Process Capability

Vermeulen, Andre (2011)

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PROCESS CAPABILITY

1. INTRODUCTION

In this literature as related to the criteria’s identified impacting on Business Process Maturity

(BPM and BPMM)) and Business Process Capability (BPC) are discussed. Factors contributing

to Business Process Capability Maturity and Performance (BPCMP) as identified highlight what

should be included in a measurement instrument to measure performance, capability, and

competitiveness, competitive priorities.

If organisations can produce / manufacture and deliver high-quality, low cost products that meet

customer requirements in a timely manner, then its probability of success is increased. To

understand business processes and how they can contribute to the success of an organisation,

it is important to understand how:

1. Integrated system and business processes add value to the organisation

2. Knowledge and technology in the form of processes, and procedures impact on the

performance of the organisation

3. Managers and well managed teamwork should achieve operating and organisational

objectives

Organisations also consist out of a system and sub-systems as defined by Vonderembse, et al

(1996). Vonderembse, et al, (1996:13) defined a system as a group of events, or actions in

which an item, event, or action occurs independently. Noted is that subsystems are often

referred to as functional areas and should be linked by common organisational goals and should

be part of the organisations strategy.

In order to achieve organisation objectives, organisations should develop competitive

capabilities that meet organisational goals and customer requirements. Capabilities are the

result of organisational processes such as strategy development, product development, design

of systems and processes, producing products or services, as well as order fulfilment at a

defined level. Not adhering to “above criteria’s “could very much be the reason why

organisations do experience problems for not achieving competitive capabilities.


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2. BASIC BUSINESS PROCESS CAPABILITY PRINCIPLES

Capability has an enormous extent of application and since non-scientific terms are inadequate

for communication within the industrial community and will therefore be clearly defined in the

literature study. However, the following concepts / definitions as defined by Gryna. F.M (2001,

516) is provided to the reader of the research document:

1. Process: Refers a unique combination of machine, tools, methods, materials, and people

engaged in operations or production.

2. Capability: This word is used in the sense of a competence, based on tested

performance, to achieve measurable results.

3. Process capability refers to the reproducibility at a set standard over a long period of

time with normal changes in workers, material, and other process conditions.

4. Process capability is the measured, inherent reproducibility of the product turned out by

a process.

5. Measured: This refers to the fact that process capability is quantified from data which, in

turn, are the results of measurement of work performed by the process.

6. Inherent reproducibility: This refers to the product uniformity resulting from a process

which is in a state of statistical control, i.e., in the absence of time to-time "drift" or other

assignable causes of variation. "Instantaneous reproducibility" is a synonym.

7. Product or Service: Physical / variable or tangible / attribute. The measurement thereof

is made on the product / service due it is product variation which is the end result.

8. Machine capability versus process capability: Some practitioners distinguish between

these two terms. Machine capability refers to the reproducibility under one set of process

conditions (e.g.: one operator, homogeneous raw material, uniform manufacturing

practice).

9. Process capability as defined above is a measurable property of the process. The

resulting measure is expressed in terms of variation and is unrelated to the product

tolerance; i.e., "the process doesn't know what the tolerance is." However, the capability

measurement is compared to the tolerance in order to judge the adequacy of the

process.

It is only evaluation of an organisations business process that organisations can stay

competitive. In order to stay competitive originations should consider business processes,

namely:

1. To be customer focused organisation


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2. Predict and control change

3. Ability to compete

4. Means to effect major changes to very complex activities in a rapid manner

5. Managing organisations effectively

6. Keeping the focus on processes

7. Preventing errors

8. Understanding inputs become outputs

9. Providing the organisation with a measure of its poor quality

10. Provide a view of how errors occur and methods for correcting them (elimination of

waste)

11. Development of a complete measurement system

12. Providing an understanding of how good the organisation can be and defining how to get

there

13. Prepare organisations to meet future challenges

However, a more comprehensive integrated business system approach to business

development and the management of processes is what distinguishes modern organisation

businesses from “traditional” organisation businesses. What is proposed is that a broader view

should be considered that should link together “synergistically” the key components of business

success from Corporate strategy, functional planning to cross-functional cooperation, from

supply chain management to customer value creation, to the art of continuous improvement,

innovative and pragmatic view that can be applied to achieve sustainable organisation

competitive advantage towards growth and competitive edge and business process capability.

The goal of “total systems thinking” is to manage the rapidly growing complexity of the worlds of

business and technology. The focus being to create systems, within a sensibly structured

business, that empowers employees, enables people and for organisations to achieve higher

productivity and greater competitive advantages. This approach deals with the whole business

system from “end-to end” business processes and in terms of the interconnections and

interactions of its organisation process towards process capability.

In order to understand the strategic importance of business processes, Krajewski, et al,

proposed that it is essential to understand processes in view of cross-functional coordination

and that processes must add value for customers throughout the supply chain. They stated


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organisation must not “miss strategic insight” as it is processes that add value for customers

throughout the supply chain and that the supply chain reinforces the link between processes

and performance. Business processes will thus include organisations internal processes as well

as those of its external customers and suppliers.

To improve business processes Harrington stated that organisations should firstly (1) obtain

management support, (2) have a long term commitment, (3) apply disciplined methodology, (4)

assign process owners, (5) develop a measurement feedback system, and (6) focus on the

process.

2.2.1 CORPORATE STRATEGY

2.2.1.1 Definition

The Business Directory (20111) defines Corporate Strategy as the overall scope and direction

of a corporation and the way in which its various business operations work together to achieve

particular goals and defines Corporate Strategy Planning as the systematic process of

determining goals to be achieved in the foreseeable future. It consists of: (1) Management's

fundamental assumptions about the future economic, technological, and competitive

environments. (2) Setting of goals to be achieved within a specified timeframe. (3) Performance

of SWOT analysis. (4) Selecting main and alternative strategies to achieve the goals. (5)

Formulating, implementing, and monitoring the operational or tactical plans to achieve interim

objectives.

Top-Down Strategy

Focusing on operations strategy as well as process strategy, Slack, et al, (2009:45),

emphasised that operations / process strategy is one of several functional strategies that are

governed by decisions at the top of the organisational tree (top down perspective) and that is

mainly concerned with the day – today running of the organisation processes. However, Slack,

et al, stated that this should not conflict with the organisations overall strategy, but that a top –

down strategy should also take into account what is actually happening on the “bottom”.

Corporate strategies should also therefore take into account (bottom – up) the circumstances,

experience and capabilities of the various business that form the organisation.

Top – down strategy often identify three levels of strategy: corporate, business and functional.

Slack, et al, Operations and Process Management, (2009:46), states that a corporate strategy

should position the organisation in its global, economic, political and social environment.

Decisions regarding the type of business the organisation want to be in and what parts of the

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world it wishes to operate in have to be considered.

Slack, et al further stated that every business unit within the corporate group will have to put

together a strategy that sets out the individual missions and objectives and guide the

organisation in relation to its customers, markets and competitors and defines its role within the

organisation. It is then required that each business function as the “best they can” interact with

each other and should contribute towards the strategic objectives of the organisation.

Top – Down Strategy should therefore reflect the needs of the whole organisation and the

corporate strategy should position the organisation in its “global” economical, political and social

environment. Decisions such as these forms the corporate strategy of the organisation should

be aligned with t a bottom – up perspective in providing a day to day experience of providing

products and services to the market reveals problems and potential solutions which is

formalised into a operation strategy.

2.2.1.2 Bottom – Up Strategy

In reviewing corporate strategies an organisation should also take into account the

circumstances, experiences and capabilities of the various businesses that form the

organisation. Slack, et al, stated that when reviewing strategies consultation between individual

functions within the organisation will take place to evaluate their constraints and capabilities and

those ideas come form each function’s day to day experience.

The principle of governing a bottom-up approach is to ensure that operations / process

objectives and actions should be shaped by “knowledge gains” from its day to day activities.

Essential to achieve either a top-down or bottom – up approach, Harrington, (2001, 21),

propose the following methodology for organisation to manage their business:

1. Organise for improvement through- building leadership, understanding and commitment

2. Understanding all the dimensions of the current business

3. Streamlining processes to improve efficiency, effectiveness and adaptability of business

processes

4. Measurement and controls through implementing system to control the process towards

continuous improvement

5. Implementation of a continuous improvement process


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2.3 Business Governance

The Cambridge Business English Dictionary describes corporate governance as - the way in

which a company is managed by the people who are working at the highest level in it: good/poor,

etc. corporate governance Effective corporate governance will contribute decisively to a company's

success.

Business governance should therefore includes policies, standards, guidelines and a process

governance framework that works on three levels to align/innovate, optimize/improve, and

operate/manage an organizations business processes.

It therefore focuses on “how well” the business processes should be operating in order to obtain business

process capability.

According to Richardson (2006) – Process Governance Best Practices, the term governance

has over the past five years, gained prominence in information technology and business circles.

Richardson states that term is used to define the set of rules that dictate or govern how an

organisation how they should conduct a specific business function. Thus, process governance

consists should consists of the set of guidelines and resources that an organisation utilise to

facilitate collaboration and communication when it undertakes enterprise process initiatives,

such as implementing a new contracts administration process or a new budgeting system.

Richardson stated that as organizations begin to deploy enterprise-wide solutions for managing

key business processes, they are encountering many obstacles and challenges associated with

cross departmental interaction and collaboration. Organizations are discovering that while

intradepartmental business process initiatives typically execute with minimal issues,

interdepartmental business process initiatives often become mired in cross departmental

Although focusing on “continues improvement. Slack, et al, 2010, 546, states that improvement

is not getting employees to “think improvement” and that it “just” happens but should have some

type of system that support the improvement effort. Thus it should:

“Define and cover all facts of an organization’s operation, from identifying and meeting the

needs and requirements of customers, design, planning, purchasing, manufacturing, packing,

storage, delivery and service, together with all relevant activities carried out within these

functions. It deals with organization, responsibility, procedures and processes.


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Business Governance therefore emphasize business process performance using the

analysis, monitoring, reporting and optimization of business processes and business

activities, and including process simulation and optimization of desired business outcomes

by using real-time, historical and estimated data. Good governance structures and quality

input help growing businesses effectively utilize their entire resource base.

However, to ensure that Corporate and Business Governance is adhering to clear objectives

have to be set enabling all employees to obtain a desired level of performance and be

capable of achieving these objectives.

This should ensure that business processes are optimized and aligned with organisations

objectives and should help to:

Assess and document current processes and simulate new processes using "what if"

scenarios

Uphold the control that assess compliance and adherence to pre determined standards

through self formal assessment

Govern the entire lifecycle of business processes using policies, standards and

guidelines providing a clear direction towards Business Process Capability and

Performance

Evaluate the deployed business processes against the stated operational and

performance objectives to identify areas of potential improvement

Policies and procedures be documented and communicated to all stakeholders

Deliver critical, real-time business data to business leaders using dashboards and

scorecards. Therefore a formal reporting process to relevant governing bodies should be

in place supported by process to rectify non compliance and to take corrective action

Business Governance can therefore best be described as a set of policies, procedures and laws

affecting that set the way that the organization’s business to be to executed in which manner

people direct administer and control the interrelationship of the organizations processes

amongst shareholders, management, employees, suppliers, regulators, the environment and

the community at large.

Good Business Governance will have an impact in Business Process Capability and should be

included as key criteria’s and measurement tools towards Business Process Capability Maturity

models focusing on:


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1. Principles and policies

2. Roles and responsibilities

3. Standards and procedures

4. Models, data, and

5. Performance measurement

2.4 Business Process Principles

All organisations have “business processes” enabling organisations to satisfy internal and

external customer needs. Slack, Chambers, Johnston, (2010:18) states that whenever a

business attempts to satisfy customer needs it will use many processes.

However, in order for organisation organisations to obtain competitive advantage they should

focus on the value chain. Krajewski, et al (2007 5-12) states that products that are produced

through a series of interrelated business activities should be the cumulative work of the

processes in a value chain and that there is an inter relationship of a series of processes that

produces a product. In doing so each activity in a process should add value to the preceding

activities. In doing so the value chain focus on the core processes in a chain and delivers value

to the external customer whilst the support processes provide vital resources and inputs to the

core processes.

Processes are therefore designed according to activities that they perform, the resources that

they use, and are focused on end-to end set of activities that satisfy customers. In order to

achieve end-to end satisfaction calls for business process reengineering which forces

organisations to radically rethink their process design.

Of strategic importance is the management of processes focusing on the strategic impact in

short term as well as long term in terms of cost, cost reduction, revenue, quality, effective capital

investment, building of knowledge and skills within the business capabilities towards competitive

advantage.

It must be noted that processes differs in characteristics in some way and therefore needs to be

managed differently. Some of theses differences could be technical of nature due to the nature

of skills and technology required to deliver products or services.


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Business Processes is therefore unique in that it can be measured directly and the results

thereof can become a key part of a scorecard measurement system for organisation and or can

contribute competitive indicators of future business performance. It shows the transformation of

inputs into outputs and defines the activities to which an organisation should respond to as well

as the criteria required to measure business process capability and performance.

It also defines the role that all stakeholders adhere to and defines the guidance needed to carry

out the process and attain the desired outcomes. It also defines the capabilities required from

people, technology and facilities in order to succeed and become competitive. Business

processes defines the required measurement system and performance targets to establish

assessment criteria of an organization towards Business Processes Improvement,

Performance, and Excellence.

In summary, a process has therefore its own set of objectives, utilise resources with capabilities

to achieve organisational objectives, it involves a work flow that cuts across departmental

boundaries and requires resources from several departments within an organisation.

2.5 Business Processes and Competitiveness

To obtain competitive advantage denote an organisations ability to achieve market superiority

and competitive edge depending on the design of the production and service system through

developing and executing a “good strategy”.

In developing and execution of “good strategy” requires the managing of consistent, accurate,

sustainable, and timely information at all times across all functional areas of the organisation.

Information in itself must provide real time information for evaluation and improvement of

processes, products, and services to meet the organisations objectives and to address ever

changing customer needs and assist in performance measurement towards competitiveness.

Evans, (2008:184 - 230).

Evans further stated that organisations need performance measurements for three reasons:

1. to lead the organisation in a particular direction to drive strategies and organisational

change

2. to manage resources by evaluating the effectiveness of action plans

3. to operate the business processes that make the organisation work and continuously

improve


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To be competitive, Krajewski, et al, (2010:33) stated that competitive priorities are critical

operational dimensions that a process or a supply chain must possess to satisfy internal as well

as external customers, both now and in the future. They further identified that Competitive

Capabilities are (1) cost, (2) quality, (3) time and (4) flexibility dimensions that a process or

supply chain actually possesses in order to deliver product or services and if these fall short of

the priority attached to it then management must find ways to close the gap or revise the

priority.

Table Definitions, Process Considerations, Of Competitive Priorities. Krajewski, et al, (2010:34)

COMPERTITIVE PRIORITY DEFINITION PROCESS CONSIDERATIONS

1. COST

Delivering a service or product

at the lowest possible cost to

satisfy external or internal

customers of the process or

supply chain

To reduce cost, processes must be designed and

operate to make then efficient using rigorous process

analysis that addresses workforce, methods, scrap

and rework, overhead, and other factors, such as

investments in new automated facilities or

technologies to lower the cost per unit of the service

or product

2. QAULITY

2.1 Top Quality

2.2 Consistent Quality /

Dependability

Delivering an outstanding

service or product

Producing services or products

that meet design specifications

on a consistent basis

To deliver top quality service according to high levels

of customer service and product according to product

features, tolerances and durability

Processes designed and monitored to reduce errors,

prevent defects, and eliminate waste consistently over

time

3. SPEED / TIME

3.1 Delivery Speed

3.2 On-Time Delivery

3.3 Product and Service Development

Quickly filling a customer order

Meeting due dates

Introducing new product and

services

Design processes to reduce lead time

Process that reduce lead time, planning processes,

scheduling, capacity, etc

Processes to achieve cross-functional integration and

involvement of critical external suppliers in the service

or product development process

4. FLEXIBILITY

4.1 Customisation

1.2 Variety

Satisfying the unique needs of

each customer

Handling a wide assortment of

services or products efficiently

Acceleration or deceleration rate

of services or products to

Processes with a customisation strategy in place

Processes supporting variety must be capable to

handle large volume


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1.3 Volume Flexibility

handle fluctuations in demand Processes must be designed for excess capacity and

excess inventory to handle demand fluctuations.

The objectives and benefits of good process design according to Slack et al are illustrated in

Table 2.2 can only be achieved when whatever being processed enter a process and progress

or flow through a series of activities whereby they are transformed in some way or another.

2.6 Business Process Classification Framework

The American Productivity and Quality Centre (APQC), http://www.apqc.org (tights and

permission granted to use Classification Framework 1996) stated that Process Classification

Framework serves as a high-level, generic enterprise model that should encourages businesses

and organisations to view their activities from a cross-industry process viewpoint instead of from

a narrow functional viewpoint.

According to APQC it is important that organisations communicate effectively across industry

boundaries and overcome the vocabularies that obscure the underlying commonality of their

business processes, therefore provides “shared” meaning in an organization through the use of

“common language.

APQC - Process Classification Framework supplies a generic view of business processes often

found in multiple industries and sectors such as for manufacturing and service, healthcare,

government, education, and many others.

It is stated that many organizations should seek to understand their inner workings from a

horizontal process viewpoint, rather than from a vertical functional viewpoint. Process

Classification Framework therefore seeks to represent major processes and sub-processes, not

functions, through its structure and vocabulary. The Process Classification Framework should

therefore be used by organizations to classify and understand all processes in the value chain,

product or department as well as the scope and complexity of their business and business

processes. What should be noted is that the Framework is a guide and does not list all

processes within any specific organization. Nor every process listed in the Framework is

necessarily presented in every organisation.


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What makes the Processes Classification Framework useful is that it could be used as a tool in

understanding and mapping business processes and according to APQC a number of

organisations have used the Framework to classify both internal and external information for the

purpose of cross-functional and cross-divisional communication.

The APQC classifies business into 13 largely namely seven basic business process and six

support business process which furthermore subdivides the basic business process into 92 and

support business process into 123 sub categories

Table 2.2.8 1 APQC Key organisations process classification framework

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. 1. UNDERSTAND MARKETS AND CUSTOMERS

1.1 Determine customer needs and wants 1.1.1 Conduct qualitative assessments 1.1.1.1 Conduct customer interviews 1.1.1.2 Conduct focus groups 1.1.2 Conduct quantitative assessments 1.1.2.1 Develop and implement surveys 1.1.3 Predict customer purchasing behaviour 1.2 Measure customer satisfaction 1.2.1 Monitor satisfaction with products and services 1.2.2 Monitor satisfaction with complaint resolution 1.2.3 Monitor satisfaction with communication 1.3 Monitor changes in market or customer expectations 1.3.1 Determine weaknesses of product/service offerings 1.3.2 Identify new innovations that meet customer needs 1.3.3 Determine customer reactions to competitive offerings

2. DEVELOP VISION AND STRATEGY

2.1 Monitor the external environment 2.1.1 Analyze and understand competition 2.1.2 Identify economic trends 2.1.3 Identify political and regulatory issues 2.1.4 Assess new technology innovations 2.1.5 Understand demographics 2.1.6 Identify social and cultural changes 2.1.7 Understand ecological concerns 2.2 Define the business concept and organizational strategy 2.2.1 Select relevant markets 2.2.2 Develop long-term vision 2.2.3 Formulate business unit strategy 2.2.4 Develop overall mission statement 2.3 Design the organizational structure and relationships between organizational units 2.4 Develop and set organizational goals

3. DESIGN PRODUCTS AND SERVICES

3.1 Develop new product/service concept and plans 3.1.1 Translate customer wants and needs into product and/or service requirements 3.1.2 Plan and deploy quality targets 3.1.3 Plan and deploy cost targets 3.1.4 Develop product life cycle and development timing targets 3.1.5 Develop and integrate leading technology into product/ service concept 3.2 Design, build, and evaluate prototype products and services 3.2.1 Develop product/service specifications 3.2.2 Conduct concurrent engineering 3.2.3 Implement value engineering 3.2.4 Document design specifications 3.2.5 Develop prototypes 3.2.6 Apply for patents


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3.3 Refine existing products/services 3.3.1 Develop product/service enhancements 3.3.2 Eliminate quality/reliability problems 3.3.3 Eliminate outdated products/services 3.4 Test effectiveness of new or revised products or services 3.5 Prepare for production 3.5.1 Develop and test prototype production process 3.5.2 Design and obtain necessary materials and equipment 3.5.3 Install and verify process or methodology 3.6 Manage the product/service development process

4. MARKET AND SELL

4.1 Market products or services to relevant customer segments 4.1.1 Develop pricing strategy 4.1.2 Develop advertising strategy 4.1.3 Develop marketing messages to communicate benefits 4.1.4 Estimate advertising resource and capital requirements 4.1.5 Identify specific target customers and their needs 4.1.6 Develop sales forecast 4.1.7 Sell products and services 4.1.8 Negotiate terms 4.2 Process customer orders 4.2.1 Accept orders from customers 4.2.2 Enter orders into production and delivery process

5. PRODUCE AND DELIVER FOR MANUFACTURINGORIENTED ORGANIZATIONS P R O C E S E S

5.1 Plan for and acquire necessary resources 5.1.1 Select and certify suppliers 5.1.2 Purchase capital goods 5.1.3 Purchase materials and supplies 5.1.4 Acquire appropriate technology 5.2 Convert resources or inputs into products 5.2.1 Develop and adjust production delivery process (for existing process) 5.2.2 Schedule production 5.2.3 Move materials and resources 5.2.4 Make product 5.2.5 Package product 5.2.6 Warehouse or store product 5.2.7 Stage products for delivery 5.3 Deliver products 5.3.1 Arrange product shipment 5.3.2 Deliver products to customers 5.3.3 Install product 5.3.4 Confirm specific service requirements for individual customers 5.3.5 Identify and schedule resources to meet service requirements 5.3.6 Provide the service to specific customers 5.4 Manage production and delivery process 5.4.1 Document and monitor order status 5.4.2 Manage inventories 5.4.3 Ensure product quality 5.4.4 Schedule and perform maintenance 5.4.5 Monitor environmental constraints O P E R A T I N

6. PRODUCE AND DELIVER FOR SERVICE-ORIENTED ORGANIZATIONS

6.1 Plan for and acquire necessary resources 6.1.1 Select and certify suppliers 6.1.2 Purchase materials and supplies 6.1.3 Acquire appropriate technology 6.2 Develop human resource skills 6.2.1 Define skill requirements 6.2.2 Identify and implement training 6.2.3 Monitor and manage skill development 6.3 Deliver service to the customer 6.3.1 Confirm specific service requirements for individual customer 6.3.2 Identify and schedule resources to meet service requirements 6.3.3 Provide the service to specific customers 6.4 Ensure quality of service

7. INVOICE AND SERVICE CUSTOMERS

7.1 Bill the customer 7.1.1 Develop, deliver, and maintain customer billing 7.1.2 Invoice the customer 7.1.3 Respond to billing inquiries 7.2 Provide after-sales service 7.2.1 Provide post-sales service 7.2.2 Handle warranties and claims


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7.3 Respond to customer inquiries 7.3.1 Respond to information requests 7.3.2 Manage customer complaints M A N A G E M E N T & S U P P O R T P R O C E S S

8. DEVELOP AND MANAGE HUMAN RESOURCES

8.1 Create and manage human resource strategies 8.1.1 Identify organizational strategic demands 8.1.2 Determine human resource costs 8.1.3 Define human resource requirements 8.1.4 Define human resource’s organizational role 8.2 Cascade strategy to work level 8.2.1 Analyze, design, or redesign work 8.2.2 Define and align work outputs and metrics 8.2.3 Define work competencies 8.3 Manage deployment of personnel 8.3.1 Plan and forecast workforce requirements 8.3.2 Develop succession and career plans 8.3.3 Recruit, select and hire employees 8.3.4 Create and deploy teams 8.3.5 Relocate employees 8.3.6 Restructure and right size workforce 8.3.7 Manage employee retirement 8.3.8 Provide outplacement support 8.4 Develop and train employees 8.4.1 Align employee and organization development needs 8.4.2 Develop and manage training programs 8.4.3 Develop and manage employee orientation programs 8.4.4 Develop functional/process competencies 8.4.5 Develop management/leadership competencies 8.4.6 Develop team competencies 8.5 Manage employee performance, reward and recognition 8.5.1 Define performance measures 8.5.2 Develop performance management approaches/feedback 8.5.3 Manage team performance 8.5.4 Evaluate work for market value and internal equity 8.5.5 Develop and manage base and variable compensation 8.5.6 Manage reward and recognition programs 8.6 Ensure employee well-being and satisfaction 8.6.1 Manage employee satisfaction 8.6.2 Develop work and family support systems 8.6.3 Manage and administer employee benefits 8.6.4 Manage workplace health and safety 8.6.5 Manage internal communications 8.6.6 Manage and support workforce diversity 8.7 Ensure employee involvement 8.8 Manage labour-management relationships 8.8.1 Manage collective bargaining process 8.8.2 Manage labour-management partnerships 8.9 Develop Human Resource Information Systems (HRIS)

9. MANAGE INFORMATION RESOURCES

9.1 Plan for information resource management 9.1.1 Derive requirements from business strategies 9.1.2 Define enterprise system architectures 9.1.3 Plan and forecast information technologies/methodologies 9.1.4 Establish enterprise data standards 9.1.5 Establish quality standards and controls 9.2 Develop and deploy enterprise support systems 9.2.1 Conduct specific needs assessments 9.2.2 Select information technologies 9.2.3 Define data life cycles 9.2.4 Develop enterprise support systems 9.2.5 Test, evaluate, and deploy enterprise support systems 9.3 Implement systems security and controls 9.3.1 Establish systems security strategies and levels 9.3.2 Test, evaluate, and deploy systems security and controls 9.4 Manage information storage & retrieval 9.4.1 Establish information repositories (data bases) 9.4.2 Acquire & collect information 9.4.3 Store information9.4.4 Modify and update information 9.4.5 Enable retrieval of information 9.4.6 Delete information 9.5 Manage facilities and network operations 9.5.1 Manage centralized facilities 9.5.2 Manage distributed facilities


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9.5.3 Manage network operations 9.6 Manage information services 9.6.1 Manage libraries and information canters 9.6.2 Manage business records and documents 9.7 Facilitate information sharing and communication 9.7.1 Manage external communications systems 9.7.2 Manage internal communications systems 9.7.3 Prepare and distribute publications 9.8 Evaluate and audit information quality

10. MANAGE FINANCIAL AND PHYSICAL RESOURCES

10.1 Manage financial resources 10.1.1 Develop budgets 10.1.2 Manage resource allocation 10.1.3 Design capital structure 10.1.4 Manage cash flow 10.1.5 Manage financial risk 10.2 Process finance and accounting transactions 10.2.1 Process accounts payable 10.2.2 Process payroll 10.2.3 Process accounts receivable, credit, and collections 10.2.4 Close the books 10.2.5 Process benefits and retiree information 10.2.6 Manage travel and entertainment expenses 10.3 Report information 10.3.1 Provide external financial information 10.3.2 Provide internal financial information 10.4 Conduct internal audits 10.5 Manage the tax function 10.5.1 Ensure tax compliance 10.5.2 Plan tax strategy 10.5.3 Employ effective technology 10.5.4 Manage tax controversies 10.5.5 Communicate tax issues to management 10.5.6 Manage tax administration 10.6 Manage physical resources 10.6.1 Manage capital planning 10.6.2 Acquire and redeploy fixed assets 10.6.3 Manage facilities 10.6.4 Manage physical risk

11. EXECUTE ENVIRONMENTAL MANAGEMENT PROGRAM

11.1 Formulate environmental management strategy 11.2 Ensure compliance with regulations 11.3 Train and educate employees 11.4 Implement pollution prevention program 11.5 Manage remediation efforts 11.6 Implement emergency response programs 11.7 Manage government agency and public relations 11.8 Manage acquisition/divestiture environmental issues 11.9 Develop and manage environmental information system 11.10 Monitor environmental management program

12. MANAGE EXTERNAL RELATIONSHIPS

12.1 Communicate with shareholders 12.2 Manage government relationships 12.3 Build lender relationships 12.4 Develop public relations program 12.5 Interface with board of directors 12.6 Develop community relations 12.7 Manage legal and ethical issues

13. MANAGE IMPROVEMENT AND CHANGE

13.1 Measure organizational performance 13.1.1 Create measurement systems 13.1.2 Measure product and service quality 13.1.3 Measure cost of quality 13.1.4 Measure costs 13.1.5 Measure cycle time 13.1.6 Measure productivity 13.2 Conduct quality assessments 13.2.1 Conduct quality assessments based on external criteria 13.2.2 Conduct quality assessments based on internal criteria 13.3 Benchmark performance 13.3.1 Develop benchmarking capabilities 13.3.2 Conduct process benchmarking


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13.3.3 Conduct competitive benchmarking 13.4 Improve processes and systems 13.4.1 Create commitment for improvement 13.4.2 Implement continuous process improvement 13.4.3 Reengineer business processes and systems 13.4.4 Manage transition to change 13.5 Implement TQM 13.5.1 Create commitment for TQM 13.5.2 Design and implement TQM systems 13.5.3 Manage TQM life cycle

The importance of the above table is that provides an overview of possible questions that may

guide an organisation when evaluating Business Process Capability. It is important that

organisations should be able to set-up a Business Process Classification Framework when

designing and selecting business processes. This will enable organisations characterise and

ensure process improvement when a business process have been selected. Some of the above

categories and questions guided the researcher in compiling the research questionnaire.

Classification systems that partition a body of knowledge according to value chain or functional

area are classified into main and sub processes and defines the subordinate relationship

between respective levels of processes decomposition. This approach should lead to

understanding all processes in the value chain, product or department, as well as the scope and

complexity of the organisations processes.

What is required is to take lessons learned - knowledge from everyday experience evaluating

existing processes and rules and re-produces renewed ones enabling that improved

performance is made possible the next time through.

If there is no “specific” knowledge management process to take lessons learned and evaluate

them and change the capabilities on a consistency basis, either performance of the process will

stagnate with no improvement or will degrade due to the process becoming out of touch with a

changing set of stakeholder expectations. What is needed is a formal process or framework of

improving the capability including updating the rules and the enablers within which they are

embodied or embedded. All improved business processes will require commitment in a process-

managed environment as well as resources. However, “new set” of rules should be published

and communicated regularly and enablers renewed regularly, improved performance will be

delivered, staff will continuously learn and the organisation will adapt and thrive.


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2.7 Process Modelling / Mapping

According Harrington (2001:57), diagramming a process is to help in identifying the key

business process steps for departments under evaluation, the process owner, as well a

responsible people listed for each operation. It forces process owners to mentally and physically

viewing the degree of visibility of each part of the total process under review.

Why flowcharting? Oakland (1994:72) states that flowcharting is a systematic planning or

examination of any process, being it in manufacturing or managerial activity. It is necessary to

record the series of events and activities, stages and decisions in a form that it can be easily

understood and communicated to all stakeholders.

According Oakland, flowcharting is statements defining the process should lead to its

understanding and provide the basis of any critical examination necessary for improvements.

Slack, et el, (2009, 143) states that process mapping or process blue printing in its most basic

level involves describing processes in terms of how the activities within the process relate to

each other.

According to Slack there are two main features in process mapping:

They identify the different types of activities that take place during the process

They show the flow of material or people or information through the process. Therefore, the

sequencing of activities required in a business process is subjected to that include materials,

people, or information.

Process modelling / mapping can be complex and business processes are normally mapped at

an aggregated level. However, the objective of process mapping is a method for improving

organisational efficiency and quality aims to improve business performance by optimising the

efficiency of connecting activities in the provision of a product or service.

The final output of process modelling is to improve the way “how” business processes should

work.


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If business process modelling / mapping is done correctly and focuses on process

improvements it should to add “value” towards actions that make the customer service and

experience better, and on reducing effort, and eliminate waste.

There are two main different types of Business Process Models:

the 'as is' or baseline model (the current situation)

and the 'to be' model (the intended new situation)

Types of Process Models / Maps

The aim of modelling is to illustrate a complete process, enabling managers, consultants and

staff to improve the flow and streamline the process.

The outcomes of a business process modelling are essentially:

Value for the customer, and

Reduced costs for the company,

Increased profits.

This research will not deal in detail all the different types of business process models / mapping.

However, the following types can be used by organisations:

2.2.7.1.1 Value Stream Mapping

Value Stream mapping is a specific type of process mapping flowchart which will show the flows

of material and information within an organisation from supplier to customer. The value stream

map should indicate the length of time that product is within your organization as well as the

total processing time so that you can ascertain exactly for what percentage of its time product is

being worked on within your organization.

2.2.7.1.2 Business Process Mapping

Business process mapping is similar to value stream mapping in that an organisation analyse

how “value flows” through the organization but for specific processes. The aim is to identify any

“wasteful steps” in originations business processes. Once identified an organization should be

able to have the opportunity to find ways to either remove these wasteful steps or reduce their

impact on your organisation.

2.2.7.1.3 Workflow Diagrams

These diagrams depict the transfer of outputs produced by one process to another process

2.2.7.1.4 Activity Flow Diagrams

Is to show the flow of work between activities and the tasks to which the activities belong


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2.2.7.1.5 Data Flow Diagrams

The purpose of data flow diagrams is to show the flow of data through an organization

processes.

Of critical importance is that:

1. Process classification must be agreed upon and designed for the organisation and all

process must be clearly classified accordingly

2. All process maps should be structured according to the hierarchy with major functions

3. Process maps should be linked to provide a holistic view of all the organisation business

processes (value chain)

4. Interfaces between high-level processes and sub-processes must be clearly indicated on

process maps, and

5. Process maps must clearly indicate which functions the system must perform and process

maps be utilised when system is designed

One of the important aspects of flowcharting is supported by Harrington, (2001:108) stating that

flowcharts as diagrams is used to follow information through a process.

2.8 Sequencing in Business Process Modelling

Business Process Modelling / Mapping concentrates on modelling systems that defines the

sequencing of activities since at an elemental level sequence is crucial to quality and related

factors of business process, quality, monitoring, management, and change, etc. Also, at an

elemental level, i.e., when a big activity is broken down into its constituent parts, the sequence

thereof have a vital effect upon the effectiveness of each of the individual processes.

However a wider consideration is that many large scale systems commonly contain related

processes and resources for which a fixed related sequence is not a specific or crucial or

predictable aspect, and for which consequently it is not always possible or easy (or in many

cases necessary) to define the exact sequential relationship of processes on a big systemic

scale.

Sequence is always an important consideration, especially when trouble-shooting. It should

assist at any level to be the key in finding dramatic improvements. However, sequencing is not a

mandatory feature, and there is no need to search to apply sequential conditions within any

stage of process modelling.


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In conclusion flowcharting and sequencing of activities provide excellent documentation and

insight to enable organisations to optimize their processes and is therefore useful as a trouble –

shooting tool to discover inconsistencies and determine potential sources of process variations

and problems.

2.9 Process Task and Capacity

Slack, et al, (2009, 147), states that process maps show how activities of any particular process

are to be arranged and how they should possible be reconfigured. Of importance is how it

relates to the total task and how task should be divided up within the process and to determine

how capacity should be allocated.

Slack states that getting to grips with process capacity means understanding the following

criteria’s

1. Task precedence relationship.

How individual activities comprise a total process task

Interrelationship between individual activities

Time necessary to perform the total task (work content)

Time necessary to perform each individual activity within an task

2. Series and parallel configurations

Should activities in a process be arranged in a single “long thin” configuration or in

“short flat” configurations

3. Cycle time and process capacity

The cycle time of a process is the time between completed units emerging from it.

Slack states that cycle time is a Vitol factor in process design and has significant

influence on detailed process design decisions. Cycle time sets the pace of a

process and therefore processes should be designed to be able to meet its required

cycle time.

4. Process balancing

Involves attempting to allocate activities to each stage as equally as possible. The

effectiveness of balancing activity is measure by balancing loss or time wasted

through unequal allocation of activities as a total of processing time.

5. Throughput, cycle time and work in progress

Cycle time of a process is a function of capacity. According to Slack, et al, for any

given amount of work content in a process task, the greater the capacity required


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within the process, the smaller its cycle time. The reciprocal of cycle time is called

“throughput rate”. If there is a large amount of units within a process, they then have

to wait in “work in process” (inventory) for part of the time they are within the process

(throughput time)

Critical diagnostic checklist, Slack, et al, (2009:162)

1. Are processes configured correctly to match volume and variety?

2. Are the details of task precedence known for each process?

3. Have the correct process precedence relationship been established?

4. Have the advantages and disadvantages of series and parallel configurations been

explored

5. Is the process balanced?

6. Is the relationship between throughput, cycle time and work in process understood?

2.2.11 Process Variability

Evans (2011: 48) in discussing Foundations OF Performance Excellence sighted Deming,

Juran, and Crosby approaches to performance excellence. Of importance is that all Deming,

Juran and Crosby highlight the fact that variability in processes should be minimised.

In analysis of process variability Slack, et al, (2009:156) highlighted the importance to determine

reasons why variability effect processes and highlighted some reasons:

Late arrival of material, information or customers at specific stage within the process

Breakdowns of malfunctions of process technology

Recycling of “misprocessed material”, information or customers

Incorrect routing of material, information or customers within the process an needs

redirecting

Product or service characteristics is not the same and should therefore not be

treated similarly

Products or services may differ in treatment, repairs, diagnostics checks

Human physical co-ordination and effort on the part of performing the task may result

in a variation

Variability in demand for processing at individual stage in the process

Variation in the time taken to perform the activities at each stage


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Slack, et el, (2009:162) designed a checklist of diagnostic questions regarding process

variation comprising of critical questions that can be usefully applied to any type of operations /

process analysis namely:

1. Have a clear set of performance objectives been set for each process?

2. Do process design objectives clearly relate to the business strategic level?

3. Is the following information known for all key process in operation?

4. Are process documented using process mapping techniques?

5. Are formal process descriptions followed in practice?

6. Process descriptions include the degree of visibility at each stage of the process?

7. Are the resources of process variability recognised?

8. Has the effect of variability been recognised in the design of the process?

2.2.10 Process Control

The effectiveness of any organisation depends on its people and to which extent every

stakeholder performs their role to achieve a common goals and objective. Oakland (1994: 29)

states that control is the process by which information or feedback is provided so as to keep all

functions on track.

Gryna, M (2001, 146) states that organisations have many important cross-functional processes

from which top management should select primary processes for the process management

approach. Gryna further stated that processes selected be aligned with the organisations

mission, strategic plans and key business objectives.

According to Gryna what is important is that processes should be evaluated and assed based

on critical success factors and current process performance.

Evans, (2011, 117) states that control is the activity of ensuring conformance to the

requirements and taking corrective action when necessary, to correct the problems and

maintain a stable performance. He identified that any control system has three distinct

components namely:

1. Standard and goals

2. By means of measuring accomplishments

3. Comparison of actual results with standard, along with feedback and corrective action


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Process control requires a well designed system of measurement to track quality and

operational performance. Measurements should provide the ability to capture important quality

and performance indicators and should be able to reveal patterns about process performance.

Key to the success of process control is to provide humans with all they need to meet quality

objectives. According to Gryna, (2001:442), to do so people must be provided with the following

criterions:

Criterion 1: Knowledge of what they supposed to do. Therefore clear work procedures,

performance standards, and training.

Criterion 2: Knowledge of what they are actually doing (performance): Adequate review of

work, and feedback on results

Criterion 3: Ability and desire to regulate the process for minimum variation. Therefore a

process and job design capable of meeting quality objectives, process

adjustments that will minimise variation, adequate training in adjusting the

process, maintaining of process capability, Strong quality culture and

environment

2.10 Process Decision

Decision regarding the organisation of products depends on the choice and way of strategically

structuring the process by organising the resources around the process or organising them

around the products to be manufactured or services delivered.

Critical organisational decisions should have an impact in selecting processes and should be

able to optimise process capability. In deciding how production and organisation of goods are

being organised, Stevenson (2007: 227-263) stated that strategic process selection approaches

is determined by the organisations process strategy and essentially involves choice of

technology, capacity planning, and layout of facilities, equipment and the design of work

systems.

Stevenson (1999:196) identified key criteria’s for process selection and highlighted the follow to

be considered:

1. Make or buy. In-house or out sourced organisation

2. Capital intensity therefore the mix of equipment and labour that will be used by the

organisation`

3. Process flexibility: The degree that the system adjust to changes in the processing


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requirements due to factors as change in product or service design, changes in volume

processed and changes in technology

Whilst highlighting the primary questions Stevenson (2007: 229) considered the affects it has on

the supply chain and therefore included a total system approach. Stevenson stated that the

outcome of the questions should be focused on:

1 How much varieties in products a system need to be able to handle?

2 What degree of equipment flexibility is required?

3 What is the expected volume of output?

In support of Stevenson (2007), Krajewski, et al (2007:121), identified basic principles

concerning process and extended the process selection that should include all processes in the

value chain:

1 The key to successful process decisions is to make choices that fit the situation and

make sense together and matches the key process characteristics that have a close

strategic fit. 2 Process focused in terms of equipment, layout of facility and supervision

3 The cumulative effect of processes should be the building blocks towards the

organisations value chain

4 Whether processes in the value chain are performed internally or by outside suppliers

that management should pay particular attention to the interfaces between processes

In order for organisation organisations to make process decisions Krajewski, et al (2007:122)

stated that manufacturers should consider four common process decisions that act as building

blocks to be used in different ways to achieve effective processes .namely :

(1) Process structure that determines how processes are designed relative to the type and kind

of resources required. In organisation the level of volume and customisation pave the way for

process re-engineering and process improvement.

(2) Customer involvement in the processes

(3) Resources flexibility whereby the ease that employees and equipment can handle a wide

variety of products, output level, etc

(4) Capital intensity with regard to the best mix of equipment and human skills in a process.

What should be important is that process strategy is to build organisational processes that meet

customer requirements according to product specification within cost, quality and other


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organisation constraints.

2.10.1 Process Characteristics

Many organisation systems and processes have different characteristics, from project systems

designed to produce a single unit of a product at a site highly specialised or to high volume flow

processes or a process designed for mass production that should not be efficient for low volume

production and visa versa and a process itself that should only be compared to the design limits

of the product type, process capability in order to determine if the process itself is or is not

capable of producing the products within specifications. It is essential that selection of the

“right” process should be selected in organisation and that the process selected will have a

long-term effect on the efficiency and flexibility of production, as well as the cost and quality of

goods produced.

3 BUSINESS INFORMATION AND TECHNOLOGY

3.1 Quality Information System (Qis)

Gryna, F.M. (2001:642), states that a quality information system is an organised approach of

colleting, storing, analysing and reporting information on quality to assist decision makers at all

levels to align quality related activities with the vision of the organisation and measure

performance to drive improvement.

Gryna, F. M. states that QIS should not only recognise information that consists of data but

should also knowledge needed for decision making and provide the following elements of QIS:

1. Market research information on quality; i.e. Customer satisfaction, improving fitness for

use, etc

2. Product design; Test data, data on parts, supplier data

3. Information on design evaluation fro quality; review meetings, reliability, critical analysis,

etc

4. Information on purchased parts and material; inspection data, supplier data, supplier

survey information

5. In process data; Inspection system including all forms of waste, process control and

process capability data

6. Final inspection data; data at final inspection

7. Field performance data; Examples of mean time between failures (MTBF)

8. Improvement data; summary of improvements along with compilation of improvement

projects


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9. Results of departmental quality measurements; Examples include data from functional

and administrative support activities.

10. Audit results; data include audits of processes, specific activities, and product

11. Complaint data; data on warranties and customer complaints

12. Management control data; Cost of poor quality

13. Information on the quality system; Examples include the quality policy manual, quality

procedures, quality system documentation, and process control plans

Gryna (2001:656) argued that QIS is an organised method of collecting, storing, analysing, and

reporting information on quality to assist all decision makers:

1. Achieving in quality is a key purpose of QIS and that goes beyond reporting on quality

status

2. QIS must be aligned with organisational wide goals

3. Reports on quality focus on both operational and executive matters

4. Application of software packages are available to suite needs

5. Data quality has many dimensions and must be thoroughly defined for a QIS

Enterprise Resources Planning

Slack, et al, (2009:319) defines

Norris, G. Hurley, JR. Hartley, KM. Dunleavy, JR. Balls, JD, (2000) – E- Business and ERP

States that all organisations need to update their business infrastructures and change the way

they operate to respond more to customer needs. Hurley, et al, states that organisations should

make use of Enterprise Resources Planning (ERP) and together with e-business provides

organisations with options for raising profitability and creating substantial competitive

advantage. When implementing ERP - optimal system architecture is of utmost importance,

however, Hurley, et al, warns that technology should not be allowed to drive the enterprise, but

rather that technology should fit the enterprise by meeting certain conditions of satisfaction.

Slack, et al, (2009) defines ERP system as a complete enterprise wide business solution. ERP

system consists of software support modules such as marketing and sales, filed service,

product design and development, production and inventory control, procurement, distribution,

industrial facilities, process design and development, manufacturing, quality, human resources,

finance and accounting, information services focusing on integrating all the modules without

duplication of information.

In summary an information system is an essential component of “organisational strategies and


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defines the organisation information value chain, comprising out of business processes,

integrated data system. Important is that organisations documentation such as policies,

procedures, and business plans should be available to all stakeholders.

4. BUSINESS PROCESS OPTIMISATION, IMPROVEMENT AND PERFORMANCE

One of the biggest challenges today for organisations is to ensure overall business performance

improvement which emanates from improving business processes and business should seek

and implement strategies to ensure survival which depends on continuously improving and

optimising their processes and resources.

If processes are in control, then the measure of process performance results enables

organisations in determining their processes capability and therefore forces organisations to

strive towards Business Process Capability Maturity thus leading to the understanding and

application that there is a link between business processes optimisation, and to the degree of

competiveness and how well the business is performing with respect to specific enablers to

obtain Business Process Capability maturity

The solution to the above situation of business process optimisation as highlighted by the all

authors referenced lies most probably in identifying a “model” that will guide a organisation to

obtain process optimisation, capability and performance with specific reference to Business

Process Maturity Model(s) – (BPMM).

5. BUSINESS PROCESS OPTIMISATION, CAPABILITY AND PERFORMANCE

5.1 Business Process Maturity Model (BPMM)

BPMM is based on the work by Watts Humphrey at the Software Engineering Institute at

Carnegie Mellon University. Humphrey developed Process Maturity Framework (PMF), which is

the foundation of the Business Process Capability Maturity Model (BPCM).

It is also noted that Capability Maturity Model (CMM) as introduced by Humphrey, W, as

described in his book: Managing the Software Process (1989) was based on earlier work by

Crosby, P, - Quality is Free (1979). As reference see Crosby's Quality Management Maturity


28

Grid (QMMG), Ivancevich, Lorenzi, Skinner, Crosby (194:13). It can thus be assumed that

Business Process Capability Maturity originated from Crosby. P. B.

Business Process Maturity Model (BPMM), focus on business process optimisation and can

best be describe as a dynamic evolutionary improvement “path” that guides organisations

moving from immature, inconsistent processes to mature, disciplined processes. BPMM

therefore provides a guide, and reference model(s) for appraising business processes as well

providing a roadmap for business process improvement within an organisation therefore

focusing and prioritising continuous improvements.

According to Curtis, B, Alden, D, (2004 & 2006), with reference to - BPMM and Organisational

Maturity & Capability Measurement - BPMM can be described “as an evolutionary improvement

path that guides organisations as they move from immature, inconsistent business activities to

mature, disciplined processes” as illustrated in figure 2.3

Figure 2.2: Dr. Alden, J, Dr. Curtis, B. (2006) Capability Measurement. The Ecology of Fail

Systems:


29

Curtis, et al, stated that BPMM focuses on improvements at each stage and should provide a

foundation on which to build Improvements undertaken at the next stage of business process

improvement. Thus, an improvement strategy drawn from the BPMM provides a roadmap for

continuous process improvement.

In order to achieve BPMM, Curtis, et al, defined the following foundational principles:

Attributes of a process should be evaluated to determine its capability to contribute to

organizational objectives;

Capable processes cannot survive unless the organization is mature enough to sustain

them;

Process improvement is best approached as an organisational change program that

stages the improvements to achieve successively more predictable states of

organizational capability

Each stage or maturity level lays a required foundation on which future improvements

can be built, and indicated how BPMM and appraisal methods can be used:

According to Curtis, et al, there are four primary ways in which the BPMM will be used and each

will have different requirements for appraisals.

Guiding business process improvement programs: BPMM should be designed to guide

improvement programs, and should anticipate being its most frequent use. Improvement

programs should be initiated with an evaluation of the organisation’s current strengths

and weaknesses;

Assessing risk for developing and deploying enterprise applications: BPMM should be

used to identify risks to the successful implementation of systems and to provide

guidance on the actions to be taken to improve them prior to system deployment;

Evaluating the capability of suppliers: Organisations need a trusted and open standard

against which to evaluate the capability of their vendors for meeting their service level,

quality, price, and functionality commitments;

Benchmarking: Management should evaluate where they stand relative to the maturity of

business processes in their industry segment;

Like all maturity models guided by the Process Maturity Framework (PMF), BPMM is divided

into five maturity levels that represent different states through which an organisation is

transformed as its processes are improved, evolving from poorly defined and inconsistent

practices.


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(level 1), to repeatable practices at the workgroup level (level 2), to standard organization-wide

end-to-end business processes (level 3), to statistically-managed and predictable processes

(level 4), and finally to continuous process innovation and optimization (level 5). Achieving each

maturity level also entails satisfying all the requirements of the lower levels.

However, any successful BPMM model depends on business process improvement. It is

therefore important to note that organisations needs continuous process improvement programs

towards optimization and that they should take lessons learned from everyday experience with

today’s processes and rules and produces renewed ones so that improved performance to

make it possible the next time around.

Management should therefore utilize the knowledge and lessons learned and evaluate them

and institute change focusing on process capabilities on a regular basis or their performance of

the process will stagnate with no improvement or will degrade due to the process becoming out

of touch with a changing set of stakeholder expectations.

What is needed is a formal process of optimisation, improving the capability and performance of

organisations including updating the rules and the enablers within which they are embodied or

embedded. This Improved Guidance Creation Process should require resources and a

commitment in a process-managed environment. With new rules published and communicate

regularly and with enablers renewed regularly, improved performance will be delivered, staff will

continuously learn and the organization will adapt and thrive

As identified by Crosby‘s QMMG and Humphrey’s, the BPMM consists of 5 maturity levels, each

of consisting of criteria’s impacting on the capability of process areas and is therefore designed

to establish the capability achieved at that level. .According to Curtis, eta l, each of the process

areas is designed to “accomplish a limited set of goals” that includes a set of practices that

should have proven beneficial in achieving these goals.

For the purposes of this research literature study an overview is provided to describe the

criteria’s and intent of process improvement areas of BPMM at each level. Critical criteria’s and

questions was developed using Curtis, B, Alden, J, Weber, C.V (2006) as guideline as part of

the research questionnaire. This should enable the researcher to “design” an analytical tool for

measuring business processes capability and performance.


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5.2 Capability Levels

The following capability levels from 1 – 5 for Process Maturity Models in Business Process was

provided as a guideline by Curtis, B, Alden, J, Weber, C.V, (2006).

Level 1: Initial – Most organisations start their improvement project / programme at this level.

At this level the organisation “lacks consistent processes or practices for performing its business

activities.

It found that people / employees are often overloaded due management failure to balance the

workload with the resources not being able to accomplishing it.

Curtis, et al, states that the problem is usually not that people are incapable of performing the

work, but that management is engaged in constant fire-fighting mode and has not yet

established a stable environment in which people can perform their tasks consistently in a

disciplined and professional manner.

Crosby, (QMMG), also identifies this phenomenon at stage 1 – Uncertainty, where problems are

sorted out as they occur and seldom fully resolved and that fir-fighting dominates management

actions. The success in these organisations is usually more the result of individual efforts and

not due to the result of sustainable processes.

Curtis, et al, states that although an organisation at the Initial Level relatively good managers,

that there is a considerable inconsistency in skills across managers and the organisation is not

systematically developing the management skills required.

According to Curtis the key problem areas effecting organisations at Level 1 is that:

1 The organisation is inconsistent; both in business results and in the manner

business activities are conducted.

2 Undisciplined: Few repeatable processes exists and often scarifies under

pressure

3 Individualistic: People rely on personal methods to accomplish work

4 Inconsistent: Little preparation for managing the work unit

5 Inefficient: Limited measures for analysing effectiveness of practices

6 Stagnant: No foundation or commitment towards improvement

Summary of Level 1: Processes at level 1 is usually managed at an ad hoc basis and

associated with organisations that usually do not provide a stable environment. Success in

these organisations depends largely on the competence and effort people in the organisation


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and not on the use of proven processes. These organisations most probably does not adhere at

all to competitive capabilities of (1) cost, (2) quality, (3) time and (4) flexibility that business

processes or supply chain possesses should have in order to deliver product or services and

therefore fall short of closing the competitive gap or revise and reengineer their business

processes. However, in spite of this ad hoc, presumably chaotic environment, organisations

may produce products and services that work.

Level 2: Managed – Curtis, et al states that the first step in most perspective organisational

maturity models is to stabilise work even before trying to implement organisation-wide solutions

the organization. Curtis stated that if “people are constantly overloaded, untrained, and then no

organization-wide initiatives will have much impact, since people are too stressed to adopt

them”.

The primary focus of Level 2 is to establish management control over the work unit

environment. This should enable people to repeat practices or work procedures and have

“knowledge” of how to perform successfully.

Key to Level 2 is to capture the “as-is” process in each work unit to identify best practices and to

determine how much variation take place in accordance to work methods and procedures.

Work measurements taken at Level 2 should enable a work unit manager to plan and track work

activities against the unit’s assigned responsibilities.

According to Curtis, et al, The process areas that create a Level 2 capability should include the

following:

Organizational Business Governance—establishing of executive accountability for the

management and performance of the organisation’s work and results. Executive commit

to improving processes;

Organisational Process Leadership — establishing of sponsorship of the program to

improve the organisation’s business processes. Leaders take responsibility towards

improving processes and become proactive rather than reactive;

Work Unit Requirements Management — establishing of documented and agreed-to

requirements (e.g., commitments, results, compliances) that a work unit will be held

accountable for meeting and ensures that changes to the requirements are managed

against existing work commitments and resources;


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Work Unit Planning and Commitment — establishing of plans for performing and

managing the work required of a work unit to ensure that commitments are balanced

with resources;

Work Unit Monitoring and Control — establishing of regular monitoring of work

assignments, resources, and other work factors in the work unit in order to make the

adjustments needed to keep performance and results in line with the work unit’s

requirements, commitments, and plans;

Work Unit Performance — establishing discipline and coordination among the individuals

and workgroups within a work unit so that their aggregate efforts satisfy the work unit’s

requirements, commitments, and plans;

Work Unit Change Management — establishing of change and version control over the

content of work products to be delivered to other work units or customers.

Sourcing Management — the management and acquisition of products and services

from suppliers external to the organisation;

Process and Product Assurance — providing compliance guidance and objective review

of the activities and work products within the organisation to ensure that they comply

with applicable laws, regulations, standards, policies, process descriptions, and work

procedures;

Summary Level 2

The key to level 2 is that Business Governance, leadership, management principles and

process discipline should ensure that existing practices are retained. Managers ensure that

work unit requirements, work units performance, work unit planning and commitment, work unit

monitoring and control, and work unit change management should be in place, thus ensuring

business process and product and service assurance. However, if not then the organisation

should not be able to progress to Level 3.

It is most probably true that numerous organisations do display all the characteristics as

required for Level 2 but not necessary practice them.

Level 3: Standardized – Curtis, et al, states that only once the organisation has stabilised its

work units and is able to manage commitments at the local level, then it should be able to

standardise processes across all work units. Curtis, et al, states that standardisation is only

achieved by integrating best practices from the local methods and procedures that are


34

producing the “best results” along with incorporating “best practices” from outside to fill gaps in

the end-to-end workflow.

Implementation standard processes allows the organisation to learn from experience gained by

establishing common measures at the process level, capturing and sharing lessons learned,

and developing common competencies and learning activities. Guidelines should be established

from experience tailor making standard process for use in different circumstances. Standard

processes and capabilities should enable to provide the foundation for a common corporate

culture to emerge.

According to Curtis, et al, The process areas that create a Level 3 capability should include the

following:

Organizational Process Management — the establishing of standard processes and

related measures for the organisation; therefore the development of repositories of

experience, artefacts, and results from performing standard processes; and conducts

improvement activities based on periodic appraisals of process strengths and

weaknesses.

Organisational Competency Development — the development of competencies within

the workforce that are required to develop, deploy, deliver, and support the

organization’s products and services using its standard processes.

Organisational Resource Management — the planning and managing of acquisition,

allocation, and reassignment of the people, equipment, computing and communication

infrastructure, supplies, and other resources that should be required to be developed,

deployed, delivered, and support the organisation’s products and services.

Organisational Configuration Management — the identification, managing, and

controlling of the content of and changes to product baselines that are released for

external use and should be used in performing and managing the work efforts in the

organisation.

Product and Service Business Management — the planning and managing the

integrated end-to-end work for developing, deploying, operating, and supporting the

organisation’s product and service offerings using defined processes tailored from the

organization’s standard processes and the organization’s process assets.

Product and Service Work Management — the understanding of the market for a

product and service offering, defining the capabilities and features of the products and

service offered, and the establishing of the overall business plans for the offering, and

the managing of the business and financial aspects of the offering


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Product and Service Preparation — establishing the requirements for a product and

service offering, the development thereof, and preparation for its deployment and use.

Product and Service Deployment — installs, modifies, replaces, or removes the people,

equipment, computing and communication infrastructure, supplies, and other resources

used in operating and supporting a product and service offering

Product and Service Operations — provides customers of an acceptable product and

service offering within the capabilities and features of the offering.

Product and Service Support — maintaining of the physical infrastructure, equipment,

computing and communication infrastructure, software, supplies, and other resources

needed to sustain the operation and availability of a deployed product and service

offering, and provides for handling incidents, disasters, and the continuance of business.

Curtis, et al, propose that Level 3 may be tailored for application to specific domains of business

processes, such as, procure-to-pay, customer relationship management, supply chain,

marketing, finance, technology enablement, security, or for industry types such as financial,

healthcare, automotive, pharmaceutical. Curtis propose that by substituting “domain specific

process areas” for the six process areas identified above that begins with the words ‘Product

and Service’. Curtis states that these six process areas have proven adequate for many

application of the BPMM, but that the model can be tailored by including process areas,

primarily at Level 3, that contain the best practices specific to the processes typically used in

particular domains.

Summary Level 3

A critical distinction between level 2 and level 3 is the scope of standards, process descriptions,

and procedures. At level 2, the standards, process descriptions, and procedures may be quite

different in each specific work unit of the process. However, at level 3, the standards, process

descriptions, and procedures are tailored from the organization’s set of standard processes to

suit a particular domain specific or organisational unit and focus on organisational goals of end

– to end, integrated business processes.

The organisation’s set of standard processes, which is the basis for level 3, is established and

improved over time. These standard processes are used to establish consistency across the

organisation and is only qualitatively predictable.


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Level 4: Predictable – The implementation of common measures at a Standardised Level

should allow organisation to quantitatively manage processes. The primary objective this level is

to predict results of end-to-end business processes during its performance. To accomplish this

predictability, organisations should work to establish “statistically stable processes” those of

whose results provide good predictors of the end results.

Therefore performing work and striving to understand and control sources of variation in their

processes. This should assist management to use intermediate results to predict business

outcomes. In addition, the organization should use common processes as a foundation exists

for reuse of the knowledge, experience, and artefacts produced in the business process. This

should enable full realisation of processes for “knowledge management” focusing on the ability

to reuse what has been developed or learned in a different situation.

What must be noted is that the foundations for knowledge management have been established

at the previous levels of the maturity model, and that at Level 4 are integrated to create a

organisational capability. The results of creating standardisation at Level 3 should be now

standardised functional processes and should been integrated into a workflow.

According to Curtis, et al, this enables the next step at Level 4 which is to integrate functional

processes into a single product and service process incorporating functions as roles into an

integrated process.

Curtis, et al, states that the process areas that created a Level 4 capability should include the

following:

Organisational Common Assets Management — identifies and exploits commonalities in

the organization’s current and future product and service offerings to improve the

performance, quality, cycle time, throughput, and predictability of the organization’s

processes.

Product and Service Process Integration — integrate standardised work processes of

different disciplines and functions involved in a product and service offering as roles into

an integrated product and service process to increase the efficiency and effectiveness of

interdependent work.

Organisational Capability and Performance Management — the characterising the

capability of the organisation’s standard processes quantitatively, and develops and

provides the capability data, baselines, and models to quantitatively manage the

performance of the organization’s product and service offering work.


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Quantitative Product and Service Management — plans and quantitatively manages the

work involved in a product or service offering to achieve its quantitative performance and

quality goals and to control sources of variation

Quantitative Process Management — statistically manages the end-to-end performance

of work for developing, deploying, operating, and supporting a product or service offering

to achieve its performance and quality goals.

Summary Level 4

Key to level 4 is that business processes in an organisation become predictable

Using precise measurements quantitatively, management should be able to effectively control

process variation, performance and capability. Variation in processes is thus reduced through

reuse, mentoring and statistical management.

Sub-processes are selected that significantly contribute to overall process performance. These

selected sub-processes are controlled using statistical and other quantitative techniques.

Outcomes should now be predictable from sub-processes capability and performance

It is noted that a critical distinction between maturity level 3 and maturity level 4 is the

predictability of process performance at Level 4. At maturity level 4, the performance of

processes is controlled using statistical and other quantitative techniques, and is therefore

quantitatively predictable. People are should be now empowered through data and should be

able to manage and monitor their own work.

Level 5: Optimising – Although at level 4 the organisation has stable and predictable

processes, but that these processes may not be capable of achieving the outcomes

management needs from the business process.

At Level 5 management should sets in place proactive improvement activities, continuous

improvement practices and performance to close the gaps between the current capability of its

various business processes and the capability needed to achieve business objectives.

According Curtis, et al, and these improvement opportunities should include automation,

process engineering, improved training, Research and Development (R&D) projects, and other

actions to ensure that capability improvements necessary meet business objectives. Continuous

improvement is institutionalised so that change management should become an ordinary

business process, and that continual improvement should encouraged at the organisational,

workgroup, and individual levels. The emerging business system is continually evaluated to


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ensure that the improvements do not sub-optimise the performance of the business system or

its resource expenditures.

According Curtis, et al, the process areas that create a Level 5 capability should include the

following:

Organizational Improvement Planning — should set the organisation’s quantitative performance

and quality goals and establishes the infrastructure and strategy for making the improvements

required to meet them.

Defect and Problem Prevention — should be able to identify and addresses the causes of

defects and other problems interfering with achieving quantitative performance and quality goals

so that they do not recur.

Continuous Capability Improvement — should improve performance by encouraging and

motivating all levels of the organisation to continuously identify and deploy incremental

improvements in work processes.

Organizational Innovative Improvement — should formulate a complete improvement solution

that, when deployed, should be able to achieve specific quantitative performance and quality

goals assigned to a planned improvement effort.

Organizational Improvement Deployment — should transitions improvements with demonstrated

benefits into standard practice using institutionalised change management practices.

Organizational Performance Alignment — should maintain and align the organisations

quantitative performance and quality goals as well as improvement strategies at all

organisational levels and across the organisation’s from end – to - end product and service

offerings.

Summary Level 5 – Optimisation and Performance

A critical distinction between maturity level 4 and maturity level 5 is the “type” of process

variation addressed. At maturity level 4, processes are concerned with addressing special

causes of process variation and providing statistical predictability of the results. Though

processes may produce predictable results, the results may then be insufficient to achieve the

established objectives or may be thought to be sufficient.

At maturity level 5, processes are concerned with addressing common causes of process

variation and changing the process to improve overall process performance to be able to

achieve the established quantitative process-improvement objectives.


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At Level 5 - Organisations main focus should be on continuously improving process

performance through both incremental and innovative technological improvements. Quantitative

process-improvement objectives for the organisation should be established, continuously

revised to reflect changing, corporate goals, business environment, business objectives, and

used as criteria in managing business process improvement from end-to-end, the supply chain,

and value chain. The effects of deployed process improvements are measured and evaluated

against the quantitative process-improvement objectives. Both the defined processes and the

organisation’s set of standards for business processes should be targeted as integrated

measurable improvement activities.

Process improvements should address common causes (not symptoms) of process variation

and measurably improve the organisation’s business processes. Optimising of identified

business processes should be evaluated, adaptable. Innovativeness depends on the

participation of an empowered workforce aligned with the business values and objectives of the

organisation. Therefore the organisations ability to rapidly respond to changes and opportunities

is enhanced by finding ways to accelerate and share learning, and should be deployed

throughout the value chain.

Key characteristics at Level 5 are: Being Proactive, Systematic, Continual, Aligned, and

Preventative.

Brief Summary of Curtis, et al, BPMM

Level 1 is characterised by ad hoc management practices

Level 2 is characterised by stable work units performing repeatable local procedures

Level 3 is characterised by standard, integrated, end-to-end business processes

Level 4 is characterised by statistically stable processes with predictable outcomes

Level 5 is characterised by proactive improvement actions to achieve the process capability

required to meet changing business objectives


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BPMM therefore identifies process deficiencies in an organisation and guides improvements to

be made in logical, incremental steps in order to provide a roadmap for continuous process

improvement.

BPMM thus focus on stages of process improvement towards capability maturity which activate

improvements at each stage and then provide a foundation on which to build improvements

undertaken at the next stage. Thus, an improvement strategy drawn from the BPMM should

provide a roadmap towards continual improvement of business processes. It is therefore a

mean to identify process inefficiencies in an organisation and guides the organisation towards

continuous improvements in logical and incremental steps. Curtis, et al, states that this should

ensure that at each level the organisation achieves a new stage of business capability, behaves

differently, and exhibits a more mature culture.

In summary key characterises of BPMM towards improved organisational performance:

BPMM is not focusing on the end product or service rather its focus is on the

development of business processes capability itself;

BPMM enhances business agility, control and accountability by streamlining internal and

external processes;

BPMM is forms the basis for integrating end-to end business processes

Level 1

Level 2

Level 3

Level 4

Level 5

Inconsistent

Management

Repeatable

Management

Defined

Management

Controlled

Management

Optimising

Management

Repeatable

Practices

Measurable

Processes

Quality

Process Manage & Control

Continuous

Improvemen

t


41

BPMM allows organisations to record and measure their improvement in developing and

applying improvement. Thus, this helps organisations to see their improvement.

BPMM supports top-down – bottom up process modelling across the value chain;

involving business process stakeholders, systems, information and equipment;

BPMM focus on organisations workforce and should tie workforce improvements to both

their strategic plans and their operational plans. Thus, these organisations have a much

clearer coupling of what their workforce does in terms of the plans and directions of the

organisation. This improvement makes it easy for managers of an organisation to see

how each person’s knowledge, skills, and process abilities support the organisation’s

operational and strategic plans;

BPMM defines the ability to change business processes

5.4 Business Process Improvement Perspective

Harrington, H.J, (1991:246) states that “no matter how good you are, how well you regarded

your products and services, you cannot stop improving. You cannot stand still and if you do you

are slipping backwards because the competition is constantly improving”

In defining improvement, Slack, et al, (2009: 424- 456) stated that improvement is the “activity”

of closing the “gap” between the current performance and the desired performance of an

operation or process. In doing so assessing of the “gap” between actual and desired

performance should be the starting point. Slack, et al, stated that it requires two sets of

activities:

1. Firstly assessing the operations and each process current performance establishing

how performance is to be measured within operations. This involves deciding what

aspects to measure and identifying which are most important aspects, and the what

detailed measures should be used to assess each factor

2. Secondly deciding on an appropriate level of target performance.

Slack argue that a good starting point should be for performance measures to adopt is the use

of the five generic performance objectives of an organisation namely – quality, speed,

dependability, flexibility and cost.

It is clear that the organisation vision and strategy for process optimisation should be in place as and be

part of the Business Process Capability strategy plan. The organisation should therefore apply process

optimisation strategies to increase business process capabilities.


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Therefore process improvement strategies should be defined from implementation, through

supporting strategy and finally driving strategy, form end-to end focusing on process

performance objectives that effect customer satisfaction and competitiveness and should be

aligned with BPC strategy (i.e. The manner in which the organisation utilises resources and

methodology to improve business processes towards Business Process Capability)

According to Slack, et al, (2009: 429), choosing the key performance measures is to try and

achieve a balance between having a few key measures and having many detailed measures

which is complex, but capable of conveying many nuance of performance. However, Slack, et

al, states that their should be a clear link between the overall operations / process strategy (or

key) performance indicators (KPI’s) that reflects strategic objectives, and a “bundle of detailed

measures” be applied to “flesh out” each key performance indicator.

Slack, et al, argued that traditional financial measures only “focus” on past events and therefore

does not take into account long-term capabilities, customer relationships which are critical to the

success of an organisation. Slack, et al, stated that organisations should now create future

value through investment in customers, suppliers, employees, processes, technology.

In summary, Ivancevich, et al, (1994:33) stated that to achieve the highest levels of quality and

competitiveness requires a well defined and well executed approach to continuous improvement

should be followed. Ivancevich, et al, stated that Improvement in it self is not only driven by the

objective to provide better quality, but also the need to be responsive and efficient, and to meet

the objectives of the continuous process improvement that contains a cycle of regular planning,

execution, and evaluation.

6. IMPROVEMENT PROCESS

The concept of continuous improvement is according to Evans, J. R, relatively “new” and was in

its earliest form stimulated and initiated by the success that Toshiba (1946), Matsushita (1950)

and Toyota (1951). Toyota particularly established Just-In-Time (JIT) philosophy as part of

continuous improvement (Kaizen in Japanese).

According to Evans, J.R, (2011:139) improvement means changing the performance to a new

level, and to be able to improve a process it should be repeatable and measureable.

Evans, (2011:144) stated that a manger needs a systematic approach to drive continuous

improvement programmes and used the example of Eastman Chemical who used seven

approaches namely:


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1. Focus and pinpoint. Getting everybody on the same page specifying in measurable

terms what is expected

2. Communicate by publicising key results areas, the vision, and mission statement so that

all employees can answer the question: What is being improved? Why it is important to

the customer and to themselves? What has the management team committed to help?

How can employees help?

3. Translate and link to company wide objectives

4. Create an action plan with specific goals, including metrics to measure success

5. Improve processes; Team approach

6. Measure progress and provide feedback

7. Reinforce behaviours and results

However, if continuous improvement programmes is to be implemented to improve processes

then management should focus on critical areas of eliminating “waste”. Slack, et al, (2009: 348)

best describe “waste” in terms of lean synchronisation and according to, Slack, et al, “lean

synchronisation aims to meet demand instantaneously, with perfect quality and no waste. Lean

synchronisation therefore aims to ensure the flow of products and services according to

customer needs, in exact quantities, when and where needed, at the lowest possible cost. The

key objectives are that items flow rapidly and smoothly through processes, operations and

supply networks.

Stevenson (2009: 696) stated that the ultimate goal of “lean” is to ensure a smooth, rapid flow of

materials, and or work through a system. According Stevenson the overall goal depends on how

well supporting goals are achieved. Stevenson identified, (1) disruptions (eliminate), (2) system

to be flexible, (3) elimination of waste

It is also important to note that there should be a clear understanding of what is meant by waste,

as this will helps to understand the all encompassing extent of the philosophy of JIT. Waste thus

can be defined as any activity which does not add value to any business processes or to

products and services.

Waste - identified as anything that adds cost, but not value, to a product or service. Heizer, et al,

(2008:642), Stevenson (2009) stated that waste represent unproductive resources and should

be minimised. However, “waste” as identified by Taiichi Ohno, is noted for his work at Toyota

Production Systems (TPS) and categorised the elimination of waste in seven areas:


44

Heizer, et al, Stevenson, Slack, et al, including numerous authors in the field of operations and

quality management identified the seven areas of waste according to Ohno criteria, namely:

1 Overproduction: Involves excessive use of manufacturing or operations

resources

2 Waiting time: Also known as queuing, waiting refers to the periods of

inactivity in a downstream process that occur because an upstream activity

does not deliver on time, including bottle necks

3 Transportation: This is unnecessary motion or movement of materials, such

as work-in-process (WIP) is being transported from one operation to another.

4 Processing waste. Extra Processing in terms of extra unnecessary

operations, such as rework, reprocessing, handling or storage that occurs

because of defects, overproduction or excess inventory.

5 Inventory. Beyond minimal quantities and also refers to inventory that is not

directly required to fulfil demand. Inventory includes raw materials, work-in-

process and finished goods. Inventory all requires additional handling and

space

6 Inefficient Work Methods, Motion or Activities. Refers to the unnecessary

“steps” taken by employees and equipment to accommodate inefficient

process layout, defects, reprocessing, overproduction or excess inventory.

Motion takes time and adds no value to the product or service.

7 Defects. Product or service quality is “defective: and require rework and

possible loss of sales. Wastes may also include wait time that increases

costs and lead times for subsequent processes, defective material, and

scrapping defective pieces

.

The first step in eliminating the seven deadly wastes is to understand and identify each one

within the operation. After that, managers should take corrective measures to reduce, control or

eliminate the problems.

In order to eliminate waste, each of the seven deadly wastes must be clearly understood to

recognise their strategic impact and where it exists in organisations processes. Some wastes

are noticeable, and some are more subtle. After understanding each and considering how it

relates to the business processes, organisations should then strategically analyse the impact

and ways to reduce or eliminate each one. It is of utmost importance that every organisation

should develop a continuous improvement system that reduces cost and improve business


45

processes “operational effectiveness” by endlessly pursuing elimination of these wastes towards

process capability maturity.

7. BUSINESS PROCESS IMPROVEMENT TECHNIQUES

7.1 INTRODUCTION It is of utmost importance that management must know how to, act, handle, control, and direct

total quality as it set guiding principles and lay down the foundation towards continuous

improvement, [7].

Oakland, J.S, [76] argue that an organisation can only be truly effective if every part in it work

properly together. Furthermore, organisations consist of a series of internal suppliers and

customers, which in turn is part of an integrated quality chain. This forms the core of any

organisations quality improvement drive as it interfaces with the measurement of quality and

capability. It focuses on two distinct but interrelated aspects of quality; (1) the design and

measurement of how well a product or service perform, and (2) design conformance of well a

product or service perform at its desired function.

In order to achieve the above organisations must apply and adapt techniques that will assist

them in achieving business process capability, excellence and performance. Some of these

performance enablers and quality techniques include:

1. Total Quality management (TQM),

2. Quality Cost Analysis

3. Continuous Improvement

4. Business Process Improvement (BPI)

5. Quality Improvement Projects

6. Business Process Re-Engineering (BPR)

7. Just-In- Time (JIT)

8. Lean Synchronisation (LS)

9. Six-Sigma

10. Risk Analysis


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8 TOTAL QUALITY MANAGEMENT (TQM)

According to Besterfield, D.H, [10] -Total Quality Management (TQM) is a proven technique that

guarantees survival in world-class competition and only by changing the actions of management

will the culture and actions of an entire organization be transformed. TQM consist of three

words, (1) Total – whole organisation, (2) Quality as a degree of excellence, and (3)

Management as the art of managing the whole organisation to achieve excellence,

Key to the understanding of the TQM concept is that it is applied company wide and includes all

business processes that occur in the organisation. It relies on total employee involvement,

commitment and visibility in support of improvement. It calls for commitment and leadership

(from the top) in an approach to improve the competitiveness, effectiveness and flexibility of a

whole organisation.

Excellence through TQM is only achievable when an organisation has:

1. An sound quality policy and management is dedicated towards improvement of

quality

2. Created organisational culture toward quality and excellence focusing on the

organisations core values, purpose, and mission

3. Control through information feedback keeping all business functions on track

4. Effective leadership starting with the Chief Executive Vision and strategy.

To achieve TQM, Krajewski, et al, argue that a product or service must fulfil customer needs.

This requires that Quality must be consistent to customer expectation. It also requires that the

managing thereof means ensuring that quality must be understood, applied and improved

throughout the entire business.

Key focus and criteria for managing quality is to ensure that;

1. Quality must be well understood throughout the organisation. This implies that it

is the responsibility of managers and every individual in the organisation to

improve quality.

2. Quality need to be understood from a customer perspective. This view is most

of the time the only way to apply quality gap analysis.

3. Without measuring quality will be difficult to control. According to Slack, et al,

[90] various characteristics of quality can be measured, either as a variable or

an attribute. This should be expressed via quality costs terminology.


47

4. Monitoring and responding to any deviations from acceptable levels of quality

using statistical process control (SPC) reduces variation in performance, and

enhances knowledge, [1] [46].

5. The management of quality should lead towards continuous improvement. Very

often quality improvements are not sustained because there is no defined set of

procedures to support and embed then in the day- to- day running of operations

Studying various experts in quality, it is become clear that certain variables are core to the

management of quality:

I. Employee empowerment;

II. Quality assurance;

III. Customer focus;

IV. Quality philosophy;

V. Process and product / service design

VI. Information analysis

VII. Strategic planning;

VIII. Environment infrastructure;

IX. Team approach;

X. Focus on quality department;

XI. Focus on quality in every department

XII. Quality driven projects, and

XIII. Breakthrough improvements by means of continuous improvement,

A critical question is how well organisations apply quality management principles and

techniques. Foster, S.T, probably provides the “best” answer when the author stated that the

ultimate goals of strategic quality planning and control are that it aids the organisation to

achieve sustainable competitive advantage and that this can only be achieved through the

effective management of quality. Foster, further quoted D Garvin of the Harvard Business

School as to quality is not just a control system but a quality management function.

The greatest tangible benefit of TQM is increased market share, rather than just reduction in

quality cost. Even more important is that TQM should be a way of life for everyone in the

organisations in pursuit of continuous improvement. It requires commitment from management


48

beginning with business process alignment of commitment, communication, and culture change.

TQM emphasise the need for a never – ending commitment towards improvement.

9. COST OF QUALITY PERSPECTIVE

Crosby, P.B, - Quality is Free (1979) argue that real cost distract from the bottom line are the

cost of inspection and fixing problems plus all other costs associated with not doing the job right

the first time.

One of the absolute necessities of Crosby Quality Management philosophy is that the cost of

quality provides the only performance measurement of non-conformance. It is known that non-

conformance impact on business process capability as well as the maturity status of an

organisation.

According to Oakland, J.S,, it is not enough to only deliver a product or service or performing a

task. If organisations wish to satisfy customer the cost of quality associated achieving it should

be carefully managed. If the cost of quality in its pursuit of quality improvement, customer

satisfaction, market share, and profit is not properly managed then it will effect the organisation

in the long term. According to Besterfield the cost of quality is the economic common

denominator that forms the basic data for Total Quality Management (TQM). If not controlled

properly it indicates ineffective management, provides a warning system against unacceptable

financial situations, and lends credence to management commitment towards quality.

Of importance is that the Quality Maturity Model included cost of quality as an essential

barometer for measuring performance. The cost of quality may arise from a range of activities,

such as, sales and marketing, design, research, product development, purchasing, storage,

handling, production planning and control, production and operations, delivery, installation and

service. According to Besterfield [9] the cost of poor quality can exceed 20% of cost of sales in

manufacturing companies and 35% in service companies.

According to Gryna, the cost of quality concept can be used to determine;

I. The magnitude of quality problems terms of money.

II. Traceability of assignable causes

III. Opportunities to reduce customer dissatisfaction


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IV. Measure quality costs as a means of evaluating the progress of quality

improvement programme

V. Need to develop of a strategic quality plan that is consistent to the overall

goals of the organisation.

Gryna,] provides guidance to identify collectively the four categories on cost of quality and

defines poor quality as internal and external failure categories, whereas appraisal and

prevention are viewed as investment to achieve quality objectives.

It is clear that the cost of quality will have a direct impact in determining business process

capability and therefore the understanding of the above mentioned categories will be

summarised according to Gryna.

9.1.1.1 Quality Cost Categories

9.1.1.1.1 Internal Failure Cost

Cost of failing to meet customer requirements and needs. These costs would disappear if no

defects existed prior to shipment to the customer. Internal failure Cost may include: Scrapped

materials, goods and services; replacement, rework, and repair; re-inspection and re-testing;

Modification permits and concessions; downgrading; reduced capacity/ yield/ increased

downtime (downtime); rescheduling; service delays; disruption to the service process;

troubleshooting or defect / failure analysis; inefficient processes, and non-value adding

activities.

9.1.1.1.2 External Failure Cost

External Cost would disappear if no defects existed in the product or service after delivery to the

customer. These costs include: Warranty claims and servicing costs; Product liability / Litigation;

Product rejected and returned; Complaints and their administration; Concessions, cost of

concession; Loss of sales; Loss of customer goodwill; Inconvenience to other customers;

Product recall, Lost opportunity for sales revenue, customer defections: Loss of customers due

to poor quality, New customers lost due to lack of capability to meet customer needs

9.1.1.1.3 Appraisal

These are costs in initially ascertaining the conformance of the product to quality requirements;

they do not include costs from rework or inspection following failure. These costs include:

Receiving inspection; Testing and Inspection of supplier goods and services; Laboratory


50

acceptance testing; Testing and Inspection of internal service processes; Inspection and testing;

Inspection and test equipment; Material consumed during inspection and testing; Analysis and

reporting of tests and inspection results; Measurement of customer satisfaction after process

9.1.1.1.4 Prevention

These are the cost related to all activities to prevent defects from occurring and to keep

appraisal and failure to a minimum. These costs include; Quality planning; Design of quality

system; Calibration of and maintenance of quality measurement and test equipment; Calibration

and maintenance of production equipment used to evaluate quality; Supplier assurance; Quality

auditing; Staff quality training and development; Supplier development training; Quality

improvement programs: Administering quality procedures ((e.g. ISO 9001:2000). Preventative

maintenance; Acquisition analysis and reporting of quality data; Process planning; Process

capability studies, inspection planning, and other activities associated with manufacturing and

service processes; Process control: In-process inspection and testing to determine the status of

the process.

Key to cost of quality is the availability of information as it provides guidance on how to set up a

program concerning quality improvements and quality cost reduction. It requires firstly, as in any

quality improvement program that management must be willing to support a quality cost

program. Secondly, that organisation has experts estimating the organisation’s total quality

costs with available accounting or financial data to support a continuous improvement

programme using “cost of quality” parameters.

Applying cost of quality information and the analysis thereof should point out procedures that

must be adopted to improve the overall quality and capability of the organisation. This however,

depends on many factors:

1. The commitment of management to attaining acceptable quality levels in the most

economical way.

2. The devising and implementation of quality related cost procedures. The

identification reporting and analysis of quality costs

3. The formation of a quality cost action team who is responsible for overall direction,

coordination ensuring that quality cost savings target are set and met

4. The implementation of a cost of quality training programme ensuring that everyone

understands from the outset the financial implications of quality as it is vital to the

success and growth of an organization.


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5. The presentation of significant quality cost savings in readily understandable terms

to everybody. This might include displays of defective products; rework cost of

defective products, and possible remedial action.

Finally quality related cost is not readily acceptable and ideas for the reduction of quality costs

should emanate from all parts of the organisation. The introduction of a suitable cost of quality

scheme for achieving maximum participation by all employees is advocated. This may include

means of promoting, initiating, and receiving, discussing, appreciating, and auctioning new

ideas.

9.1.2 CONTINUOUS IMPROVEMENT INITIATIVES

Due to competitive pressures, organisations should maintain and focus on continuous

improvement and therefore require improvement projects. According to Gryna, the foundation

for maintaining a focus on continuous improvement includes formalising a process for

nominating and selecting improvement initiatives. These initiatives require the formation of

quality teams, training and support.

Process improvement initiatives are a systematic study of activities and flows. It requires

planning as it forms the basic requirement for effective quality, quality improvement systems

and quality management system. The sole purpose is to determine the finer details of any

process as it is only after understanding processes that it can be improved or be able to provide

improved quality. In essence, this means that process improvement is an ongoing activity.

Quality planning requires specific attention and techniques and according to Evans, the concept

of continuous improvement is relatively new. In its earliest form was initiated by the success that

Toshiba (1946), Matsushita (1950), and Toyota (1951). Toyota particularly established Just-In-

Time (JIT) philosophy as part of continuous improvement programme (Kaizen in Japanese).

Recently improvement is an activity that closes the gap between current and desired

performances. Its ultimate goal is to improve all management activities.

Improvement means changing performance to a new level and requires that management

needs a systematic approach to drive continuous improvement programmes. However, to


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improve processes require that they should be repeatable and measurable and attention be on

the execution and sustainability of improvement programs.

What is required to achieve performance excellence and effectiveness is an organisational

structure that supports quality at every level of the organisation. The classification of authority,

responsibility, reporting lines and performance standard amongst individuals at all levels of the

organisation should inhibit process improvement and maintain stability. Organisation must focus

on processes as a basic principle towards total quality and process owners are accountable for

process performance. Process owners should therefore be empowered to accept the

responsibility to improve their processes as their decisions will impact on strategic goals, value

creation, and core business processes.

Processes improvements is therefore a continuous and joint undertaking between staff, process

owners, business units, and other stakeholder, emphasising the importance of team work to

accomplish quality work.

9.1.2.1 Leadership Teams

When organisations undertake process improvement action should be taken to institutionalise

and empower all employees. Stevenson, [93] postulates that organisations in their effort to

become more productive, competitive and customer focused had to rethink how work is to be

accomplished and in particular lean operations systems. Furthermore, the author stated that

there different forms of teams which in the short term could address quality improvement,

product or service design, or problem solving. The benefit of these teams includes higher

quality, productivity and greater work satisfaction.

The formation of teams should have a common purpose and a set of own performance

objectives. Teams should be held accountable to improve processes and quality and is the

most efficient way to solve process improvement problems. Teamwork changes individuals

from independence to interdependence through communication, trust and the free exchange of

ideas, knowledge, data, and information. When imprinting teamwork for quality improvement a

structured disciplined approach to solve problems should be provided. It may mean a change in

organisational culture supported by management.

It is important that the formation of leadership teams, sometimes called steering committees or

quality councils be established to set the way how organisations integrate performance

excellence goals. This in itself promotes the development and empowerment of all employees.


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According to Evans, leadership teams can be categorised by four elements:

i. Leadership - by promoting and articulating quality vision aligned to business

processes, management with a quality approach, and visibility of commitment,

involvement, education, methods and tools.

ii. Planning - strategic quality goals, understanding customer needs and business

capabilities, long-term goals, formulating human resources goals and policies,

and understanding the employee’s perception of quality, and recognition system.

iii. Implementation - formation of key business process teams chartered to manage,

review and improve processes, inclusive of working with suppliers as business

partners.

iv. Review – by means of quality audit, system tracking through customer

satisfaction, internal measures of quality, and monitoring of progress ensuring that

quality objectives are achieved.

It is important to note that any changes or improvements to business processes have a

profound impact on all levels of the organisation (end-to end) and that it includes everybody. It

also influences on individuals work performance level and of most importance impacts on

business process capability.

9.1.2.2 Design of work

Individual work performance levels have an impact on continuous improvement. Work or job

design is an ongoing process and is required for all jobs in the entire organisation. Prior to job

design, objective data is obtained, analysed in order to determine the single best way to

perform the work or job. The key objective is to enhance employee performance and the way in

which task must be performed. In essence all work and jobs must be aligned towards

performance, be customer focused, and rapid response.

When continuous improvement initiatives are required, then jobs or work many a times requires

fundamental changes and have to be redesigned. When redesigned, attention must be paid as

to what extent jobs and work affect other work systems and how it will improve the overall

performance in the organisation. In reality, improved performance means that individual jobs or

work contributes towards achieving goals and objectives of the organisation. It is important that

business process never to remain static and by improving them does not necessary mean


54

increasing workload but rather mean eliminating meaningless activities in jobs and work. [3]

What is known is that is that high-performance work is characterised by flexibility, innovation,

knowledge, and skill.

9.1.2.3 Elimination of Waste

According to Stevenson, [93] the ultimate goal of an organisation is to be lean. The objective is

to ensure a smooth, rapid flow of materials, and or work through a system. This in itself

depends on how well supporting goals is achievable. It requires that all waste be eliminated and

forms the basis in understanding the all-encompassing extent of the philosophy of JIT. In

essence, waste is defined as any activity that does not add value to the entire organisation

business processes, to products and services. It therefore adds cost, but not value, to product

or service. Waste therefore represents unproductive resources and should be minimized or

eliminated.

Waste contributes to underachievement of process capability and performance. The concept

of waste was identified by Taiichi Ohno [Toyota Production Systems (TPS)] and categorised the

elimination of waste in seven areas:

1. Overproduction which involves excessive use of manufacturing or operations

resources

2. Waiting time, known as queuing and refers to periods of inactivity in a downstream

process. It occurs because an upstream activity does not deliver on time and

includes bottle necks

3. Transportation due unnecessary motion or movement of materials

4. Process waste and is related to any extra unnecessary operations taking place.

This occurs due to rework, re-processing, handling, or storage. This occurs due to

defects, overproduction or excess inventory.

5. Inventory, not directly required fulfilling demand or capacity. Inventory includes raw

materials, work-in-process and finished goods and requires additional handling and

space

6. Inefficient work methods, motion, or unnecessary activities performed by

employees and equipment. This is due to inefficient process layout, defects,

reprocessing, overproduction or excess inventory. It also includes unnecessary

motion time that adds no value to the product or service.


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7. Defects affecting the quality in products or services and require rework and

possible loss of sales.

It is important that waste must be eliminated and to understand why organisations and

managers must take corrective measures to reduce, control or eliminate any problems. Of

importance is that organisations must develop a continuous improvement system focusing on

elimination of waste, reduce cost and will improve business processes effectiveness.

According to Slack, et al, the best way to describe waste is in terms of lean synchronisation as

it aims to meet demand instantaneously, with perfect quality and no waste. The objective of

Lean Synchronisation is to ensure that the flow of products and services transpire according to

customer needs, in exact quantities, when and where needed, at the lowest possible cost. It

requires that items flow rapidly and smoothly through processes, operations and supply

networks.

9.1.2.4 Symptoms and Causes Identification Techniques

Numerous techniques can be used to identify symptoms and causes assisting managers,

supervisors and staff in solving problems on a daily basis and during continuous improvement

initiatives. Some of the techniques that can be used are briefly discussed as follow:

Of importance is that an organisation should appoint a dedicated team(s) to oversee BPI

implementation, [3]. According to Harrington, [50] an Executive Improvement Team (EIT) and a

Process Improvement Team (PIT) should be formed with the primary objective to manage BPI

activities. Furthermore, Harrington, [50] stated that PIT should apply fundamental and advanced

BPI tools ensuring new ways of thinking and application. Tools and activities that should be

applied include:

i. Flowcharting processes

ii. Gathering process costs and quality

iii. Establishment of measuring points and feedback loops

iv. Qualifying processes

v. Developing and implementing improvement plans

vi. Reporting efficiency and effectiveness, and status change, and

vii. Ensuring process adaptability


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According to Harrington, BPI improvement and implementation projects consist of five critical

stages.

It is clear that organisations cannot achieve quality improvement unless obstacles such as lack

of upper management commitment; unplanned organised approach; increased workloads; and

lack of provision for reward are eliminated. The application of BPI projects assist organisations

to improve towards long lasting results and performance. This however, this is only achievable

when supported by a comprehensive improvement process involving all facets in the entire

organisation.

BPI projects are directly linked in obtaining BPC and will result in that organisations achieve

business processes capability, [50] [63].

1. Flowcharting or process mapping identifying what happened; what happens

next; who makes decisions; what operation is performed; and how does it

effect operations and processes. It involves people, staff, managers and

customers, jobs, material flow, etcetera.

2. Check sheets as a aid in data collection and interpretation of data according

to an attribute or variable

3. Histograms as graphical representation of data regarding the variations in a

process

4. Pareto Analysis is a technique applied to prioritise different types of sources

of problems separating the trivial few from the trivial few

5. Cause–and–effect diagrams as a useful tool in identifying causes of

problems. The Cause–and–effect diagram is normally constructed during a

brainstorming setting so that everybody should participate focusing on the

problem identified and its causes, based on facts and not opinions

6. Control Charts as a backbone of statistical process control (SPC). Normally

applied in identifying improvement opportunities and verifying that

improvements really have the desired outcome.

Symptoms and Causes Identification Techniques also assist managers and organisations when:

1. Flowcharting processes as a process modelling and mapping tool in process

improvement,

2. Planning for purchasing and obtaining the correct equipment, material, and

services, at the right quantity, time, and price as well as supplier performance,


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3. Planning for Just-In – Time (JIT)

4. Continues improvement initiatives in order to determine and identify problems and

to eliminate waste

5. Documentation of a total quality system, documenting of quality objectives, quality

policies according to International Standards Organisations (ISO) series should

enable organisations to follow a, Plan, Do, Check, Act cycle, [44].

Relating to ISO systems, Gryna, [48] argue that ISO 9000 standards provide the minimum

criteria for a quality system. It focuses on business processes, products or services to be

delivered at a consistent of quality level.

ISO systems also include; management responsibility, quality system, contract review, design

control, checking / measuring / inspection, non-conforming products or services, corrective

action, protection of product service quality, quality records, quality system audits and reviews,

training, servicing and statistical techniques.

The above-mentioned techniques form the basis of any continuous improvement and BPC

initiatives and in most situations cannot be use as standalone techniques but rather used as a

combination with each other.

9.1.2.5 Business Process Improvement (BPI)

BPI is a systematic methodology assisting organisations to make significant advances in how

business processes should operate in the organisation. It provides a system that aids

operations ensuring that both internal and external customers receive what they want.

Andersen, states that organisations opting to make use of multiple improvements projects at

once throughout the organisation to beware that if projects are not properly managed that they

may become expensive and be neglected causing BPI efforts to loose focus and coordination.

The main objective of BPI is to improve business processes by eliminating errors; minimise

delays; maximise the use of assets; promote understanding; ease of use; satisfying changes in

customers needs and to provide the organisation with a competitive advantage. BPI, [3] [50]

therefore have three key objectives:

i. Making a process effective and therefore produce desired results

ii. Making processes efficient and therefore optimise resources


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iii. Making processes adaptable and therefore be able to adapt to changes in

customer and business needs

Table BPI improvement and implementation projects phases [Harrington (1991:21-23]

BPI Phases Objectives Activities

Phase 1

To ensure success through

leadership, understanding

and commitment

(1) Establish EIT; (2) appoint BPI

champion; (3) Executive training; (4)

develop improvement model; (5)

Communicate goals to employees; (6)

review business strategy and customer

requirements; (7) select critical processes;

(8) appoint process owners; (9) select PIT

Phase 2

Understand all the

dimensions of the current

business process

(1) define process scope and mission; (2)

define process boundaries; (3) provide

team training; (4) develop process

overview; (5) define customer and business

requirements; (6) flowchart the process; (7)

collect cost, time , value data; (8) perform

process walkthrough; (9) resolve

differences; (10) update documentation

Phase 3

Improve the efficiency,

effectiveness, and

adaptability of business

processes

(1) provide team training, (2) identify

improvement opportunities; (3) eliminate

bureaucracy; (4) eliminate non adding

activities; (5) simplify processes; (6) reduce

process time; (7) error proof processes; (8)

upgrade equipment; (9) standardise; (10)

automate; (11) document the process; (12)

select employees; (13) train employees

Phase 4

Implement a system to

control the process for

ongoing improvement

(1) develop in-process measurements and

targets; (2) establish feedback; (3) audit the

process periodically; (4) establish a poor

quality cost system

Phase 5 Implement continuous

improvement process

(1) qualify the process; (2) perform periodic

qualification reviews; (3) define and


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eliminate process problems; (4) evaluate

change impact on the business and

customers; (5) benchmark the process; (6)

provide advanced team training

9.1.2.6 Quality Improvement Projects (QIP)

According to Foster, organisations can only achieve quality improvement if managers prioritise

improvement projects. QIP requires dedicated project team(s) to solve quality problems. Project

team(s) should determine the scope of the quality improvement project. This can only be

achieved from work performed starting with a diagnostic improvement projects journey and

requires selected individuals from multiple departments.

It is important to note that the same principles and techniques required when managing any

project also applies for business process improvement projects. This because many of the

processes within project management are iterative in nature and is requires a progressive

elaboration of detail decisions, re-adjustment of resources and schedule throughout the

improvement project life cycle. The value of mapping a quality improvement project is that it

identifies key milestones in obtaining quality at every phase as it is a set of activities with a

defined start point (date) and defined end state (completion date), in pursuit of a defined goal

utilising resources and entails scoping, planning and controlling of the project.

According to Kerzner, [61] there are numerous types of projects and it was only by the 1990 that

projects became a necessity and not a choice as organisations. It is only then when

organisations started to realise the importance of project management. The author also

identified maturity and excellence in projects and argue that maturity in projects is the

implementation of a standard methodology occupying processes to the extent that there is a

high likelihood that success is repeated when proper tools, techniques, processes, and culture

exist in projects. This however is only achievable if projects managers create an environment in

which a continuous stream of measure exists that is in the best interest to the organisation and

the project.


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It is important to note that many capability models exist and that these have been developing for

specific industries. Organisations should select the best fit model to obtain capability according

to organisational culture, industry, and business objectives.

Embarking on BPI and BPCM initiative requires the application of well-defined project

management principles as it plays a major role in projects focusing on continuous improvement,

performance, and excellence.

9.1.2.7 Business Process Redesign

Redesigning business process requires specific actions to be undertaken. It is a systematic

approach for analysing processes in order to identifying opportunities for improvement and

applies project management principles with planned and specific objectives.

Process analysis and redesign require steps. It starts with process analysis when opportunities

for process improvements are identified and ends with implementing a revised process before

going back to the first step, thus creating a cycle of continual improvement.

According to Slack, et al, [91] there are two paths that organisations may apply to improve goals

namely; breakthrough improvement and continuous improvement. Both of these focuses on

business process redesign by means of process analysis and the design of workflows in order

to achieve performance improvements.

Many approaches can be applied for systematically analysing and redesigning processes. The

most useful are (1) Process - reengineering, (2) Six-Sigma improvement model, (3) Quality

Management and value stream mapping, and (4) designing Lean Systems.. Each of these will

be discussed in broader detail.

9.1.2.8 Business Process Reengineering

According to Vonderembse, et al, [97] customer requirements for services and goods are

satisfied by creating competitive capabilities. These competitive capabilities are created by

designing and redesigning business processes, focusing on quality, time, and cost effectiveness

according to customer requirements. It depends on how organisations reengineer and improve

business process. It therefore requires a detailed process analysis monitoring performance over

a period, [63].


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Business Process Reengineering (BPR) in reality means starting over. It can be defined as

process reengineering, redesigning or reinventing organisations performance. When deciding to

apply BPR organisations should understand the difference between total quality management

(TQM), time-based competition (TBC), and productivity improvement programmes (PIP), [97].

Organisations must decide if they wish to focus on single performance measures or a general

approach of improving multiple performances. They therefore must decide whether

improvement is to be incremental or radical as illustrated in Table 2.5: - Comparing BPR and

Other Improvement Techniques

Table: Comparison of BPR to Other Improvement Techniques [Vonderembse, et al, (1996:145]

Focus on Single Performance

Measure

General Approach for Improving

Multiple Performance Measures

Incremental

Improvement

TQM: Focuses on quality and uses

Kaizen (continuous improvement)

Continuous Improvement: Holds

basic organisational structure,

processes and facilities constant

and seeks small improvements

Dramatic

Improvement

TBC: Focus on time and uses BPR

to seek dramatic improvements

BPR: Holds nothing constant and

seeks dramatic improvements

Furthermore, Vonderembse, et al, [97] postulate that continuous improvement assumes that the

basic structure of the organisation, its processes, and its facilities are sound and that

adjustments to be made is incrementally. Therefore small improvements gains over time whilst

BPR examines all aspects of the process, keeping nothing safe from change.

Critical question in process reengineering is why should this be done at all? The answer to this

is that when organisations apply BPR immediate and dramatic changes will take place. It

requires the application of supporting technical and behavioural concepts and techniques to

implement process reengineering. To accomplish this organisations develop an organisational

environment that encourages quantum leaps in improvement whereby the existing systems is

terminated and new systems are invented and replaces replacing the old systems. According to

Vonderembse, et al, [97] for an organisation to be successful continuous improvement and BPR

should coexist.


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In order for BPR to be successful organisations should priorities the following:

1. Analyse and select a process or processes to be redesigned, i.e. eliminate

waste

2. Select a team approach convincing others in the organisation to change,

empower people and involve process owners and decision makers;

3. Commitment from top management,

4. Rethinking an redesigning work, jobs, organisational structures, measuring

systems, values and norms of the organisation,

5. Apply state of the art information technology,

6. Benchmark against other organisations,

7. Remove causes of error in process to reduce rework, and

8. Use creative thinking techniques and to visionary leadership.

[37] [48] [63] [97]

BPR is a valuable concept and tool to if organisations dramatically want to streamline their

businesses processes in an endeavour to achieve business processes capability.

9.1.2.9 Just-In-Time (JIT) and Lean Processes

JIT as an approach focus on continuous improvement forces organisations to solve problem

solving focusing on throughput and inventory. In conjunction with Toyota Production System

(TPS) and Lean Operations, it forms a comprehensive manufacturing strategy. According to

Render, et al, [83] JIT, TPS, and Lean Systems are philosophies of continuous improvement

towards sustaining a competitive edge, [63] [91].

The key objectives of JIT, TPS and Lean are to eliminate waste and variability and improve

throughput.

9.1.2.9.1 JIT Principles

JIT focus on a pull system solving problems relating to inventory, eliminating waste and delay. It

therefore reduces cost associated with excess inventory, process variability and waste, and

undesired throughput..


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9.1.2.9.2 JIT Partnerships

According to Render, et al, [84] it is important that partnership exist between supplier and

purchaser. It requires an open communication network and combined goal of removing and

driving out waste. This entails leading organisations view suppliers as extension of their own

organisation and it expects suppliers to be fully committed to improvement.

9.1.2.9.3 Toyota Production System (TPS)

TPS and continuous improvement means building an organisational culture and instilling in

people a value system. TPS emphasize treating people as knowledgeable workers. This entails

that workers are empowered to such an extent that they do have the authority to stop machines

and processes when a problem arises ensuring that the standard of work be at the highest level.

According to Render, et al, [84] - TPS consist of three critical components. They are continuous

improvement, respect for people, and standard of work. Furthermore TPS highlights gaps that

occur between what is accepted and what occurs and therefore calls for immediate corrective

action or continuous improvement.

9.1.2.9.4 Lean Processes and Synchronization

Lean operations identify customer values by analysing all the activities required producing the

product and service. It then optimises the entire process from a customer prospective by

removing waste and delays. This leads to continuous improvement and require three phases of

implementation:

Phase 1: Using operations to compete, and managing effective projects;

Phase 2: Designing and managing processes by means of developing process

strategy, analysing processes, managing quality, planning capacity,

managing process constraints, and designing a lean system;

Phase 3: Designing and managing supply chains by means of designing effective

supply chains, integrating supply chain, locating facilities, managing

inventories, forecasting demand, planning and scheduling, and planning

sufficient resources. [63]


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9.1.2.9.5 Six-Sigma

Six- Sigma is a comprehensive and flexible system for achieving, sustaining and maximising

business success. Slack, et al, [91] argue that Six Sigma is uniquely driven by understanding

customer needs, disciplined facts, data, and diligent attention to managing. It is a systematic

approach known as DMAIC cycle (Define, Measure, Analyse, Improve, and Control) that

improves and reinventing business processes, [34] [90] [91].

According Slack, et al, Krajewski, et al, [63] although Six Sigma was mainly used to improve

manufacturing processes it is also applied to optimise service processes and lends itself for

improvement and performance available to all industries. [22] [91]

According to Puffer, J, [80] and LeVasseur, C, [58] Six-Sigma can be usefully applied with

Capability Maturity Models. The authors argue that Six Sigma projects addresses process

problems and produce a measurable return on investment, whilst CMM focus on organisational

change reflecting steps an organisation should take to improve its process capability. However,

although Six- Sigma projects are noted as process analysis and statistical technique it can be

applied in the entire organisations to obtain maturity and performance, [58] [80].

9.1.2.9.6 Risk management

Risk management is an important part of planning for businesses. Risk is potential and

unwanted consequences that arise from events. Resilience is the ability to prevent, withstand,

and recover from those events. Resilience starts with understanding the possible sources and

consequences of failure and the potential sources of failure.

Business processes are therefore always at risk and it is essential that when problems arises

that the impact thereof and the risk associated with it be identified and the impact thereof

minimised. When identified the organisation must create a plan of action to minimize or

eliminate the impact of at risk factors. Variety of strategies is available, depending on the type

of risk and the type of business.

The process of risk management is designed to reduce or eliminate the risk of certain kinds of

events happening or having an impact on the business. Risk can be categorised as supply

failures, failures within an operations due to humans, organisational, technology, product or

service, customer failures and failures caused by environmental conditions.


65

There are a number of risk management standards, including those developed by the Project

Management Institute, [79] and International Organization for Standardisation (ISO), [44].

The prevention or resilience of failure is of utmost importance as it becomes a critical and useful

tool when organisations want to determine the status of processes capability. Attempts should

always be made to eliminate the “risk” of failure and sometimes involves radical changes to

business processes.

9.1.2.9.7 Process Review cycle

Today’s organisations face tremendous changes in economical, technological, environmental,

and governmental and therefore constantly require that their business processes be reviewed in

an effort to become proactive and therefore to remain competitive.

According to Sinha, M. N, and Willborn, W.O, [89] organisations needs to remain competitive

and therefore requires constant analysis and examination of the effectiveness of business

processes.. Organisations should have an overall process review program in place that

manage the improvement and optimisation life cycle. Review cycle, or audit should be a

frequent event in any organisation and authorised and qualified person should audit and

examine documentations and performances against set standards. A quality audits is therefore

a systematic and independent examination of the effectiveness and form an integral part of

quality assurance programs. Audits includes quality analysis of products or services as well as

and processes. It requires that an independent review is conducted to compare aspects of

quality performance with a standard of that performance.

According to Gryna, [48] the essential ingredients for a successful audit are that there must be

an emphasis on facts, attitude on the part of the auditors, identification of opportunities for

improvement, addressing human relations issues, and competence of the auditors.

Furthermore, Gryna, [48] identified key steps in performing an audit namely planning,

performing, reporting, follow-up on corrective action, and closure. It is important that the process

review cycle will ensure that:

1. Individual business units and process owners have a process review plan

which focuses on implementing significant continuous improvements to

processes


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2. The workforce has the big picture regarding review of enterprise-wide core

processes.

3. There is an integrated work plan that enforces the review of proposed

processes by stakeholders during the improvement phase.

4. All resources are involved in the implementation of processes should be

trained and empowered

5. All new process implementations have a post implementation assessment

phase that would provide sufficient feedback on measurement aspects to

management.

6. Processes should be implemented and managed to ensure that continuous

improvement and review of processes be sustained during the operational

phase of the process that follows process reengineering or BPI project.

It is essential that for any BPC project proper review policy exist in the organisation.

Management must ensure that timely review of the entire organisations processes take place.

Gaps must be identified gaps and the necessary measurement and the review process be

controlled.

9.1.2.9.8 Process Standards and Measures

9.1.2.9.8.1 Introduction

Traditionally, performance measure and indicators have been derived form cost accounting

information and did not really support continuous improvement initiative as they were unable to

map process performance. According to Oakland, [75] organisations must strive to survive over

a long term and therefore performance must be measured and seen by the customer. It is

essential that organisations must measure their performance, as it is not possible to control and

manage them without measurement. Process measurements are the starting point for

improvements as they enable organisations to understand what goals are to be achieved.

Every subject to be controlled should have a quality goal. The control of subjects and

associated goals differ for products, services, processes, and departments in the entire

organisation. Each of these has a set of operational goals and features and therefore requires

technological analysis. Critical is that encourages continuous improvement in goals and is

based on a high level of achievement by deploying and aligning them to the organisational

quality goals, [48].


67

It is essential that processes be measured in order to control these processes and in

performance improvement. It should provide information about how well processes and people

are performing. Furthermore, many organisations only rely on financial measurements.

According to Oakland, [75] measuring return on in vestment (ROI) can only be competed after

profits have been calculated. The use of ROI for evaluating strategic requirements and

performance leads to discriminatory allocation of resources and is after the fact. Traditionally

these measures have not been linked to the process where value-adding activities and does not

provide feedback to all areas of the organisation.

Measurements provide critical data and information regarding key processes, outputs, and

results. It ensures that the organisation is managed by facts and measurements such as

customer satisfaction, defects rates, process cycle time should receive attention during strategic

planning, [34].

It is important that performance measurements, standards, and compliance principles be

determined, and adhered to as well as understood by all stakeholders in the entire organisation.

9.1.2.9.8.2 Measurement Techniques

Organisational goals have to be set and deployed. It requires that these goals be identified and

measured using different techniques. Each of techniques contributes directly or indirectly to

performance improvement. This entails defining sub goals, business, plans, and projects and

key measurements should be established to measure goals.

9.1.2.9.8.3 Balance Scorecard

According to Gryna, [48] the use of a balance scorecard combined with the measurements from

financial, customer, internal processes, and learning will assist when reviewing progress

measurements, assessments, or audits. The balance scorecard should therefore be used in

conjunction with four management processes; translating the vision, communicating and linking

strategy to departmental and individual objectives, integrating business financial plans, and

modifying strategies to reflect real–time learning.

In essence, the Balance Scorecard attempts to bring together elements that reflect the

organisations strategic position, including product or service quality measures, product or

service development time, customer complaints, labour productivity, and so on.


68

The advantage of the balance scorecard approach is that it represents an overall picture of the

organisations performance measures in a single report. It is comprehensive in measures of

performance and focuses on the entire organisation rather that sub-optimising around narrow

measures. [90]. It therefore assists managers to determine their status of process capability

highlighting weaknesses and shortcomings.

9.1.2.9.8.4 Benchmarking

Benchmarking is seen as a process of learning from others. It involves the organisations own

performance or methods against other comparable operations, [69]. According to Slack, et al,

[90] there are numerous types of benchmarking some of which he listed as follow;

1. Internal benchmarking within the same organisation

2. External benchmarking: comparison between an operation and other operations

which is part of different organisation

3. Non-competitive between organisations which does not compete directly in the

same market

4. Competitive benchmarking comparative between competitors

5. Performance benchmarking comparative between the levels of achieved

performance in different operations (own operations)

6. Practice benchmarking comparison between an organisations operations

practices, or ways of doing things, and those adopted by another operation

In conclusion, benchmarking is based on ideas that highlight (a) problems in managing a

process, and (b) the probability that another operation somewhere has been developed in a

better way of doing things, [17] [70].

9.1.2.9.8.5 Supplier Capabilities Measurement

Supply chain management is one of the core competency required in any organisation.

According to Burt, [14] supply managers and organisations should focus their decision making

process to proactively improve and optimise their supply processes. The author argue that the

supply chain should be fully understood as well as supply markets and be continuously


69

monitored to any identify threats, [14].

Harrington, [50] postulates that process capabilities of suppliers and the requirements of

customers should be understood in terms of process performances. According to the author it is

essential that the customer should provide the supplier with documents specifying specific

needs and expectations. Critical to these defined specifications is that the supplier agrees that

it will be able to meet the specifications as agreed. Of importance is that supply chain objectives

should be clear so that every process and product and business process design throughout the

chain contribute towards a mix of quality, speed, dependability, flexibility and cost.

Process capabilities of suppliers must therefore be understood in terms of all aspects of

process performances. It therefore calls that the customer should provide the supplier with

documents specifying the specific needs and expectations. It is also critical s that the supplier

agrees that it will be able to meet the agreed specifications and cooperate, even to the extent of

sharing skills and resources to achieve joint benefits, [3] [50] [90].

When choosing suppliers, Slack, et al, [90] further argued that that it is important to make trade

off between four capabilities:

1. Technical capability – the product or service knowledge to supply to a high level

of specification

2. Operations capability – process knowledge to ensure consistent, responsive,

dependable and reasonable cost supply

3. Financial capability – financial strength to fund the business in both short term

and long-term

4. Managerial capability – stable management, management talent, and energy to

develop supply potential in future

Supplier relationship contributes towards the success of processes capability and performance

and that products and services. This must be measured against goals and objectives of BPC. In

addition, consideration should be given on how well capacity balances processes variation

focusing on demand and capacity. Therefore, capacity utilisation and performance

measurements should be recognised and it is essential that measurements should include:

1. Resource planning and control system interface with customers

2. Resource planning and control system interface with suppliers

3. Resource planning and control information is integrated


70

4. Lean Synchronisation applied throughout the supply network

5. Lean Synchronisation understood within the organisation

6. “Waste” caused by any variability and quality is calculated within the operation

processes

7. Inventory information system integrates all inventory decisions

8. JIT principles have been explored and applied

9. Little’s Law is understood and applied

10. All inventories are itemised and assessed

11. Methods of reducing waste and inventories are explored

In conclusion, the success of improvement strategies lies within the ability of business

processes to perform at a desired level performance and excellence. This can only be achieved

if proper measurements of performance were made against defined standards. It is therefore of

utmost importance that organisations should know what, how, and when to measure business

processes against set standards and measurements, namely:

1. Performance standards, compliance principles should be determined and

included in all business processes during all appropriate stages of business

process capability measurements

2. Performance standards as well as the responsibility and accountability of all

stakeholders regarding set standards on all businesses processes (from – en

– to end) should be properly be communicated and understood

3. Organisation should identify suitable measurement techniques that are

aligned to enterprise-wide goals, and are integrated within the organisations.

4. Measurements of business processes performance should involve all

stakeholders, employees, supply chain managers focusing on Total Quality

including customer according to organisational objectives to obtain BPCM

5. Measurement techniques should be understood and results be

communicated to all stakeholders, employees, and supply chain managers.

6. An organisational quality culture should be installed. This must be aligned

towards continuous improvement by means of measurement and standards.

7. Capacity utilisation and performance measurement results should be

recognised in achieving lean synchronisation according to BPCM strategy


71

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Process Capability

Documents

process conditions

business processes

business process maturity

organisations strategy

form of processes

competitive capabilities

organisation objectives

defined level