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Better Business Process Optimization

By: C. Richard Panico
Posted: October 24, 2006, from the October 2006 issue of GCI Magazine.

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Additionally, it assists in the identification of the final product deliverable. Six Sigma is a data-driven problem-solving methodology that requires the formal definition of performance standards. When planning for a process optimization project, specific Six Sigma tools and activities are used to characterize customer needs and processes to be improved. These tools include the mapping of the high-level process in its current state, identification of the existing performance measures and a process financial analysis. Specifically, Six Sigma seeks to identify the costs of poor quality (COPQ). COPQ includes costs of rework, rejects, inspection, testing and other considerations—such as the cost of customer complaints. While a BPO project’s benefit can be measured financially (hard) or nonfinancially (soft), most business cases are based on the hard benefits.

Six Sigma projects take the needs of the customer into consideration. The project team must understand how the process problem links to the eventual customer. Six Sigma employs voice of the customer (VOC) research to gain this important insight. There are many different methods to researching the customer’s voice—including, but not limited to a customer complaint database, direct customer contact and indirect customer contact. The suppliers, inputs, process, outputs and customer (SIPOC) high-level process mapping tool is another effective tool to use in a BPO project. It is a simple yet effective tool to align the project team and all stakeholders as to the core process within the scope of the project. It is important to note that it is too early in the project to detail the existing process; that comes later in the measure phase.

Similar to any other project, a BPO project requires the formal identification of a project team with a clear structure, roles and responsibilities. Use of the SIPOC ensures all process stakeholders are represented on the core project team.

Remember, the initiating and planning phase of a BPO project starts by formally identifying the process problem, not with the identification of a process solution. Six Sigma tools such as SIPOC, COPQ and VOC help the project team identify the potential issues, process scope and essential process representatives before the organization invests substantial time and money in the initiative.

Execution Stage

During the execution phase of a BPO project, developing process measures are critical. These measures must identify and capture data on key performance indicators to determine process effectiveness and efficiency. In general, the following steps are completed to measure the performance of a business process:

  1. Develop a data collection plan for the process.
  2. Identify process efficiency data collection sources.
  3. Identify process effectiveness data collection sources (primarily customers of the service or product).
  4. Collect efficiency and effectiveness data to determine process performance baseline measurements.