Customer Driven-Operations Management

Customer Driven-Operations Management

Introduction

 

This book is written based on a simple concept of “What it takes to create a world-class organization. Author has replaced the most current business theories and practices that will help in identifying and eliminating operational inefficiencies and enable the necessary metrics for delivering products and services better, cheaper, and faster. Ahoy walks through the steps of creating a world-class organization, which includes:

• Mapping a Company’s processes to Target Weak points.
• Realigning management systems from Functional to Process-Focused.
• Setting Benchmarks throughout the process, so as to quantify the levels of success.
• Establishing a system of Knowledge Management for the seamless alignment of teams and departments.
• Improving Process Management using lean, Six Sigma, and other methodologies.
• Creating a Sound Strategic planning initiative to eliminate future surprises.

Process Mapping

Process mapping is a method of understanding a process thoroughly. It is a tool for analyzing and improvising business processes by determining the current reality and making improvements leading to the future state and ultimately to the ideal state. Mapping process in a world-class operation is critical to determining the existing conditions.

 

Alignment

The term alignment refers to consistency of plans, processes, information, resource decisions, actions, results, and analyses to support key organization-wide goals. Effective alignment requires a common understanding of purposes and goals.

 

Benchmarking

A benchmark is defined as a point of reference from which measurements may be made, something that serves as a standard by which others may measure. The term can refer to a particular point within a series of processes that is good stopping point to take stock of any organization’s progress.

 

Knowledge Management

Knowledge management is finding the right information for the right people in the organization at the right time. A knowledge management focus for an organization is the next logical step to garner all the intellectual capital and institutional memory that resides in an organization and requires data mining of pertinent information for appropriate actions.

 

Process Management

Process management is one opportunity that brings to the forefront a vehicle for managing changes and facilitating change in facilities operations Lean and Six Sigma methodologies can be used to fill the gap in the system model:

          

Lean Methodology:

1. Eliminates waste through continuous improvement of currently established processes.
2. Maximizes value-steam mapping with the intent of eliminating and/or minimizing non-value-added operations.
3. Eliminates searching, walking, and waiting.

Six Sigma:

1. Eliminates defects associated with variation.
2. Optimizes processes to exceed customer expectations.
3. Focuses on financial results with laser like intensity
4. Measures errors in parts per million.
5. Provides breakthrough improvements.

 

Strategic Planning

Strategic Planning is the key to helping organizations or companies, collectively and cooperatively, to gain control of the future and the destiny of organizations. The overall goal of strategic planning is to produce a plan that can be successfully implemented. There are three major keys to successful strategic planning and implementations are:

1. Commitment
2. Credibility
3. Communication

 

Creating a World-Class Organization

 

The global economy is witnessing previously unseen levels of competitiveness, forcing business leaders to contend with unprecedented challenges. No longer can companies seize and hold a customer base merely by operating adequately. In order to enjoy a competitive advantage, an organization must operate at exemplary levels of performance in every facet of business and maintain that degree of excellence indefinitely.

This can be achieved through careful alignment of operational systems and the use of innovative process management initiatives. The aspiration of being the best in class is composed of two parts, namely:

 

1. Being competitive (with others and with self).
2. Attaining the leading edge by becoming the best in an area of interest or focus and then becoming first.

 

A world-class organization satisfies a customer by providing a complete packaging of goods, products, and services through innate understanding of the critical to quality requirements of the customer. World class paradigms include the following:

 

Effective Organization

To create world class organization one must begin by creating an effective organization. An effective organization must provide goods, value-added products, and superior services of high quality, at low cost, with delivery that meets customer expectations. The matrix of the success of an organization is in building a staff endowed with self-equity, high performance operations, and high level of organizational equity. Profound clarity of the organization’s values, vision, mission, strategies, and objectives in an effective organization is a must for employees. Customer Success is a new paradigm for customer success that is built through successful relationships.

                                                

Stages of Change

“Attitude not Aptitude determines Altitude”. To develop a new breed of employee and an organization with a purpose, where people are aligned behind a clearly defined strategy and a compelling vision, requires giving existing workers opportunities to discover their individual talents. It may also require hiring new workers with great attitudes. The organization must capitalize on the strengths and differences of each employee.

By pursuing excellence through focusing on individual and organizational strengths while managing the weakness, an organization can achieve outstanding results. One methodology is to establish a guiding coalition for this transformation by using vision and strategies and looking at change assessments.

 

Process of Transformation

To reach the ideal state of a world-class operation, transformation of an organization must take place at the individual employee level by creating knowledge-based workers and by instituting an organization design. This transformation takes place by the following steps as shown in “Figure-1”. In the phase of Process of Transformation, any organization also undergoes “Organizational and Personal Transformation”. This transition phases can be divided into two categories: strugglers and thrivers.

There are various stages that an individual in an organization may pass through to get to the position of being ready to become thriver. “Figure-2” shows the pendulum swing from shock and denial, to anger and blaming, to grief and nostalgia, finally reaching the survival stage, which is called the “Process of Getting There”.

                    

 

                   Figure-1                                                  “Process of Getting There” Figure-2

 

 

Levels of Development

 

“All growth depends upon activity. There is no development physically or intellectually without effort, and effort means work”. For an organization to be viable and move beyond the survival phases, it must go through three cycles to reach world-class stature. One life cycle for an organization as specified by empirical data is from three to seven years.

 

It moves from the current reality, to the future state, and finally to the ideal state. Then, it must repeat this tricycle state or it will begin to degenerate and disintegrate again. If it keeps renewing itself, it will remain viable, but only as long as its output incorporates sufficient new methodologies to maintain its vantage point will it be a thriving organization.

 

An organization must allow the knowledge-based workers to experiment with new ways of doing things, asking new questions to generate new ideas. Charles Handy explains that there is always first period of experimentation and learning, which is followed by a time of growth and development.

Value-driven percepts

Value-driven precepts involve permanently changing an organization’s culture to reach for outstanding results in the pursuit of excellence, while innovating and differentiating from its competition through continuous and never-ending quality initiatives and improvements. It also involves changing the way employees of an organization think and work together for the greater good. It is about how people are perceived and how they perceive themselves, their organization, their stakeholders, their stockholders, and their customer’s perception of the goods, products, and services that they provide.

 

Challenge Zone or Mastery

Craft mastery is to develop profound knowledge-knowledge both explicit and tacit-as well as to acquire the requisite skill sets to solve more complex science problems. The challenge is to build strength and core competencies to get out the rut or current reality and solve problems of tomorrow. To reach the ideal state is to design and implement solutions where there is no blueprint to follow. The new global economy requires perfecting seven critical “masteries” as follows:

 

Strategic Decisions

Strategic decisions are made at the leadership level. Strategic decisions are derived from matching three different decision-making processes. These components are environmental opportunities that are placed before an individual or an organization. The SWOT’s are in an area in which an organization makes the most productive and meaningful changes possible. The third item of personal values, shown as component, is the difficult one to resolve.

 

Decision lens offers a family of open, integrated solutions that enable organizations easily and effectively:

1. Organize and evaluate complex factors.
2. Reduce the amount of time and money to make effective decisions.
3. Accelerate consensus building and ownership while applying the collective intelligence of key stakeholders in a decision.
4. Synthesize quantitative and qualitative benefits, opportunities, costs, and risks of alternatives into decisions.
5. Spend resources well
6. Remove stress and uncertainty associated with complex decisions.
7. Quickly test the impact and sensitivity of changing scenarios on business decisions.
8. Provide transparency into how decisions were made.
9. Establish sustainable and higher-quality decision-making processes.

 

 

 

 

Who is the Customer?

 

“The customer may not always be right, but the customer is always the customer”. A customer is a person or group that buys goods, products, or services and with whom an organization has a relationship. If an organization hopes to achieve customer success, it must start by listening critically to the voice of the customer.

 

To acquire world-class stature, an organization must understand the critical-to-customer needs, requirements, and satisfactions. Understanding the VOC (voice of customer) is critical to the success of any enterprise. The ultimate goal for any enterprise is relationship building, motivated organization launching a quality journey by improving everyday processes. There are three conditions that organizations must seek to achieve customer satisfaction or delight. These are:

 

1. Having the right people in the organization with the right attitude,
2. Having the proper processes in place, and
3. Using the right tools to attain a competitive advantage.

 

If an organization hopes to achieve customer success, it must start by listening critically to the voice of the employee. To acquire world-class stature, organizations must have happy and educated employees, critical-to-customer needs, requirements, and satisfaction.

 

Customer Requirements

Understanding customer requirements is known as critical-to-customer requirements (CCRs). These requirements are minimal conditions that organizations must meet. Customer requirements surpass customer wants and needs, as they are critical to supplying the minimum requirements that will fulfill the customer’s expectations.

 

An organization must translate these critical requirements through a tool known as quality functional deployment (QFD), it is also known as the “house of quality”. It is a structured methodology of translating customer requirements into technical specifications for each step of the development of a product or service. These include design, manufacturing, and implementation of various processes to capture the voice of the customer.

 

The QFD matrix includes identification, verification, and clarification of the following:

1. The voice of the customer (wants, needs, and requirements).
2. The importance of customer requirements as differentiated from wants and needs.
3. Product characteristics to meet customer requirements.
4. Correlations between the required technical specifications of the products or services with customer requirements.
5. The weighing correlation between customer requirements and products and services characteristics.
6. Prioritization of customers’ perception of products and services produced by the organization as compared to the organization’s competition.
7. The level of customer focus throughout the organization.

 

 

Customer Focus

 

“The approach that gives you the best shot of taking care of the customer is the same one that best takes care of you”. The new paradigm of world class to meet competitiveness for companies is Customer Focus. Customer focus is achievable for both internal and external customers. The three areas of customer focus are:

 

1. Customer Satisfaction paradigm:

The customer satisfaction paradigm is when an organization finally has matured and reached the threshold of high performance, the beginning stage to become a world-class operation. The organization has achieved the specification level of satisfying the customer or meeting what was promised, and the organization is waiting to launch itself from good to great.

 

1. Customer Delight paradigm:

The customer delight paradigm is delivered through solutions provided by knowledge-based workers who impart the core value propositions of the organization.

 

1. Customer Success paradigm:

To reach the lofty goal of achieving customer success, an organization must build good relationships with its existing customer base and develop potential customers by having the right people with the right attitude in the right place in the organization.

 

The new mantra to attain world-class status for each organization in this multicultural age is Customer Success. This can be achieved by providing a full range of services from beginning to end and keep in contact with your customer with follow-ups.

 

If your customer is successful, your organization will also be successful and will reap bountiful benefits in the form of greater wealth in every way, including goodwill and monetary gains endowed with long-lasting relationships.

 

In order to create operational excellence and reach organizational effectiveness, you have to train and develop human resources in the following ways:

• Fulfill the voice of the customer and the voice of the employee.
• Look at the entire organizational excellence from a system perspective.
• Fill in the gaps through gap analyses.

 

Customer success involves process improvements. Process improvements are the third leg of the stool for continuous improvement through various quality initiatives. These improvements, removing waste and variation can be accomplished by using Lean and Six Sigma methodologies.

 

Organization Design

Organization design is a methodology used to attain self-equity for employees and then organizational equity. Organization design must be a deliberate, conscious, and planned effort with a long-term commitment. It is the natural outgrowth of three areas of influence:

 

1. The coping with or managing environmental factors.
2. The resolution of strengths, weaknesses, opportunities, and threats (SWOT’s) that an organization faces;
3. The understanding and nurturing of the unique, cultural, and personal values of the employees.

 

All the three areas of environmental factors, SWOTs, and personal values produce a matching process relative to the position that each organization attains to create strategic decisions for the organization.

 

1. Coping with or Managing Environmental Factors: The environment has a tremendous impact on the socioeconomic conditions of a state or nation. Some of these issues transcend boundaries beyond the control of an individual or an organization. In our organization design, we must manage and cope with all the environmental factors.

 

1. Strengths, Weakness, Opportunities, and Threats (SWOT): SWOT analysis is the strategic planning process to understand strengths and weakness by looking at the opportunities and threats that the enterprise may face from external competition or lack of internal progress. Some possible questions we need to ask in each of the four categories are:
2. Strength—What do we do well? What resources can we draw on? How do others see our strengths? How do we see our strengths?
3. Weakness—What can we improve? Do we have fewer resources than others in a similar industry? How do others see our weakness? How do we see our weakness?
4. Opportunities—What opportunities are available? What trends can we see to take advantage of? How can we turn our strengths into opportunities? How can we turn our strengths into opportunities?
5. Threats—What trends could harm us? What is our competitor doing? To what threats do our weaknesses expose us?

 

1. Cultural and Personal values of employees: Cultural values and personal values play a significant role in organizational behavior. We are talking about cultural and personal norms that impact an organization derived from individual backgrounds- the schools in which they have been educated, the community from where they came, and their spiritual and religious upbringings. These all play a role in employee reactions to situations, especially in the workplace.

For an organization to survive and succeed in the 21st century, the employee must have fun and find a place where there is purpose, passion and meaningful work. Therefore, creating knowledge-based workers who are possessed with the skills of creativity, competency, collaboration, and a high level of anticipatory communication becomes primary and needed function.

Organizations, with the right kinds of knowledge workers, gain a competitive edge from the ability of their members to live in the fog of reality and still make quick decisions and excellent interpretations of where the current reality is and where the future state should be in order to reach the ideal state of world-class operations.

 

Metrics

 

Metrics with respect to an organization is to measure and determine how well an organization is doing in its venture toward becoming world-class. To understand whether an operation has made progress, an organization needs to measure what it values.

 

These measurements are the metrics derived for a particular operation. The metrics developed will be specific to each organization and will vary depending on the type of business.

 

The four criteria of the original Balanced Scorecard metrics are used to determine the appropriate metrics. These criteria are necessary for a data-driven, fact-based, and knowledge-based management operation in order to respond to the critical-to-quality customer needs in producing goods, products, and services that are better, cheaper, and faster than the competition.

 

Dashboards to Success

Dashboards to success translate strategies into action. Identify and track key performance indicators as predictive measures for future success. Dashboard applications gather and present information for decision makers and knowledge workers at all levels of the organization.

 

Dashboards also provide the mechanism for instant feedback to process at different levels in the organization so that they can assess the pulse of their operation and make any necessary changes or improvements.

 

Creating a Dashboard

Dashboard is a tool used for collecting and reporting data, information and knowledge about vital customer requirements and/or your business performance for key customers. Dashboards provide a quick summary of process, and/or product, or services performance.

 

Creating a dashboard is complex, but it generally represents a simple graphical presentation of diverse data that can be used to drill down on underlying information. However, the elements of the dashboards to success in an organization are different. These dashboard elements for success can be rearranged, modified, and customized to fit each work unit of an operation.

 

Performance Scorecard

The Performance Scorecard helps an organization set and communicate goals, establish key performance metrics and accountability, and continuously measure performance against organizational goals and objectives. The performance scorecard aligns and focuses on business objectives, plans, and actions.      

 

Balanced Scorecard

To be competitive and on the leading edge of progress, an enterprise needs the six criteria of the balanced scorecard plus components as guidelines for measurement of performance, which lead to operational excellence and an effective world-class organization.

Systems approach and filling in the gaps

 

The primary need to create awareness for world-class operation required that we implement a systems engineering approach to problem solving, using organized creative technologies and methodologies. Organization seeking competitiveness and a desire to attain world-class stature must seek an organized creative technology methodological approach to reach its goal.

 

We must look at an organization from a systems perspective if it is to become world-class. We must look at it as holistically developing, drilling down the concepts of a systems approach to organization design, metrics, and process improvement.

 

Knowledge-based workers manage and lead the operation through these percepts and gain a competitive advantage by aligning all of the organization’s activities based on the supply chain model SIPOC (supplier, input process, output, and customer).

 

The SIPOC model is a systems model, a holistic way of approaching the entire supply chain value stream until the outcomes reaches the customer. Variation in each of the output processes causes defects, and defects must be analyzed at every step of the way.

 

We focus on three areas. The first area is an organizational design approach involving creating self-equity and organizational equity—implementing dashboards, using metrics for performance measurement, and using SIPOC model to remove non-value-added work.

 

Gaps

A gap is defined as an unfilled space or interval—a blank, breaks in continuity, and so on. It is necessary to determine gaps in the various levels of administration in the organization for organizational development and incorporating the continuous improvements needed to move to the next level of transformation.

 

Gaps in an organization can be measured at the beginning of a process and after the process has been completed. The leading indicator gap metrics are at the beginning of process management where the five variables—people, machine, method, and environment—are inputted into the processes. The lagging indicator gap is perceived after the process is completed and metrics are established for historical information. Both gap analyses are important to determine the health of the organization.

 

The goal of gap analysis methodology is, first to review the issue at hand by recognizing, defining, measuring, analyzing, and improving processes in the system and, second, is to meet the standards prescribed by the quality initiatives to become world-class.

 

The outcomes from gap analysis are improved processes, processes that are repeatable and measureable. Gap analysis must be performed to reach customer satisfaction, customer delight, and finally customer success.

 

 

How to fill the gaps

Filling in the gaps is critical for any organization that seeks to reach the pinnacle of success. For organization design, the following three methods are suggested for use when aspiring to become world-class:

 

1. Fill gaps through organization design, creating effective organization and operational excellence. Build creative knowledge-based workers and a world-class organization by building self-equity and organizational equity for organizational alignment.
2. Measure gaps using metrics in Balance Scorecard Plus format.
3. Mitigate gaps by process management through Lean and Six Sigma methodologies. Lean principles and Six Sigma methodologies remove waste and reduce errors in the processes.

 

 

Quality Tools

 The American Society for Quality provides many quality tools for use in solving problems, and these are neatly arranged in eight categories:

 

1. Cause analysis tools—fishbone diagram, Pareto chart, and scatter diagrams. These tools could be the first step an organization uses for its process improvements by identifying the cause of the problem or situation and then applying other processes and tools to solve the problem.
2. Evaluation and decision-making tools—decision matrix and multivoting tools to narrow a group of choices to arrive at the best one. This process allows you to make informed decisions and helps you choose the best option.
3. Process analysis tools—flowchart, failure mode, effect and analysis, mistake-proofing, sometimes known as poke-a-yoke. These tools help to identify and eliminate unnecessary process steps in a work flow or an environment to increase productivity and operational excellence through efficiency, reducing time, and cutting costs.
4. Seven basic quality tools—Quality circles (QC) is known for emphasizing the cause-effect diagram, check-list sheet, control charts, Pareto charts, scatter diagram, histogram, and stratification as the seven tools to get to the heart of implementing quality principles.
5. Data collection and analysis tools—uses check sheet, control chart, design of experiment, histogram, scatter diagram, stratification, and survey tool to collect or analyze data.
6. Idea creation tools—organizes many ideas using affinity diagrams, benchmarking, brainstorming, and nominal group technique.
7. Project planning implementation tools—Gantt chart, PDCA (plan–do–check–act or plan–do–check–adjust) is an iterative four-step management method used in business for the control and continuous improvement of processes and products. It is also known as the Deming circle.
8. Seven new management and planning tools—using 7MP tools in planning avoids the guesswork and the rework of any project. It can take seemingly complex, abstract idea and narrow it down to an understandable, orderly plan of action.