Process Simplification for RPA From complex to simple processes as a pre-requisite for process automation and implementing AI

23 November 2018 PM Day 2018 Workshop Typical Application of RPA to Business Processes

• Data extracts from IT systems, scanned documents, PDFs, other formats (screen scraping, OCR – optical character recognition) • Data transfer and entry (migrate information from files, formats e.g. CSV) • Regular report preparation and sharing (auto-generate reports, analyze contents and based on the contents, email them to stakeholders) • Quote-to-cash (sales operations processes >> send invoices earlier – pay earlier) • Procure-to-pay (extracting invoice and payment data from multiple systems and integrating information via RPA) • Customer onboarding (customers start using the product after purchase / sign up, loading customer profile and preferences, detailed billing data) • Mass emails (get data from multiple systems and send, regular emails – electronic utilities bills)

https://blog.appliedai.com/robotic-process-automation-use-cases/#common-business-processes Typical Application of RPA to Functions

Sales Tech support • Create and deliver invoices, CRM • Diagnostics updates • Regular testing Customer service • Software installations • Updated customer profile and • Automated tools for preferences employees / customers • Billing data HR • Resolving basic customer issues • Payroll Finance • Absence management • FP&A activities • Employee data management • Reconciliations Insurance • P&L preparation • Claims processing RPA Enablers and Challenges

Enablers Challenges • Standardized and streamlined • Complex processes: inconsistent and business processes non-standard business processes • Underestimating the amount of • Change management capability change to deliver on digital transformation • Lack of leadership strategy for process • Business model and strategy to drive standardization and automation standardization and efficiency Process Simplification

Focus improvement efforts on process simplification • Use of quality methods (Lean ) to drive process simplification • Automation of simplified processes • Pre-requisite for implementing RPA (robotic process automation)

From this… …to this:

Use of Lean Six Sigma quality methods for process simplification Lean Six Sigma Process Simplification Roadmap

1. Define 2. Measure 3. Analyze 4. Improve 5. Control Describe the problem Collect baseline data Identify the root cause Select the best solution Sustain the gains

▪ Project Selection ▪ CTQ Metrics ▪ ▪ Brainstorming ▪ Statistical Process ▪ ▪ MSA ▪ Run Chart ▪ Benchmarking Control ▪ VOC ▪ Summary Statistics ▪ Cause and Effect ▪ Force Field Analysis ▪ Control Plan ▪ Define the Problem ▪ ▪ Scatter Diagram ▪ Criteria Test ▪ Cost-Benefit Analysis ▪ Map the process ▪ Control Chart ▪ Value Analysis ▪ FMEA ▪ Mistake Proofing

Project Critical To Quality Tree Analysis and Charter Selection of Cause & Effect Solution Diagram Statistical Process Control Voice of the Risk Assessment Customer Measurement Surveys and System Analysis Sustainability & data Pareto Chart benefits

Proces Solution s Project Implementation Map Summary handover to Run Chart Statistics operations Identify the inputs Identify the Identify the output Optimise Process control (x’s) and value opportunity measures (y’s) the process and sustain the gains adding steps Process Simplification Strategy

What is the problem you are trying to solve? (e.g. process too complex, takes too much time to complete, multiple errors)

1. Problem statement Confirm primary purpose of the process

Use KPIs to measure 6. Metrics 2. Voice of the – what should the process produce as business impact definition Customer OUTPUT (e.g. a list of numbers, a report, a graph)

Prioritize simplification Identify and remove all waste in the 3. Process 5. Pareto processes – process steps that do not add efforts and impact mapping diagram value and make the processes complex (double processing, unnecessary

4. SIPOC approvals, too many details, waiting) diagram

Check user requirements about the desired OUTPUT (e.g. level of detail, timeliness, delivery mode) Case study Handout 1 Case Study Description Background In Sales Operations department of a European furniture production company, there is a regular weekly report of sales volumes in country X. Customers of report: Head of Sales in country X, Country Managing Director, account managers Timeline Report is due every Monday 10.00 for previous week data on sales volumes Delivery mode Report is sent by email to all customers Data sources IT system extract (data available at 9.00 on Mondays) and two Excel files (uploaded by Friday EOB on a sharepoint site by a staff member - Tim) Roles and Report is produced by three staff members – extracting the data from IT system (Billy), uploading 2 Responsibilities Excel files on sharepoint (Tim), merging data, data restructuring and dissemination (Anna) Current issues 1. Delays - (report is delivered by 10.00 in only 75% of cases, between 11.00 and 12.00 in 20% of cases, after 12.00 - 5%) 2. accuracy – report contains errors (68 errors for the previous month) - leads to requests to double check, amend errors and resend Customer feedback: Customers unhappy that the report is delivered later than the time agreed and has errors 1. Problem Tool 1: Problem Statement statement

A problem statement should: A problem statement should not: • State how big is the problem • Share an opinion about what is wrong • Show data to support the statement • Describe the cause of the problem that we have a problem • Assign blame or responsibility for the • Demonstrate how it is measured problem • Contain quantifiable information • Recommend or prescribe a solution about the problem and its impact on customers 1. Problem Tool 1: Problem Statement statement Handout 2 Case Study: Describe the problem and the business impact

…………………………………………………………………………………………… …………………………………………………………………………………………… …………………………………………………………………………………………… …………………………………………………………………………………………… 1. Problem Tool 1: Problem Statement statement

Case Study: Describe the problem and the business impact

The regular weekly report of sales volumes in country X has been consistently delayed (only submitted on time in 75% of cases). It also contains errors (68 errors reported last month) which has led to multiple edits and resubmissions. 2. Voice of Tool 2: Using the Customer

Proactive and consistent feedback

▪ Foundational concept in quality programs ▪ VOC methods: - Surveys via telephone, mail, email, or online - Focus groups in person or online - Interviews - Beta or user testing - Feedback forms - Customer complaints - Social media or site interaction - Reviews

12 2. Voice of Tool 2: Using Voice of the Customer the Customer

VOC helps formulate Critical to Quality (CTQ) characteristics that are the major drivers of Requirement quality within an organization or process Driver Customer Requirement Why identify CTQs? Need • Key characteristics that can be measured Driver Requirement • Critical to narrow and focus work scope • CTQs are factors that drive 80% of customer satisfaction • Helps create the most improvements possible within the available resources • Managing a few critical metrics helps ensure excellent output 2. Voice of Tool 2: Using Voice of the Customer the Customer

Translate Voice of the customer feedback into specific and measurable requirements

Critical to Quality (CTQ) Diagram Requirement Driver Customer Requirement Need Driver Requirement

14 2. Voice of Tool 2: Using Voice of the Customer the Customer

Requirement Driver Case study: CTQ Tree Customer Requirement Need Driver Requirement

Report has few to errors (95% of submissions) Report is accurate No report resubmissions required Report received on time (95% of submissions) and accurate

Report is received by Report is received on 10.00 on Mondays time (95% of submissions)

15 3. Process Tool 3: Process Maps mapping

Benefits of using Process maps • identifying any disconnected steps in a process • identifying and clarifying any responsibilities and relationships • identifying non value-added activities • isolating process bottlenecks • discovering opportunities for improvement • determining corrective actions 3. Process Tool 3: Process Maps mapping Handout 3 Case Study: Process Map

Sales Volumes Weekly Report Production and Dissemination

Phase

Send data extract o IT system download

Anna IT system IT(Billy)

Excel files uploaded Start

on sharepoint Excel files Excel (Tim) files

Do additional Anna receives input Download the Excel Consolidate all three Restructure & edit Finalize report checks, edit and End from Billy files inputs volume data

Anna resend

No

Send to end Report correct Yes End

customers Customers 4. SIPOC Tool 4: Using SIPOC diagram diagram

SIPOC helps you learn about the process, its components and linkages to other processes

SIPOCs can be created in a brainstorming session, diagramming takes team effort and analysis to complete. Done by project team, including SMEs and process owner. Level of detail varies from detailed level to high level process.

Suppliers Inputs Process Outputs Customers

18 4. SIPOC Tool 4: Using SIPOC diagram diagram

Creating a SIPOC Diagram

Step 1: Create Process flow Step 2: Set Boundaries and Name Your Process Step 3: Complete Process flow • Name Outputs and Customers • Name Inputs and Suppliers Step 4: Validate the Information

19 4. SIPOC Tool 4: Using SIPOC diagram diagram Handout 4 Case Study: Develop a SIPOC diagram

Suppliers Inputs Major Process Steps Outputs Customers 1. Department X 1. IT system upload 1. IT system 1. Excel file 1. Anna download

2. Tim 2. 2. Excel files 2. Excel files (x2) 2. Anna download

3. Anna 3. 3. Consolidate all 3. 3. inputs

4. Anna 4. Consolidated file 4. Restructure and 4. 4. Anna edit

5. Anna 5. 5. Send to customers 5. Volume report 5. 20 4. SIPOC Tool 4: Using SIPOC diagram diagram

Case Study: Develop a SIPOC diagram

Suppliers Inputs Major Process Steps Outputs Customers 1. Department X 1. IT system upload 1. IT system 1. Excel file 1. Anna download

2. Tim 2. Excel file (x2) 2. Excel files 2. Excel files (x2) 2. Anna download

3. Anna 3. IT system 3. Consolidate all 3. One consolidated 3. Anna download and Excel inputs file files 4. Anna 4. Consolidated file 4. Restructure and 4. Volume report 4. Anna edit

5. Anna 5. Volume report 5. Send to customers 5. Volume report 5. End Customers21 5. Pareto Tool 5: Using a Pareto Chart diagram

A special type of bar chart where the values are plotted in descending order

The Pareto chart is based on the Pareto principle or the 80/20 concept >> that 80% of the effects come from 20% of the causes. The Pareto chart is a very reliable way to identify the sources within a process that create the highest number of defects. The Pareto chart is useful when the problem with a , product, or service can be categorized >> analyzing non-numerical data, such as the types of causes of a problem. The Pareto chart can be used to determine what the key causes of the problem are, and this allows you to scope the project so you're focusing on those areas. 5. Pareto Tool 5: Using a Pareto Chart diagram

Pareto example • 80 % of defects are caused by the top three categories • Need to focus on these first to make the most impact

23 5. Pareto Tool 5: Using a Pareto Chart diagram

Steps for building a Pareto chart • List all of the causes of the defects in descending order • Calculate the cumulative percentage of defects • Add the axes, numerical scale, bars, and categories • Plot the cumulative frequency of defects • Prioritize the vital few 5. Pareto Tool 5: Using a Pareto Chart diagram

Case study: Types of errors (count of errors per month)

Type of error Count Duplicate numbers 29 Missing numbers 6 Wrong calculation (formulas wrong) 23 Numbers don’t reconcile across the three inputs 10 5. Pareto Tool 5: Using a Pareto Chart diagram

Case study: Types of errors (count of errors per month ) 6. Metrics Tool 6: Using Metrics definition

Measures are used to quantify the success factors and benefits realisation (efficiency and effectiveness) • Moving from problem statement to goals and objectives, we need to identify the project metrics • What is to be measured should be quantitative, should relate directly back to specific project requirements, and should be something that is important to the customer (Voice of the Customer feedback) • Goals should be measureable, so that at the end of the project we know if we have achieved the desired results in terms of efficiency and effectiveness (e.g. Goal 1 >> KBI 1) 6. Metrics Tool 6: Using Metrics definition

How do we know that a change will lead to an improvement? Primary Metrics Secondary Metrics Balancing Metrics

• Can be directly • Influence the • The negative side observed and primary metrics effects of the influenced that you can not improvement • Link between directly observe • Example: metric and • Example: increased objectives customer delivery times Example: delivery satisfaction may increase times transportation and labor costs 6. Metrics Tool 6: Using Metrics definition Handout 5 How do we know that a change will lead to an improvement?

Primary Metrics Secondary Metrics Balancing Metrics

• KBI 1 • KBI 1.1 • KBI 1

• KBI 2 • KBI 1.2 6. Metrics Tool 6: Using Metrics definition

How do we know that a change will lead to an improvement?

Primary Metrics Secondary Metrics Balancing Metrics • 1. Improve • 1.1. Reduce and • Increased delays accuracy for the eliminate in report report (68 errors duplicate submission per month to numbers in max 6 errors: 90+ inputs (from 29 % improvement) to max 1) • 2. Improve • 1.2. Reduce and timeliness of the eliminate wrong report (from 75% formulas (from to min 95%) 23 to max 1) Define the Project Simplification Scope Tips for Scoping LSS projects Best practices

• Address the source of the problem • Determine the impact other projects • Focus on one or few problems only may have on your project • Set realistic objectives • Set clear objectives and KBIs • Collect input from stakeholders • Focus on critical business issues • Realistic budget estimate • Set clear start and end points • Write a precise and concise scope Project Charter

Gives the team and the organization an idea of what is involved in the project

• business case ("why should we do this project?”) • problem statement (“what is the problem we are trying to solve and its impact?”) • project scope (“what should and should not be included in the project?” ) • goal statement (”what is the anticipated results from the process improvement efforts?”) • key deliverables (roadmap for the team and estimations of completion date) • required resources • roles and responsibilities Define the Project Simplification Scope

Causes of scope creep Move outside of the processes that you are targeting Be careful not to add in extra deliverables, requirements, or process steps (extend time and lose focus)

• Scope is focusing on a bigger issue Reasons: not a good problem statement, leadership expects too much • Scope is too narrow or too broad Reasons: Too narrow – looking at a subset of a process (only improve part of it) Too broad – may miss the root cause of the problem (may overwhelm the project team, and lead to unrealistic expectations) Review your project scope Back-up Slides Process Simplification Roadmap

1. Define 2. Measure 3. Analyze 4. Improve 5. Control Describe the problem Collect baseline data Identify the root cause Select the best solution Sustain the gains Lean Six Sigma ▪ Project Selection ▪ CTQ Metrics ▪ Pareto Chart ▪ Brainstorming ▪ Statistical Process ▪ Project Charter ▪ MSA ▪ Run Chart ▪ Benchmarking Control Process ▪ VOC ▪ Summary Statistics ▪ Cause and Effect ▪ Force Field Analysis ▪ Control Plan ▪ Define the Problem ▪ Process Capability ▪ Scatter Diagram ▪ Criteria Test ▪ Cost-Benefit Analysis Simplification ▪ Map the process ▪ Control Chart ▪ Value Analysis ▪ FMEA ▪ Mistake Proofing Tools

▪ Identify Project, ▪ Determine Critical Xs ▪ Benchmark the ▪ Design of ▪ Statistical Process Champion and and Ys Process or Product Experiments Control Project Owner ▪ Determine Operational ▪ Establish Causal ▪ Develop Solution ▪ Determine Needed ▪ Determine Customer Definitions Relationships Using Alternatives Controls Requirements and ▪ Establish Performance Data ▪ Assess Risks and (measurement, CTQs Standards ▪ Analysis of the Benefits of Solution design, etc.) ▪ Define Problem, ▪ Develop Data Process Map Alternatives ▪ Implement and Objective, Goals and Collection and ▪ Determine Root ▪ Validate Solution Validate Controls Benefits Sampling Plan Cause(s) Using Data using a Pilot ▪ Develop Transfer ▪ Define ▪ Validate the ▪ Implement Solution Plan Stakeholder/Resourc Measurements ▪ Determine Solution ▪ Realize Benefits of e Analysis ▪ Measurement Systems effectiveness using Implementing ▪ Map the Process Analysis Data Solution ▪ Develop Project Plan ▪ Determine Process ▪ Close Project and Capability and Baseline Communicate Result

Identify the inputs Identify the Identify the output Optimise Process control (x’s) and value opportunity measures (y’s) the process and sustain the gains adding steps Process Flow for achieving 70%+ Improvement Six Sigma Process for ensuring breakthrough changes

Select project that is Baseline Review and approve Authorize Communicate Champion critical to operational performance solutions process results, train success and monitor change and ensure results sustainability

Set up team and follow Develop solutions, Define financial Black Belt DMAIC roadmap complete benefit and benefit risk assessment

Implement and Team Understand root cause of Validate standardize process problem Solution changes