Three Types of Powerful Process Measuresby Stacey Barr |
To align teams to your organisation’s strategic direction and purpose, they each need to focus on three types of powerful process measures.
Imagine that you’re the manager of a department in a railway that rails sugar from the mill to the port. And you’ve just had a call from the manager at the sugar mill:
“Where are those *%$#ing trains we ordered?! We’ve had to shut down production AGAIN because the silos are full. You know how much that costs us! When are you guys going to get your train problem sorted?!”
It’s not too far from the truth. I worked with a pretty forward-thinking manager in the railways, called Martin. One of Martin’s processes was the flow of sugar from mill to port. His department took orders from the mill for trains when they were needed to come and load up with sugar at the silos, and take the sugar to the port for export. And Martin probably heard complaints, like the example above, from his sugar mill customers on more than one occasion.
The solution is not to get the train drivers or the wagon loaders or the train schedulers to try harder. The problem was not with the people (rarely are such problems with the people, in fact).
The problem was in the white space; the hand off points between parties in the sugar process, as sugar flows from the mill to the port. Actually, even as it flows from the cane fields to the ships.
And how Martin solved the problem was to take a birds-eye view of the whole process and use three types of measures to find the bottleneck and fix it. These three types of powerful process measures are relevant to anyone trying to improve the performance of a business process:
- process outcome measures
- process output measures
- in-process measures
Process Outcome Measures – these set the priorities for the process.
A really important outcome of the sugar process was that it should flow without causing the sugar mill to stop production on account of not enough trains to keep emptying the mill’s silos. Stopping production is a huge waste of time, capital and labour costs. So this was a very important process outcome measure for the sugar train process:
total hours of mill downtime caused by insufficient train capacity
Clearly this process outcome is strategically important for the railway. It’s one of the most important things that customers need from the railway, and a significant driver of at least one of the railway’s strategic goal: ‘Customers have an excellent service experience’. Our organisation’s strategic direction is a great place to start, to narrow down the process outcomes worth measuring for our processes. These questions can help:
- Which strategic goal does our process have the biggest impact on?
- What aspect of our organisation’s mission does our process have a big impact on?
- What exactly is our process’s impact on that strategic goal and/or mission?
Process Output Measures – these help in diagnosing and testing improvements to the process.
Martin flow-charted the entire process from when the mill ordered a train to when the train left the port after unloading the sugar for export. An important output for the sugar train system is that all the sugar gets delivered to the port on time. This led to the following process output measure:
tonnes of sugar delivered to the port each day
This is a measure of the capacity or throughput of the sugar-train system. The more sugar that can be railed to the port each day, the less chance there is that the mill’s silos will be filled, and therefore there will be far fewer hours of mill downtime. In other words, our process output measures monitor specific outputs that have a big influence over the process outcomes. Questions like these can help us find them:
- What are the tangible or observable outputs our process produces?
- How does each of these outputs influence our chosen process outcomes?
- Which outputs would be most worth improving, to get the biggest improvement in the process outcomes?
In-Process Measures – these are the powerful measures!
One of the problems in the sugar-train system was that the trains, in fact, were not keeping up with production. And the railway’s first response – by tradition – was to put more trains into the system. Very expensive. But forward-thinking Martin looked deeper into the problem.
He discovered that increasing the number of trains or the number of wagons on each train would improve capacity at too high a cost. By modeling the sugar-train system, he found that he could increase capacity by using the same (or fewer) wagons, but in a very different way to traditional thinking. What he did instead was to create trains that were a fixed length that cycled more frequently through the sugar system. No trains needed to be ordered by the mill, no need to change the number of wagons on the train each time, and no need to create complex train schedules. The unit-length trains just kept cycling through the system, continuously moving sugar from the mill to the port.
And to add insult to injury to traditional railway thinking, Martin’s team made sure they had enough wagons on these fixed-length trains so that one wagon would stay empty because it wasn’t needed. This unneeded wagon was called the ‘buffer’ wagon, and it was the key to Martin’s in-process measure:
percentage of trains where buffer wagon capacity was used, by week
In traditional railway thinking, running an empty wagon was very poor asset utilisation, so it took a fair bit of effort from Martin to get support to try out this solution. But it didn’t take long at all for everyone to realise the transformational power of this in-process measure: when that empty wagon was actually needed to empty the sugar silos, it was a lead indicator that production was beginning to exceed the railing capacity. So the railway could ramp up capacity before the mill ever had to stop production.
Transformational measures are almost always the in-process measures. But we have to really understand our process to find them! The starting point is to dig out the best in-process measures for our process, with questions like these:
- Where is time wasted in our process, that limits the output we want to improve?
- Which steps in our process are not directly helping our process to deliver that output?
- What are the most important changes to make within our processes, to improve this output?
Process measures are powerful because they drive strategic priorities.
It’s only through the design and execution of our business processes that we can change how our organisations perform. What people do is ultimately dictated and constrained by how our processes work. Measuring our processes with a system of outcome, output and in-process measures gives us a diagnostic tool to execute and achieve our strategic direction.
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