The economic news this morning is not so good. The Institute of Supply Management (ISM) manufacturing report sent the market into another free-fall today (down 425 points at the moment, following last week’s massive rally). The ISM index stands at 36.2% which may not mean much to the lay-person. The important indicator here is that anything below 50% is bad news and 36.2% is as low as it’s been in more than a quarter century. This is a report that measures factory output based on orders for manufactured goods. Only two sectors performed well: apparel and paper. European and Chinese factories are reporting similar output and demand for their goods. We all know how this is playing itself out for Ford, GM and Chrysler. They have a shot at financial support that will bode well for thousands of suppliers and – frankly – millions of employed people. For the remainder of the manufacturing community, there may not be a bail-out. What are small businesses and manufacturers to do?
Time is of the Essence
MarketWatch reports that economists now admit the recession began at least a year ago. Could have fooled me. Experts tell us we can rest assured that it will endure at least another year – maybe two. That said, small business and small manufacturers are faced with the need to get lean very quickly. There is no time for hemming and hawing and this is not the time to simply lay people off. Your path forward is as complex as the path that got you here. No silver bullet. Your costs are a reflection of (among other things) executive pay, labor, benefits, space, utilities, supplies, suppliers, marketing, hardware and – to a great extent – your business processes.
Those of you who are familiar with Lean Methodology or who might be familiar with a consultant who specializes in Lean may now be thinking: “This is the time for it.” I commend you. I agree that Lean can and will deliver the elimination of costs associated with waste in your processes. However, bear in mind that Lean can involve between 6 and 12 weeks’ time for execution.
Lean is a bit like a diet. You have new habits to learn and you glean life-changing insights from an examination of how you did things in the past. Lean is a lifestyle and it creates a certain culture. I want to suggest that you consider the Lean equivalent of liposuction or getting your stomach stapled. It’s quick, it’s dirty, but it works. It’s commonly referred to as Rapid Process Improvement or RPI.
RPI Works and Works Fast
An RPI event requires: 2-3 days; a core business process suspected of carrying waste (extra fat) and whose repair would make a big cost difference; a team of subject matter experts and decision-makers; the willingness to be brutally honest and trim the waste. In that brief 2-3 days time, the process can be articulated and modeled and business rules can be captured. Basic performance measures can be identified and the team can brainstorm ways that waste can be eliminated from the value stream without any adverse impacts. New, future-state process models can be developed and basic simulations can be conducted to assure you and your customers that quality concerns haven’t been introduced or exacerbated. You want the results to be faster and better. Once you’ve nailed the future state, a solid RPI process involves mapping your implementation and measuring results over the next 3 to 12 months. Hint: measuring cost savings from the get-go is a must. Remember your baseline!
Rapid Process Improvement should be near or at the top of your list of things to do in the next 4-8 weeks. The small business owner and small manufacturer have got to make the time and prioritize events like this until all of the low-hanging fruit has been harvested. This is not business process management or improvement for the sake of developing software. This is crisis management and RPI may save jobs. Every job saved has an immediate impact on your entire community. A job saved is a person saved and that person may very well be your star player when the economy turns upward in 6 months. Don’t lose them when you could easily trim the fat and waste in your processes.
Posted in BPM, business process management, business process re-engineering, Efficiency, Lean methodology, Workflow
Tagged BPM, business process improvement, implementation, Lean methodology, Rapid Process Improvement, RPI, Value Stream
Business Process Management (BPM) promises to bring the disciplines of IT and HR together. That’s the promise, anyway. BPM draws the map and establishes goals while HR provides the framework to hold people accountable for those goals. Sadly, I rarely see the integration of HR in BPM projects led by IT folks and yet I believe it’s absolutely essential. Bridging the divide between HR and IT is not so difficult if you follow some simple guidelines.
- Understand HR’s Role. This is fundamental to your success. You must understand that significant changes in business process cause changes in job description and performance expectations. HR can help you decide which changes are significant enough to have a material impact on job descriptions and can identify those performance measures that make a difference to performance appraisal. Similarly, significant changes in processes may mean change in employee recruiting (you may, in fact, be seeking a different skill-set than previously thought) and it will likely mean considerable change in supervision.
- Integrate From The Beginning. Include HR in the BPM discussion from the start. Invite HR to the table and seek their input and advice. If you don’t have an HR professional on your staff, invite a consultant from the community. Trust me, the lawsuits that can result from botching this aspect of your BPM initiative will outstrip the cost of hiring an HR consultant by a factor of 100.
- Include HR in Human-Centric BPR (re-engineering). BPM and BPR are not simply mapping exercises. Eliminating waste, finding efficiencies and improving quality in the way things are done is about modifying human behavior. All of our models and talk of “suppliers, triggers, resources, outputs and metrics” must bear in mind that real people are involved at every juncture.
- Conduct HR/BPM Gap Analysis. Involve HR in assessment of the changes you’re making to the current state. Review your future state designs together and determine:
- What rules need to be properly documented and how will people be held accountable for following those rules?
- How will employees navigate the decision-making processes and who do they seek permissions from?
- What training will employees require to implement the new state of your business processes?
- Who will provide that training and how will you know when your people are competent in the new way of doing things?
- Are there any risks associated with your new business processes? Exposure to dangerous conditions? Risk of accident or injury? Violations of workplace safety laws? Your HR professional can answer these questions for you.
- Establish New Performance Metrics Together. Assume the new key performance indicators (KPIs) will have a direct impact on the way employees are appraised and rewarded. There may be some exceptions and your HR professional can help you decide.
- Enlist HR to Communicate your BPM Initiative. Establishing buy-in and overcoming resistance to change (your biggest barriers to success) are dealt with by executing a comprehensive communication plan. You must create and maintain momentum by including all of your stakeholders in the conversation. Your greatest asset in communications is your HR professional. IT people in particular should not attempt to communicate without the help of HR.
- Implementation & Training. You want to implement changes in process and HR professionals want to properly train people. Implementation is the intersection where HR and IT usually collide. If you’ve followed these guidelines reasonably well till now, implementation will be a success because it will have been a collaborative effort.
- Assess Compliance. Compliance is a creature with many heads. While IT may have ERP, XML and integration standards they are trying to comply with and the CFO has Sarbanes-Oxley compliance issues with the new process, HR will have a full slate of compliance issues to assess. There are safety and occupational hazrds to assess, discrimination and disability conditions to review and the full array of hiring/training/supervising processes to evaluate in light of a modified workflow. It’s not impossible, for instance, to engineer or design a business process that suddenly creates a disadvantage for people with a disability who had been properly hired to do things the “old way”.
The most often-cited reason BPM projects stumble and fall is that organizational dynamics and human behaviors weren’t properly assessed and accounted for. There is a lot of psychology at work here. HR people are a different breed and IT people – most often asked to lead BPM – need to accept and include HR. I think the creation of HR/IT teams for the purpose of BPM ought to be your first BPM initiative. It’ll create the conditions for everything else you’re hoping to accomplish.
Posted in Business, Business Process Fundamentals, business process re-engineering, Management, Organizational Change
Tagged BPM, BPR, business process management, business process re-enginnering, business rules, compliance, decision management, HR, human resources, implementation, KPI, performance