Processes develop over time and change according to people know-how and tool support. If left unmanaged, the output might become sub-optimal and costly, as defects develop over time and non-value added steps are typically performed.
Lean sigma is a tool-kit to identify issues both within and outside the value chain. If done rigorously, it is the solution to align the process to customer needs, eliminate waste and put in place a control environment. If you have an problem with an existing process, and fixing it could lead to increased revenue, reduced cost or improved efficiency, then a Lean Sigma 5-step approach (‘DMAIC’) would be most beneficial.
This is how the phased approach takes place:
1. Define Opportunities
In this first phase a project charter is created whereby the problem is stated in its full impact. Which processes are included in scope and what is out of scope. Also what kind of resources are needed over which time. A goal statement is made and an initial business case is calculated. Customer and business requirements are specified. A tollgate meeting is held where important stakeholders decide about project continuation.
2. Measure Performance
In this phase the baseline performance is captured for all relevant key performance indicators. The statistical variation is calculated and based on observable defects a sigma value is assigned. The business case is revisited to fine-tune calculations based on new findings.
3. Analyze Opportunities
In the Analyze phase the problem statement is solidified and all relevant root causes are identified and validated. Usually Measure and Analyze phase are presented together in a tollgate meeting to check if the necessary data transparency has been obtained to warrant a project continuation.
4. Improve Process
In this creative phase solution ideas are generated to tackle the root causes. Finding the best fit will be based on tailor-made criteria for the organization. A solution report will be presented in a tollgate meeting to decide on what to implement
5. Control Performance
After the solution has been implemented, the process is measured again and compared to the baseline. It is then managed according to the control plan. Here the agreed measures and targets are met. Best practice can then be shared and replicated across the organization.
Process Mining is an innovative approach to analyze electronic processes where event log files exist. It is a perfect complement to Lean Six Sigma, e.g. as a starting point to improve an automated process or to conduct a Kaizen event. It can be used to understand the process as it really happens and with all its variance. With it performance can be assessed and allows for quick detection of bottle necks, internal rework and waiting time in the process. Modern process mining tools offer a replay of the cases for easy demonstration to stakeholders.
Management Information System (MIS)
Whether monthly reports or near-realtime online dashboards, MIS allow for focused information to help steer the company through various market conditions and avoid potholes. Integrating continuous process management into existing MIS can be as easy as adding additional key performance indicators. Adding historic data or even a visualization layer will help to highlight relevant topics and compare against previous periods. The aim is to have the right information with the right person at the right time – data quality and governance being important topics
Where regulatory reporting is concerned, management information better be aligned to avoid having differences arising from using different data sources, definitions or teams in creating regulatory reports.
Potential for Cost-Reducing and Efficiency-Increasing Measures in Financial Institutions
KfW-Report No. 3, 2016
Autors: Diana Cazacu, Tatyana Dolgaya, Till Bruckner, Michael Kortenbusch