KING FAHAD UNIVERSITY OF PETROLEUM & MINERALS

1. KING FAHAD UNIVERSITY OF PETROLEUM & MINERALS College Of Environmental Design Construction Engineering & Management Department CEM 515- Quality managenet Term Paper Presentation - 082 Process Improvement at Material Supply Organization Prepared by: Abdurrahman S. Al Shahrani, PMP June 8, 2009

2. OUTLINES • Introduction • What is “Process Improvement”? • Material Supply – Process Improvement and Change Management Unit “PI&CM” Risks Atrium Smoke • Process Improvement Projects Selection • Process Improvement Methodologies • Case Study

3. Introduction: • Quality is satisfying the end customer and add value to his business • Adding the same value every day does not work anymore and every organization needs to continually seek ways to improve value to customers • Adding the same value every day does not work anymore and every organization needs to continually seek ways to improve value to customers • They want more for less • Thus, to move towards competitive world, the organization target is to insist on Process Improvements.

4. What is “Process Improvement”? • way of looking at how we can do our work better • when try to fix what’s broken, we may never discover or understand the root cause of the difficulty. • However, when we engage and apply process improvement methodology, we seek to learn what causes things to happen in a process . • use this knowledge to reduce variation, remove activities that add no value to the product or service produced, and improve customer satisfaction • It means making things better.

5. Material Supply – Process Improvement and Change Management Unit “PI&CM” • formed in the material supply division in 2003, Material Supply Organization , Saudi Aramco • grown from three member team to eight members • The objective was to drive process improvement initiatives within various units • material supply is the crucial link between the supplier and the customer. If this link is strong, secure and effective then only the material can be provided at the right time, place, quantity, quality and cost.

6. Material Supply – Process Improvement and Change Management Unit “PI&CM” Continue….. • Unit members are from various background and experience which give to the unit a good culture to exchange ideas • Each unit member is at least Lean Six Sigma Green Belt Certified which enough tools & techniques as skills to drive process improvement initiatives within the division. • VISION : Providing World class process Improvement services to all Material Supply Departments and enable them to deliver Six Sigma Quality service to all Customers with minimum waste in the processes”

7. Material Supply – Process Improvement and Change Management Unit “PI&CM” Continue….. Objectives: • Focus on Material Supply business processes improvement initiatives • Facilitate Business Process improvements using Lean Six Sigma and other best practices, process improvement methodologies and frameworks • Provide Training and Consultancy to all Material Supply departments for improving Business Processes with structured methodologies/Frameworks • Create learning organization with process improvement and customer centric culture

8. Process Improvement Projects Selection Before Selection: • “Listening to Customers” • understanding the Business needs • looking at performance of the process Then theme to capture: • Customer requirements/concerns • Management Goals/ Objectives • Process Performance • Auditing items

9. Process Improvement Methodologies Three methods: • Lean Six Sigma • Lean Method • Just-Do-It SHOULD LYING ON BUSINESS PROCESS MAPS, METRICS and MONITORING

10. Process Improvement Methodologies

11. Process Improvement Methodologies Lean Six Sigma Selected if: • Root causes are not known for the problem and solution is also not known • Problem is complex and cross functional or departmental • Problem is related to defects reduction • Data is available and data based root cause analysis is required • Business benefit is significant • Improvement takes more than 2 months

12. Process Improvement Methodologies Lean Six Sigma Lean Six Sigma has various methodologies and in Material Supply department we use DMAIC (Define, Measure, Analyze Improve, and Control) for improving the existing processes

13. Process Improvement Methodologies Lean Method Selected if: • Problem is not complex and related to more number of steps in the process • Problem is related to seven types of Waste in the process • Data analysis is not required for the root cause analysis • Solution can be finalized in the Lean Event • Improvement can be achieved within 2 months

14. Process Improvement Methodologies Lean Method

15. Process Improvement Methodologies Just-Do-It Methodology: Selected if: • Solution is clearly known • Doesn’t need any further root cause analysis • Solution can be finalized with 1 or 2 Brain storming sessions • Improvement can be achieved within a month • No need of forming bigger team ( 2 or 3 members can solve this problem)

16. Process Improvement Methodologies Just-Do-It Methodology:

17. Effectiveness of Process Improvement and Change Management Team • Progress of Process Improvements is measured for all Material supply departments through engagement and effectiveness parameters • Effectiveness parameters consist of business benefits which PI projects have resulted in improving Quality, Cost and Time parameters. • Engagement parameters include like Number of people Trained in the Process Improvement Methodologies, Number of PI Projects, etc.

18. Effectiveness of Process Improvement and Change Management Team

19. Recognition of Process Improvement Projects • Lean Six Sigma projects After closure of the project, project teams will receive the Project completion certificate and Green Belt/Black Belt will receive GB/BB certificate • Lean Projects After closure of the project, project team and leader will receive the Project completion certificate   • Just-Do-It Projects After closure of the project, project teams will receive the appreciation letter from Management about the Quick win

20. CASE STUDY • Title : Purchase Agreement/ Purchase order Bid Summary process Improvement project • Operational Definition: PO/ PA • Problem Statement: Based on data for the year 2007 (Jan to Dec), the median cycle time for Purchase Order “PO” Bid summary preparation is 8 days for all orders less than 250,000 USD which contributes to 94% of total PO counts. This leads to delay in material & services provided to customers resulting loss in productivity. See Fig 9 next page for the current flow chart.

21. CASE STUDY Objectives • Streamline the current bid summary and bid equalization processes. • In addition to reviewing the current bid summary and bid equalization process, the following need to be considered: • Currency forecast. • Price lists • Vendor performance • Grouping products (keeping a set of items together) • Simulation/ scenarios (Optimization) • Logistics options (Freight and Warehousing )

22. CASE STUDY Project Scope: • Longitudinal Scope: (Length of the process): • Start Point: Bid Closing • End Point: PO Creation • Lateral Scope: (Width of the process) • Orders < 250,000 USD, All PAs & POs • Out of Scope: • (Special Cases) Technical Evaluation related activities

23. CASE STUDY

24. CASE STUDY High Level Process Map (SIPOC):

25. CASE STUDY What is wrong

26. CASE STUDY Pareto Chart

27. CASE STUDY What to be done:

28. CASE STUDY Future state Process Map:

29. CASE STUDY Project Scope: • Longitudinal Scope: (Length of the process): • Start Point: Bid Closing • End Point: PO Creation • Lateral Scope: (Width of the process) • Orders < 250,000 USD, All PAs & POs • Out of Scope: • (Special Cases) Technical Evaluation related activities

30. THANKS Q & A