Implementing an enhanced business management system steps 1 & 2 addresses the initiating phase of the 9-step Integrated Enterprise Excellence (IEE) business management system. Application of this IEE methodology is illustrated in the following example.
A manufacturing firm wants to initiate targeted improvement projects that address opportunities identified through voice of the customer (VOC). (Although a manufacturing firm is used in this example, the approach applies equally well to service and other organizations.)
Described in this system is not only a process for the identification of improvement projects that have enterprise-as-a-whole benefits, but also a methodology in which process owners will be asking for, if not demanding, timely completion of projects in their area.
Step 1: Describe Vision and Mission
The company’s executive team agreed to the following:
- Vision – Become a preferred supplier for all major department store chains – that is, have a branded display section in those stores.
- Mission – Produce plastic injection molded items for consumer use.
Step 2: Describe IEE Value Chain
The value chain shown in Figure 1 details:
- What the company does [rectangular boxes] and
- Notes the performance measures for each function from a quality, cost, and time perspective [oblong boxes], where external customer metrics are colored.
IEE Value Chain with Highlight of External Customer Metrics
From the value-chain business functions shown in Figure 1, it can be inferred that a relationship exists between the defective-rate metric and VOC satisfaction. That relationship implies that a reduction in defective rates would lead to both improved customer satisfaction and corporate profitability.
With this performance scorecard system, satellite-level metrics focus on the financials (e.g., profit margins) while 30,000-foot-level metrics track operational performance metrics (e.g., defective rates and on-time delivery). Both corporate satellite-level and 30,000-foot-level metrics are:
- Tracked over time and
- Are unbounded by calendar years.
When a metric chart shows a recent region of stability, the process is called predictable. Data from an earlier region of stability can be used as a random sample when making a prediction statement. If an organization does not like what is predicted, process improvements must be made to the driver of that metric.
To achieve long-lasting benefits, VOC initiatives and other improvement efforts need executive management support. For this to occur, it is imperative that the process enhancement efforts align with financial goals.
The example manufacturing company, then,
- First needed to create a baseline for the satellite-level metric, profit margins.
- From that, the business looked at what could be done to improve profitability while still working to achieve its customer satisfaction and retention vision.
Figure 2 shows the profit-margin baseline for the example manufacturing company.
IEE Satellite-level Metric (Financial Performance Measurement)
Item number two of the following was just addressed relative to describing the application of a business improvement program. Other aspects that need consideration for this objective are items one, three, and four:
- Application of the Business Management System
- Application of the Business Management System, Steps 1 & 2
- Application of the Business Management System, Steps 3 – 6
- Application of the Business Management System, Steps 7 – 9
For additional information see: