We all know that data can tell a story. But what story do you want to tell? To whom do you want to tell it? There are multiple ways to "measure" a process and multiple dimensions that can make it confusing for external stakeholders. Since quantifying a process is a necessary step to improving it, it's critical to know the difference between managing efficiency versus managing quality. In this meetup, we discussed how we differentiate management versus audit as well as the implications of each.
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Measuring performance with data performance management vs performance audit
1. Measuring Performance with Data:
Performance Mgmt vs Audit
Highlights and Q&A - NYBPP Meetup
08.21.2018 | CAVI CONSULTING
2. Samuel Chin
Samuel is the co-founder and chief process scientist for Cavi Consulting, a process
science consultancy helping businesses to remove obstacles to energy flow and
more effectively automate, scale and grow.
Experience
Samuel has consulted for small-to-enterprise level companies across a wide range of
sectors and verticals, including financial services, resources, legal services, media
and digital services, in both the for profit and nonprofit domains.
Education and Certifications
Samuel holds an MBA from the University of Richmond, and a B.A. from the
University of Virginia.
Samuel is certified in Lean, Six Sigma, Change Management (PROSCI), and Project
Management (PMP and CSM).
3. Agenda
● Performance Management versus Performance Audit
○ Defining Process Audit
○ Why Audit Processes?
○ Measuring Process Quality
○ Defining Process Management
○ Why Manage Processes?
○ Measuring Process Efficiency
○ Confusing Audit & Management Measures
○ Summary
● Q/A
○ Are process audits necessary to ensure process quality?
○ What are the right metrics to measure a process?
○ Do process measures help with automation?
4. Defining Process Audit
● A process audit is a non-recurring, one-time
examination of a process and its outcomes to determine
whether the activities and resources involved in the
process are being managed efficiently and effectively
within expected constraints
● An effective process is one that achieves the results that
are intended – i.e. the specific objectives (without
violating constraints).
● Ultimately, a process audit assesses the overall ability
for a process to appropriately create value
5. Why Audit Processes?
If you want a snapshot of how your process is doing
for any reason at any detail level, an audit is the
right way to go. Normally you would audit a process
for the following reasons:
● Capture an operating or project baseline
● Compliance objective
● Certification or external requirement
6. Measuring Process Quality
A process can be very efficient, but produce a bad product. When you measure process quality, you are
looking to associate process outputs with the value creation demanded by the market. This equates to
understanding what benefit the process is meant to produce and at what cost the production actually occurs.
Cost also includes penalties and risk associated with non-compliance! Thus, process quality must address
regulatory/compliance/risk issues.
Quality measures are defined by the
characteristics of the end product and success
criteria is defined by the expected product and
value objective defined by the process design.
It is not a set measure standard!
7. Defining Process Management
Process Management equates to operations management. It is the ongoing and continuous activities that
measure key metrics to identify whether a process is operating optimally and with as little waste
(efficiently) as possible in meeting its value creating objectives.
Process Management should achieve:
● Reduced energy required for (reduced cost of) operations
● Faster cycles for business changes and continuous improvement activities
● Improved ability to measure, analyze, and control processes
FLOW
8. Why Manage Processes?
We manage processes so that they can
continuously improve. Management of
processes ensure that the physical and design
layer of the process stay aligned, and that
there is always a data baseline to inform
process evolution.
Continuous Process Improvement requires
dynamic baselining; otherwise, it would be
cost proihbitive
9. Measuring Process Efficiency
Measures needed to manage processes are more standard. You always want to be measuring the flow
(units/time), the costs, and the timing - typically. These measures will help operations management
understand the efficiency of the process.
Lead Time (Cycle Time + Wait Time)
Cycle Time
Wait
Time
Resource Cost
Machine/Technology Cost
10. Confusing Audit and Management
Measures
Audit measures the ability of a process to do what it’s
supposed to do in the way it’s supposed to do it
Process Management measures the ability of the process
to execute at the lowest cost possible to create a defined
output
They don’t overlap much!! Process management should be
aware of the quality objective, but only concerned in so
much to avoid defects - it is at the activity detail level.
Audit should measure the entire process for a one time
internal or external concern it is at the total process level.
11. ● Process audit looks at the entire process at a high level to make sure it is doing what it’s supposed to be
doing - the measures depend on the product and objective
● Process management looks at the ongoing operating variables of a process to make sure its operating at the
lowest cost possible
● Process management has a common data set that defines measuring critical cost variables
● Process audit and management have little overlap!
○ Process audit can be at any detail level and should be a one time event
○ Process management is ongoing and pre-requisite for a continuous improvement culture
Summary
13. Question 1: Are process
audits necessary to
ensure process quality?
● No! You can measure and ensure process
quality with process management and
continuous measurement. Audit is usually
a one time endeavor meant to satisfy a
unique objective around qualifying the
process in some way
14. Question 2: What are the
right metrics to measure
a process?
● There are no “right” set of metrics, but for
process management, the universal
variables include: cycle time, wait time,
lead time, cost of labor, cost of poor
quality, and fixed resource costs.
15. Question 3: Do process
measures help with
automation?
● Yes! Measuring process metrics is required
for jidoka, intelligent automation, and
measuring flow paths is also very
important for decision analysis, which is
the foundation of automation work.
16. Thanks for coming!
● NYBPP Meetup:
○ Please leave us a positive review!
● You can view all of our past slides over on
Slideshare.net:
○ Slide Decks from Past Meetups
● Also, join our Facebook Group!
○ https://NYBPP Meetup Facebook
Group
● Finally, check out more process insights at:
○ www.caviconsulting.com
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