Staying Lean, 2nd Edition

127

© 2011 by Taylor & Francis Group, LLC

Chapter 6

Processes

In Going Lean: A Guide to Implementation (2000) we

defined key business processes as “patterns of inter-

connected value-adding relationships designed to meet

business goals and objectives.” Two things are important

when looking at businesses processes.

1. Which processes are key to the core business?

2. How do you design and optimize key processes

to deliver value to the customer, business, or value

stream?

Each business process comprises a number of steps,

tasks, or activities that convert a series of inputs into

outputs. Our example (Table6.1) shows some common

processes but you should always define and agree upon

your own for your organization.

In our experience, many companies make the mistake

of defining too many processes. It is better to settle for

between four and ten key business processes that can be

defined from start to end.

Many companies find it useful to classify their pro-

cesses into categories. For example, you might divide the

processes into three categories:

128  ◾  Staying Lean: Thriving, Not Just Surviving

© 2011 by Taylor & Francis Group, LLC

1. Processes that focus the overall direction of the

organization but do not directly deliver against the

targets—strategic processes

2. Processes that directly deliver on top-level targets—

core processes

Table6.1 Core business processes.

Key Business Process Denition

1. Product Lifecycle

Management

Managing customer needs for new

products. Designing and developing

new products, bringing them to market,

and retiring obsolete products.

2. Order Creation Winning new business with existing or

new customers.

3. Order Fulllment Transforming raw materials into

products that meet customer orders

including taking orders, order

processing, production planning,

production, delivery to the customer,

and payment management.

4. Technology, Plant and

Equipment

Management

Developing, managing, and

maintaining operating equipment,

including IT.

5. Human Resource

Management

Developing, managing, and

maintaining employees, including

training, recruitment, and retention.

6. Strategy and Policy

Deployment

The strategic management of the

company, focusing on change and

management of critical success

factors.

7. Supplier Integration and

Development

Integrating suppliers into other key

business processes, developing new

suppliers, and managing supplier

relationships.

8. Continuous

Improvement

Continuous radical, or incremental,

improvement of other key business

processes.

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© 2011 by Taylor & Francis Group, LLC

3. Processes that indirectly deliver on top-level targets—

support processes

The strategic processes set direction; the core processes,

aided by the support processes, deliver the targeted results.

Within the core processes, some can be identified as cus-

tomer facing, such as order fulfillment, order creation, and

product life-cycle management. Designing and managing

core processes effectively and efficiently ensures that the

company can compete and remain competitive.

Our companion book Going Lean: A Guide to

Implementation (2000) describes how you can select

processes to deliver targeted improvements, and we refer

you to this for further information.

We believe that improvement in core processes either

focuses primarily on waste reduction or, alternatively, on

value creation. For example, improving the order fulfill-

ment process is primarily reducing or eliminating waste

so as to enhance performance, increase capacity, and

reduce cost. Focusing on order creation primarily adds

value by generating more sales to utilize excess capacity.

Indeed, some people will argue that you cannot create

value by increasing sales until you have improved oper-

ations and stabilized the process, thus releasing excess

capacity. We believe the most effective way is to improve

both processes simultaneously; absorbing the excess

capacity generated by improvements in processes such as

order fulfillment with new sales generated through value-

adding processes such as the order creation process.

Why do waste reduction and value enhancement go

hand in hand? Waste reduction is often considered a way

of reducing costs; after all, waste is costly. But cost is not