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Using DMAIC and Richard Larson, PMP, CBAP, PMI-PBA BABOK Techniques Founder, Watermark Learning

@Rich_Larson

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© Educate 360, LLC • Practical, engaging, and industry-leading services • Training, coaching, and course licensing • Certification preparation services • Self-paced Video-on-Demand (VOD) • Certificate programs from Auburn University

Auburn University © Educate 360, LLC Session Objectives

After this presentation you will be able to:

• Describe typical process challenges • List and define the steps in the DMAIC methodology - Define, Measure, Analyze, Improve, and Control • Describe some tools and techniques for each stage of process improvement

Discuss:Challenges: ChallengesWhat are yourwith (andBiggest improving) Process processesChallenges?

This Photo by Unknown Author is licensed under CC BY-NC-SA

© Educate 360, LLC Summary of Common Process Challenges • Process boundaries “fuzzy” • Process owners hidden or non- existent • Functional divisions within organizations • Task-orientation vs. process • Disagreements about the “best” process • Inefficiency and Inertia (“if it ain’t broke…”)

Receive Application Check Credit Verify Employment Verify Income/ Assets Underwrite Loan Prepare Title Work Close Loan

Receive Application

Check Credit Underwrite Loan

Verify Prepare Employment Title Work Applications Verify Close Income/ Loan Underwriting Assets

Verifications Production

Several Intangibles: • Captures Corporate Knowledge • Easier to Manage and Work • Increases Confidence in Outputs.

Photos by Unknown Authors and licensed under CC BY-ND © Educate 360, LLC BPI: What is DMAIC?

Process Improvement Framework DMAIC

Phases Define Measure Analyze Improve Control

Business Process Analysis Process Execution ✓ Understand function/process function/process ✓ Measurement Activities hierarchies ✓ Compliance ✓ Define processprocess boundaries boundaries ✓ Automation ✓ Map processesprocesses ✓ Continuous ✓ Analyze improvementimprovement Improvement opportunities DMAIC and BABOK DMAIC Define Measure Analyze Improve Control • Business Cases • Balanced • Brainstorming • Acceptance and • Balanced • Stakeholder Scorecard • Data Modeling Eval. Criteria Scorecard List, Map, or • Benchmarking/ • Process • Business Rules • Benchmarking/ Personas Market Analysis Modelling (As- Analysis Market Analysis • Process • Data Mining Is vs. To-Be) • Decision Analysis • Metrics/KPIs Modelling • Financial • Root Cause • Metrics/KPIs (As-Is) Analysis Analysis • Org Modelling • Metrics/KPIs • Value Stream • Prototyping Techniques Mapping • Risk Analysis & Management • Roles/Permis- sions Matrix

• RACI • Check Sheets • SIPOC (To-Be) • Project Plans • Automation • Selection • Data Sheets • RACI • Reports Matrices • Pareto analysis • Quality

Tools • SIPOC (As-Is) Standards (e.g., ISO 9000)

• Process improvement • Process requirements for automation projects • Quality and compliance checks

This Photo by Unknown • Process creation (e.g., for new Author is licensed under CC BY-ND products and regulations) • Job and organizational realignment • Training aids.

1. Look at the Big Picture • Value Chain/Hierarchy to organize • Tie vision/strategy to processes • Use Business Case/Project Charter to build a case for BPI 2. “Framing” Processes and Finding Stakeholders 3. Prioritize Processes for Analysis • Highest value first • Decide which are in scope: Scope Diagrams • Prioritization Matrices can help

This Photo by Unknown Author is licensed under CC BY-SA © Educate 360, LLC 1. Big picture: Example Value Chain

Organization

Applications Verifications Underwriting Production

Cross-functional process: Produce Mortgage

Cross-functional process: Establish Auto-pay

Cross-functional process: Foreclose Mortgage

Pre-Condition: Post-Condition: Mortgage Request Mortgage Applied for

Inputs: • Financial Outputs: Information Receive • Completed • House Application Mortgage Information Application

Process Suppliers: • Requester Customers: (property • Verification purchaser) Staff

High ➢Develop web site for ➢Develop standard taking mortgage application form Applications ➢Perform all verifica- ➢Create incentives tions simultaneously for quality and speed Quick Hits Benefit ➢Create a data feed ➢Email a copy of directly to credit credit bureau report bureaus,X employers to borrowers

Low This Photo by Unknown Author is licensed under CC BY-SA Hard to implement Easy to implement

• List the following on paper: • Process Start (pre-condition) • Process End (post condition) • Then list a few SIPOC items • Supplier(s) • Input(s) • Output(s) • Customer(s) This Photo by Unknown Author is licensed under CC BY-SA

• Key metrics for the business process • Accurate and reliable? • What/how to measure: • Cycle time and wait time • Waste, delays, bottlenecks • Customer satisfaction surveys • Financial metrics (sales, profits, market share) • Techniques and Tools: • Balanced Scorecard • Benchmarking/Market Analysis • Data Mining • Metrics/KPIs • Financial Analysis • Pareto Analysis

Complaints per Month

6000 5453 96% 100%

5000 90%

78% 4000 Complaints per Mon. 1 = Late Delivery 3000 52% 2689 2 = Quality 3 = Wrong Product

2000 4 = Miscellaneous Complaints 1174 5 = Pricing

1000 660 432

0 1 2 3 4 5

“Simple” as 1-2-3: 1. Current State Analysis (D) 2. Future State Analysis (A) 3. Gap analysis (A)

1. Current 3. Gaps 2. Future Process • Change 1 Process Today • Change 2 we • etc. Want

© Educate 360, LLC Analyze and more : How does/should the Process Work? • Model/Map the Current and To-Be Processes • Ask good root cause “why” questions • Suggestions: Process B.O.G.s • Do Primary path then alternate paths • Bottlenecks • Capture handoffs between participants • Overlaps • Look for where a process can “B.O.G. down” • Gaps

People Process

Inefficient Inadequate Verification information Process sharing

Paper Application Mortgage Verifications Limited Too Slow Measure only Automation Complete Cycle Time

Measurements Systems © Educate 360, LLC Analyze Example: Improve this Process • What are some things that could improve this mortgage process?

Receive Application

Verify Credit This Photo by Unknown Author is licensed under CC BY-SA-NC

Verify Underwrite Employment Loan and Income

Verify Approve Assets for Title Work Closing

Part of this Close and Now done in process now Fund parallel to outsourced Loan speed process Process boundary clarified © Educate 360, LLC Improve: The Process

• Considerations: 1. Project or One-Off? 2. Resources to make the change 3. Overcoming barriers to change: Organization Change Management (OCM) • Tools and Techniques • Acceptance and Evaluation Criteria • Business Rules Analysis • Decision Analysis • Metrics/KPIs • Org Modelling • Pilots and Prototypes • Risk Analysis & Management • Roles/Permissions Matrix

R A C I Responsible/ Accountable/ Consult With Inform ITEM Role Approve Design new online UX Team Lou Scannon Legal, Customers application (Application Underwriting Sales) Add security C. Colin Lou Scannon Otto Delupe All Managers infrastructure for Backslash (IT (Application online applications Security) Sales) Redesign verification BA (TBD) Luke Bizzy Kay Sera, Kent Verification staff process (Verificaton C. Detrees Director) Split up title work PM (TBD) Kay Sera (Title Kent C. Detrees Title company process and Deed (external) Control) Document loan BA (TBD) Rick Shaw Orson Buggy, Affected funding process (Loan Finance Kay Sera, Managers Director) Affected Mgrs

© Educate 360, LLC Control: Maintaining the Improvement • Battling process “erosion” • Controlling processes: measure, evaluate, and enforce • Automation • Reporting • Alerts • Balanced Scorecard • Benchmarking/Market Analysis • Metrics/KPIs • 3 Ways Technology can help: 1. Promote regular staff communication 2. Regulation-specific apps and software 3. Workflow software (forced compliance) Source: BeiNetworks

• Which of these tools does your organization use? • How can you see using DMAIC (or parts) in your job? • What obstacles do you face in doing process improvement? How can you overcome them?

© Educate 360, LLC Resources • Web Sites • https://www.watermarklearning.com/business-process-management-training • https://en.wikipedia.org/wiki/DMAIC • Assoc. of Business Process Management Professionals: https://www.abpmp.org/ • Business Process Trends: www.bptrends.com

• Articles (Downloaded 1/14/2020) • “Fundamentals of Process Management: Best Practices in Optimizing Cross-Functional Business Processes,” By Robert M. Curtice, © Performance Improvement Associates, LLC • “3 ways technology can make regulatory compliance easier,” https://beinetworks.com/3- ways-technology-can-make-regulatory-compliance-easier/ Books • Harmon, Paul. Business Process Change, © 2002-2019, 4th Edition • Jacka, J.Mike and Keller, Paullette J., Business Process Mapping: Improving Customer Satisfaction, © 2002-2009, 2nd Edition • Sharp, Alec et. al., Workflow Modeling: Tools for Process Improvement and Application Development, © 2020, 2nd Edition

© Educate 360, LLC Free Resources to Continue your Recommended Courses for a Learning: Deeper Dive • Articles • Business Process • Webinars On-Demand Management Foundations • Templates • Linked-In, Facebook, and Twitter Groups • Business Process Modeling watermarklearning.com/resources/ • Business Process Improvement For more information please contact: [email protected] [email protected] www.WatermarkLearning.com