to a Warehouse Shipping process?

This is particularly interesting to Business Process Outsourcing service providers. They have the problem of managing the many levels of management that manage business processes for a variety of business processes for very different customers in different domains! How do you compare the performance of a process manager that manages a 250-person order management process to that of a 5-person Accounts Payable process for another customer?

This is where the concept of Performance Scorecarding could come in very handy. Key Performance Indicators (KPIs) provide objective measures of actual performance. Efficiency KPIs like Average Handle Time (AHT) on the phone, Turn-Around Time for Insurance Claims, etc or Effectiveness Metrics like Closed Sales Volume on the phone or Early Payment Discounts collected in a Accounts Payable process could all provide some measure of performance.

But how do you compare the performance of one process in one domain with that of another in another domain?

That’s where assigning Stretch Goals for the KPIs and assigning a score from -5 to +5 or -10 to +10 for each KPI could come in handy. If you just meet your SLA alone you get -5. If you meet the Internal SLA which is more stringent than the SLA, you get 0. If you meet Stretch Goal 1 you get +3. If you meet Stretch Goal 2 you get +5. Stretch Goals are tougher to achieve and needs excellent management of the process. You arrive at a score for each KPI.

All KPIs may not be equal. Some are more equal than others. In a Customer Support process, the Average Handle Time metric may not be as important as the Customer Satisfaction Index KPI. This is where you can assign different Weightages to different KPIs and a weighted average allows you to adjust how much leverage different KPIs have on overall performance.

Performance Scorecarding using weighted scores for different KPIs allows you to arrive at a single score for each level of management. Are they meeting their goals, normal and stretch, no matter what they manage.

Very intriguing and may be very useful!

It is an immutable law in business that words are words, explanations are explanations, promises are promises but only performance is reality. - Harold S.Geneen

Micro level improvements are usually used by Six Sigma efforts to calculate savings in $. But are these numbers always true? That’s an interesting question for which the answer seems to be ’It Depends".

In many cases, small local improvements do add to an large overall improvement. Especially, if you look at manufacturing assembly lines, systems like the Toyota Production Systems have shown that as long as local improvements don’t cause unforeseen side effects down the line, small improvements done over a long period of time, add up to phenomenal overall savings, increase in quality and less rework.

Is it the same for Business Processes? This is where we need to be careful in adapting and modifying lessons learned from manufacturing to business process management.

In business processes, small local improvements may improve a local department’s or division’s performance but may be at the cost of the overall picture. There may be many sub-optimizations that may go on. For example, improving the speed of order processing without worrying about whether the warehouse, shipping and logistics can keep up with the additional speed with which orders are getting processed!

Strangely, if third parties are involved in different parts of the process, small improvements result in dramatic results for the third party company. If order processing is done by a third party company and they can do more orders with less people, they maximize their efficiency and effectiveness. The Outsourcing buyer may still need to worry about the shipping and logistics but the third party vendor may benefit.

Something to consider by Business Process Outsourcing providers when contemplating small improvements in their parts of the process. They may need to coordinate with the buyer and make sure that their improvements do not adversely affect the overall process. Of course, if the buyer improves the shipping and logistics function also, everybody wins!

Something to think about!

Where we cannot invent, we may at least improve - Charles Caleb Colton

Everyone of us has been frustrated at one time or another paying for a service and getting it done from a service provider. The most ridiculous one was the provisioning of a T1 Internet line in San Francisco that I had to do as the CTO of a startup company there.

You had to fill numerous forms and we essentially had to shepherd the application through various departments of the utility from which we got this service! They had the gall to ask for an additional "expediting fee" to speed up things internally within their company through various departments. This was five years ago. Hope this is not the case now and they have improved their process.

What a waste of time and effort, on our part, and on their part!

Service BluePrinting is a methodology to systematically identify Customer Touchpoints and simplify things from the customer’s perspective. This is another way of making sure that a process you design from the point of view of the organization, is easy enough for a customer to use also.

Manual touchpoints are fraught with errors and potential for ticking a customer off. Automated processes with computer to computer handoffs have been known to have less errors than when a manual touchpoint is introduced. This can be true even across companies’ systems. For example, if you are to initiate a UPS or a Fedex pickup directly from your computer systems to their systems (They have provided fabulous ways of doing this, BTW!), you stand much lesser chance of introducing any errors in the process than when you enter these manually.

Customers also will get an idea of all they need to do in one go, rather than bits and pieces here and there. When designing or redesiging processes, keeping Customer Touchpoints in mind always helps in making sure that they are customer friendly also in addition to eliminating errors.

A little rudeness and disrespect can elevate a meaningless interaction to a battle of wills and add drama to an otherwise dull day - Bill Watterson

Here’s a fascinating article from the Wall Street Journal - Honda’s Flexible Plants Provide Edge - Company Can Rejigger Vehicle Output to Match Consumer Demand Faster Than Its Rivals.

Honda plants in the U.S use what are called Gray Robots that can be set up to manufacture Honda Civics, on the welding part of the assembly process. The production line can be rejiggered to produce Honda CR-V vehicles which are are larger and of different shape than Civics. It appears that the Gray Robots have "hands" that are meant for Civics. In about five minutes time, these are changed to the hands meant for CR-Vs and the production line now assembles CR-Vs!

The impressive part of this is the cost that Ford needs to incur to change their production line from one vehicle to another ($75M and 13 months) and General Motors - $350M.

This gives Honda an enormous cost advantage and more importantly, the flexibility to switch from smaller to larger vehicle manufacturing or vice-versa depending upon Gas Prices and what people want to buy at any time. This is an enormous cost advantage to Honda and unless the other makers adopt similar ways of flexibility they may under a big disadvantage!

The same kind of principles apply to business processes also. You can design a business process for handling auto and life insurance each or you can design one that can accommodate both. Or they can be claims for one type of insurance policy or another.

Many technilogies like Business Rules Engines, Document Scanning and Storage, Workflow engines, etc have all been available for quite a while now when business processes are considered for simplification and flexibility. You can check out my article - Ten Key Technologies for Lean Process Improvement published sometime ago.

Exciting real-life examples that show the impact of flexibility in Manufacturing that can be adapted for Business Process Improvement!

Originality is nothing but judicious imitation. The most original writers borrowed one from another. The instruction we find in books is like fire. We fetch it from our neighbor’s, kindle it at home, communicate it to others, and it becomes the property of all. - Voltaire