This post is the third in the series of the Business Process Management (BPM). In the last one, we created the As-Is model for the process that was provided about the business. This week is about breaking that process down, rearranging, and updating it to make it more efficient for the business.

When you utilise BPM, you enable people to use various methods to discover, model, analyse, measure, improve, optimise, and automate business processes. Essentially, you create a map of tasks that people perform, analyse it, and find the WASTE that creates DOWNTIME (Defects, Overproduction, Waiting, Non-utilised talent, Transportation, Inventory, Motion, and Extra-processing). BPM, LEAN, WASTE reduction, and Six Sigma complement each other in improving business efficiency. BPM provides a structured approach to analysing and optimising workflows. LEAN focuses on eliminating waste to enhance value. Six Sigma aims to reduce process variation and defects using data-driven methods. Together, they streamline operations, reduce inefficiencies, and improve quality, resulting in more efficient, effective, and customer-focused processes.

The following are descriptions of that DOWNTIME acronym mentioned above. These are the aspects of the production process that we will be reviewing and assessing it with:

• Defects
  • Defect waste is the loss of value that occurs when a product does not meet quality standards or customer specifications or is otherwise unfit for use. Because the defective item will take extra-processing to rework or often needs to be scrapped altogether, this results in lost time, resources, and money.
  • Defective waste can be caused by many factors like poor item design, a highly complex or excessive variation in the manufacturing process, use of sub-par materials, insufficient training of assigned employees, unnecessary handling, improper storage, etc.

• Overproduction
  • Overproduction occurs when more goods are produced than are actually needed in a given time. This can be due to inaccurate demand forecasting, badly optimised production schedules, ineffective workstation setups, etc. It can also result from opting for a just-in-case approach instead of a just-in-time one. For example, when an item’s safety stock runs out once due to a random customer demand spike and is then set consistently too high thus creating an unnecessary surplus.
  • Overproduction may also result from a temptation to avoid idling workstations or employees. Companies utilising “push”-type manufacturing workflows like make-to-stock – in which goods are produced in anticipation of sales – need to be especially vigilant in avoiding overproduction.

• Waiting
  • The waste of waiting is increased overhead cost that arises from co-dependent workflows and routings being unevenly synchronised. In other words, it is the loss of efficiency from items waiting their turn in production queues and WIP inventory. This mostly occurs due to insufficient production planning or badly organised inventory or warehouse management practices.
  • Waiting results in production bottlenecks, unplanned downtime, and falling capacity utilisation rates, all of which increase production costs and stretch lead times. For example, when components take longer to arrive at a workstation than the workstation takes to complete a cycle – it is left idling while it waits for the next batch.

• Non-utilised talent
  • Non-utilised talent is the waste arising from failing to recognise and fully utilise employee skillsets and appointing them to mismatched tasks. It mostly occurs when employees are not allowed to self-govern at all, if managers are made to micro-manage too many aspects of employee tasks, or if employee inputs are not taken into consideration.
  • This leads to underutilisation, overlooked opportunities, skillsets remaining hidden, and poor engagement. Non-utilised talent was not included among the original 7 wastes. It came to be recognised as a key driver of manufacturing inefficiency and addressing the other wastes in later years.

• Transportation
  • This waste is defined as the lost time and efficiency from the unnecessary moving of raw materials, WIP inventory, or finished goods. Transporting goods as such does not add value that customers are willing to pay for. This waste is mostly caused by poor warehouse layouts or route and production line planning.
  • A prominent example is when sequential workstations fail to be positioned appropriately, like in a cellular layout, and extra effort is needed to move components from one to the other. Next to longer lead times and needless work, excess transportation can increase the wear and tear of inventory and increases the risk of defects and damage.

• Inventory
  • Inventory waste is defined as any kind of accrued overhead arising from excess stock. Essentially, all inventory that is not moving toward exiting the pipeline as closed sales, constitutes tied-up cash and accumulates overhead. Whether it’s raw materials, WIP, or finished goods, excess stock is caused by ineffective inventory management and optimisation.
  • Overstocking inevitably raises storage costs and congests the warehouse. What’s more, the excess stock may lose its quality and value over time and is at risk of becoming dead stock. Overstocking can occur for any number of reasons like overestimated safety stock levels, an overly optimistic or faulty demand forecast, over-purchasing due to tempting discounts on bulk purchases, improper tracking practices, etc.

• Motion
  • Motion waste should not be confused with transportation waste. Motion waste is the needless action that employees and equipment undergo when creating products. It is mostly caused by unergonomic workstation layouts and machinery placement, or poor process documentation and checklists.
  • Motion waste results from employees having to needlessly walk to, reach or bend down for, lift, or carry tools and items. It may be hard to spot but can quickly add up to a huge time loss, especially for repetitive tasks. Motion waste leads to low worker safety, productivity, repetitive strain injuries, and even loss of motivation.

• Extra-processing
  • This waste is generated in instances where workers’ skills or equipment is of a higher grade than is required to produce a specific good. Also, if products are made out of raw materials with higher capacities than the product requires, or if there are extra steps in a product’s routing that do not add value that customers are willing to pay for.
  • Like many others on this list, extra-processing waste results in raised production costs and elongated lead times. Overqualified employees cannot create value on par with their compensation, otherwise, it would be a case of non-utilised talent. Similarly, using high-precision machinery for simple processing negatively affects its rate of return and depreciation.

Analysis Summary

Analysis of DOWNTIME Wastes in the Early Contractor Involvement Process

1. Defects:
   1. Current Issue: Printing tender submissions in triplicate is prone to human error, such as missing pages or incorrect sorting, leading to potential defects in the documents provided to the assessment panel.
   2. Recommendations:
      1. Implement digital document sharing with version control, reducing the risk of errors and ensuring consistent information is available to all panel members.
      2. Beyond documentation accuracy, we should also focus on the potential for miscommunication between the PM and contractors, especially during the kick-off and monthly updates. Clarifying expectations and deliverables upfront and using digital tools for real-time updates can reduce defects caused by misunderstandings.
2. Overproduction:
   1. Current Issue: Sending an ITT to a 4th contractor unnecessarily extends the timeline, even when 3 contractors may already suffice. Also, multiple reminders and follow-ups add to excessive administrative work.
   2. Recommendations:
      1. Limit the tendering process to the first 3 contractors. If one fails to respond, proceed with the others to avoid overproduction of effort and unnecessary delays.
      2. Overproduction might also occur if unnecessary reports or redundant meetings are conducted. Reducing the frequency of workshops (from bi-monthly to monthly) and using a real-time project management tool could avoid generating excess information and updates, thus reducing overproduction.
3. Waiting:
   1. Current Issue: Delays caused by waiting for contractors to confirm their participation and then waiting for submissions. The reminder process further extends the timeline unnecessarily.
   2. Recommendations:
      1. Automate reminders and shorten the waiting periods. Introduce penalties for late responses to encourage timeliness. This reduces idle time for BYFF’s C&P team.
      2. Despite the improvements, waiting could still occur if there are delays in receiving government approvals or if contractors delay in responding to queries. Building in contingency plans and setting stricter timelines for government interactions can further reduce waiting times.
4. Non-Utilised Talent:
   1. Current Issue: The C&P Manager is heavily involved in manual tasks (e.g., printing, following up), which underutilises their strategic capabilities.
   2. Recommendations:
      1. Delegate administrative tasks to an assistant or automate them, allowing the C&P Manager to focus on strategic supplier selection and relationship management.
      2. Non-utilised talent might also include not leveraging contractors’ expertise fully. Engaging contractors early in decision-making and allowing them to propose innovative solutions can maximise the utilisation of their talents.
5. Transportation:
   1. Current Issue: Physical transportation of documents for printing and distribution to the assessment panel members is inefficient.
   2. Recommendations:
      1. Switch to electronic document management and virtual assessments, reducing unnecessary movement and associated time delays.
      2. Virtual transportation of documents can also be streamlined. For example, using a centralised cloud-based platform where all stakeholders can access and update documents in real-time could further reduce delays related to virtual “transportation” of information.
6. Inventory:
   1. Current Issue: The company may be holding excessive inventory of printed documents and maintaining physical records, which adds to storage and management costs.
   2. Recommendations:
      1. Move to a digital archiving system, reducing the need for physical document storage and lowering costs.
      2. Inventory might also include the accumulation of pending decisions or unresolved issues. Implementing a system for prioritising and quickly resolving these can reduce this type of “inventory.”
7. Motion:
   1. Current Issue: Excessive movement of documents (e.g., printing, physical distribution) and personnel (e.g., follow-up meetings) leads to wasted time and effort.
   2. Recommendations:
      1. Streamline the process by using electronic workflows, reducing unnecessary physical movement.
      2. Further opportunities to reduce motion might include reducing unnecessary steps in the decision-making process, such as automating the approval of routine invoices or using AI-driven insights to pre-assess contractor bids.
8. Extra-Processing:
   1. Current Issue: Redundant steps, such as printing submissions in triplicate and manually reviewing cost proposals separately from other assessments, add unnecessary complexity.
   2. Recommendations:
      1. Integrate assessments into a single digital review platform where cost, HSE, and technical assessments are completed concurrently.
      2. Extra-processing might also occur in redundant meetings or excessive manual oversight. Streamlining communication (e.g., using automated status reports) and reducing check-ins to when they are genuinely necessary could further cut down on extra-processing.

Colour Annotated Analysis

Here is the original process, with the DOWNTIME aspects highlighted in their respective colours. After each section, there is a summary of an update to occur (which will happen in the next, to-be, post):

As soon as the local government confirms receipt of BYFF’s Development Approval (DA) application, BYFF’s Contracts & Procurement (C&P) Manager finalises a document called Invitation To Tender (ITT) and issues it to 3 construction companies. This document asks them to provide a proposed response to the ITT, including their cost proposal, to work alongside BYFF and its other suppliers to finalise plans for the construction phase. The construction companies have 4 weeks to respond to the ITT in full.

• Update: Add automated reminders and digital submission tools for contractors to streamline communication and avoid defects due to miscommunication.

Since BYFF C&P wants to ensure it gets competitive bids, it requires those who intend to respond in full to confirm their interest within 1 week of receiving the ITT. If a company fails to respond within 1 week, BYFF’s C&P Manager sends a reminder to that company, giving them 3 days to confirm their interest. If after 3 days, BYFF has not received a response, the C&P Manager will send the ITT to a 4th interested company, and inform all companies that the date is now 4 weeks from that new date (thus ensuring that the 4th contractor has time to prepare a good response). BYFF does not seek further confirmation from the 4th company that it will respond. All contractor responses must be received by the Tenders emails inbox BYFF by 3pm on that date. 

• Update: Use a digital tender platform with automatic confirmations from contractors to eliminate waiting time and reduce manual effort.

If a consultant requests an extension beyond the 4 weeks, BYFF’s C&P Manager will consider it, and may grant an additional 2 weeks, depending on the circumstances. If the extension is granted, the C&P Manager will inform all contractors of the revised submission date for their responses, and if not, she will inform the requesting contractor that the request has been rejected. In the great majority of cases, the contractors do not request an extension, as they are concerned it may undermine BYFF’s impression of their ability to deliver on time in the construction phase.

• Update: Set up automated notifications that include extension considerations or rejections, reducing extra-processing and waiting times for stakeholders.

At 3.01pm on the day submissions are due, BYFF’s C&P Manager opens the Tender Inbox, and prints each submission in triplicate: one for each of the 3 members of the Contracts Assessment Panel which will meet within 3 days to jointly review and assess the responses. This Assessment Panel will start by conducting a Health, Safety & Environmental (HSE) assessment to ensure the contractors have a good record in these areas, followed by a Technical Assessment to confirm that the contractors have proposed the right technical experts, and propose a satisfactory schedule.

• Update: Switch to digital document review to avoid motion (printing and handling hard copies), and add real-time collaboration tools to reduce waiting between panel reviews.

Concurrently, the C&P Manager reviews the cost component of each company’s response, and summarises them in a standardised format which is then provided to the Contract Assessment Panel. Once costs are received, the Assessment Panel reviews those contract documents including cost, HSE and Technical assessments, and makes a decision to select the preferred contractor. The Panel then informs the C&P Manager, who then prepares, sends the selected contractor a letter and includes a contract to be signed.

• Update: Integrate automated cost analysis and panel decision tools, streamlining extra-processing related to cost summarisation.

The contractor must sign and return this contract (including any updates to it) within 5 days, during which time various terms can be negotiated as needed. If the contractor does not contact BYFF’s C&P Manager to return the signed contract or to negotiate the terms within 3 days, the C&P Manager will contact them on day 4 to remind them they must sign and return the contract by day 5. So far, this approach has always delivered a successful outcome for BYFF.

• Update: Digitise the contract signing process with e-signature tools, reducing waiting and potential defects (missing signatures).

Now that the contractor has been selected, BYFF’s PM arranges a Team Kick-off meeting between the selected Construction contractor, the external Consultant engineer, and him. The output of this meeting is a confirmed scope for the construction contractor and consultant engineers to work on, and an agreed schedule of team meetings for the remainder of the EOI process.

• Update: Use real-time project management software for tracking scope and agreed schedules, reducing overproduction and unnecessary motion during meetings.

Over the next few months, this process is consistent: on the 25th day of each month, the PM will request project updates from both external suppliers to be delivered by the 29th of each month. By the 29th of each month, the PM receives two documents by email from each of the suppliers, comprising a written report on progress and an invoice. Once he has received both, the PM reviews the reports, and if necessary, seeks clarifications from the relevant supplier prior to the workshop the following day.

• Update: Implement an automated report generation and submission system, eliminating the need for repetitive manual follow-ups and reducing waiting and overproduction of redundant data.

At the same time, he also reviews the invoices, and if satisfied, approves and emails a scan of the invoices to the C&P Manager to process it. If the invoice was different to the PM’s expectations, he contacts the supplier, seeking clarification and a new invoice (if required). Sometimes the invoice is accepted without further change as a result of that clarification.

• Update: Move to a centralised ERP with automated invoice matching and approvals to reduce extra-processing and streamline payments.

The C&P Manager will enter the invoice in the procurement module of the ERP system, which will automatically process the invoice in the ERP and instruct the bank to pay it. The PM also chairs a team workshop on the 15th and 30th of each month where the team reviews its collective progress. These workshops are designed to allow the PM to review progress, highlight challenges and identify solutions rapidly, which, over the 4 months, will provide BYFF with a reliable plan, cost and schedule for constructing its new facilities.

• Update: Consider reducing the frequency of in-person workshops, utilising virtual meetings and project management software to track and address issues in real-time, avoiding motion and overproduction.

Once the PM assesses these outputs are complete, the ECI phase is successfully completed.

After the ECI process is complete, the PM requests that the contractors send their final invoices. These will be reviewed and, if appropriate, approved by the PM, following the invoice review and payment process outlined above. 

• Update: Automate final invoice submission and approval to eliminate unnecessary manual processing and ensure payment processes are integrated with the ERP system.

At any stage after arranging the ECI kick-off meeting, the local government may provide BYFF’s PM with its development approval for the project, in which case the process continues. If the local government rejects the development application, this means there is no point in continuing the ECI, so results in BYFF’s PM informing the contractors that BYFF is stopping the ECI process abruptly. The possibility has been contemplated in the contract, so the external contractors will issue a final invoice once that notice has been given, which is reviewed in the usual Accounts payable process, and the project will end.

Final Recommendations

Overall Potential Enhancements/Final Recommendations:

1. Stakeholder Engagement: The process might benefit from a more inclusive approach to stakeholder engagement, ensuring that all relevant parties are involved early on and throughout the process.
2. Continuous Improvement: Building a feedback loop to continuously assess and improve the ECI process would ensure that any emerging inefficiencies are promptly addressed.
3. Data Analytics: Leveraging data analytics to predict potential delays or issues could help in proactively managing risks and further streamlining the process.
4. Review Communication Channels: Ensure that all communication is clear, concise, and effective, using digital tools to reduce defects and extra-processing.
5. Optimise Meeting Frequency: Consider whether bi-monthly workshops are necessary or if a more efficient communication method could achieve the same outcome.
6. Utilise Contractor Expertise: Involve contractors earlier in the planning stages and encourage innovative problem-solving.
7. Implement Real-Time Tools: Use cloud-based tools for real-time collaboration and document sharing, reducing virtual transportation and waiting.
8. Final Invoice Processing: Ensuring the final invoice process is fully automated.
9. Unnecessary Meetings: Reducing the frequency of in-person meetings and using virtual tools to cut down on extra steps.
10. Talent Utilisation: Engaging contractors more proactively in earlier stages to better utilise their expertise.