Team Members P.Saravanan (16) SS10-12/ISBE/Fin Rominic Alexander SS10-12/IIPM/Fin

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Designing,Controlling and Improving Organizational process

Team members P.Saravanan(16) SS10-12/ISBE/Fin Rominic Alexander SS10-12/IIPM/Fin

DESIGN PROCESS
Organizational design is about corporate culture, organizational structure, and leadership behavior. Through the design process, organizations act to improve the probability that the collective efforts of members will be successful

the Organizational Design principles that lead to the foundation required for successful process improvement programs. Tools like Six Sigma, Lean Thinking and Theory of Constraints. Desire for Change

DESIGN PROCESS
Organization Design is a formal, guided process for integrating the people, information and technology of an organization. Through the design process, organizations act to improve the probability that the collective efforts of members will be successful

Change?
How well does your organization accept new ideas for development and implementation? How much risk can your organization handle?

Accepting New Ideas

. A new idea is introduced and then grows rapidly through to maturity and eventually enters decline. Organizations dedicated to process improvement (i.e. Toyota, GE) have very short Idea Adoption Cycles and are able to improve quickly.

What drives the Idea Adoption Cycle? There are two primary motivators, aspiration and desperation. Every organization uses one or the other to drive new ideas. Which one does your organization choose? Unfortunately for most of us, it is usually desperation over aspiration.

The Business Itself-What are your customer s needs and wants? What is the competition doing? What are the industry trends? What are marketplace changes? What are your organization s overall strengths and weaknesses? Company Values-What does your company stand for? What are your values? What is your vision? What organizational culture do you want to cultivate? How congruent are you with your stated values and your informal cultural norms and behaviors?

Designing and developing a new design with predictable functional performance Implementing major changes to an existing design when variation associated with continuous improvement efforts have reached a point of diminishing returns and an innovative redesign effort is required Indicated by system-wide changes Reducing common cause variation Achieving quantum breakthrough design improvements

Characteristic
Complexity

Hierarchical structure

Organic structure

High with lots of horizontal separation Usually lower less differentiation or into functions, departments and functional separation divisions

Formality

High lots of well defined lines of control and responsibility

Lower no real hierarchy and less formal division of responsibilities

Participation

Low employees lower down the Higher participation lower level organization have little involvement with employees have more influence on decision making decision makers

Communication

Downward information starts at the top and trickles down to employees

Lateral, upward, and downward communication information flows through the organization with fewer barriers

Case Study
Maruti Swift Changing its design after reaching the maturity stage Adopting new technology to meet the competition

Case study 2
Case study on manufacturing match box: Changing the design of the sticks randomly Changing the size of matches Improving the working process

Improvement Process
Business Process Improvement (BPI) is a systematic approach to help an organization optimize its underlying processes to achieve more efficient results Based on 2 methodologies Process Redesign Business Process Reengineering BPI has been responsible for reducing cost and cycle time by as much as 90% while improving quality by over 60%.

Process Redesign
The Process Redesign methodology is applied to the current process to remove all of its waste and to streamline its activities. It first streamlines the processes, and then uses IT techniques to perform the routine and repetitive activities. It is effective at reducing cost and cycle time between 20-60% and improving quality from 40-200%.

Phases of Process Redesign

Phase I Organizing For Improvement


Selects the critical processes and assigns someone who will be held responsible for improving the selected process total performance, even though parts of the process include activities performed in more than one function. The process owners organize a Process Improvement Team (PIT) that sets boundaries, establishes total process measurements, identifies process improvement objectives, and develops a project plan.

Phase II Understanding The Process


PIT will draw a picture of the present process (asis process), analyze compliance to present procedures, collect cost and cycle time data, and align the day-to-day activities with the procedures. There are six activities in this phase. The purpose of Phase II is for the PIT to gain detailed knowledge of the process and its matrices (cost, cycle time, processing time, error rates, etc.). The flowchart and simulation model of the present process (the as-is model of the process) will be used to improve the process during Phase III.

Phase III Streamlining the Process


The streamlining phase of Process Redesign is the most critical and the most interesting. It is during this phase of the Process Redesign methodology that the creative juices of the PIT members are really put into action

Phase IV Implementation, Measurements and Controls


An implementation team is pulled together to install the selected process, measurement systems, and control systems. The new in-process measurement and control systems will be designed to ensure that there is immediate feedback to the employees, enabling them to contain the gains that have been made and to improve the process further.

Phase V Continuous Improvement


This is not the end of the improvement activities; it is just the beginning. Now the process must continue to improve, usually at a much slower rate (10-20% per year), but it must continue to improve.

The Natural Work Teams or Department Improvement Teams now take over.

Benefits
It documents and quantifies the current process. It prepares a simulation model of the current and future state processes. It reduces cost and cycle time between 30-60%. It improves quality between 40-200%. It reduces risk by 50-100%. It increases customer satisfaction. It reduces internal conflict.

Effectiveness of Process Redesign


Some of organizations that have tried Redesign are Ford, Boeing, IBM, 3-M, Nutrasweet,McDonnell Douglas. Results of McDonnell Douglas 20-40% overhead reduction. 30-70% inventory reduction. 5-25% material cost reduction. 60-90% quality improvement. 20-40% administrative cost reduction. Federal-Mogul Reduced development process cycle time from 20 weeks to 20 business days, resulting in a 75% reduction in throughput time. .

Business process Re-engineering


Business process re-engineering is the analysis and design of workflows and processes within an organization Re-engineering is the basis for many recent developments in management. The cross-functional team has become popular because of the desire to re-engineer separate functional tasks into complete cross-functional processes.

Business Process Reengineering seeks radical rather than merely continuous improvement. Escalates the efforts of JIT and TQM to make process orientation a strategic tool and a core competence of the organization. Concentrates on core business processes, and uses the specific techniques within the JIT and TQM toolboxes as enablers, while broadening the process vision

Use of IT
A major contributing factor. IT plays a role as enabler of new organizational forms, and patterns of collaboration within and between organizations.

IBM
BPI was developed within IBM requiring the rest of IBM operations to upgrade their processes so that they were at least as good as the production processes. The production processes were required to be at a Cpk of 1.4. To measure and meet these performance goals required major improvements in IBMs business processes. To accomplish this, IBMs Business Process Improvement methodology was developed.

Focus of BPI
Focuses on "doing things right" than "doing the right thing Attempts to reduce variation and/or waste in processes, so that the desired outcome can be achieved with better utilization of resources. Works by: Defining the organization's strategic goals and purposes (Who are we, what do we do, and why do we do it?) Determining the organization's customers (or stakeholders) (Who do we serve?) Aligning the business processes to realize the organization's goals (How do we do it better?)

Implementing BPI
Most resistance to BPI comes from within an organization. Managers often do not wish to change existing structures. The labor force may resist BPI because of fears of layoffs Some organizations have implemented BPI on a smaller scale and reported success, by doing the following: Start with a small process that can be completed in a short time frame. Set clear timelines. Do not spread resources thinly and focus on the short term payoff. Management and primary stakeholders must be involved, or else even a limited implementation will fail.

Thank you

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