Hi! Managers: The business of improving a firm's processes

But quite often there will be an event which causes a company to look at a process; an inexplicable loss, missing stock, a new boss, the Bt300 minimum wage or a new law all being examples.

The article also looked at how companies that were committed to high-quality customer service, reducing costs and adding new services, had a relentless focus on continuous process improvement.

So how does process improvement really work?

Take a simple process that can be completed by performing two tasks. About every task we need to understand "why?", "how?", "what?", "who?", "where?" and, by measuring three different axes of time, we can determine "how well?" too.

Why? It sounds obvious but it is not a question that is asked often enough. What is the reason we are doing this? Because the process has changed over time, there are surprisingly many things being done that do not need to be done at all. For example, in the process "Put money in suppliers account", I have a task: "Go to the bank." Today a company would transfer money electronically. Asking why forces us to challenge each task in the process.

How? Is this task automated or is it manual? How is it done? Here we will also understand procedures that relate to the task. These often "branch", like an "if" statement. For example: "If more than 5,000 do X, but if less, do Y". The branches will then have their own associated tasks.

What? Are we using a computer, a forklift truck, a car, a motorbike, or an e-mail? Gathering this information is important, as it contributes to the eventual overall cost of the entire process. "What" may seem an obvious question but by asking it we are actually annotating the new process at the same time as the improvement. When we have finished, we effectively have the user manual completed.

Who? Who is carrying out the task? Is there one person doing it or more? What percentage of their time is being spent on it? This will also directly relate to a key part of the cost of the overall process. If a person is being paid Bt10,000 per month, and he or she is spending 50 per cent of their time on this task, Bt5,000 per month is part of the cost of completing the process.

"Who" is further broken down by what is known as its "RACI" code.

--"R" for Responsible. The individual(s) who actually complete(s) the task, the action/implementation.

--"A" for Authorise. The individual who is ultimately responsible. Includes yes or no authority and veto power.

--"C" for Consult. The individual(s)or groups to be consulted prior to a final decision or action.

--"I" for Inform. The individual(s) or groups who need to be informed after a decision or action are taken.

Where? Physically, where is the task being done? For example, Task 1 might be done in a completely different location from Task 2. Often, large company processes are happening over large geographies; an example might be stock delivery or supply chain management.

For time, there are three key measurements: "Task Time", "Wait Time", and "Actual Time".

"Task time" is the total time that task is available for. For example, a purchase order lands on a manager's desk at 9am and leaves it at 10am. The "Task Time" is one hour.

Then we consider the "Wait Time". This is the time between the end of Task 1 until the beginning of Task 2. Perhaps, in this example, the purchase-order is sent in the afternoon to the next manager to sign, so the "Wait Time" is perhaps four hours.

The "Task Time" + "Wait Time" multiplied by the number of tasks is the total maximum time for the process.

The "Actual Time" measures the amount of time it takes to complete the task in reality. For example, the "Actual Time" needed to sign the purchase order is only three minutes.

Quick-wins for process improvement are always to reduce the time between "Task Time" and "Actual Time" - in our example that could be 57 minutes - and also to reduce "Wait Time".

Typically we find a process consists of between 40 and 70 tasks and every single one should have the "why?", "how?", "what?", "who?", "where?" and "how well?" questions answered.

Finally, these need to be done for every process. Businesses have many processes, for example a branch-banking business has over 1,500 processes, meaning up to 105,000 interrelated tasks to be improved, hence the need for continuous improvement within every company.

Andrew McBean is a partner at Grant Thornton Management Consulting, a newly formed unit of Grant Thornton Thailand. Follow his article on every third Monday of the month.