Looking for Better Business Performance
Looking
for Better Business Performance?
Try
Mapping Your Processes.
Understanding
the way you perform
work
is the best tool for improving
the
way your company runs.
By:
Fletcher
L. Groves, III
Vice
President
Service
and Administrative Institute
Ask
the president of any homebuilding company to describe the best
opportunity for improving profitability, and he will more than likely
tell you that his first priority is better building operations and
processes.
This
collective viewpoint, documented as part of our 1997 Reference Point
survey, suggests that homebuilders intuitively understand the effect
that processes have on their business performance. They also seem to
understand that homebuilding is a value-added business, and that the
only way they can create value is through their processes.
If
it was only that easy. Judging from the carnage we see strewn around
the process improvement landscape, the task of revamping a
homebuilding company around its business processes tends to be very
challenging work.
The
basic problem is that the management of processes clashes with the
deal-driven mentality of most homebuilding companies. This natural,
horizontal, process-centered view of a company organized around the
work that it performs is a complete departure from the departmental,
project-oriented perspective found in the management and
organizational thinking of most companies in this industry.
In
our opinion, homebuilders have to start
dealing with performance at the process level, or they
stand to lose what they
acknowledge to be their best opportunity to improve the operational
and financial performance of their companies.
The task would be far easier if they would simply learn to map their
processes, because process mapping – detailed
cross-functional process mapping
– is the key to
understanding and improving the manner in which work is performed and
value is added.
To
be certain, process mapping is not a substitute for good
decision-making or strong leadership, nor will it fix problems caused
by bad designs, bad locations, or bad balance sheets. It will not
make competition go away, or make homebuyers less demanding.
What
process mapping will
do is make your company more effective and more efficient; it will
improve your quality and reduce your cycle time; it will reduce your
costs and increase your production capacity. It is a powerful
management tool that will work in a broad range of process
improvement initiatives – from solving problems in otherwise
sound processes to fundamentally rethinking and redesigning the
manner in which work is performed – and it will work in any
size company.
Let
me give you a quick “how-to” on process mapping, and then
I’ll share the experience of a client as they used process
mapping to redesign their contract-to-closing process.
Process
mapping was developed by Motorola Corporation in the mid-1980’s
as part of its cycle time reduction methodology. It is a systematic
approach to documentation, analysis, and design that views processes
from three different dimensions: the current (AS-IS) state of the
process; a future state of the process constrained by existing
resources (SHOULD-BE); and a future state of the process that would
be unconstrained by resource requirements (COULD-BE).
Process
mapping always starts with the AS-IS, and moves to either the
SHOULD-BE or the COULD-BE, depending on the issues (cost, difficulty,
timeframe, resource requirements, return on investment, and
competitive pressure) involved. When you map a process, you
literally explode it into a sequence of activities, tracing the flow
of work between functions and departments, identifying the problems
and issues that affect the performance of the work, and measuring the
performance of the process.
With
all of the non-value-added activities, excessive control points,
bottlenecks, handoffs, waste, rework, and redundancy clearly visible,
the AS-IS phase tends to be a gut-wrenching,
eye-opening
experience
for clients. In many cases, it is the first time that the real
manner in which work is performed has been documented, and the first
time that the people who actually perform the work see and understand
how their work affects the entire process. The anger created by
having to perform so much non-value-adding work and the frustration
stemming from the lack of mutual accountability becomes a powerful
catalyst for change.
At
the conclusion of the AS-IS phase, there will be five “voices”
in the process that have been heard: the voice of the customer;
the voice of the employee;
the voice of the supplier
and
tradecontractor;
the voice of the industry
(through benchmarking best practices); and the voice of the process
itself. All of these voices, synthesized into the AS-IS Report,
provide the context and perspective for the new process design.
In
the design phase (SHOULD-BE or COULD-BE), there are three orders of
business. First, the team needs to set the requirements for a
successful new design. What should this new process look like? What
are its capabilities? What features must it have? What type of
change will it require? Is the process being incrementally improved
or radically redesigned – are we doing SHOULD-BE or COULD-BE?
Second,
the team has to flowchart the sequence of activities – in
essence, design the manner in which work will be performed – in
the new process. In the case of SHOULD-BE, the new design will
probably look like a streamlined, re-ordered version of the original
process – minus all of its non-value-added activities and other
flaws. In the case of COULD-BE, however, the team will probably
start with a white sheet of paper and design a totally new way to do
the work – probably accompanied by a lot of organizational
change and new systems requirements.
The
last order of business for the team is to spell out – step by
step – the scope, responsibility, make-up, schedule, cost, and
measurable outcome of every initiative required to implement the
design of the new process, and secure the commitment to run the
project.
With
the assistance of an outside consultant, it only takes a team five or
six days (over a two month period) to complete a process mapping
project. The cost of the outside consultant is more than recovered
in the management of the project and control of the work product, but
another important reason for outsourcing the project management and
facilitation is the objectivity, credibility, experience, and
expertise you get with an outside consultant.
Is
process mapping worth the cost and effort? Does it work? Judge for
yourselves, through the eyes of one of our clients as they set out to
redesign their contract-to-closing process. Like many homebuilding
companies, this client was struggling to improve operating
performance in a very competitive housing market – trying to
reverse their declining market share and relatively low profit
margins.
The
contract-to-closing process in a homebuilding company is the
equivalent of the order management cycle in a manufacturing company –
it is the aorta
in terms of processes and workflow. Macro-type processes are always
kind of unwieldy, but as this team started mapping the AS-IS, they
couldn’t even get the process on a single flowchart, despite
treating the permit-to-completion portion of the process separately.
For
purpose of its AS-IS work, we decided to divide the process into
three flowcharts (a sales contract process, a job cost process, and
the remainder of the work in the contract-to-closing process). As we
flowcharted these three sub-processes, it was obvious that there
really wasn’t a process design; the
work was just
happening.
There
were entire sequences of activities being repeated whenever there was
a change or modification to the contract or plans; there was manual
reporting, even when the data was available on-line in the company’s
operating system. A major bottleneck was being created by the weekly
Production Meeting, and there was chronic process failure, including
a high probability – not possibility,
but probability
– that company-initiated revisions to signed purchase offers
would fail to meet customer expectations, and that the resulting
purchase agreement would contain inconsistencies associated with
change orders and color selections.
There
were steps and activities in the process that were pure rework and
redundancy, and others that didn’t appear to add any particular
value to the process output. For example, there were 32 steps
involving 148 separate activities in these processes, but the work
itself was handed off from one department or person to another
department or person 51
times, the work of one
person was checked by another person 14
times, there were 14
separate documents handled,
and there were at least five
instances when the same
information or data was reproduced.
In
the end, the team identified more than 75 chronic problems and issues
associated with the current (AS-IS) state of these processes,
everything from the inability to control data to the lack of
procedures. The list included problems with operating systems and
reports, and issues related to the performance of suppliers and
subcontractors (even though the project didn’t deal with
site-related processes). There were training issues and
communication problems. All told, there were nine separate
categories of problems and issues that were regularly and commonly
associated with this process.
A
more significant problem was an operating model that was all over the
ballpark, evidenced by a tendency for the company to want to be “all
things to all people”. We convinced them that the new process
design really needed to flow from the context of a strategic decision
that would define the company in terms of a specific value
proposition. Since the company really saw itself as a
semi-production builder competing on price and excelling at ease of
doing business, we suggested to the team that they design a process
that met the requirements of this larger, more efficient, more
standardized, and more disciplined operating model.
Before
the team actually redesigned these processes, they also established a
number of requirements that they wanted to incorporate in the new
design, including the encouraging decision to abandon the company’s
functional alignment in favor of an organizational structure aligned
horizontally with the manner in which work is performed, and the
decision to eventually replace the company’s current operating
system with a new, fully-integrated “knowledge” system.
Going
into the SHOULD-BE phase, the objective was to arrive at a design
that would reduce the complexity of the process by at least 50%, and
reduce handoffs by at least 80%. The team’s SHOULD-BE design
reduced process activities by 36%, handoffs by 71%, checking of work
by 86%, and completely eliminated the need to reproduce information
and data.
The
redesign was a clear improvement over the existing process, but it
also fell short of the order-of-magnitude improvement possible under
a COULD-BE effort. In the end, this company recognized that it had
neither the willingness nor capability for radical change, and that’s
okay – SHOULD-BE is just what the term implies.
Process
mapping is the key to delivering more value to your buyers, in the
form of better homes, in shorter time, with less hassle, at a better
price, and you will find that it unlocks the door to better
production capacity, better market share, and better profit margins.
(Fletcher
Groves is a Vice President and senior consultant with Service and
Administrative Institute, Ponte Vedra Beach, FL, a consulting firm
specializing in business performance improvement. He can be reached
at (904) 273-9840)
Keys
to a Successful
Process
Mapping Project
Define
the project in terms of the specific, measurable results that the
project must achieve, not by the nature of the work or the project
activity. A project to improve process cycle time by 20% is
specific and measurable; a project to redesign the
contract-to-closing process is not.
Match
the scope of the project to the company’s willingness and
capability to implement the range of recommendations that are likely
to come out of the new process design.
Concentrate
on projects that can achieve successful results in short periods of
time; the longer a project drags on , the less likely it will
deliver the desired results.
Regardless
of whether you use a project manager or an outside consultant, don’t
handoff the responsibility for the work; the people who actually
perform the activities in the process have to be responsible for the
design of the work and the implementation of the improvements.
