Lean six sigma process improvement tools and techniques by donna summers chapter 07

Process Performance
Measures
Chapter 7

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Facts are the most important thing in
business. Study facts and do more than is
expected of you.
– Frederick Hudson Ecker
• Chairman Metropolitan Life Insurance

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• I’ve always been able to make erroneous
decisions very quickly.
– Herb Kelleher
• Founder, Southwest Airlines

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Knowledge is what we get by evaluating
vast quantities of information…and adding
something a little extra-creativity,
judgment, experience, and thought.
– Dominic Tarantino
• Former chairman, Price Waterhouse World Firm

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Information is only as valuable
as its source.

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,

Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures

• You can’t improve what you
don’t measure

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures

• Organizations measure what
matters.

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Our view was, if we could measure it, we
could manage it.

– Don England
• CEO, C.R. England, Inc.

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Organizations measure what they
value
– What does our organization value?
– What does the organization measure?
– What measures does the organization
use to make decisions and take action?

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Measures create a link between
philosophy and action.
– What does the organization measure, record,
analyses, reports, shares throughout the

organization, and takes action on.

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• How do we know what is important?
• How do we do what we do?
• How will we do what we said we would
do?
• How do we know we did what we said we
would do?

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• What role does information play in creating
an effective organization?
• How does the analysis of information
support customer satisfaction?
• How does the analysis of information

support a healthy bottom line?

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Information enables you to make
appropriate decisions.
• Inter-departmental relationships can be
integrated through the use of information.

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Integrating Customer information,
processes and decision-making:
– use data collection and analysis to
define the customer requirements
within the identified market segment.

Lean Six Sigma: Process Improvement Tools and Techniques

Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
– Translate requirements into major design
parameters to develop, produce, deliver, and
service the product that meets the customer
requirements.
– Complement these primary processes with
support activities such as finance, accounting,
personnel, etc.
– Design the information requirements
necessary to manage each process and to
integrate all processes.
Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Measures of Performance answer the
question:
– How do we know?

Lean Six Sigma: Process Improvement Tools and Techniques

Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Performance measures enable an
organization to answer the following
questions:
– How well is something performing its intended
purpose?
– Is the organization able to measure the impact
of the changes being made?
– How does the organization know that it has
allocated its assets correctly?
Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• An effective measurement system enables an
organization to:
– determine if the activities occurring within the
company support the achievement of company goals
and objectives
– determine whether or not those goals and objectives

move the organization closer to the stated vision
– see where the organization is and where it is going.

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• An effective measurement system
links actions and plans to the
goals and objectives.

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Results (Outcome) measures
– Results are the objectives the organization
wants to achieve.
– Results are what customers hope to obtain by
doing business with the organization.

• Process measures

– Process measures monitor operational
activities.

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• The Balanced Scorecard
– Using measurements from four areas
integrates the key business measures into a
few manageable indicators of performance so
that management is able to quickly access the
short and long-term health of the organization
from several points of view.
• Kaplan and Kaplan

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
•

The Balanced Scorecard
– (Kaplan and Kaplan)

•

FOUR areas of focus :
1.
2.
3.
4.

Customer Focus
Internal Processes
Learning and Growth
Financial Analysis

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Barriers to Installing Measurement
Systems
– Lack of leadership
– Individuals are fearful of having specific,
measurable objectives to achieve
– Lack of focus on what’s important to the

organization.

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• Determine
– what needs to be measured
– and why it needs to be measured
– before designing a measure of performance.

• PUBLISH definitions for each metric!

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.


Process Performance Measures
• For Effective Measurement Systems:
– Leaders must demonstrate their commitment
by holding people accountable for measures
– Leaders must show persistence and
perseverance to work through data integrity

issues.
– Real life advice - How about a metric that
measures the accuracy of the metrics?

Lean Six Sigma: Process Improvement Tools and Techniques
Donna C. Summers

© 2011 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.