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© 1992-2013 by Smarter Solutions, Inc. Austin, TX www.smartersolutions.com
1
Integrated Enterprise Excellence
One-day Workshop
Smarter Solutions, Inc.
www.smartersolutions.com
info@smartersolutions.com
512-918-0280
Referenced chapters, examples, and exercises are from
The Integrated Enterprise Excellence System: Volumes II
Forrest W. Breyfogle III, Bridgeway Books/Citius Publishing, 2008
Note
All contents of these materials are Copyright © 1992-2013 Smarter Solutions, Inc.. All rights
reserved. The phrases 'smarter solutions', 'satellite-level', '30,000-foot-level' , '50-foot-level',
Integrated enterprise excellence, IEE, and the logo featuring the words 'smarter solutions' and an
upwardly moving arrow are each trademarks or registered trademarks of Smarter Solutions, Inc.
© 1992-2013 by Smarter Solutions, Inc. Austin, TX www.smartersolutions.com
2
Agenda
1. Business Management and Improvement Practices
 Business Management Systems
 Team Exercise: Assessment of current business management and improvement practices
2. Steps 1-2 of the 9-step Integrated Enterprise Excellence (IEE) Business Management System
 Vision and mission
 Value chain creation for integrating processes with performance measures
 Issues with traditional performance metric reporting
 An enhanced scorecard methodology with predictive scorecards
 Team Exercise: Comparing performance reporting methodologies
 Team Exercise: Creating an enterprise value chain with functional metrics
3. Steps 3-9 of the 9-step IEE Business Management System
 Analysis of the enterprise
 Establishment of financial goals for corporate and operational units
 Creation of strategies
 Identification of high-potential improvement areas & establishment of operational goals
 Identification and execution of projects
 Assessment of each project’s final impact on goals
 Continuation of the gain
4. Linkage of IEE with Business Process Management (BPM)
 Roadmap for IEE/BPM linkage
 Team Exercise: Creation of a hospital’s business management & improvement system
5. Wrap-up
 IEE business system checklist
 Tabular comparison of systems, which illustrates the benefits of IEE
 Business system maturity model
 Individual Exercise: Determination of the maturity for your business management system
 IEE evolution and its benefits
© Smarter Solutions, Inc. 1 www.SmarterSolutions.com
Integrated Enterprise Excellence
One-day Workshop
Forrest W. Breyfogle, III
Smarter Solutions IncSmarter Solutions, Inc.
www.SmarterSolutions.com
Learning Objectives
• Summarize problems with current business management
systems.
• Describe issues with current process improvement efforts.
• Describe benefits of predictive scorecards.
• Describe an enhanced system where business metric
improvement needs pull for projects that benefit the
business as a whole.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 2
© Smarter Solutions, Inc. 2 www.SmarterSolutions.com
Reference Books
• Much of this workshop’s content is taken from the Integrated
Enterprise Excellence five-book series.
References will be made during this training to book sections for• References will be made during this training to book sections for
additional information about topics.
– The primary workshop reference will be Integrated Enterprise Excellence
Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six
Sigma and the Balanced Scorecard (IEE Vol. II)
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 3
Business Management Practices
• Management by objectives (from Wikipedia)
– Management by objectives (MBO), also known as management by results
(MBR), is a process of defining objectives within an organization so that(MBR), is a process of defining objectives within an organization so that
management and employees agree to the objectives and understand what they
need to do in the organization in order to achieve them.
– The term "management by objectives" was first popularized by Peter Drucker
in his 1954 book The Practice of Management.
– The essence of MBO is participative goal setting, choosing course of actions
and decision making.
– An important part of the MBO is the measurement and the comparison of the
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 4
An important part of the MBO is the measurement and the comparison of the
employee’s actual performance with the standards set.
– Ideally, when employees themselves have been involved with the goal setting
and choosing the course of action to be followed by them, they are more likely
to fulfill their responsibilities.
© Smarter Solutions, Inc. 3 www.SmarterSolutions.com
Business Management Practices
• Exception management (from Wikipedia)
– Exceptions are special cases that deviate from the normal behavior in a
business process and need to be cared for exceptionally, normally by humanbusiness process and need to be cared for exceptionally, normally by human
intervention.
– Their cause might include: process deviation, malformed data, infrastructure or
connectivity issues, poor quality business rules, etc.
– Exception management is the practice of investigating, resolving and handling
such occurrences by using skilled staff and software tools.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 5
Business Management Practices
• Management by wandering around (from Wikipedia)
– The term management by wandering around (MBWA), also management by
walking around, refers to a style of business management which involveswalking around, refers to a style of business management which involves
managers wandering around, in an unstructured manner, through the
workplace(s), at random, to check with employees, or equipment, about the
status of ongoing work.
– The emphasis is on the word wandering as an impromptu movement within a
workplace, rather than a plan where employees expect a visit from managers
at more systematic, pre-approved or scheduled times.
– The expected benefit is that a manager, by random sampling of events or
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 6
p g , y p g
employee discussions, is more likely to facilitate the productivity and total
quality management of the organization, as compared to remaining in a
specific office area and waiting for employees, or the delivery of status reports,
to arrive there, as events warrant in the workplace.
© Smarter Solutions, Inc. 4 www.SmarterSolutions.com
Business Management Practices
• Quality Management System (QMS) [from Wikipedia]
– QMS can be expressed as the organizational structure, procedures, processes
and resources needed to implement quality management.and resources needed to implement quality management.
– Early systems emphasized predictable outcomes of an industrial product
production line, using simple statistics and random sampling.
– By the 20th century, labor inputs were typically the most costly inputs in most
industrialized societies, so focus shifted to team cooperation and dynamics,
especially the early signaling of problems via a continuous improvement cycle.
– In the 21st century, QMS has tended to converge with sustainability and
transparency initiatives as both investor and customer satisfaction and
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 7
transparency initiatives, as both investor and customer satisfaction and
perceived quality is increasingly tied to these factors.
– Of all QMS regimes, the ISO 9000 family of standards is probably the most
widely implemented worldwide - the ISO 19011 audit regime applies to both,
and deals with quality and sustainability and their integration.
Business Management Practices
• Total Quality Management (TQM) [from Wikipedia]
– TQM is an integrative philosophy of management for continuously improving
the quality of products and processes.the quality of products and processes.
– TQM is based on the premise that the quality of products and processes is the
responsibility of everyone involved with the creation or consumption of the
products or services offered by an organization, requiring the involvement of
management, workforce, suppliers, and customers, to meet or exceed
customer expectations.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 8
© Smarter Solutions, Inc. 5 www.SmarterSolutions.com
Business Management Practices
• Business process management (BPM) [from Wikipedia]
– BPM has been referred to as a "holistic management" approach to aligning an
organization's business processes with the wants and needs of clients.organization s business processes with the wants and needs of clients.
– It promotes business effectiveness and efficiency while striving for innovation,
flexibility, and integration with technology. BPM attempts to improve processes
continuously. It can therefore be described as a "process optimization
process."
– It is argued that BPM enables organizations to be more efficient, more effective
and more capable of change than a functionally focused, traditional hierarchical
management approach.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 9
g pp
– This foundation closely resembles other Total Quality Management or
Continuous Improvement Process methodologies or approaches.
– BPM goes a step further by stating that this approach can be supported, or
enabled, through technology to ensure the viability of the managerial approach
in times of stress and change.
Team Exercise
• List the business management systems that your
organizations are using.
– List the positives and negatives of these systems
• Your executive management has concluded that the
hospital where you are employed has excessive costs and
unsatisfactory customer satisfaction.
– You have a new position, Director of Business Operations
Systems and Improvement You report to the CEO
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 10
Systems and Improvement. You report to the CEO.
– Your team is to improve the hospital’s operations.
• What improvement projects does your team suggest should be created?
• What else should be undertaken?
© Smarter Solutions, Inc. 6 www.SmarterSolutions.com
Team Exercise: Group Discussion
• Do you think that this situation could occur?
• Thoughts about typical business management systems that
organizations are using; e.g., management by objective,
management by exception, management by walking
around, others?
– What are the opportunities for improving these approaches?
• Share the name of one improvement project that your team
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 11
selected.
– How did you select that project? Who owns completion?
– Do you think that the project could “fall off a process-
improvement practitioner’s plate” because of other priorities?
Team Exercise: Group Discussion
• What else should be done when managing the hospital?
• Four years from now the company’s industry sector will
experience hard times and even more financial pressures
– Do you think that the process improvement function will survive
downsizing efforts?
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 12
© Smarter Solutions, Inc. 7 www.SmarterSolutions.com
Improvement Project Selection
• In process improvement programs, projects are typically
selected from a ranked list of opportunities.
– This push (using as a Lean term) for a project creation can lead to
significant resources being spent on the sub-optimization of
processes, where the business as a whole does not benefit.
• What other methods have you encountered for selecting
improvement projects?
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 13
Other Actions
• Organizational improvement efforts benefit if they are
integrated with a predictive scorecard and
l ti ll /i ti l t t i l i t th t thanalytically/innovatively strategic planning system so that the
– organization can move toward achievement of the 3 Rs of business;
i.e., everyone doing the Right things, and doing them Right, at the
Right time.
• This objective is achieved through the Integrated Enterprise
Excellence (IEE) business system
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 14
Excellence (IEE) business system.
© Smarter Solutions, Inc. 8 www.SmarterSolutions.com
Graphic View on the 9 Steps to
Excellence in Governance
1. Describe
vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
3. Analyze
enterprise.
4. Establish
SMART
satellite-level
metric goals.
5 Create
6. Identify high
potential improvement 7. Identify and
8. Assess project's
completion impact 9 Maintain the
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 15
5. Create
strategies.
areas and establish
related SMART 30,000-
foot-level metric goals.
execute
projects.
completion impact
on enterprise
goals.
9. Maintain the
gain.
Figure 4.7 Integrated Enterprise Excellence, Volume II, Copyright 2008
1. Describe vision and mission
Mission, vision and values outlines
• Who we are.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
• What we seek to achieve.
• When and how we want to achieve it.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 16
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
© Smarter Solutions, Inc. 9 www.SmarterSolutions.com
2. Create the Enterprise Value Chain
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
Basic “Business Value Chain” chart
represents activities, without regard
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
to the organization chart
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 17
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
2. Create the Enterprise Value Chain
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Basic value chain can be
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 18
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
Basic value chain can be
expanded to include significant
inputs and outputs
© Smarter Solutions, Inc. 10 www.SmarterSolutions.com
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
2. Create the Enterprise Value Chain
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Activities outside of the main flow
Activities
outside of the
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 19
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
Activities outside of the main flow
can be added as standalone units
outside of the
main flow can
be added as
standalone
units
2. Create the Enterprise Value Chain
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 20
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
Shaded steps can be
“drilled down”
© Smarter Solutions, Inc. 11 www.SmarterSolutions.com
Develop
Product
Market Product Sell Product
Produce &
Deliver Product
Invoice and
Collect
Payment
Report
Financials
InformationHuman
Days Sales
Outstanding
(DSO)
Percent
Annualized
Gain in Gross
Revenue
Gross
Revenue
Defective Rate
Lead Time
Developed
Product Design
Quality
Product
Development
Lead Time
Work in
Process (WIP)
Voice of the
Customer
(VOC)
Labor
Quote Quality
RFQ Response
Acceptance
Rate
Quote
Response
Time
Net Profit
Margins
Existing
Customer
Additions
New Customer
Additions
Timely Inputs
Effective Inputs
2. Create the Enterprise Value Chain
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
Step 1 Step 2 Decision Step 3
No
Step 4
Yes
End
Start
Information
Technology
(IT)
Human
Relations (HR)
Enterprise
Process
Management
(EPM)
On-time
Delivery
Labor
Relations Safety and
Environment
Legal Finance
Internal
Process
Reworks
Product
Margins
TOC
Throughput
Learning and
Growth
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 21
Step 5 Step 7Step 6
Process
Step 6
Start Step 6A Step 6B Step 6C End
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
Subprocess drilldown example
VOC step drill
down Complaints
Audits
Receive
complaint
Evaluation of complaint
by Enterprise Process
Management
Department
Document
complaint in
data
warehouse
Document results in
data warehouse and
give feedback to
person who
complained
Weekly
someone acts
as a customer
and documents
findings
Document
results in data
warehouse
Develop
Product
Market Product Sell Product
Produce &
Deliver Product
Invoice and
Collect
Payment
Report
Financials
Information
Technology
(IT)Human
Relations (HR)
Days Sales
Outstanding
(DSO)
Percent
Annualized
Gain in Gross
Revenue
Gross
Revenue
Defective Rate
Lead Time
Developed
Product Design
Quality
Product
Development
Lead Time
Work in
Process (WIP)
On-time
Delivery
Voice of the
Customer
(VOC)
Labor
Relations
Safety and
Environment
Quote Quality
RFQ Response
Acceptance
Rate
Internal
Process
Reworks
Quote
Response
Time
Net Profit
Margins
Existing
Customer
Additions
New Customer
Additions
Timely Inputs
Customer
Satisfaction
with Feedback
Client turnover
Surveys
Internal
Survey
Conduct random survey to 1% of
end customers, asking about
system problems and one
suggestion what should done
differently to improve.
Document
results in data
warehouse
g
Conducts a survey of 1/12 of the
employees every month; e.g., as
described in chapter 43 of
I l ti Si Si
Document
results in data
warehouse
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 22
Enterprise
Process
Management
(EPM)
Legal Finance
Reworks
Product
Margins
TOC
Throughput
Learning and
Growth
Data
Warehouse
Monthly statistically
analyze complaint,
audits, survey, and
retention data
Report on findings,
making suggestions,
when appropriate, for
improvement
Monthly evaluate 30,000-foot-
level reported defective and on-
time delivery metrics, checking
for metric degradation and
improvement project(s) status
Implementing Six Sigma
© Smarter Solutions, Inc. 12 www.SmarterSolutions.com
2. Create the Enterprise Value Chain
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
Produce and Deliver Products
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Adding enterprise &
operational level
f t i
Lead Time
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 23
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
performance metrics
completes value chain
Defective Rate
WIP
On-time Del.
After determining what to measure, need to then
select performance reporting methodology. Vol II, Fig. 7.1
Performance Reporting: Table of
Numbers
What conclusion would you make from this report?
Performance Meas ure  F Y 2001 
Actual 
F Y 2002 
Actual 
F Y 2003 
Actual 
F Y 2003  
Amended 
F Y 2004 
Amended 
Percentage of cus tomers  s atis fied 
with dis patch s taff 
99.99% 100% 99.99% 98% 98%
Percentage of priority one calls  
dis patched to field crews  within 
80 minutes  of receipt 
99.99% 99% 99.99% 95% 95%
L abor cos t per cus tomer call 
taken in Dis patch Operations   
$4.20  $5.31  $5.09  $4.88  $5.09 
Number of calls  taken through 
Dis patch Operations   62,054 59,828 63,046 60,000 60,000
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 24
Number of priority one calls  
dis patched to field crews   5,797 4,828 6,686 5,000 6,500
Number of work orders  and 
component parts  (s egments ) 
created in databas e 
8,226 4,724 7,742 5,500 6,700
Reproduced from Table 3.1 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’
Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
© Smarter Solutions, Inc. 13 www.SmarterSolutions.com
Performance Reporting
• The next four slides will describe/compare the revenue-
generated performance of five sales personnel.
– Instead of sales people, what is something similar in your
organization that could be compared?
– What response instead of revenue could be compared?
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 25
Performance Reporting: Pie Chart
What conclusion would you make from this report?
1
2
3
4
5
Person
Sales
5
2
1
1
2
3
4
5
Person
Sales
2
1
5
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 26
4
3
4
3
Reproduced from Figure 3.1 of Integrated Enterprise Excellence Volume II, Business Deployment: A
Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
© Smarter Solutions, Inc. 14 www.SmarterSolutions.com
Performance Reporting: Line Chart
What conclusion would you make from this report?
1
2
3
4
5
Person
Sales
60
140
100
nue(ThousandDollars)
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 27
20
Reven
Months
5 6 7 8 9 11 12 1 2 34
Reproduced from Figure 3.1 of Integrated Enterprise Excellence Volume II, Business Deployment: A
Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
Performance Reporting: Bar Chart
What conclusion would you make from this report?
100
200
400
300
enue(ThousandDollars)
500
600
1
2
3
4
5
Person
Sales
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 28
100
Reve
0
5 6 7 8 9 10 11 12 1 24 3
Months
Reproduced from Figure 3.2 of Integrated Enterprise Excellence Volume II, Business Deployment: A
Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
© Smarter Solutions, Inc. 15 www.SmarterSolutions.com
Performance Reporting: Bar Chart
What conclusion would you make from this report, where data
are from several years?
200
400
300
ue(ThousandDollars)
500
600
500
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 29
432143214321432143214321432143214321432143214321
100
Revenu
Year
Month 5 6 7 8 9 10 11 12 1 24 3
Reproduced from Figure 3.3 of Integrated Enterprise Excellence Volume II, Business Deployment: A
Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
What conclusion would you make from this report?
Monthly SCORECARD
Business Unit Name
Measurement Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05
CUSTOMER
Customer Metric A 0.63574 0.653576 0.660404 0.732996 0.62521 0.708566 0.641873 0.727115 0.687201 0.6123 0.670894 0.6341
Yellow if equal to or higher than 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720
Performance Reporting: Stoplights
Green if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750
Customer Metric B 1.866044 1.804823 1.777056 1.87373 1.791988 1.826504 1.824634 1.799849 1.822007 1.838969 1.87088 1.893155
Yellow if equal to or higher than 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830
Green if equal to or higher than 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860
Customer Metric C 0.82475 0.730724 0.627179 0.728212 0.751174 0.801946 0.780248 0.761874 0.68133 0.790902 0.728168 0.790485
Yellow if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750
Green if equal to or higher than 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780
FINANCE
Finance Metric A 3.387525 2.965966 3.042505 2.891057 3.485847 2.867981 2.764183 3.297147 3.301612 2.892969 2.737161 3.0936
Yellow if equal to or higher than 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05
Green if equal to or higher than 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1
Finance Metric B 2.09819 2.254758 2.345674 2.207099 2.316309 2.214396 2.156223 2.493305 2.509988 2.163489 2.168469 2.288786
Yellow if equal to or higher than 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2
Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
Finance Metric C 0.762611 0.958071 1.051227 0.867969 1.158351 0.82278 0.800541 0.989747 0.980718 0.611179 0.789868 1.035084
Yellow if equal to or higher than 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9
Green if equal to or higher than 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95
Finance Metric H 0.222716 0.480099 0.296397 0.203 0.3541 0.2326 0.1693 0.4552 0.2278 0.194 0.288 0.321
Yellow if equal to or higher than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21
Green if equal to or higher than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
Finance Metric I 0.490024 0.27568 0.190908 0.357 0.5284 0.4058 0.3391 0.3347 0.3247 0.327 0.286 0.383
Yellow if equal to or higher than 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Green if equal to or higher than 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35
INTERNAL BUSINESS OPERATIONS
IBO Metric A 1.7693 1.73499 1.80064 1.76888 1.76068 1.79877 1.863956 1.862206 1.829389 1.875557 1.741041 1.69758
Yellow if equal to or higher than 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70
Green if equal to or higher than 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73
IBO Metric B 0.20531 0.18053 0.184817 0.16204 0.18 0.178 0.202 0.205 0.176 0.226 0.201 0.197
Yellow if equal to or less than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
Green if equal to or less than 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22
IBO Metric C 0.427692 0.505666 0.504354 0.568529 0.44906 0.464186 0.446241 0.422419 0.445758 0.475769 0.340339 0.366324
Yellow if equal to or less than 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26
Green if equal to or less than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21
IBO Metric D 2.66634 2.64814 2.69324 2.67166 2.68 2.66 2.67 2.68 2.65 2.67 2.67 2.69
Yellow if equal to or less than 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60
Green if equal to or less than 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58
Let’s examine
a different set
of data.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 30
Green if equal to or less than 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58
IBO Metric F 0.113318 0.157456 0.163175 0.146534 0.113 0.143 0.143 0.173 0.143 0.163 0.133 0.143
Yellow if equal to or less than 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086
Green if equal to or less than 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068
IBO Metric G 0.043949 0.078984 0.051823 0.055083 0.110424 0.068515 0.080985 0.076333 0.07306 0.077379 0.103885 0.069867
Yellow if equal to or less than 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06
Green if equal to or less than 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05
IBO Metric H 1.222222 1.222222 1.166667 1 1 1 1 1.166667 1.333333 1.25 1.230769 1.266667
Yellow if equal to or higher than 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33
Green if equal to or higher than 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45
LEARNING AND GROWTH
L&G Metric A 4.47048 5.23666 4.17365 4.57158 4.54306 4.31449 4.67242 3.67574 4.94651 3.57205 4.92629 4.55868
Yellow if equal to or less than 5 5 5 5 5 5 5 5 5 5 5 5 5
Green if equal to or less than 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5
L&G Metric B 68.1916 69.643 57.0598 62.4947 59.6528 74.1863 77.7315 54.8459 57.6235 83.5998 66.4914 54.2673
Yellow if equal to or higher than 65 65 65 65 65 65 65 65 65 65 65 65 65
Green if equal to or higher than 75 75 75 75 75 75 75 75 75 75 75 75 75
Reproduced from Table 3.5 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’
Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
© Smarter Solutions, Inc. 16 www.SmarterSolutions.com
Performance Reporting: Stoplights
Red/Yellow/Green visuals are the
most popular concept in
scorecards because of the
stoplight relationship.
– Only compares the
instantaneous performance to
a set goal
– No insight into trends or
historical performance
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 31
historical performance
Graphics found at http://download.oracle.com/docs/cd/E15051_01/web.1111/b31973/dv_intro.htm
If the goal is not a specification, it is often
ignored. Is that a good behavior?
Performance Reporting: Balanced
Scorecard
Is your organization using the Balanced Scorecard?
Visionand
Strategy
Financials
ProcessesCustomer
Balanced Scorecard
10 0
CUSTOMER SATISFACTION 30
PROFIT IN %
30
PROFIT IN %
30
PROFIT IN %
Each Category has:
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 32
Learning
0
QUALITY
SPEED
COURTESY
COMPETENCE
COMMUNICATION
HELPFULNESS
!
0
10
20
1 2 3 4 5 6 7 8 9 10 11 12
!
0
10
20
1 2 3 4 5 6 7 8 9 10 11 12
0
10
20
1 2 3 4 5 6 7 8 9 10 11 12
!
Each Category has:
Objectives, measures,
targets, and initiatives
Reproduced from Table 3.5 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’
Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
© Smarter Solutions, Inc. 17 www.SmarterSolutions.com
Performance Reporting: Balanced
Scorecard
Thoughts
about the
BSC
approach
methodology?
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 33
Vol. II, Fig. 3.6
Performance Reporting: Alternatives
Tabular Reporting
Performance Meas ure  F Y 2001 
Actual 
FY  2002 
Actual 
F Y 2003 
Actual 
FY  2003  
Amended 
F Y 2004 
Amended 
Percentage of cus tomers  s atis fied 
with dis patch s taff 
99.99% 100% 99.99% 98% 98%
Percentage of priority one calls  
dis patched to field crews  within 
80 minutes of receipt
99.99% 99% 99.99% 95% 95%
Financials
Balanced Scorecard
Classic Bar Charts
80 minutes  of receipt 
L abor cos t per cus tomer call 
taken in Dis patch Operations   
$4.20  $5.31  $5.09  $4.88  $5.09 
Number of calls  taken through 
Dis patch Operations  62,054 59,828 63,046 60,000 60,000
Number of priority one calls  
dis patched to field crews   5,797 4,828 6,686 5,000 6,500
Number of work orders  and 
component parts  (s egments ) 
created in databas e 
8,226 4,724 7,742 5,500 6,700
600000
500000
400000
llars)
1
2
3
4
5
Person
Sales
Visionand
Strategy
Processes
Learning
Customer
0
10 0
QUALITY
SPEED
COURTESY
COMPETENCE
COMMUNICATION
HELPFULNESS
CUSTOMER SATISFACTION
!
0
10
20
30
1 2 3 4 5 6 7 8 9 10 11 12
PROFIT IN %
!
0
10
20
30
1 2 3 4 5 6 7 8 9 10 11 12
PROFIT IN %
0
10
20
30
1 2 3 4 5 6 7 8 9 10 11 12
PROFIT IN %
!
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 34
Month 321121110987654
300000
200000
100000
0
Revenue(Dol
Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05
Finance Metric B 2.10 2.25 2.35 2.21 2.32 2.21 2.16 2.49 2.51 2.16 2.17 2.29 2.14
Yellow if equal to or higher than 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20
Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
What other approach might we use to present data?
© Smarter Solutions, Inc. 18 www.SmarterSolutions.com
Process Tracking and Performance
Metrics: Issues and Resolution
TYPICAL METRICS
• Based on fiscal yearBased on fiscal year
• Unrelated to improvement system
• Point to point comparisons
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 35
Process Tracking and Performance
Metrics: Issues and Resolution
However …
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 36
Xs Xs Xs
Reproduced from Figure 4.8 of Integrated Enterprise Excellence Volume II, Business Deployment: A
Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
© Smarter Solutions, Inc. 19 www.SmarterSolutions.com
Process Tracking and Performance
Metrics: Issues and Resolution
EFFECTIVE METRICS
• View the enterprise as a system of processesp y p
• Acknowledge the effect of variability
• Support long-lasting systematic process
improvement
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 37
Let’s next examine how we can
create effective metrics.
Monthly SCORECARD
Business Unit Name
Measurement Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05
CUSTOMER
Customer Metric A 0.63574 0.653576 0.660404 0.732996 0.62521 0.708566 0.641873 0.727115 0.687201 0.6123 0.670894 0.6341
Yellow if equal to or higher than 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720
Green if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750
Customer Metric B 1.866044 1.804823 1.777056 1.87373 1.791988 1.826504 1.824634 1.799849 1.822007 1.838969 1.87088 1.893155
Yellow if equal to or higher than 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830
Green if equal to or higher than 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860
Customer Metric C 0.82475 0.730724 0.627179 0.728212 0.751174 0.801946 0.780248 0.761874 0.68133 0.790902 0.728168 0.790485
Yellow if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750
Green if equal to or higher than 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780
FINANCE
Finance Metric A 3.387525 2.965966 3.042505 2.891057 3.485847 2.867981 2.764183 3.297147 3.301612 2.892969 2.737161 3.0936
Yellow if equal to or higher than 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05
Green if equal to or higher than 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1
Finance Metric B 2.09819 2.254758 2.345674 2.207099 2.316309 2.214396 2.156223 2.493305 2.509988 2.163489 2.168469 2.288786
Yellow if equal to or higher than 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2
Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
Finance Metric C 0.762611 0.958071 1.051227 0.867969 1.158351 0.82278 0.800541 0.989747 0.980718 0.611179 0.789868 1.035084
Yellow if equal to or higher than 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9
Green if equal to or higher than 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95
Finance Metric H 0.222716 0.480099 0.296397 0.203 0.3541 0.2326 0.1693 0.4552 0.2278 0.194 0.288 0.321
Yellow if equal to or higher than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21
Green if equal to or higher than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
Finance Metric I 0.490024 0.27568 0.190908 0.357 0.5284 0.4058 0.3391 0.3347 0.3247 0.327 0.286 0.383
Yellow if equal to or higher than 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Green if equal to or higher than 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35
Let’s examine
Finance Metric B
Stoplight
Scorecard
q g
INTERNAL BUSINESS OPERATIONS
IBO Metric A 1.7693 1.73499 1.80064 1.76888 1.76068 1.79877 1.863956 1.862206 1.829389 1.875557 1.741041 1.69758
Yellow if equal to or higher than 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70
Green if equal to or higher than 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73
IBO Metric B 0.20531 0.18053 0.184817 0.16204 0.18 0.178 0.202 0.205 0.176 0.226 0.201 0.197
Yellow if equal to or less than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
Green if equal to or less than 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22
IBO Metric C 0.427692 0.505666 0.504354 0.568529 0.44906 0.464186 0.446241 0.422419 0.445758 0.475769 0.340339 0.366324
Yellow if equal to or less than 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26
Green if equal to or less than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21
IBO Metric D 2.66634 2.64814 2.69324 2.67166 2.68 2.66 2.67 2.68 2.65 2.67 2.67 2.69
Yellow if equal to or less than 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60
Green if equal to or less than 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58
IBO Metric F 0.113318 0.157456 0.163175 0.146534 0.113 0.143 0.143 0.173 0.143 0.163 0.133 0.143
Yellow if equal to or less than 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086
Green if equal to or less than 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068
IBO Metric G 0.043949 0.078984 0.051823 0.055083 0.110424 0.068515 0.080985 0.076333 0.07306 0.077379 0.103885 0.069867
Yellow if equal to or less than 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06
Green if equal to or less than 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05
IBO Metric H 1.222222 1.222222 1.166667 1 1 1 1 1.166667 1.333333 1.25 1.230769 1.266667
Yellow if equal to or higher than 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33
Green if equal to or higher than 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45
LEARNING AND GROWTH
L&G Metric A 4.47048 5.23666 4.17365 4.57158 4.54306 4.31449 4.67242 3.67574 4.94651 3.57205 4.92629 4.55868
Yellow if equal to or less than 5 5 5 5 5 5 5 5 5 5 5 5 5
Green if equal to or less than 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5
L&G Metric B 68.1916 69.643 57.0598 62.4947 59.6528 74.1863 77.7315 54.8459 57.6235 83.5998 66.4914 54.2673
Yellow if equal to or higher than 65 65 65 65 65 65 65 65 65 65 65 65 65
Green if equal to or higher than 75 75 75 75 75 75 75 75 75 75 75 75 75
Let’s examine
this corporation’s
red-yellow-green
scorecard
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 38
33% red & 50% green?
Special or Common Cause?
Green if equal to or higher than 3.1 3.1 3.1 3.1 3.1 3.1
Finance Metric B 2.09819 2.254758 2.345674 2.207099 2.316309
Yellow if equal to or higher than 2.2 2.2 2.2 2.2 2.2 2.2
Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25
C 3.1 3.1 3.1 3.1 3.1 3.1 3.1
2.214396 2.156223 2.493305 2.509988 2.163489 2.168469 2.288786
2.2 2.2 2.2 2.2 2.2 2.2 2.2
2.25 2.25 2.25 2.25 2.25 2.25 2.25
0 82278 0 800541 0 989747 0 980718 0 611179 0 789868 1 035084
© Smarter Solutions, Inc. 20 www.SmarterSolutions.com
Traditional Performance Reporting Example – Red-Yellow-Green Scorecard
Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05
Finance Metric B 2.10 2.25 2.35 2.21 2.32 2.21 2.16 2.49 2.51 2.16 2.17 2.29 2.14
Yellow if equal to or higher than 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20
Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
TRADITIONAL  SCORECARD  EXCERPT                               
Building a Better Scorecard
2.7
2.6
2.5
2.4
2.3
2.2
2.1
2.0
Response
_
X=2.2583
UCL=2.6192
Individuals Control Chart
99
95
90
80
70
60
50
40
30
20
10
5
Percent
32.657
Normal Probability Plot
IEE Improved Reporting for Process Assessment and Improvement
q g
INDIVIDUALS CONTROL CHART
The metric is colored red when a goal is not being met 
and corrective action needs to be taken.
This can result in counter‐productive initiatives, 24/7 firefighting, the 
blame game, and proliferation of fanciful stories about why goals
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 39
4
2.2
Histogram
Aug'05
Jul'05
Jun'05
M
ay'05
Apr'05
M
ar'05
Feb'05
Jan'05
Dec'04
Nov'04
Oct'04
Sep'04
Aug'04
1.9
Date
LCL=1.8974
2.62.52.42.32.22.12.01.9
1
Response
2.2
blame game, and proliferation of fanciful stories about why goals 
weren’t met.  
Most importantly, it tells us nothing about what 
to expect  in the future! Vol. II,
Example 3.3
Building a Better Scorecard
Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05
Finance Metric B 2.10 2.25 2.35 2.21 2.32 2.21 2.16 2.49 2.51 2.16 2.17 2.29 2.14
Yellow if equal to or higher than 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20
Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
Traditional Performance Reporting Example – Red-Yellow-Green Scorecard
1
Integrated Enterprise Excellence (IEE) Scorecard System
Process is
predictable
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 40
So what do we predict?
If there is a recent region of stability, we
can say that the process is predictable.
© Smarter Solutions, Inc. 21 www.SmarterSolutions.com
Building a Better Scorecard
Individuals Control Chart
C
LCL=1.90
UCL= 2.62
1.8
2.0
2.2
2.4
2.6
Mean = 2.26
Response
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 41
If a process is predictable, we can consider
that data from the recent region of stability
are a random sample of the future.
Observation
2 41 3 5 6 7 8 9 10 11 12 13
• The red criterion, of less than 2.2, can
be applied to the histogram for
4
2.2
Normal
Histogram of Response
Histogram
2.23
4
ency
2.2
Histogram
Building a Better Scorecard
– estimation of the percentage below 2.2;
– however, it is difficult to estimate from this
graphic.
1
2
Freque
0
2.0 2.1 2.2 2.3 2.4 2.5
Response
• A probability plot is a better approach
since
– if the sample data are from a predictable
2.0 2.1 2.2 2.3 2.4 2.5
Response
t
99
95
80
Normal ProbabilityPlotNormal Probability Plot
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 42
• Conclude: Approx. 32.6% is below 2.2.
if the sample data are from a predictable
process, this tool can provide a long-term
performance estimate.
2.2
32.657
Percen
2.0 2.1 2.2 2.3 2.4 2.5 2.61.9
Response
80
50
30
10
1
2.2
32.6
1.9 2.0 2.1 2.2 2.3 2.4 2.5 2.6
Response
© Smarter Solutions, Inc. 22 www.SmarterSolutions.com
Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05
Finance Metric B 2.10 2.25 2.35 2.21 2.32 2.21 2.16 2.49 2.51 2.16 2.17 2.29 2.14
Yellow if equal to or higher than 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20
Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
Traditional Performance Reporting Example – Red-Yellow-Green Scorecard
Building a Better Scorecard
1
Individuals Control Chart
Response
LCL=1.90
UCL= 2.62
1 8
2.0
2.2
2.4
2.6
Mean = 2.26
2
2.2
32.657
Percent
99
95
80
50
30
10
1
2.2
32.6
Normal ProbabilityPlot
Integrated Enterprise Excellence (IEE) Scorecard System
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 43
Observation
1.8
2 41 3 5 6 7 8 9 10 11 12 13
2.0 2.1 2.2 2.3 2.4 2.5 2.61.9
Response
1
The probability plot provides process variability insight, which Edwards
Deming said was important.
IEE reporting assesses predictability & then if the process is predictable
provides a prediction statement.
Building a Better Scorecard
Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05
Finance Metric B 2.10 2.25 2.35 2.21 2.32 2.21 2.16 2.49 2.51 2.16 2.17 2.29 2.14
Yellow if equal to or higher than 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20
Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
Traditional Performance Reporting Example – Red-Yellow-Green Scorecard
1
Individuals Control Chart
Response
LCL=1.90
UCL= 2.62
1 8
2.0
2.2
2.4
2.6
Mean = 2.26
2
2.2
32.657
Percent
99
95
80
50
30
10
1
2.2
32.6
Normal ProbabilityPlot
Integrated Enterprise Excellence (IEE) Scorecard System
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 44
Observation
1.8
2 41 3 5 6 7 8 9 10 11 12 13
2.0 2.1 2.2 2.3 2.4 2.5 2.61.9
Response
1
Predictable process with an approximate
non-conformance rate of 32.6%
3
Reproduced from Table 3.5 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’
Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
© Smarter Solutions, Inc. 23 www.SmarterSolutions.com
• IEE Enterprise Performance Reporting System (EPRS)
scorecard report-out format
Building a Better Scorecard
IEE Scorecard
2.62.42.22.0
99
95
80
50
20
5
1
l
Percent
2.2
32.657
Mean 2.258
StDev 0.1297
N 13
AD 0.531
P-Value 0.141
Aug'0
5
Jul'05
Jun'0
5
M
ay'0
5
Apr'0
5
M
ar'0
5
Feb'0
5
Jan'0
5
Dec'0
4
Nov'0
4
O
ct'0
4
Sep'0
4
Aug'0
4
2.6
2.4
2.2
2.0
IndividualValue
_
X=2.2583
UCL=2.6192
LCL=1.8974
Probability plot
Normal
I-chart
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 45
The process is predictable since the last process change
The process estimates about 32.657% non-conformance rate
Process valuesDate
Reproduced from Table 3.5 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’
Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
Traditional Performance Reporting
Pie Chart
1
2
3
4
5
Person
Sales
5
1
1
2
3
4
Person
Sales
1
5
1
2
3
4
5
Person
Sales
140
100
sandDollars)
Line Chart
Sales data
presented in
different
formats
Bar Charts
600000
500000
1
2
3
4
5
Person
Sales
4
3
2
4
52
4
3
20
60
Revenue(Thou
Months
5 6 7 8 9 11 12 1 2 34
400
ndDollars)
500
600
500
Bar Charts
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 46
Month 321121110987654
400000
300000
200000
100000
0
Revenue(Dollars)
432143214321432143214321432143214321432143214321
100
200
400
300
Revenue(Thousan
Year
Month 5 6 7 8 9 10 11 12 1 24 3
© Smarter Solutions, Inc. 24 www.SmarterSolutions.com
IEE 30,000-foot-level Scorecard
IEE Scorecard for Sales
120000
100000
n
UCL=114046
60000
iation
UCL=66576
I-chart of Mean I-chart of Std. Deviation
Sales data
presented in IEE
format (before
change)
99.9
99
90
50
rcent
90
50
Mean 71884
StDev 32910
N 170
AD 0.520
P-Value 0.184
343128252219161310741
80000
60000
40000
Subgroup Period
SubgroupMea
_
X=71884
LCL=29721
343128252219161310741
45000
30000
15000
0
Subgroup Period
SubgroupStd.Dev
_
X=31664
LCL=-3249
Probability plot
Normal
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 47
The process is predictable between subgroups and within subgroups
The est. median is 71883. with 80% of the occurrences from 29708. to 114059
200000150000100000500000
10
1
0.1
Data values
Pe
114059
71884
29708
10
IEE 30,000-foot-level Scorecard
IEE Scorecard for Sales
120000
100000
n
UCL=114046
60000
iation
UCL=66576
I-chart of Mean I-chart of Std. Deviation
Sales data
presented in IEE
format (before
change)
99.9
99
90
50
rcent
90
50
Mean 71884
StDev 32910
N 170
AD 0.520
P-Value 0.184
107411074110741
80000
60000
40000
Subgroup Period
SubgroupMea
_
X=71884
LCL=29721
107411074110741
45000
30000
15000
0
Subgroup Period
SubgroupStd.Dev
_
X=31664
LCL=-3249
160000
120000
80000
tavalues
Probability plot
Normal
Individual Value Plot of Sales
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 48
The process is predictable between subgroups and within subgroups
The est. median is 71883. with 80% of the occurrences from 29708. to 114059
200000150000100000500000
10
1
0.1
Data values
Pe
114059
71884
29708
10
54321
40000
0
categories
Da
© Smarter Solutions, Inc. 25 www.SmarterSolutions.com
IEE 30,000-foot-level Scorecard
IEE Scorecard for Sales
150000
n
UCL=136782
1(Baseline) 2(New)
60000
ation
1(Baseline) 2(New)
I-chart of Mean I-chart of Std. Deviation
Sales data
presented in IEE
format (after
change)
99
90
50
rcent
90
50
Mean 103046
StDev 20979
N 25
AD 0.798
P-Value 0.033
37332925211713951
100000
50000
Subgroup Period
SubgroupMean
_
X=103046
LCL=69311
37332925211713951
45000
30000
15000
0
Subgroup Period
SubgroupStd.Devia
_
X=19362
UCL=41818
LCL=-3094
Probability plot
Normal
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 49Vol. II, Figure 9.6
The process is predictable since the last process change
The est. median is 103046 with 80% of the occurrences from 76160. to 129932
1500001250001000007500050000
10
1
Data values in current stage
Pe
129932
103046
76160
10
IEE 30,000-foot-level Scorecard
IEE Scorecard for Sales
150000
n
UCL=136782
1(Baseline) 2(New)
60000
ation
1(Baseline) 2(New)
I-chart of Mean I-chart of Std. Deviation
Sales data
presented in IEE
format (after
change)
99
90
50
rcent
90
50
Mean 103046
StDev 20979
N 25
AD 0.798
P-Value 0.033
1951951951
100000
50000
Subgroup Period
SubgroupMean
_
X=103046
LCL=69311
1951951951
45000
30000
15000
0
Subgroup Period
SubgroupStd.Devia
_
X=19362
UCL=41818
LCL=-3094
150000
125000
100000
sincurrentstage
Probability plot
Normal
Individual Value Plot of Sales
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 50
The process is predictable since the last process change
The est. median is 103046 with 80% of the occurrences from 76160. to 129932
1500001250001000007500050000
10
1
Data values in current stage
Pe
129932
103046
76160
10
54321
75000
50000
categories
Datavalues
© Smarter Solutions, Inc. 26 www.SmarterSolutions.com
Team Exercise: Comparing Performance
Reporting Methodologies
• Describe the differences in reporting methodologies.
• What are the benefits of using predictive scorecards?
Pie Chart
1
2
3
4
5
Person
Sales
5
4
3
2
1
1
2
3
4
5
Person
Sales
2
1
5
4
3
1
2
3
4
5
Person
Sales
20
60
140
100
Revenue(ThousandDollars)
Months
5 6 7 8 9 11 12 1 2 34
Line Chart
IEE Scorecard for Sales
1951951951
150000
100000
50000
Subgroup Period
SubgroupMean
_
X=103046
UCL=136782
LCL=69311
1(Baseline) 2(New)
1951951951
60000
45000
30000
15000
0
Subgroup Period
SubgroupStd.Deviation
_
X=19362
UCL=41818
LCL=-3094
1(Baseline) 2(New)
I-chart of Mean I-chart of Std. Deviation
Traditional Performance Reporting IEE Scorecarding
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 51
Bar Charts
Month 321121110987654
600000
500000
400000
300000
200000
100000
0
Revenue(Dollars)
1
2
3
4
5
Person
Sales
432143214321432143214321432143214321432143214321
100
200
400
300
Revenue(ThousandDollars)
500
600
Year
500
Month 5 6 7 8 9 10 11 12 1 24 3
Bar Charts
The process is predictable since the last process change
The est. median is 103046 with 80% of the occurrences from 76160. to 129932
1500001250001000007500050000
99
90
50
10
1
Data values in current stage
Percent
129932
90
103046
50
76160
10
Mean 103046
StDev 20979
N 25
AD 0.798
P-Value 0.033
54321
150000
125000
100000
75000
50000
categories
Datavaluesincurrentstage
Probability plot
Normal
Individual Value Plot of Sales
2. Create the Enterprise Value Chain
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
Produce and Deliver Products
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
The resulting
value chain Lead Time
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 52
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
value chain
functional linkages
bridging silos
Lead Time
Defective Rate
WIP
On-time Del.
Figure 7.1 Integrated Enterprise
Excellence, Volume III, Copyright 2008
© Smarter Solutions, Inc. 27 www.SmarterSolutions.com
2. Create the Enterprise Value
Chain
• Stoplight Scorecard data linkage with IEE value
chain
IEE S d
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
Develop
Product
Market Product Sell Product
Produce &
Deliver Product
Invoice and
Collect
Payment
Report
Financials
Information
Technology
(IT)
Human
Relations (HR)
Enterprise
Process
Management
(EPM)
Days Sales
Outstanding
(DSO)
Percent
Annualized
Gain in Gross
Revenue
Gross
Revenue
Defective Rate
Lead Time
Developed
Product Design
Quality
Product
Development
Lead Time
Work in
Process (WIP)
On-time
Delivery
Voice of the
Customer
(VOC)
Labor
Relations Safety and
Environment
Legal Finance
Quote Quality
RFQ Response
Acceptance
Rate
Internal
Process
Reworks
Product
Margins
Quote
Response
Time
TOC
Throughput
Net Profit
Margins
Existing
Customer
Additions
New Customer
Additions
Timely Inputs
Effective Inputs
Learning and
Growth
IEE Scorecard
99
95
80
50
20
5
Percent
32.657
Mean 2.258
StDev 0.1297
N 13
AD 0.531
P-Value 0.141
2.6
2.4
2.2
2.0
IndividualValue
_
X=2.2583
UCL=2.6192
LCL=1.8974
Probability plot
Normal
I-chart 3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 53
The process is predictable since the last process change
The process estimates about 32.657% non-conformance rate
2.62.42.22.0
1
Process values
2.2
Aug'05
Jul'05
Jun'05
M
ay'05
Apr'05
M
ar'05
Feb'05
Jan'05
Dec'04
N
ov'04
O
ct'04
Sep'04
Aug'04
Date
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
• Together we will create the high-level functional steps of a
hospital’s enterprise value chain.
Team Exercise: Creating an Enterprise Value
Chain with Functional Metrics
• We will then break into groups where each team is
assigned a function.
• Each team is to note on a flipchart
– Performance metrics for their function.
– A comparison between this metric selection approach and others
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 54
that you have seen.
• Report out to the class.
© Smarter Solutions, Inc. 28 www.SmarterSolutions.com
3. Analyze the Enterprise
• Analyze the enterprise as a whole,
looking for
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
– constraints
– defective reduction opportunities
– waste
– speed to market
– other restraints
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 55
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
4. Establish Financial Goals for
Corporate and Operational Units
• Satellite-level metric goals (e.g., profit
margins and revenue growth) are to be
SMART S ifi M bl
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
SMART: Specific, Measurable,
Actionable, Relevant, and Time-based.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 56
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
© Smarter Solutions, Inc. 29 www.SmarterSolutions.com
5. Create Strategies
• Develop strategies to improve
performance when satellite-level metrics
are not achieving goals
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
are not achieving goals.
– Focus on creating strategies that are specific
and benefit the big picture.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 57
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
6. Indentify High-Potential Imp. Areas
& Establish Oper. Goals
• Identify high potential target areas
– Set 30,000-foot-level (operational) metric performance
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
goals
– Other business area 30,000-foot-level metrics are not
to degrade from current performance levels.
• Things to consider:
– Performance of value-chain metrics
– Statistical analysis of value-chain drill downs
Competitive pressures
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 58
– Competitive pressures
– Business environment
– Bottle necks
– New business opportunities
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
© Smarter Solutions, Inc. 30 www.SmarterSolutions.com
6. Indentify High-Potential Imp. Areas
& Establish Oper. Goals
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
Business Goal Strategies High Potential Areas Projects
Improve
marketing
ff ti
Improve product group
C h i
Step 4 Step 5 Step 6 Step 7
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Increase
monthly profit
margins by 2%
in 10 months.
Increase
monthly gross
revenue by 8%
in 10 months.
Reduce DSO
mean by 3
days in 7 mo.
Reduce DSO of
product group D and
leverage benefits to
other business groups.
effectiveness
by 15% in 10
mo.
C search engine
ranking by 25%.
Improve RFQ
acceptance
rate by
improving
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 59
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
p g
quote response
time so that all
quotes are
completed in
14 days. To be
completed in 5
mo.
Increase TOC
Developed in
Example 12.1
Figure 12.1 Integrated
Enterprise Excellence,
Volume II, Copyright 2008
Enterprise Improvement Plan (EIP)
7. Identify and Execute Projects
• Project execution could follow one of the
following methodologies:
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
– Special cause condition (solution known)
• Just do it
– Special cause condition (solution unknown)
• Root Cause Analysis: Fault tree analysis
– Common cause condition (solution known)
• Lean Project: 5S, kaizen, value stream map
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 60
j , , p
(VSM), low hanging fruit
– Common cause condition (solution unknown)
• Plan-Do-Check-Act (PDCA): Continuous
improvement
• Lean Six Sigma DMAIC or DMADV roadmap
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
© Smarter Solutions, Inc. 31 www.SmarterSolutions.com
7. Identify and Execute Projects
• A Lean Six Sigma project execution
roadmap that truly integrates Lean and Six
Si t l i
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
Sigma tools is: 3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
D M A I C
Plan Project
Wisdom
of theMSABaseline Lean
ControlAnalyzeDefine Measure Improve
D M A I C
Plan Project
Wisdom
of theMSABaseline Lean
ControlAnalyzeDefine Measure Improve
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 61
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
PROCESS IMPROVEMENT PROJECT: P-DMAIC
Plan Project
and Metrics
of the
Organization
MSABaseline
Project
Lean
Assessment
PROCESS IMPROVEMENT PROJECT: P-DMAIC
Plan Project
and Metrics
of the
Organization
MSABaseline
Project
Lean
Assessment
From Figure 2.1, Integrated Enterprise Excellence Volume III, Improvement
Project Execution: A Management and Black Belt Guide for Going Beyond
Lean Six Sigma and the Balanced Scorecard, Copyright 2008
8. Assess Each Project’s Final Impact
on Goals
• Each project should be judged against
how well it positively impacted the
30 000 f t l l t i f
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
30,000-foot-level metric performance. 3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 62
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
© Smarter Solutions, Inc. 32 www.SmarterSolutions.com
Example: Hospital 30,000-foot-level metric –
Diagnosis to bed time
• Demonstrated project’s process improvement
9181716151413121111
300
200
100
0
Time(Minutes)
_
X=45.7
UCL=80.0
LCL=11.5
Diagnosis to Bed Before ChangeDiagnosis to Bed After Change
200150100500
99
90
50
10
1
Percent
7.065
1.829
30
45.72 10.69 50 0.191 0.893
124.9 45.40 50 0.767 0.043
Mean StDev N AD P
Diagnosis to Bed After Change
Diagnosis to Bed Before Change
sub
I Chart of DiagnosistoBed by sub Probability Plot of DiagnosistoBed
Normal
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 63
Week 51 there was a reduction from about 98% to 93% non-conf rate to 30 min. or less criterion
Process is predictable since day 51 with approx 93 % non-conformance rate to 30 min. criteria
Day DiagnosistoBed
Example: Hospital 30,000-foot-level metric –
Errors per 1000 patient days
• Demonstrated project’s process improvement
I Chart of Errors
4137332925211713951
80
60
40
20
0
Week
Errorsperthousandpatientdays
_
X=10.84
UCL=15.30
LCL=6.39
Med Errors Before Med Errors After
C a o o s
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 64
Pred proc since week 30 with approx 11 errors per 1000 patient days
Process improvement was made in week 30 where error reduced from 48 to 11
Week
© Smarter Solutions, Inc. 33 www.SmarterSolutions.com
9. Maintain the Gain
• Value-chain metrics are to be a part of
company-wide management review
meetings for the assessment of day-to-
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
1. Describe vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.g y
day performance and process-steps
execution.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
3. Analyze enterprise.
4. Establish SMART
satellite-level metric goals.
5. Create strategies.
6. Identify high potential
improvement areas and
establish related SMART
30,000-foot-level metric
goals.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 65
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
g
7. Identify and execute
projects.
8. Assess project's
completion impact on
enterprise goals.
9. Maintain the gain.
Linkage of IEE with BPM
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 66
Reproduced from https://www.smartersolutions.com/business-system-iee/
© Smarter Solutions, Inc. 34 www.SmarterSolutions.com
Team Exercise: Objectives
• As a group, we will discuss how your organization’s structure would differ
from the following hospital IEE value chain.
• After being shown various performance attributes of a hospital’s value chainAfter being shown various performance attributes of a hospital s value chain,
your team is to present results from the following in a flip-chart presentation:
– Create an EIP for the determination of improvement projects, which would
benefit the enterprise as a whole.
– List attributes of a business management policy (rules) that addresses
day-to-day activities, performance monitoring, and improvement efforts.
D t diff b t th IEE/BPM t l ti t t diti l
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 67
– Document differences between the IEE/BPM system relative to traditional
approaches in the following areas (include positives and negatives for
each entry):
• Improvement project selection
• Business management
Team Exercise: Input
Vision Statement: Our hospital will maintain an occupancy
1. Describe
vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
3. Analyze
enterprise.
4. Establish
SMART
satellite-level
metric goals.
5. Create
strategies.
6. Identify high
potential improvement
areas and establish
related SMART 30,000-
foot-level metric goals.
7. Identify and
execute
projects.
8. Assess project's
completion impact
on enterprise
goals.
9. Maintain the
gain.
p p y
rate in the top 10% in our city while maintaining a full staff
of employees and providing quality of services equal to or
better than other hospitals in our area for all forms of
service, achieving a cost structure that allows for
maintaining excellent physical condition of the property.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 68
More on following
slides
© Smarter Solutions, Inc. 35 www.SmarterSolutions.com
Team Exercise:
Input
1. Describe
vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
3. Analyze
enterprise.
4. Establish
SMART
satellite-level
metric goals.
5. Create
strategies.
6. Identify high
potential improvement
areas and establish
related SMART 30,000-
foot-level metric goals.
7. Identify and
execute
projects.
8. Assess project's
completion impact
on enterprise
goals.
9. Maintain the
gain.
How would your organization’s
value chain differ?
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 69
Will demonstrate clickable Enterprise Performance Reporting System (EPRS) approach
to integrate “real-time” predictive performance metrics with processes; i.e., Y=f(X).
Team Exercise: Input
Report Finances: Value Chain Drill Down
Functional
Generic flowchart or
value-stream map
metrics
relative to
quality,
cost, and
time
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 70
Y=f(X)
© Smarter Solutions, Inc. 36 www.SmarterSolutions.com
Team Exercise: Input
Report Finances: Profit Margins Drill Down
The process is
predictable since the
last process change.
The estimated
median is 9.9 with
80% of the
occurrences from
8.7 to 11.2.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 71
Comment: On
10/1/2007 profit
margins declined
from an estimated
median of about
11.9% to about
9.9%.
Voice of the Customer: Value Chain Drill Down
Team Exercise: Input
Functional
Generic flowchart or
value-stream map
metrics
relative to
quality,
cost, and
time
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 72
© Smarter Solutions, Inc. 37 www.SmarterSolutions.com
Team Exercise: Input
Reporting VOC: Dissatisfaction Drill Down
The process is now
predictable. The
estimated
performance or
capability is a 0.131
non-conformance
rate.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 73
Comment: Customer
feedback:Poor room
cleanliness,
unfriendly staff, and
spent a of time
waiting.
Sales and Marketing: Value Chain Drill Down
Team Exercise: Input
Functional
Generic flowchart or
value-stream map
metrics
relative to
quality,
cost, and
time
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 74
© Smarter Solutions, Inc. 38 www.SmarterSolutions.com
Team Exercise: Input
Reporting Sales & Marketing: Market share
Comment: On
9/1/2007 k t
Predictable process
since last change. The
estimated median is
52.6 with 80% of the
occurrences between
51.3 to 53.8.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 75
9/1/2007 market
share decreased from
about 56% to about
53%.
Delivery of Services: Value Chain Drill Down
Team Exercise: Input
Functional
Generic flowchart or
value-stream map
metrics
relative to
quality,
cost, and
time
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 76
© Smarter Solutions, Inc. 39 www.SmarterSolutions.com
Team Exercise: Input
Reporting Delivery of Services: LOS
The process is
predictable between
subgroups and within
subgroups. The
estimated median of
262 8 with 80% of the
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 77
Comment: There are
no comments.
262.8 with 80% of the
occurrences between
149.6 to 375.9
Team Exercise: Input
Reporting Del. of Services: Weekly Errors
The process is
predictable. The
estimated error rate is
10.84 per thousand.
Comment: Process
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 78
Comment: Process
improvement was
made in week 30
where error rate
reduced from
approximately 48 to
11 per 1000 patients
© Smarter Solutions, Inc. 40 www.SmarterSolutions.com
Housekeeping: Value Chain Drill Down
Team Exercise: Input
Functional
Generic flowchart or
value-stream map
metrics
relative to
quality,
cost, and
time
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 79
Team Exercise: Input
Reporting Housekeeping: Quality
Comment: On
The process is
predictable since the
last process change.
The estimated median
is 6.8 with 80% of the
occurrences from 6.1
to 7.4.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 80
Comment: On
9/1/2007 cleaning
services quality
decreased after being
outsourced as part of
a cost reduction
program.
© Smarter Solutions, Inc. 41 www.SmarterSolutions.com
Patient Transportation: Value Chain Drill Down
Team Exercise: Input
Functional
Generic flowchart or
value-stream map
metrics
relative to
quality,
cost, and
time
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 81
Team Exercise: Input
Reporting Transportation: Diag. to Bed
Comment: Week 51
The process is
predictable since the
last process change.
The process estimated
non-conformance rate
is about 92.9%
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 82
Comment: Week 51
there was a reduction
from about 98% to
93% non-
conformance rate
relative to a criterion
of 30 minutes or less.
© Smarter Solutions, Inc. 42 www.SmarterSolutions.com
Team Exercise: Revisiting Objectives
• Present results from the following in a flip-chart presentation:
– Create an EIP for the determination of improvement projects, which would benefit
the enterprise as a whole.the enterprise as a whole.
– List attributes of a business management policy (rules) that addresses day-to-day
activities, performance monitoring, and improvement efforts. Consider the 9-step
IEE system with BPM integration.
• Example responses are: 1. Each process owner daily monitors their value chain 30,000-
foot-level metric to determine if there any special cause events that need to be
addressed. 2. Divisional management is given a monthly status update on how EIP
targeted metrics are performing and status of related improvement projects.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 83
– Document differences between the IEE/BPM system relative to traditional
approaches in the following areas (include positives/negatives for each entry):
• Improvement project selection
• Business management
Revisiting: Graphic View on the 9 Steps
to Excellence in Governance
4 Establish
1. Describe
vision and
mission.
2. Describe value chain,
including satellite-level and
30,000-foot-level metrics.
3. Analyze
enterprise.
4. Establish
SMART
satellite-level
metric goals.
5. Create
strategies.
6. Identify high
potential improvement
areas and establish
related SMART 30,000-
7. Identify and
execute
projects.
8. Assess project's
completion impact
on enterprise
goals
9. Maintain the
gain.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 84
foot-level metric goals.
goals.
Reproduced from Figure 4.7 of Integrated Enterprise Excellence Volume II, Business Deployment: A
Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
Let’s now examine a checklist for accomplishing the IEE system attributes
© Smarter Solutions, Inc. 43 www.SmarterSolutions.com
IEE Business System Checklists
• Let’s collective look at the following IEE implementation
checklists. Each person should highlight a couple important
it th t diff ti t IEE f t diti l th ditems that differentiate IEE from traditional methods.
– Define: IEE Vol. II, Section 6.2, page 170
– Measure: IEE Vol. II, Section 7.2, page 194
– Analyze: IEE Vol. II, Section 8.2, page 229
– Improve: IEE Vol. II, Section 13.2, page 370
C t l IEE V l II S ti 14 2 397
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 85
– Control: IEE Vol. II, Section 14.2, page 397
• We will discuss items that were highlighted
Revisiting: Linkage of IEE with BPM
• IEE needs to be
able to challenge
or improve theor improve the
rules/policies in an
organization.
• Thoughts about
IEE integration
with BPM?
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 86
Reproduced from https://www.smartersolutions.com/business-system-iee/
© Smarter Solutions, Inc. 44 www.SmarterSolutions.com
SELECTED ATTRIBUTES Integrated Enterprise 
Excellence (IEE)
Typical 
MBA 
Program
Traditional 
Six Sigma
Traditional 
Lean
Original 
Balanced 
Scorecard
Defines process for improvements at 
operational/project level ++ ‐ ++ ++ ‐
Defines a process for improvements at 
enterprise level ++ ‐ + + ‐
Comparison of Systems
++: Attribute included
+: Partial/incomplete Inclusion
- : Not included
Derives improvement projects from enterprise 
value chain metric performance needs ++ ‐ ‐ ‐ ‐
Uses DMAIC process to implement process 
improvements (P‐DMAIC) ++ ‐ ++ + ‐
Uses DMAIC process to integrate enterprise 
scorecards, strategic planning, business 
improvements, and control (E‐DMAIC)
++ ‐ ‐ ‐ ‐
Supports standardized graphical representation of 
selected data (dashboard) ++ + ‐ ‐ +
Aligns enterprise level business metrics (satellite‐
++ ‐ ‐ ‐ ‐level) and operational metrics (30,000‐foot‐level) ++ ‐ ‐ ‐ ‐
Includes process for definition of rational metrics, 
aligned at operational and enterprise level ++ + ‐ ‐ ‐
Includes process for distinguishing between 
"common cause" and "special cause" problems so 
as to eliminate firefighting
++ ‐ ‐ ‐ ‐
Integrates best practices of multiple disciplines: 
SS, Lean, DOE, etc. ++ ‐ ‐ ‐ ‐
Business System Maturity Model
• Attributes of a business system maturity model
– EPM/BPM based Business System in Place
Process aligned metric usage A business system– Process aligned metric usage
– Predictive performance reporting
– Automation in reporting
– Decisions based on performance metrics
– Entire enterprise linked through a single reporting system
– Strategies developed from performance gaps
– Strategic alignment of improvement efforts
A business system
maturity model form is
provided near the end of
the course material.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 88
g g p
• A 1-10 score is to determined for each attribute, where 10 is
perfection.
– The lowest of the eight attribute scores is the overall organization maturity
model score.
© Smarter Solutions, Inc. 45 www.SmarterSolutions.com
Individual Exercise: Your Business
System Maturity Model Assessment
• Using the blank business system maturity model form that
is provided near the end of the workshop hand-out material,
h t d t i ti ’ ll t it d lwhat do you rate your organization’s overall maturity model
score to be?
• At the beginning of this workshop, I said you reported
directly to your CEO. You now no longer have this
reporting.
Wh t ld b t t f i i it b i t
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 89
• What could be your next step for increasing its business system
maturity?
• To address this question, you could gain insight to addressing
this question by examining the attributes that have the lowest
maturity model scores.
IEE Business System Evolution
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 90
© Smarter Solutions, Inc. 46 www.SmarterSolutions.com
Integrated Enterprise Excellence System
• Can effectively integrate environmental impact efforts, VOC, supply
chain, etc. activities; i.e., silo activity avoidance
One of the five book IEE series is available as a free e book• One of the five-book IEE series is available as a free e-book
• Descriptive IEE Videos
– Issues with our Current Business Management System and Resolution
– The Integrated Enterprise Excellence Business Management System
• Documented IEE case study
– Oracle Packaging, which manufactures aluminum foil
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 91
– Case study documentation in Smarter Solutions’ website resource library
• American Management Association article
• Video
See www.smartersolutions.com
Readdressing Learning Objectives
• Summarize problems with current business management
systems.
• Describe issues with current process improvement efforts.
• Describe benefits of predictive scorecards.
• Describe an enhanced system where business metric
improvement needs pull for projects that benefit the
business as a whole.
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 92
© Smarter Solutions, Inc. 47 www.SmarterSolutions.com
Q & A
Forrest W. Breyfogle III
Contact Information
Phone: 512.918.0280
Email: forrest@smartersolutions.com
Web: www.smartersolutions.com
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 93
Potential Team Exercise
Solution
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 94
© Smarter Solutions, Inc. 48 www.SmarterSolutions.com
Potential Team Exercise
Solution
Step 4 Step 5 Step 6 Step 7
Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 95
 
Business System 
Maturity
EPM/BPM based 
Business System in 
Place
Process aligned 
metric usage
Predictive 
performance 
reporting
Automation in 
reporting
Decisions based on 
performance metrics
Entire enterprise 
linked through a 
single reporting 
system
Strategies 
developed from 
performance gaps
Strategic alignment 
of improvement 
efforts
10
EPM/BPM part of 
the culture100%100%100%100%100%100%100%
990%100%100%80%85%100%100%85%
880%100%85%60%70%85%100%70%
770%100%70%40%55%70%80%55%
655%100%55%20%40%55%60%40%
540%80%40%few25%40%40%25%
425%60%25%few10%25%20%10%
310%40%10%fewfew10%SomeSome
25%20%fewfewfewfewSomeSome
1
No uniform 
business systemfewfewfewfewfewSomeSome
 
Description
There is an orchestration of EPM and BPM efforts throughout the business for the enterprise and daily 
business processes, where the most appropriate processes are automated
A EPM system is being used to  determine targeted strategies that are aligned to financial  metric 
improvement desires, which results in time‐series predictive measurement goals that pull process 
improvement efforts, which in turn have enterprise‐as‐a‐whole benefit
Operational managers are using predictive performance reporting and statistical analyses in their status 
meetings and decision‐making process within their BPM implementation
Software is being used to automatically update the value chain’s operational and financial time‐series 
predictive operational and financial performance metrics
A value chain is linking business and operational processes throughout the organization with predictive 
scorecard performance reports‐outs, when appropriate
Business and operational processes are time‐series tracked so that when a process is stable a predictive 
statement is provided
Processes are being documented (and in some cases automated) through a Business Process Management 
(BPM) initiative; a Lean Six Sigma process improvement program has been undertaken; and/or a Lean 
program using Kaizen events has been implemented with value‐stream assessments
KPIs’ performance are being tracked and reported over time; however, there is no systematic linkage between 
these metrics and a structured process improvement methodology
Executive management has  identified some overall business KPIs and are using them is some decision making 
and strategic planning.
Limited use of defined processes, performance metrics.
V06-24-09
Smarter Solutions, Inc.
COURSE EVALUATION
Name: _________________________________________________ Date: _________________________________
(Note: providing your name is optional, but it can help us address specific issues you may have.)
Course Name: _____________________________________________________________
Instructor (A): ______________________________________ Instructor (B): __________________________________
Previous Knowledge & Experience: The following information is requested for the purpose of generating a knowledge & experience
level baseline of the respondents.
1. To what extent have you previously learned and applied statistical concepts and tools in your work environment?
To No To a Small To a Moderate To a Great To a Very
Extent Extent Extent Extent Great Extent
1 2 3 4 5  1 2 3 4 5
2. To what extent have you previously learned and applied process improvement methodologies in your work environment?
To No To a Small To a Moderate To a Great To a Very
Extent Extent Extent Extent Great Extent
1 2 3 4 5  1 2 3 4 5
Please use the following scale to indicate your level of agreement with the following statements and circle the appropriate rating. If you select
a 2 or 1 rating, what should be improved? It was NOT satisfactory to you.
1 2 3 4 5
Strongly
Disagree
(Unsatisfactory)
Disagree
(Unsatisfactory)
Neither Agree
or Disagree
(Neutral)
Agree
(Satisfactory)
Strongly Agree
(Satisfactory)
Unsatisfactory Satisfactory
Content
3. This course provided a good understanding of IEE and Lean Six Sigma techniques. 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
4. This course taught me something I can apply at work. 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
5. Overall, this course provided a good balance between lecture, discussion, examples 1 2 3 4 5
and exercises.
(If 2 or 1 what should be improved?)____________________________________________________________________________________
6. The content of this course was taught in a logical sequence. 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
Instructor(s) If there were multiple instructors delivering this session, please rate them independently.
7. The instructor demonstrated a thorough understanding of the content. (Instr A) 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
(Instr B) 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
8. The instructor encouraged participation during the class. (Instr A) 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
(Instr B) 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
9. The instructor responded to the needs of the learners. (Instr A) 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
(Instr B) 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
10. The instructor was well prepared. (Instr A) 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
(Instr B) 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
11. Coaching sessions were effective (leave blank if course or instructor does not conduct formal coaching sessions).
(Instr A) 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
(Instr B) 1 2 3 4 5
(If 2 or 1 what should be improved?)____________________________________________________________________________________
Iee one day workshop handout  material, romania 5-9-13 [compatibility mode] (1)

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Iee one day workshop handout material, romania 5-9-13 [compatibility mode] (1)

  • 1. © 1992-2013 by Smarter Solutions, Inc. Austin, TX www.smartersolutions.com 1 Integrated Enterprise Excellence One-day Workshop Smarter Solutions, Inc. www.smartersolutions.com info@smartersolutions.com 512-918-0280 Referenced chapters, examples, and exercises are from The Integrated Enterprise Excellence System: Volumes II Forrest W. Breyfogle III, Bridgeway Books/Citius Publishing, 2008 Note All contents of these materials are Copyright © 1992-2013 Smarter Solutions, Inc.. All rights reserved. The phrases 'smarter solutions', 'satellite-level', '30,000-foot-level' , '50-foot-level', Integrated enterprise excellence, IEE, and the logo featuring the words 'smarter solutions' and an upwardly moving arrow are each trademarks or registered trademarks of Smarter Solutions, Inc.
  • 2. © 1992-2013 by Smarter Solutions, Inc. Austin, TX www.smartersolutions.com 2 Agenda 1. Business Management and Improvement Practices  Business Management Systems  Team Exercise: Assessment of current business management and improvement practices 2. Steps 1-2 of the 9-step Integrated Enterprise Excellence (IEE) Business Management System  Vision and mission  Value chain creation for integrating processes with performance measures  Issues with traditional performance metric reporting  An enhanced scorecard methodology with predictive scorecards  Team Exercise: Comparing performance reporting methodologies  Team Exercise: Creating an enterprise value chain with functional metrics 3. Steps 3-9 of the 9-step IEE Business Management System  Analysis of the enterprise  Establishment of financial goals for corporate and operational units  Creation of strategies  Identification of high-potential improvement areas & establishment of operational goals  Identification and execution of projects  Assessment of each project’s final impact on goals  Continuation of the gain 4. Linkage of IEE with Business Process Management (BPM)  Roadmap for IEE/BPM linkage  Team Exercise: Creation of a hospital’s business management & improvement system 5. Wrap-up  IEE business system checklist  Tabular comparison of systems, which illustrates the benefits of IEE  Business system maturity model  Individual Exercise: Determination of the maturity for your business management system  IEE evolution and its benefits
  • 3. © Smarter Solutions, Inc. 1 www.SmarterSolutions.com Integrated Enterprise Excellence One-day Workshop Forrest W. Breyfogle, III Smarter Solutions IncSmarter Solutions, Inc. www.SmarterSolutions.com Learning Objectives • Summarize problems with current business management systems. • Describe issues with current process improvement efforts. • Describe benefits of predictive scorecards. • Describe an enhanced system where business metric improvement needs pull for projects that benefit the business as a whole. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 2
  • 4. © Smarter Solutions, Inc. 2 www.SmarterSolutions.com Reference Books • Much of this workshop’s content is taken from the Integrated Enterprise Excellence five-book series. References will be made during this training to book sections for• References will be made during this training to book sections for additional information about topics. – The primary workshop reference will be Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard (IEE Vol. II) Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 3 Business Management Practices • Management by objectives (from Wikipedia) – Management by objectives (MBO), also known as management by results (MBR), is a process of defining objectives within an organization so that(MBR), is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization in order to achieve them. – The term "management by objectives" was first popularized by Peter Drucker in his 1954 book The Practice of Management. – The essence of MBO is participative goal setting, choosing course of actions and decision making. – An important part of the MBO is the measurement and the comparison of the Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 4 An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. – Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.
  • 5. © Smarter Solutions, Inc. 3 www.SmarterSolutions.com Business Management Practices • Exception management (from Wikipedia) – Exceptions are special cases that deviate from the normal behavior in a business process and need to be cared for exceptionally, normally by humanbusiness process and need to be cared for exceptionally, normally by human intervention. – Their cause might include: process deviation, malformed data, infrastructure or connectivity issues, poor quality business rules, etc. – Exception management is the practice of investigating, resolving and handling such occurrences by using skilled staff and software tools. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 5 Business Management Practices • Management by wandering around (from Wikipedia) – The term management by wandering around (MBWA), also management by walking around, refers to a style of business management which involveswalking around, refers to a style of business management which involves managers wandering around, in an unstructured manner, through the workplace(s), at random, to check with employees, or equipment, about the status of ongoing work. – The emphasis is on the word wandering as an impromptu movement within a workplace, rather than a plan where employees expect a visit from managers at more systematic, pre-approved or scheduled times. – The expected benefit is that a manager, by random sampling of events or Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 6 p g , y p g employee discussions, is more likely to facilitate the productivity and total quality management of the organization, as compared to remaining in a specific office area and waiting for employees, or the delivery of status reports, to arrive there, as events warrant in the workplace.
  • 6. © Smarter Solutions, Inc. 4 www.SmarterSolutions.com Business Management Practices • Quality Management System (QMS) [from Wikipedia] – QMS can be expressed as the organizational structure, procedures, processes and resources needed to implement quality management.and resources needed to implement quality management. – Early systems emphasized predictable outcomes of an industrial product production line, using simple statistics and random sampling. – By the 20th century, labor inputs were typically the most costly inputs in most industrialized societies, so focus shifted to team cooperation and dynamics, especially the early signaling of problems via a continuous improvement cycle. – In the 21st century, QMS has tended to converge with sustainability and transparency initiatives as both investor and customer satisfaction and Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 7 transparency initiatives, as both investor and customer satisfaction and perceived quality is increasingly tied to these factors. – Of all QMS regimes, the ISO 9000 family of standards is probably the most widely implemented worldwide - the ISO 19011 audit regime applies to both, and deals with quality and sustainability and their integration. Business Management Practices • Total Quality Management (TQM) [from Wikipedia] – TQM is an integrative philosophy of management for continuously improving the quality of products and processes.the quality of products and processes. – TQM is based on the premise that the quality of products and processes is the responsibility of everyone involved with the creation or consumption of the products or services offered by an organization, requiring the involvement of management, workforce, suppliers, and customers, to meet or exceed customer expectations. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 8
  • 7. © Smarter Solutions, Inc. 5 www.SmarterSolutions.com Business Management Practices • Business process management (BPM) [from Wikipedia] – BPM has been referred to as a "holistic management" approach to aligning an organization's business processes with the wants and needs of clients.organization s business processes with the wants and needs of clients. – It promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. BPM attempts to improve processes continuously. It can therefore be described as a "process optimization process." – It is argued that BPM enables organizations to be more efficient, more effective and more capable of change than a functionally focused, traditional hierarchical management approach. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 9 g pp – This foundation closely resembles other Total Quality Management or Continuous Improvement Process methodologies or approaches. – BPM goes a step further by stating that this approach can be supported, or enabled, through technology to ensure the viability of the managerial approach in times of stress and change. Team Exercise • List the business management systems that your organizations are using. – List the positives and negatives of these systems • Your executive management has concluded that the hospital where you are employed has excessive costs and unsatisfactory customer satisfaction. – You have a new position, Director of Business Operations Systems and Improvement You report to the CEO Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 10 Systems and Improvement. You report to the CEO. – Your team is to improve the hospital’s operations. • What improvement projects does your team suggest should be created? • What else should be undertaken?
  • 8. © Smarter Solutions, Inc. 6 www.SmarterSolutions.com Team Exercise: Group Discussion • Do you think that this situation could occur? • Thoughts about typical business management systems that organizations are using; e.g., management by objective, management by exception, management by walking around, others? – What are the opportunities for improving these approaches? • Share the name of one improvement project that your team Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 11 selected. – How did you select that project? Who owns completion? – Do you think that the project could “fall off a process- improvement practitioner’s plate” because of other priorities? Team Exercise: Group Discussion • What else should be done when managing the hospital? • Four years from now the company’s industry sector will experience hard times and even more financial pressures – Do you think that the process improvement function will survive downsizing efforts? Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 12
  • 9. © Smarter Solutions, Inc. 7 www.SmarterSolutions.com Improvement Project Selection • In process improvement programs, projects are typically selected from a ranked list of opportunities. – This push (using as a Lean term) for a project creation can lead to significant resources being spent on the sub-optimization of processes, where the business as a whole does not benefit. • What other methods have you encountered for selecting improvement projects? Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 13 Other Actions • Organizational improvement efforts benefit if they are integrated with a predictive scorecard and l ti ll /i ti l t t i l i t th t thanalytically/innovatively strategic planning system so that the – organization can move toward achievement of the 3 Rs of business; i.e., everyone doing the Right things, and doing them Right, at the Right time. • This objective is achieved through the Integrated Enterprise Excellence (IEE) business system Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 14 Excellence (IEE) business system.
  • 10. © Smarter Solutions, Inc. 8 www.SmarterSolutions.com Graphic View on the 9 Steps to Excellence in Governance 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5 Create 6. Identify high potential improvement 7. Identify and 8. Assess project's completion impact 9 Maintain the Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 15 5. Create strategies. areas and establish related SMART 30,000- foot-level metric goals. execute projects. completion impact on enterprise goals. 9. Maintain the gain. Figure 4.7 Integrated Enterprise Excellence, Volume II, Copyright 2008 1. Describe vision and mission Mission, vision and values outlines • Who we are. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. • What we seek to achieve. • When and how we want to achieve it. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 16 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain.
  • 11. © Smarter Solutions, Inc. 9 www.SmarterSolutions.com 2. Create the Enterprise Value Chain 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. Basic “Business Value Chain” chart represents activities, without regard 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. to the organization chart Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 17 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. 2. Create the Enterprise Value Chain 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Basic value chain can be Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 18 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. Basic value chain can be expanded to include significant inputs and outputs
  • 12. © Smarter Solutions, Inc. 10 www.SmarterSolutions.com 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 2. Create the Enterprise Value Chain 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Activities outside of the main flow Activities outside of the Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 19 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. Activities outside of the main flow can be added as standalone units outside of the main flow can be added as standalone units 2. Create the Enterprise Value Chain 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 20 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. Shaded steps can be “drilled down”
  • 13. © Smarter Solutions, Inc. 11 www.SmarterSolutions.com Develop Product Market Product Sell Product Produce & Deliver Product Invoice and Collect Payment Report Financials InformationHuman Days Sales Outstanding (DSO) Percent Annualized Gain in Gross Revenue Gross Revenue Defective Rate Lead Time Developed Product Design Quality Product Development Lead Time Work in Process (WIP) Voice of the Customer (VOC) Labor Quote Quality RFQ Response Acceptance Rate Quote Response Time Net Profit Margins Existing Customer Additions New Customer Additions Timely Inputs Effective Inputs 2. Create the Enterprise Value Chain 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. Step 1 Step 2 Decision Step 3 No Step 4 Yes End Start Information Technology (IT) Human Relations (HR) Enterprise Process Management (EPM) On-time Delivery Labor Relations Safety and Environment Legal Finance Internal Process Reworks Product Margins TOC Throughput Learning and Growth 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 21 Step 5 Step 7Step 6 Process Step 6 Start Step 6A Step 6B Step 6C End g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. Subprocess drilldown example VOC step drill down Complaints Audits Receive complaint Evaluation of complaint by Enterprise Process Management Department Document complaint in data warehouse Document results in data warehouse and give feedback to person who complained Weekly someone acts as a customer and documents findings Document results in data warehouse Develop Product Market Product Sell Product Produce & Deliver Product Invoice and Collect Payment Report Financials Information Technology (IT)Human Relations (HR) Days Sales Outstanding (DSO) Percent Annualized Gain in Gross Revenue Gross Revenue Defective Rate Lead Time Developed Product Design Quality Product Development Lead Time Work in Process (WIP) On-time Delivery Voice of the Customer (VOC) Labor Relations Safety and Environment Quote Quality RFQ Response Acceptance Rate Internal Process Reworks Quote Response Time Net Profit Margins Existing Customer Additions New Customer Additions Timely Inputs Customer Satisfaction with Feedback Client turnover Surveys Internal Survey Conduct random survey to 1% of end customers, asking about system problems and one suggestion what should done differently to improve. Document results in data warehouse g Conducts a survey of 1/12 of the employees every month; e.g., as described in chapter 43 of I l ti Si Si Document results in data warehouse Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 22 Enterprise Process Management (EPM) Legal Finance Reworks Product Margins TOC Throughput Learning and Growth Data Warehouse Monthly statistically analyze complaint, audits, survey, and retention data Report on findings, making suggestions, when appropriate, for improvement Monthly evaluate 30,000-foot- level reported defective and on- time delivery metrics, checking for metric degradation and improvement project(s) status Implementing Six Sigma
  • 14. © Smarter Solutions, Inc. 12 www.SmarterSolutions.com 2. Create the Enterprise Value Chain 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. Produce and Deliver Products 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Adding enterprise & operational level f t i Lead Time Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 23 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. performance metrics completes value chain Defective Rate WIP On-time Del. After determining what to measure, need to then select performance reporting methodology. Vol II, Fig. 7.1 Performance Reporting: Table of Numbers What conclusion would you make from this report? Performance Meas ure  F Y 2001  Actual  F Y 2002  Actual  F Y 2003  Actual  F Y 2003   Amended  F Y 2004  Amended  Percentage of cus tomers  s atis fied  with dis patch s taff  99.99% 100% 99.99% 98% 98% Percentage of priority one calls   dis patched to field crews  within  80 minutes  of receipt  99.99% 99% 99.99% 95% 95% L abor cos t per cus tomer call  taken in Dis patch Operations    $4.20  $5.31  $5.09  $4.88  $5.09  Number of calls  taken through  Dis patch Operations   62,054 59,828 63,046 60,000 60,000 Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 24 Number of priority one calls   dis patched to field crews   5,797 4,828 6,686 5,000 6,500 Number of work orders  and  component parts  (s egments )  created in databas e  8,226 4,724 7,742 5,500 6,700 Reproduced from Table 3.1 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
  • 15. © Smarter Solutions, Inc. 13 www.SmarterSolutions.com Performance Reporting • The next four slides will describe/compare the revenue- generated performance of five sales personnel. – Instead of sales people, what is something similar in your organization that could be compared? – What response instead of revenue could be compared? Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 25 Performance Reporting: Pie Chart What conclusion would you make from this report? 1 2 3 4 5 Person Sales 5 2 1 1 2 3 4 5 Person Sales 2 1 5 Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 26 4 3 4 3 Reproduced from Figure 3.1 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
  • 16. © Smarter Solutions, Inc. 14 www.SmarterSolutions.com Performance Reporting: Line Chart What conclusion would you make from this report? 1 2 3 4 5 Person Sales 60 140 100 nue(ThousandDollars) Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 27 20 Reven Months 5 6 7 8 9 11 12 1 2 34 Reproduced from Figure 3.1 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard Performance Reporting: Bar Chart What conclusion would you make from this report? 100 200 400 300 enue(ThousandDollars) 500 600 1 2 3 4 5 Person Sales Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 28 100 Reve 0 5 6 7 8 9 10 11 12 1 24 3 Months Reproduced from Figure 3.2 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
  • 17. © Smarter Solutions, Inc. 15 www.SmarterSolutions.com Performance Reporting: Bar Chart What conclusion would you make from this report, where data are from several years? 200 400 300 ue(ThousandDollars) 500 600 500 Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 29 432143214321432143214321432143214321432143214321 100 Revenu Year Month 5 6 7 8 9 10 11 12 1 24 3 Reproduced from Figure 3.3 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard What conclusion would you make from this report? Monthly SCORECARD Business Unit Name Measurement Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 CUSTOMER Customer Metric A 0.63574 0.653576 0.660404 0.732996 0.62521 0.708566 0.641873 0.727115 0.687201 0.6123 0.670894 0.6341 Yellow if equal to or higher than 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 Performance Reporting: Stoplights Green if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 Customer Metric B 1.866044 1.804823 1.777056 1.87373 1.791988 1.826504 1.824634 1.799849 1.822007 1.838969 1.87088 1.893155 Yellow if equal to or higher than 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 Green if equal to or higher than 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 Customer Metric C 0.82475 0.730724 0.627179 0.728212 0.751174 0.801946 0.780248 0.761874 0.68133 0.790902 0.728168 0.790485 Yellow if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 Green if equal to or higher than 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 FINANCE Finance Metric A 3.387525 2.965966 3.042505 2.891057 3.485847 2.867981 2.764183 3.297147 3.301612 2.892969 2.737161 3.0936 Yellow if equal to or higher than 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 Green if equal to or higher than 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 Finance Metric B 2.09819 2.254758 2.345674 2.207099 2.316309 2.214396 2.156223 2.493305 2.509988 2.163489 2.168469 2.288786 Yellow if equal to or higher than 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 Finance Metric C 0.762611 0.958071 1.051227 0.867969 1.158351 0.82278 0.800541 0.989747 0.980718 0.611179 0.789868 1.035084 Yellow if equal to or higher than 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Green if equal to or higher than 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 Finance Metric H 0.222716 0.480099 0.296397 0.203 0.3541 0.2326 0.1693 0.4552 0.2278 0.194 0.288 0.321 Yellow if equal to or higher than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 Green if equal to or higher than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 Finance Metric I 0.490024 0.27568 0.190908 0.357 0.5284 0.4058 0.3391 0.3347 0.3247 0.327 0.286 0.383 Yellow if equal to or higher than 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Green if equal to or higher than 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 INTERNAL BUSINESS OPERATIONS IBO Metric A 1.7693 1.73499 1.80064 1.76888 1.76068 1.79877 1.863956 1.862206 1.829389 1.875557 1.741041 1.69758 Yellow if equal to or higher than 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 Green if equal to or higher than 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 IBO Metric B 0.20531 0.18053 0.184817 0.16204 0.18 0.178 0.202 0.205 0.176 0.226 0.201 0.197 Yellow if equal to or less than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 Green if equal to or less than 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 IBO Metric C 0.427692 0.505666 0.504354 0.568529 0.44906 0.464186 0.446241 0.422419 0.445758 0.475769 0.340339 0.366324 Yellow if equal to or less than 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 Green if equal to or less than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 IBO Metric D 2.66634 2.64814 2.69324 2.67166 2.68 2.66 2.67 2.68 2.65 2.67 2.67 2.69 Yellow if equal to or less than 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 Green if equal to or less than 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 Let’s examine a different set of data. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 30 Green if equal to or less than 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 IBO Metric F 0.113318 0.157456 0.163175 0.146534 0.113 0.143 0.143 0.173 0.143 0.163 0.133 0.143 Yellow if equal to or less than 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 Green if equal to or less than 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 IBO Metric G 0.043949 0.078984 0.051823 0.055083 0.110424 0.068515 0.080985 0.076333 0.07306 0.077379 0.103885 0.069867 Yellow if equal to or less than 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 Green if equal to or less than 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 IBO Metric H 1.222222 1.222222 1.166667 1 1 1 1 1.166667 1.333333 1.25 1.230769 1.266667 Yellow if equal to or higher than 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 Green if equal to or higher than 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 LEARNING AND GROWTH L&G Metric A 4.47048 5.23666 4.17365 4.57158 4.54306 4.31449 4.67242 3.67574 4.94651 3.57205 4.92629 4.55868 Yellow if equal to or less than 5 5 5 5 5 5 5 5 5 5 5 5 5 Green if equal to or less than 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 L&G Metric B 68.1916 69.643 57.0598 62.4947 59.6528 74.1863 77.7315 54.8459 57.6235 83.5998 66.4914 54.2673 Yellow if equal to or higher than 65 65 65 65 65 65 65 65 65 65 65 65 65 Green if equal to or higher than 75 75 75 75 75 75 75 75 75 75 75 75 75 Reproduced from Table 3.5 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
  • 18. © Smarter Solutions, Inc. 16 www.SmarterSolutions.com Performance Reporting: Stoplights Red/Yellow/Green visuals are the most popular concept in scorecards because of the stoplight relationship. – Only compares the instantaneous performance to a set goal – No insight into trends or historical performance Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 31 historical performance Graphics found at http://download.oracle.com/docs/cd/E15051_01/web.1111/b31973/dv_intro.htm If the goal is not a specification, it is often ignored. Is that a good behavior? Performance Reporting: Balanced Scorecard Is your organization using the Balanced Scorecard? Visionand Strategy Financials ProcessesCustomer Balanced Scorecard 10 0 CUSTOMER SATISFACTION 30 PROFIT IN % 30 PROFIT IN % 30 PROFIT IN % Each Category has: Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 32 Learning 0 QUALITY SPEED COURTESY COMPETENCE COMMUNICATION HELPFULNESS ! 0 10 20 1 2 3 4 5 6 7 8 9 10 11 12 ! 0 10 20 1 2 3 4 5 6 7 8 9 10 11 12 0 10 20 1 2 3 4 5 6 7 8 9 10 11 12 ! Each Category has: Objectives, measures, targets, and initiatives Reproduced from Table 3.5 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
  • 19. © Smarter Solutions, Inc. 17 www.SmarterSolutions.com Performance Reporting: Balanced Scorecard Thoughts about the BSC approach methodology? Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 33 Vol. II, Fig. 3.6 Performance Reporting: Alternatives Tabular Reporting Performance Meas ure  F Y 2001  Actual  FY  2002  Actual  F Y 2003  Actual  FY  2003   Amended  F Y 2004  Amended  Percentage of cus tomers  s atis fied  with dis patch s taff  99.99% 100% 99.99% 98% 98% Percentage of priority one calls   dis patched to field crews  within  80 minutes of receipt 99.99% 99% 99.99% 95% 95% Financials Balanced Scorecard Classic Bar Charts 80 minutes  of receipt  L abor cos t per cus tomer call  taken in Dis patch Operations    $4.20  $5.31  $5.09  $4.88  $5.09  Number of calls  taken through  Dis patch Operations  62,054 59,828 63,046 60,000 60,000 Number of priority one calls   dis patched to field crews   5,797 4,828 6,686 5,000 6,500 Number of work orders  and  component parts  (s egments )  created in databas e  8,226 4,724 7,742 5,500 6,700 600000 500000 400000 llars) 1 2 3 4 5 Person Sales Visionand Strategy Processes Learning Customer 0 10 0 QUALITY SPEED COURTESY COMPETENCE COMMUNICATION HELPFULNESS CUSTOMER SATISFACTION ! 0 10 20 30 1 2 3 4 5 6 7 8 9 10 11 12 PROFIT IN % ! 0 10 20 30 1 2 3 4 5 6 7 8 9 10 11 12 PROFIT IN % 0 10 20 30 1 2 3 4 5 6 7 8 9 10 11 12 PROFIT IN % ! Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 34 Month 321121110987654 300000 200000 100000 0 Revenue(Dol Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05 Finance Metric B 2.10 2.25 2.35 2.21 2.32 2.21 2.16 2.49 2.51 2.16 2.17 2.29 2.14 Yellow if equal to or higher than 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 What other approach might we use to present data?
  • 20. © Smarter Solutions, Inc. 18 www.SmarterSolutions.com Process Tracking and Performance Metrics: Issues and Resolution TYPICAL METRICS • Based on fiscal yearBased on fiscal year • Unrelated to improvement system • Point to point comparisons Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 35 Process Tracking and Performance Metrics: Issues and Resolution However … Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 36 Xs Xs Xs Reproduced from Figure 4.8 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
  • 21. © Smarter Solutions, Inc. 19 www.SmarterSolutions.com Process Tracking and Performance Metrics: Issues and Resolution EFFECTIVE METRICS • View the enterprise as a system of processesp y p • Acknowledge the effect of variability • Support long-lasting systematic process improvement Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 37 Let’s next examine how we can create effective metrics. Monthly SCORECARD Business Unit Name Measurement Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 CUSTOMER Customer Metric A 0.63574 0.653576 0.660404 0.732996 0.62521 0.708566 0.641873 0.727115 0.687201 0.6123 0.670894 0.6341 Yellow if equal to or higher than 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 Green if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 Customer Metric B 1.866044 1.804823 1.777056 1.87373 1.791988 1.826504 1.824634 1.799849 1.822007 1.838969 1.87088 1.893155 Yellow if equal to or higher than 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 Green if equal to or higher than 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 Customer Metric C 0.82475 0.730724 0.627179 0.728212 0.751174 0.801946 0.780248 0.761874 0.68133 0.790902 0.728168 0.790485 Yellow if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 Green if equal to or higher than 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 FINANCE Finance Metric A 3.387525 2.965966 3.042505 2.891057 3.485847 2.867981 2.764183 3.297147 3.301612 2.892969 2.737161 3.0936 Yellow if equal to or higher than 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 Green if equal to or higher than 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 Finance Metric B 2.09819 2.254758 2.345674 2.207099 2.316309 2.214396 2.156223 2.493305 2.509988 2.163489 2.168469 2.288786 Yellow if equal to or higher than 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 Finance Metric C 0.762611 0.958071 1.051227 0.867969 1.158351 0.82278 0.800541 0.989747 0.980718 0.611179 0.789868 1.035084 Yellow if equal to or higher than 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Green if equal to or higher than 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 Finance Metric H 0.222716 0.480099 0.296397 0.203 0.3541 0.2326 0.1693 0.4552 0.2278 0.194 0.288 0.321 Yellow if equal to or higher than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 Green if equal to or higher than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 Finance Metric I 0.490024 0.27568 0.190908 0.357 0.5284 0.4058 0.3391 0.3347 0.3247 0.327 0.286 0.383 Yellow if equal to or higher than 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Green if equal to or higher than 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 Let’s examine Finance Metric B Stoplight Scorecard q g INTERNAL BUSINESS OPERATIONS IBO Metric A 1.7693 1.73499 1.80064 1.76888 1.76068 1.79877 1.863956 1.862206 1.829389 1.875557 1.741041 1.69758 Yellow if equal to or higher than 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 Green if equal to or higher than 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 IBO Metric B 0.20531 0.18053 0.184817 0.16204 0.18 0.178 0.202 0.205 0.176 0.226 0.201 0.197 Yellow if equal to or less than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 Green if equal to or less than 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 IBO Metric C 0.427692 0.505666 0.504354 0.568529 0.44906 0.464186 0.446241 0.422419 0.445758 0.475769 0.340339 0.366324 Yellow if equal to or less than 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 Green if equal to or less than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 IBO Metric D 2.66634 2.64814 2.69324 2.67166 2.68 2.66 2.67 2.68 2.65 2.67 2.67 2.69 Yellow if equal to or less than 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 Green if equal to or less than 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 IBO Metric F 0.113318 0.157456 0.163175 0.146534 0.113 0.143 0.143 0.173 0.143 0.163 0.133 0.143 Yellow if equal to or less than 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 Green if equal to or less than 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 IBO Metric G 0.043949 0.078984 0.051823 0.055083 0.110424 0.068515 0.080985 0.076333 0.07306 0.077379 0.103885 0.069867 Yellow if equal to or less than 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 Green if equal to or less than 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 IBO Metric H 1.222222 1.222222 1.166667 1 1 1 1 1.166667 1.333333 1.25 1.230769 1.266667 Yellow if equal to or higher than 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 Green if equal to or higher than 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 LEARNING AND GROWTH L&G Metric A 4.47048 5.23666 4.17365 4.57158 4.54306 4.31449 4.67242 3.67574 4.94651 3.57205 4.92629 4.55868 Yellow if equal to or less than 5 5 5 5 5 5 5 5 5 5 5 5 5 Green if equal to or less than 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 L&G Metric B 68.1916 69.643 57.0598 62.4947 59.6528 74.1863 77.7315 54.8459 57.6235 83.5998 66.4914 54.2673 Yellow if equal to or higher than 65 65 65 65 65 65 65 65 65 65 65 65 65 Green if equal to or higher than 75 75 75 75 75 75 75 75 75 75 75 75 75 Let’s examine this corporation’s red-yellow-green scorecard Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 38 33% red & 50% green? Special or Common Cause? Green if equal to or higher than 3.1 3.1 3.1 3.1 3.1 3.1 Finance Metric B 2.09819 2.254758 2.345674 2.207099 2.316309 Yellow if equal to or higher than 2.2 2.2 2.2 2.2 2.2 2.2 Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 C 3.1 3.1 3.1 3.1 3.1 3.1 3.1 2.214396 2.156223 2.493305 2.509988 2.163489 2.168469 2.288786 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.25 2.25 2.25 2.25 2.25 2.25 2.25 0 82278 0 800541 0 989747 0 980718 0 611179 0 789868 1 035084
  • 22. © Smarter Solutions, Inc. 20 www.SmarterSolutions.com Traditional Performance Reporting Example – Red-Yellow-Green Scorecard Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05 Finance Metric B 2.10 2.25 2.35 2.21 2.32 2.21 2.16 2.49 2.51 2.16 2.17 2.29 2.14 Yellow if equal to or higher than 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 TRADITIONAL  SCORECARD  EXCERPT                                Building a Better Scorecard 2.7 2.6 2.5 2.4 2.3 2.2 2.1 2.0 Response _ X=2.2583 UCL=2.6192 Individuals Control Chart 99 95 90 80 70 60 50 40 30 20 10 5 Percent 32.657 Normal Probability Plot IEE Improved Reporting for Process Assessment and Improvement q g INDIVIDUALS CONTROL CHART The metric is colored red when a goal is not being met  and corrective action needs to be taken. This can result in counter‐productive initiatives, 24/7 firefighting, the  blame game, and proliferation of fanciful stories about why goals Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 39 4 2.2 Histogram Aug'05 Jul'05 Jun'05 M ay'05 Apr'05 M ar'05 Feb'05 Jan'05 Dec'04 Nov'04 Oct'04 Sep'04 Aug'04 1.9 Date LCL=1.8974 2.62.52.42.32.22.12.01.9 1 Response 2.2 blame game, and proliferation of fanciful stories about why goals  weren’t met.   Most importantly, it tells us nothing about what  to expect  in the future! Vol. II, Example 3.3 Building a Better Scorecard Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05 Finance Metric B 2.10 2.25 2.35 2.21 2.32 2.21 2.16 2.49 2.51 2.16 2.17 2.29 2.14 Yellow if equal to or higher than 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 Traditional Performance Reporting Example – Red-Yellow-Green Scorecard 1 Integrated Enterprise Excellence (IEE) Scorecard System Process is predictable Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 40 So what do we predict? If there is a recent region of stability, we can say that the process is predictable.
  • 23. © Smarter Solutions, Inc. 21 www.SmarterSolutions.com Building a Better Scorecard Individuals Control Chart C LCL=1.90 UCL= 2.62 1.8 2.0 2.2 2.4 2.6 Mean = 2.26 Response Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 41 If a process is predictable, we can consider that data from the recent region of stability are a random sample of the future. Observation 2 41 3 5 6 7 8 9 10 11 12 13 • The red criterion, of less than 2.2, can be applied to the histogram for 4 2.2 Normal Histogram of Response Histogram 2.23 4 ency 2.2 Histogram Building a Better Scorecard – estimation of the percentage below 2.2; – however, it is difficult to estimate from this graphic. 1 2 Freque 0 2.0 2.1 2.2 2.3 2.4 2.5 Response • A probability plot is a better approach since – if the sample data are from a predictable 2.0 2.1 2.2 2.3 2.4 2.5 Response t 99 95 80 Normal ProbabilityPlotNormal Probability Plot Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 42 • Conclude: Approx. 32.6% is below 2.2. if the sample data are from a predictable process, this tool can provide a long-term performance estimate. 2.2 32.657 Percen 2.0 2.1 2.2 2.3 2.4 2.5 2.61.9 Response 80 50 30 10 1 2.2 32.6 1.9 2.0 2.1 2.2 2.3 2.4 2.5 2.6 Response
  • 24. © Smarter Solutions, Inc. 22 www.SmarterSolutions.com Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05 Finance Metric B 2.10 2.25 2.35 2.21 2.32 2.21 2.16 2.49 2.51 2.16 2.17 2.29 2.14 Yellow if equal to or higher than 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 Traditional Performance Reporting Example – Red-Yellow-Green Scorecard Building a Better Scorecard 1 Individuals Control Chart Response LCL=1.90 UCL= 2.62 1 8 2.0 2.2 2.4 2.6 Mean = 2.26 2 2.2 32.657 Percent 99 95 80 50 30 10 1 2.2 32.6 Normal ProbabilityPlot Integrated Enterprise Excellence (IEE) Scorecard System Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 43 Observation 1.8 2 41 3 5 6 7 8 9 10 11 12 13 2.0 2.1 2.2 2.3 2.4 2.5 2.61.9 Response 1 The probability plot provides process variability insight, which Edwards Deming said was important. IEE reporting assesses predictability & then if the process is predictable provides a prediction statement. Building a Better Scorecard Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05 Finance Metric B 2.10 2.25 2.35 2.21 2.32 2.21 2.16 2.49 2.51 2.16 2.17 2.29 2.14 Yellow if equal to or higher than 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 Traditional Performance Reporting Example – Red-Yellow-Green Scorecard 1 Individuals Control Chart Response LCL=1.90 UCL= 2.62 1 8 2.0 2.2 2.4 2.6 Mean = 2.26 2 2.2 32.657 Percent 99 95 80 50 30 10 1 2.2 32.6 Normal ProbabilityPlot Integrated Enterprise Excellence (IEE) Scorecard System Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 44 Observation 1.8 2 41 3 5 6 7 8 9 10 11 12 13 2.0 2.1 2.2 2.3 2.4 2.5 2.61.9 Response 1 Predictable process with an approximate non-conformance rate of 32.6% 3 Reproduced from Table 3.5 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard
  • 25. © Smarter Solutions, Inc. 23 www.SmarterSolutions.com • IEE Enterprise Performance Reporting System (EPRS) scorecard report-out format Building a Better Scorecard IEE Scorecard 2.62.42.22.0 99 95 80 50 20 5 1 l Percent 2.2 32.657 Mean 2.258 StDev 0.1297 N 13 AD 0.531 P-Value 0.141 Aug'0 5 Jul'05 Jun'0 5 M ay'0 5 Apr'0 5 M ar'0 5 Feb'0 5 Jan'0 5 Dec'0 4 Nov'0 4 O ct'0 4 Sep'0 4 Aug'0 4 2.6 2.4 2.2 2.0 IndividualValue _ X=2.2583 UCL=2.6192 LCL=1.8974 Probability plot Normal I-chart Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 45 The process is predictable since the last process change The process estimates about 32.657% non-conformance rate Process valuesDate Reproduced from Table 3.5 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard Traditional Performance Reporting Pie Chart 1 2 3 4 5 Person Sales 5 1 1 2 3 4 Person Sales 1 5 1 2 3 4 5 Person Sales 140 100 sandDollars) Line Chart Sales data presented in different formats Bar Charts 600000 500000 1 2 3 4 5 Person Sales 4 3 2 4 52 4 3 20 60 Revenue(Thou Months 5 6 7 8 9 11 12 1 2 34 400 ndDollars) 500 600 500 Bar Charts Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 46 Month 321121110987654 400000 300000 200000 100000 0 Revenue(Dollars) 432143214321432143214321432143214321432143214321 100 200 400 300 Revenue(Thousan Year Month 5 6 7 8 9 10 11 12 1 24 3
  • 26. © Smarter Solutions, Inc. 24 www.SmarterSolutions.com IEE 30,000-foot-level Scorecard IEE Scorecard for Sales 120000 100000 n UCL=114046 60000 iation UCL=66576 I-chart of Mean I-chart of Std. Deviation Sales data presented in IEE format (before change) 99.9 99 90 50 rcent 90 50 Mean 71884 StDev 32910 N 170 AD 0.520 P-Value 0.184 343128252219161310741 80000 60000 40000 Subgroup Period SubgroupMea _ X=71884 LCL=29721 343128252219161310741 45000 30000 15000 0 Subgroup Period SubgroupStd.Dev _ X=31664 LCL=-3249 Probability plot Normal Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 47 The process is predictable between subgroups and within subgroups The est. median is 71883. with 80% of the occurrences from 29708. to 114059 200000150000100000500000 10 1 0.1 Data values Pe 114059 71884 29708 10 IEE 30,000-foot-level Scorecard IEE Scorecard for Sales 120000 100000 n UCL=114046 60000 iation UCL=66576 I-chart of Mean I-chart of Std. Deviation Sales data presented in IEE format (before change) 99.9 99 90 50 rcent 90 50 Mean 71884 StDev 32910 N 170 AD 0.520 P-Value 0.184 107411074110741 80000 60000 40000 Subgroup Period SubgroupMea _ X=71884 LCL=29721 107411074110741 45000 30000 15000 0 Subgroup Period SubgroupStd.Dev _ X=31664 LCL=-3249 160000 120000 80000 tavalues Probability plot Normal Individual Value Plot of Sales Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 48 The process is predictable between subgroups and within subgroups The est. median is 71883. with 80% of the occurrences from 29708. to 114059 200000150000100000500000 10 1 0.1 Data values Pe 114059 71884 29708 10 54321 40000 0 categories Da
  • 27. © Smarter Solutions, Inc. 25 www.SmarterSolutions.com IEE 30,000-foot-level Scorecard IEE Scorecard for Sales 150000 n UCL=136782 1(Baseline) 2(New) 60000 ation 1(Baseline) 2(New) I-chart of Mean I-chart of Std. Deviation Sales data presented in IEE format (after change) 99 90 50 rcent 90 50 Mean 103046 StDev 20979 N 25 AD 0.798 P-Value 0.033 37332925211713951 100000 50000 Subgroup Period SubgroupMean _ X=103046 LCL=69311 37332925211713951 45000 30000 15000 0 Subgroup Period SubgroupStd.Devia _ X=19362 UCL=41818 LCL=-3094 Probability plot Normal Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 49Vol. II, Figure 9.6 The process is predictable since the last process change The est. median is 103046 with 80% of the occurrences from 76160. to 129932 1500001250001000007500050000 10 1 Data values in current stage Pe 129932 103046 76160 10 IEE 30,000-foot-level Scorecard IEE Scorecard for Sales 150000 n UCL=136782 1(Baseline) 2(New) 60000 ation 1(Baseline) 2(New) I-chart of Mean I-chart of Std. Deviation Sales data presented in IEE format (after change) 99 90 50 rcent 90 50 Mean 103046 StDev 20979 N 25 AD 0.798 P-Value 0.033 1951951951 100000 50000 Subgroup Period SubgroupMean _ X=103046 LCL=69311 1951951951 45000 30000 15000 0 Subgroup Period SubgroupStd.Devia _ X=19362 UCL=41818 LCL=-3094 150000 125000 100000 sincurrentstage Probability plot Normal Individual Value Plot of Sales Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 50 The process is predictable since the last process change The est. median is 103046 with 80% of the occurrences from 76160. to 129932 1500001250001000007500050000 10 1 Data values in current stage Pe 129932 103046 76160 10 54321 75000 50000 categories Datavalues
  • 28. © Smarter Solutions, Inc. 26 www.SmarterSolutions.com Team Exercise: Comparing Performance Reporting Methodologies • Describe the differences in reporting methodologies. • What are the benefits of using predictive scorecards? Pie Chart 1 2 3 4 5 Person Sales 5 4 3 2 1 1 2 3 4 5 Person Sales 2 1 5 4 3 1 2 3 4 5 Person Sales 20 60 140 100 Revenue(ThousandDollars) Months 5 6 7 8 9 11 12 1 2 34 Line Chart IEE Scorecard for Sales 1951951951 150000 100000 50000 Subgroup Period SubgroupMean _ X=103046 UCL=136782 LCL=69311 1(Baseline) 2(New) 1951951951 60000 45000 30000 15000 0 Subgroup Period SubgroupStd.Deviation _ X=19362 UCL=41818 LCL=-3094 1(Baseline) 2(New) I-chart of Mean I-chart of Std. Deviation Traditional Performance Reporting IEE Scorecarding Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 51 Bar Charts Month 321121110987654 600000 500000 400000 300000 200000 100000 0 Revenue(Dollars) 1 2 3 4 5 Person Sales 432143214321432143214321432143214321432143214321 100 200 400 300 Revenue(ThousandDollars) 500 600 Year 500 Month 5 6 7 8 9 10 11 12 1 24 3 Bar Charts The process is predictable since the last process change The est. median is 103046 with 80% of the occurrences from 76160. to 129932 1500001250001000007500050000 99 90 50 10 1 Data values in current stage Percent 129932 90 103046 50 76160 10 Mean 103046 StDev 20979 N 25 AD 0.798 P-Value 0.033 54321 150000 125000 100000 75000 50000 categories Datavaluesincurrentstage Probability plot Normal Individual Value Plot of Sales 2. Create the Enterprise Value Chain 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. Produce and Deliver Products 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. The resulting value chain Lead Time Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 52 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. value chain functional linkages bridging silos Lead Time Defective Rate WIP On-time Del. Figure 7.1 Integrated Enterprise Excellence, Volume III, Copyright 2008
  • 29. © Smarter Solutions, Inc. 27 www.SmarterSolutions.com 2. Create the Enterprise Value Chain • Stoplight Scorecard data linkage with IEE value chain IEE S d 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. Develop Product Market Product Sell Product Produce & Deliver Product Invoice and Collect Payment Report Financials Information Technology (IT) Human Relations (HR) Enterprise Process Management (EPM) Days Sales Outstanding (DSO) Percent Annualized Gain in Gross Revenue Gross Revenue Defective Rate Lead Time Developed Product Design Quality Product Development Lead Time Work in Process (WIP) On-time Delivery Voice of the Customer (VOC) Labor Relations Safety and Environment Legal Finance Quote Quality RFQ Response Acceptance Rate Internal Process Reworks Product Margins Quote Response Time TOC Throughput Net Profit Margins Existing Customer Additions New Customer Additions Timely Inputs Effective Inputs Learning and Growth IEE Scorecard 99 95 80 50 20 5 Percent 32.657 Mean 2.258 StDev 0.1297 N 13 AD 0.531 P-Value 0.141 2.6 2.4 2.2 2.0 IndividualValue _ X=2.2583 UCL=2.6192 LCL=1.8974 Probability plot Normal I-chart 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 53 The process is predictable since the last process change The process estimates about 32.657% non-conformance rate 2.62.42.22.0 1 Process values 2.2 Aug'05 Jul'05 Jun'05 M ay'05 Apr'05 M ar'05 Feb'05 Jan'05 Dec'04 N ov'04 O ct'04 Sep'04 Aug'04 Date g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. • Together we will create the high-level functional steps of a hospital’s enterprise value chain. Team Exercise: Creating an Enterprise Value Chain with Functional Metrics • We will then break into groups where each team is assigned a function. • Each team is to note on a flipchart – Performance metrics for their function. – A comparison between this metric selection approach and others Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 54 that you have seen. • Report out to the class.
  • 30. © Smarter Solutions, Inc. 28 www.SmarterSolutions.com 3. Analyze the Enterprise • Analyze the enterprise as a whole, looking for 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. – constraints – defective reduction opportunities – waste – speed to market – other restraints 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 55 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. 4. Establish Financial Goals for Corporate and Operational Units • Satellite-level metric goals (e.g., profit margins and revenue growth) are to be SMART S ifi M bl 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. SMART: Specific, Measurable, Actionable, Relevant, and Time-based. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 56 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain.
  • 31. © Smarter Solutions, Inc. 29 www.SmarterSolutions.com 5. Create Strategies • Develop strategies to improve performance when satellite-level metrics are not achieving goals 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. are not achieving goals. – Focus on creating strategies that are specific and benefit the big picture. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 57 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. 6. Indentify High-Potential Imp. Areas & Establish Oper. Goals • Identify high potential target areas – Set 30,000-foot-level (operational) metric performance 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. goals – Other business area 30,000-foot-level metrics are not to degrade from current performance levels. • Things to consider: – Performance of value-chain metrics – Statistical analysis of value-chain drill downs Competitive pressures 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 58 – Competitive pressures – Business environment – Bottle necks – New business opportunities g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain.
  • 32. © Smarter Solutions, Inc. 30 www.SmarterSolutions.com 6. Indentify High-Potential Imp. Areas & Establish Oper. Goals 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. Business Goal Strategies High Potential Areas Projects Improve marketing ff ti Improve product group C h i Step 4 Step 5 Step 6 Step 7 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Increase monthly profit margins by 2% in 10 months. Increase monthly gross revenue by 8% in 10 months. Reduce DSO mean by 3 days in 7 mo. Reduce DSO of product group D and leverage benefits to other business groups. effectiveness by 15% in 10 mo. C search engine ranking by 25%. Improve RFQ acceptance rate by improving Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 59 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. p g quote response time so that all quotes are completed in 14 days. To be completed in 5 mo. Increase TOC Developed in Example 12.1 Figure 12.1 Integrated Enterprise Excellence, Volume II, Copyright 2008 Enterprise Improvement Plan (EIP) 7. Identify and Execute Projects • Project execution could follow one of the following methodologies: 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. – Special cause condition (solution known) • Just do it – Special cause condition (solution unknown) • Root Cause Analysis: Fault tree analysis – Common cause condition (solution known) • Lean Project: 5S, kaizen, value stream map 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 60 j , , p (VSM), low hanging fruit – Common cause condition (solution unknown) • Plan-Do-Check-Act (PDCA): Continuous improvement • Lean Six Sigma DMAIC or DMADV roadmap g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain.
  • 33. © Smarter Solutions, Inc. 31 www.SmarterSolutions.com 7. Identify and Execute Projects • A Lean Six Sigma project execution roadmap that truly integrates Lean and Six Si t l i 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. Sigma tools is: 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. D M A I C Plan Project Wisdom of theMSABaseline Lean ControlAnalyzeDefine Measure Improve D M A I C Plan Project Wisdom of theMSABaseline Lean ControlAnalyzeDefine Measure Improve Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 61 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. PROCESS IMPROVEMENT PROJECT: P-DMAIC Plan Project and Metrics of the Organization MSABaseline Project Lean Assessment PROCESS IMPROVEMENT PROJECT: P-DMAIC Plan Project and Metrics of the Organization MSABaseline Project Lean Assessment From Figure 2.1, Integrated Enterprise Excellence Volume III, Improvement Project Execution: A Management and Black Belt Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard, Copyright 2008 8. Assess Each Project’s Final Impact on Goals • Each project should be judged against how well it positively impacted the 30 000 f t l l t i f 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 30,000-foot-level metric performance. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 62 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain.
  • 34. © Smarter Solutions, Inc. 32 www.SmarterSolutions.com Example: Hospital 30,000-foot-level metric – Diagnosis to bed time • Demonstrated project’s process improvement 9181716151413121111 300 200 100 0 Time(Minutes) _ X=45.7 UCL=80.0 LCL=11.5 Diagnosis to Bed Before ChangeDiagnosis to Bed After Change 200150100500 99 90 50 10 1 Percent 7.065 1.829 30 45.72 10.69 50 0.191 0.893 124.9 45.40 50 0.767 0.043 Mean StDev N AD P Diagnosis to Bed After Change Diagnosis to Bed Before Change sub I Chart of DiagnosistoBed by sub Probability Plot of DiagnosistoBed Normal Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 63 Week 51 there was a reduction from about 98% to 93% non-conf rate to 30 min. or less criterion Process is predictable since day 51 with approx 93 % non-conformance rate to 30 min. criteria Day DiagnosistoBed Example: Hospital 30,000-foot-level metric – Errors per 1000 patient days • Demonstrated project’s process improvement I Chart of Errors 4137332925211713951 80 60 40 20 0 Week Errorsperthousandpatientdays _ X=10.84 UCL=15.30 LCL=6.39 Med Errors Before Med Errors After C a o o s Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 64 Pred proc since week 30 with approx 11 errors per 1000 patient days Process improvement was made in week 30 where error reduced from 48 to 11 Week
  • 35. © Smarter Solutions, Inc. 33 www.SmarterSolutions.com 9. Maintain the Gain • Value-chain metrics are to be a part of company-wide management review meetings for the assessment of day-to- 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics.g y day performance and process-steps execution. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric goals. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 65 g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. g 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. Linkage of IEE with BPM Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 66 Reproduced from https://www.smartersolutions.com/business-system-iee/
  • 36. © Smarter Solutions, Inc. 34 www.SmarterSolutions.com Team Exercise: Objectives • As a group, we will discuss how your organization’s structure would differ from the following hospital IEE value chain. • After being shown various performance attributes of a hospital’s value chainAfter being shown various performance attributes of a hospital s value chain, your team is to present results from the following in a flip-chart presentation: – Create an EIP for the determination of improvement projects, which would benefit the enterprise as a whole. – List attributes of a business management policy (rules) that addresses day-to-day activities, performance monitoring, and improvement efforts. D t diff b t th IEE/BPM t l ti t t diti l Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 67 – Document differences between the IEE/BPM system relative to traditional approaches in the following areas (include positives and negatives for each entry): • Improvement project selection • Business management Team Exercise: Input Vision Statement: Our hospital will maintain an occupancy 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000- foot-level metric goals. 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. p p y rate in the top 10% in our city while maintaining a full staff of employees and providing quality of services equal to or better than other hospitals in our area for all forms of service, achieving a cost structure that allows for maintaining excellent physical condition of the property. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 68 More on following slides
  • 37. © Smarter Solutions, Inc. 35 www.SmarterSolutions.com Team Exercise: Input 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000- foot-level metric goals. 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals. 9. Maintain the gain. How would your organization’s value chain differ? Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 69 Will demonstrate clickable Enterprise Performance Reporting System (EPRS) approach to integrate “real-time” predictive performance metrics with processes; i.e., Y=f(X). Team Exercise: Input Report Finances: Value Chain Drill Down Functional Generic flowchart or value-stream map metrics relative to quality, cost, and time Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 70 Y=f(X)
  • 38. © Smarter Solutions, Inc. 36 www.SmarterSolutions.com Team Exercise: Input Report Finances: Profit Margins Drill Down The process is predictable since the last process change. The estimated median is 9.9 with 80% of the occurrences from 8.7 to 11.2. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 71 Comment: On 10/1/2007 profit margins declined from an estimated median of about 11.9% to about 9.9%. Voice of the Customer: Value Chain Drill Down Team Exercise: Input Functional Generic flowchart or value-stream map metrics relative to quality, cost, and time Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 72
  • 39. © Smarter Solutions, Inc. 37 www.SmarterSolutions.com Team Exercise: Input Reporting VOC: Dissatisfaction Drill Down The process is now predictable. The estimated performance or capability is a 0.131 non-conformance rate. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 73 Comment: Customer feedback:Poor room cleanliness, unfriendly staff, and spent a of time waiting. Sales and Marketing: Value Chain Drill Down Team Exercise: Input Functional Generic flowchart or value-stream map metrics relative to quality, cost, and time Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 74
  • 40. © Smarter Solutions, Inc. 38 www.SmarterSolutions.com Team Exercise: Input Reporting Sales & Marketing: Market share Comment: On 9/1/2007 k t Predictable process since last change. The estimated median is 52.6 with 80% of the occurrences between 51.3 to 53.8. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 75 9/1/2007 market share decreased from about 56% to about 53%. Delivery of Services: Value Chain Drill Down Team Exercise: Input Functional Generic flowchart or value-stream map metrics relative to quality, cost, and time Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 76
  • 41. © Smarter Solutions, Inc. 39 www.SmarterSolutions.com Team Exercise: Input Reporting Delivery of Services: LOS The process is predictable between subgroups and within subgroups. The estimated median of 262 8 with 80% of the Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 77 Comment: There are no comments. 262.8 with 80% of the occurrences between 149.6 to 375.9 Team Exercise: Input Reporting Del. of Services: Weekly Errors The process is predictable. The estimated error rate is 10.84 per thousand. Comment: Process Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 78 Comment: Process improvement was made in week 30 where error rate reduced from approximately 48 to 11 per 1000 patients
  • 42. © Smarter Solutions, Inc. 40 www.SmarterSolutions.com Housekeeping: Value Chain Drill Down Team Exercise: Input Functional Generic flowchart or value-stream map metrics relative to quality, cost, and time Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 79 Team Exercise: Input Reporting Housekeeping: Quality Comment: On The process is predictable since the last process change. The estimated median is 6.8 with 80% of the occurrences from 6.1 to 7.4. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 80 Comment: On 9/1/2007 cleaning services quality decreased after being outsourced as part of a cost reduction program.
  • 43. © Smarter Solutions, Inc. 41 www.SmarterSolutions.com Patient Transportation: Value Chain Drill Down Team Exercise: Input Functional Generic flowchart or value-stream map metrics relative to quality, cost, and time Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 81 Team Exercise: Input Reporting Transportation: Diag. to Bed Comment: Week 51 The process is predictable since the last process change. The process estimated non-conformance rate is about 92.9% Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 82 Comment: Week 51 there was a reduction from about 98% to 93% non- conformance rate relative to a criterion of 30 minutes or less.
  • 44. © Smarter Solutions, Inc. 42 www.SmarterSolutions.com Team Exercise: Revisiting Objectives • Present results from the following in a flip-chart presentation: – Create an EIP for the determination of improvement projects, which would benefit the enterprise as a whole.the enterprise as a whole. – List attributes of a business management policy (rules) that addresses day-to-day activities, performance monitoring, and improvement efforts. Consider the 9-step IEE system with BPM integration. • Example responses are: 1. Each process owner daily monitors their value chain 30,000- foot-level metric to determine if there any special cause events that need to be addressed. 2. Divisional management is given a monthly status update on how EIP targeted metrics are performing and status of related improvement projects. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 83 – Document differences between the IEE/BPM system relative to traditional approaches in the following areas (include positives/negatives for each entry): • Improvement project selection • Business management Revisiting: Graphic View on the 9 Steps to Excellence in Governance 4 Establish 1. Describe vision and mission. 2. Describe value chain, including satellite-level and 30,000-foot-level metrics. 3. Analyze enterprise. 4. Establish SMART satellite-level metric goals. 5. Create strategies. 6. Identify high potential improvement areas and establish related SMART 30,000- 7. Identify and execute projects. 8. Assess project's completion impact on enterprise goals 9. Maintain the gain. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 84 foot-level metric goals. goals. Reproduced from Figure 4.7 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard Let’s now examine a checklist for accomplishing the IEE system attributes
  • 45. © Smarter Solutions, Inc. 43 www.SmarterSolutions.com IEE Business System Checklists • Let’s collective look at the following IEE implementation checklists. Each person should highlight a couple important it th t diff ti t IEE f t diti l th ditems that differentiate IEE from traditional methods. – Define: IEE Vol. II, Section 6.2, page 170 – Measure: IEE Vol. II, Section 7.2, page 194 – Analyze: IEE Vol. II, Section 8.2, page 229 – Improve: IEE Vol. II, Section 13.2, page 370 C t l IEE V l II S ti 14 2 397 Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 85 – Control: IEE Vol. II, Section 14.2, page 397 • We will discuss items that were highlighted Revisiting: Linkage of IEE with BPM • IEE needs to be able to challenge or improve theor improve the rules/policies in an organization. • Thoughts about IEE integration with BPM? Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 86 Reproduced from https://www.smartersolutions.com/business-system-iee/
  • 46. © Smarter Solutions, Inc. 44 www.SmarterSolutions.com SELECTED ATTRIBUTES Integrated Enterprise  Excellence (IEE) Typical  MBA  Program Traditional  Six Sigma Traditional  Lean Original  Balanced  Scorecard Defines process for improvements at  operational/project level ++ ‐ ++ ++ ‐ Defines a process for improvements at  enterprise level ++ ‐ + + ‐ Comparison of Systems ++: Attribute included +: Partial/incomplete Inclusion - : Not included Derives improvement projects from enterprise  value chain metric performance needs ++ ‐ ‐ ‐ ‐ Uses DMAIC process to implement process  improvements (P‐DMAIC) ++ ‐ ++ + ‐ Uses DMAIC process to integrate enterprise  scorecards, strategic planning, business  improvements, and control (E‐DMAIC) ++ ‐ ‐ ‐ ‐ Supports standardized graphical representation of  selected data (dashboard) ++ + ‐ ‐ + Aligns enterprise level business metrics (satellite‐ ++ ‐ ‐ ‐ ‐level) and operational metrics (30,000‐foot‐level) ++ ‐ ‐ ‐ ‐ Includes process for definition of rational metrics,  aligned at operational and enterprise level ++ + ‐ ‐ ‐ Includes process for distinguishing between  "common cause" and "special cause" problems so  as to eliminate firefighting ++ ‐ ‐ ‐ ‐ Integrates best practices of multiple disciplines:  SS, Lean, DOE, etc. ++ ‐ ‐ ‐ ‐ Business System Maturity Model • Attributes of a business system maturity model – EPM/BPM based Business System in Place Process aligned metric usage A business system– Process aligned metric usage – Predictive performance reporting – Automation in reporting – Decisions based on performance metrics – Entire enterprise linked through a single reporting system – Strategies developed from performance gaps – Strategic alignment of improvement efforts A business system maturity model form is provided near the end of the course material. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 88 g g p • A 1-10 score is to determined for each attribute, where 10 is perfection. – The lowest of the eight attribute scores is the overall organization maturity model score.
  • 47. © Smarter Solutions, Inc. 45 www.SmarterSolutions.com Individual Exercise: Your Business System Maturity Model Assessment • Using the blank business system maturity model form that is provided near the end of the workshop hand-out material, h t d t i ti ’ ll t it d lwhat do you rate your organization’s overall maturity model score to be? • At the beginning of this workshop, I said you reported directly to your CEO. You now no longer have this reporting. Wh t ld b t t f i i it b i t Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 89 • What could be your next step for increasing its business system maturity? • To address this question, you could gain insight to addressing this question by examining the attributes that have the lowest maturity model scores. IEE Business System Evolution Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 90
  • 48. © Smarter Solutions, Inc. 46 www.SmarterSolutions.com Integrated Enterprise Excellence System • Can effectively integrate environmental impact efforts, VOC, supply chain, etc. activities; i.e., silo activity avoidance One of the five book IEE series is available as a free e book• One of the five-book IEE series is available as a free e-book • Descriptive IEE Videos – Issues with our Current Business Management System and Resolution – The Integrated Enterprise Excellence Business Management System • Documented IEE case study – Oracle Packaging, which manufactures aluminum foil Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 91 – Case study documentation in Smarter Solutions’ website resource library • American Management Association article • Video See www.smartersolutions.com Readdressing Learning Objectives • Summarize problems with current business management systems. • Describe issues with current process improvement efforts. • Describe benefits of predictive scorecards. • Describe an enhanced system where business metric improvement needs pull for projects that benefit the business as a whole. Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 92
  • 49. © Smarter Solutions, Inc. 47 www.SmarterSolutions.com Q & A Forrest W. Breyfogle III Contact Information Phone: 512.918.0280 Email: forrest@smartersolutions.com Web: www.smartersolutions.com Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 93 Potential Team Exercise Solution Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 94
  • 50. © Smarter Solutions, Inc. 48 www.SmarterSolutions.com Potential Team Exercise Solution Step 4 Step 5 Step 6 Step 7 Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 95
  • 52.   Description There is an orchestration of EPM and BPM efforts throughout the business for the enterprise and daily  business processes, where the most appropriate processes are automated A EPM system is being used to  determine targeted strategies that are aligned to financial  metric  improvement desires, which results in time‐series predictive measurement goals that pull process  improvement efforts, which in turn have enterprise‐as‐a‐whole benefit Operational managers are using predictive performance reporting and statistical analyses in their status  meetings and decision‐making process within their BPM implementation Software is being used to automatically update the value chain’s operational and financial time‐series  predictive operational and financial performance metrics A value chain is linking business and operational processes throughout the organization with predictive  scorecard performance reports‐outs, when appropriate Business and operational processes are time‐series tracked so that when a process is stable a predictive  statement is provided Processes are being documented (and in some cases automated) through a Business Process Management  (BPM) initiative; a Lean Six Sigma process improvement program has been undertaken; and/or a Lean  program using Kaizen events has been implemented with value‐stream assessments KPIs’ performance are being tracked and reported over time; however, there is no systematic linkage between  these metrics and a structured process improvement methodology Executive management has  identified some overall business KPIs and are using them is some decision making  and strategic planning. Limited use of defined processes, performance metrics.
  • 53. V06-24-09 Smarter Solutions, Inc. COURSE EVALUATION Name: _________________________________________________ Date: _________________________________ (Note: providing your name is optional, but it can help us address specific issues you may have.) Course Name: _____________________________________________________________ Instructor (A): ______________________________________ Instructor (B): __________________________________ Previous Knowledge & Experience: The following information is requested for the purpose of generating a knowledge & experience level baseline of the respondents. 1. To what extent have you previously learned and applied statistical concepts and tools in your work environment? To No To a Small To a Moderate To a Great To a Very Extent Extent Extent Extent Great Extent 1 2 3 4 5  1 2 3 4 5 2. To what extent have you previously learned and applied process improvement methodologies in your work environment? To No To a Small To a Moderate To a Great To a Very Extent Extent Extent Extent Great Extent 1 2 3 4 5  1 2 3 4 5 Please use the following scale to indicate your level of agreement with the following statements and circle the appropriate rating. If you select a 2 or 1 rating, what should be improved? It was NOT satisfactory to you. 1 2 3 4 5 Strongly Disagree (Unsatisfactory) Disagree (Unsatisfactory) Neither Agree or Disagree (Neutral) Agree (Satisfactory) Strongly Agree (Satisfactory) Unsatisfactory Satisfactory Content 3. This course provided a good understanding of IEE and Lean Six Sigma techniques. 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ 4. This course taught me something I can apply at work. 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ 5. Overall, this course provided a good balance between lecture, discussion, examples 1 2 3 4 5 and exercises. (If 2 or 1 what should be improved?)____________________________________________________________________________________ 6. The content of this course was taught in a logical sequence. 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ Instructor(s) If there were multiple instructors delivering this session, please rate them independently. 7. The instructor demonstrated a thorough understanding of the content. (Instr A) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ (Instr B) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ 8. The instructor encouraged participation during the class. (Instr A) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ (Instr B) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ 9. The instructor responded to the needs of the learners. (Instr A) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ (Instr B) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ 10. The instructor was well prepared. (Instr A) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ (Instr B) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ 11. Coaching sessions were effective (leave blank if course or instructor does not conduct formal coaching sessions). (Instr A) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ (Instr B) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________