Speaker 1: Welcome to a special presentation by the Harrington Group. Today's topic is Streamline the Business Process. It will be presented by Dr. H. James Harrington. Dr. Harrington is recognized as one of the world's leaders in applying performance improvement methodologies to business processes. He is the past president and chairman of ASQ and the International Academy of Quality. He has published over 35 books in 10 languages and hundreds of articles. He has written regular columns for the Quality Digest magazine, is on the editorial review board for five magazines. President Clinton's one comment is that he writes the books that other consultants use. It's an honor to have him here with us today. Without further ado, Dr. Harrington.

Speaker 2: Good evening or morning or whatever it is, wherever you are. It's a nice sunny day here in Florida. I wish you were all here joining me. We're going to move very rapidly today. We've got a big subject to cover and we're going to try to get it all done in a reasonable amount of time. Let's look at the evolution of what's happened thus far as process improvement is concerned. It started when Shewhart back in 1924 with Shewhart's control chart. The next major breakthrough came along around the 1975 when benchmarking became very popular. We saw an influence of the Japanese coming to the United States, benchmarking exactly what we're doing. Companies like IBM set up benchmarking activities. At the time they called it process compatibility where they compared their processes throughout the world to be sure that they were getting best practices. The next major breakthrough occurred about 1981 when we started talking about process reengineering. We started looking at our business process, getting away from manufacturing and focusing on things like sales, marketing, all of the control processes behind the manufacturing process. The next biggest breakthrough was where we started talking about business process improvement methodologies. It came out about 1985. Sigma came along with Motorola in 1987. Process reengineering came in 1992. This is the evolutionary effect of this whole process focus. We're going to talk about streamlining process improvement. How do you streamline your processes today? The object of streamlining your process is to make them more efficient and effective and at the same time reducing cycle time and cost. You're looking at that four parameter base. A few improvements that we're talking about improving efficiency, effectiveness, customer satisfaction, morale, and adaptability. On the other side, you're reducing cost, variation, bureaucracy, all of the things that you want out of your processes. Let's think about it a little bit. What happens, a business gets started and they need to process a paycheck. They figure out the simplest, the easiest way to do it. We developed a system when your company started and what your major processes consisted of. What's happened, our business environment's got more and more complex and more and more impact from outside of the business itself. The business environment has got extremely complex, but our processes, our business processes only changed when it was broken. We really didn't design or keep our process designed so that they were in tune with the environment. Let me start off by giving you a couple good definitions so that we're at least talking about it. A process is any activity or series of activities that takes an input, adds value to it, and produces an output. A system, on the other hand, is a group of processes that are interrelated and may or may not be connected. We're going to focus primarily on processes. If you think about processes, they break down from the process itself into sub-processes, the sub-processes down into activities, and then at the lowest end is the task, what we're actually doing. Those are some of the terminology we're going to use as we go forward. The history of business processes are very important. We developed them out of a need. We needed to write a paycheck, and from that point on, they were neglected. They weren't updated. They were not refined. They were not audited. They didn't really keep pace with the business activity, and as a result, they ended up looking more like a patchwork quilt rather than a good design activity that we would look at in manufacturing. We're talking about not just the manufacturing processes, but all of the support processes that really eats up our profit. The results, we've got a high-level bureaucracy built into our government, into our businesses itself. Our processes are out of date. They're overly complicated. They're not used. At IBM, we used to talk about IBM stands for I've Been Moved. The first thing that you would do if you come into a new environment, you would go over and you'd make a contact in purchasing, and you'd get a good friend in purchasing, and when you wanted to get something done, you'd go over to your good friend and get it done rather than follow the process, and that meant you'd go around all that bureaucracy, and that added cost and more time-consuming because everything got switched around, and the whole process, the environment we live in continuously is more and more irritating. I'm sure we've seen that in some of the government activities that have been going on recently. We have really more opportunity to improve our processes than we have problems to solve. Think about that. We have more opportunities to work with the things that we don't consider problems than we have opportunities to solve problems, and that's where our cost is. That's where the high overhead is that we've been living with continuously, and that's where we've got to work with. When we talk about tools for process improvement, there's a lot of tools out there. There's process qualification. There's problem solving. There's Six Sigma. There's Lean. There's the ISO 9000 and 14000. These are all the tools that we have today, and we're just going to pick on one of them, and we're calling this streamlined process improvement, and that's what we're going to be talking about today. First of all, we hear an awful lot about Lean, and I want to sort of show you the difference from my thinking between Lean and streamlining. Today, a lot of organizations are making excellent use of Lean, but still, there's some real advantages to thinking about streamlining over Lean. A car design is streamlined to reduce the resistance to air. It makes it operate more effectively. It makes it more attractive to our customers. When we streamline our process, they operate at lower cost, lower cycle time, with increased efficiency and effectiveness, and the major focus is not on reducing and removing all waste. It's maximizing value to the person that's getting the output, and that's what I want to focus on in streamlining. Now, here is a Lean car. This is truly a Lean car. In reality, you don't need a windshield. If you don't have a windshield, you drive slower, and it's safer for your people, so it's really helping the customer, and it reduces cost. So, in our Lean car, let's get rid of the windshield. Oh, and by the way, you don't need a starter. If you've got a crank, that's good for the customer, because that gets the customer out, and they get some exercise, too, so now you're helping them physically, and you're saving all that money. So, the Lean car, this is the ideal Lean car, but this is the car I want to buy, and I think it's more the type of car you're looking at, too, and this is what we're talking about when streamlining, and there is that differential where you're looking at value, at the total entity when you get through.