Developing a "best in class" business process management system

Defense AT&L, July-August, 2004 by Keith B. Howe

With improved productivity becoming a benchmark for success in today's challenging economic environment, business process management (BPM) is a critical business function. BPM involves, among other things, finding ways to improve customer focus and satisfaction while eliminating unnecessary time, material, and effort. In the case of businesses like United Defense's Armament Systems Division (ASD), BPM also means generating the greatest possible return on investment (ROI) from every asset within the organization. These processes require the ability to create a high level of alignment with business objectives, as well as the seemingly contradictory ability to respond rapidly to changing circumstances.

Change can be difficult, and ASD, an organization with roughly 2,000 employees located at four major sites and five smaller support sites, experienced first hand the struggles of creating and instituting a BPM system that employees could embrace and use. After several false starts over the past decade, the division finally developed the formula for success. The result has been extremely rewarding, and ASD is now experiencing operational improvements few employees would have imagined just a few years ago.

The deployment of ASD's business process model has been accompanied by improved profitability, increased productivity, and a greater focus on customer service and satisfaction. The management team has become more aligned and focused on attainment of critical customer objectives, and it demonstrates a dramatic ability to shift gears in response to newly emerging customer needs. The problems and successes United Defense experienced while creating its business process model provide valuable lessons for other organizations challenged with developing a more process-oriented business culture.

The Emergence of ASD's "Top Down" Business Process Team

Significant business improvements are often driven by compelling operational needs. Before commencing ASD's BPM initiative, significant business issues were identified that constituted a critical need for change:

* Customer satisfaction problems were becoming increasingly evident, and at times, appeared difficult to resolve.

* Some segments of the business were not meeting profitability targets.

* Internal conflicts between departments, programs, and key personnel were increasing and showed evidence of poor definition of and alignment to overarching business objectives.

Leadership team discussions of the essential business processes were held to more clearly address the business deficiencies. These discussions revealed the need for improving the division's "business process understanding" in virtually all areas. The leadership team determined that the business--and particularly business processes--had become extraordinarily complex. Many new and emerging customer needs resulted in programs and operations that were difficult to understand, much less to effectively manage and measure.

The team decided to postpone a planned ASD reorganization in the near term and focus on the development of a process-based understanding of the business before taking any further action. This led to the establishment of the ASD top down business process team, which included both functional and program directors.

The mission of the top down business process team, which came to be known as the top down team (TDT) was to:

* Identify and define the division's key business processes

* Determine clear ownership of those processes, including definition, control, execution, and accountability

* Determine the interrelationships, boundaries, and hand-offs between the processes.

Immediate Impacts of TDT's Efforts

As the TDT began dissecting the division's process problems, it began to generate both immediate and long-term positive impacts. One of the immediate impacts was changing the monthly operations review format to a new concept called the "execution excellence review" (EER). The new format was built on a distinctive, process-based measurement approach to operations and included customer "scorecards." This mandatory internal customer satisfaction reporting system put real teeth into the accountability of internal customer/supplier relationships. Directors had to identify the goods and services they needed from other internal suppliers in order to be successful in delivering their products and then rate those suppliers. If they rated suppliers as "satisfactory" and then failed to meet any objective, there was clearly no one to blame but themselves. This process initially led to a rash of "unsatisfactory" and "marginal" scorecard ratings--but it also led to a great deal of focus on fixing broken processes and communications, not just putting bandages on them.

After developing the EER review process, the TDT invited the local Defense Contract Management Agency (DCMA) to join its senior-level executive reviews and discussions and submit scorecards for its interactions with division suppliers.

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As the EER process matured, TDT integrated the entire ISO 9001 quality management system review (QMSR) into it. This addition brought more focus on product and process quality as well as corrective and preventive actions. The method used to integrate the QMSR into the monthly EER didn't appreciably increase the time required for EER but certainly increased the focus on quality, customers, and measurability; at the same time, it eliminated the time required for QMSR at separate stand-alone meetings. The process had the added benefit of immediately reducing the amount of executive meeting time required.