Organizational processes are a set of core processes that make an organization effective, efficient, and adaptable; or processes are focused on delivering the right quality of products or services to customers, per customer requirements. Core processes differ from one organization to another and may be dependent on the organizational structure.

A manufacturer sources raw materials from their vendors. Material and resource requirement planning includes both inward and outward logistics. And when logistics include importing materials in stores, moving from supply to production line in a timely fashion, and storing raw materials as needed.  Outward logistics include dispatching finished goods and forming the organizational process called supply chain management.  This process may cut across different departments, geographies, and products.

Core processes are supported by sub-processes, enabling the processes to achieve higher customer satisfaction, better product quality, and increased delivery and time to market speed.

• Purchase – Increase profitability by procuring high-quality raw materials at the most cost-effective price and optimizing the inventory cost of raw materials.
• Production – Process raw materials efficiently and produce high yields by reducing defects and rework.  Pay attention to training and reducing machine downtime via suitable maintenance programs for production machinery.
• Sales and Marketing – Employ innovative strategies as part of public relations.  Increase the willingness of the customer to buy the manufactured products via advertising and sales campaigns.
• Delivery – Take care to process the order quickly, freeze the scheduled time of delivery, and ensure the delivery schedule is met in the most cost effective manner.  Obtain customer feedback for this sub-process.

Organizational drivers are the highest level of measure in a business process and are strongly linked to the strategic goals of an organization.  If the key drivers of an organization are achieved, the organization can be considered to have achieved its overall goal set for that period.  Organizational goals are usually defined for a three to five year time frame.  Organizational drivers are usually business level metrics, such as financial and performance measures.  They can be customer, market, product, and/or supplier related, and form the backbone of any business effort to improve customer, operational, and financial performance.

There should only be about five goals at maximum.  The measurement system is established to measure the progress of the strategic goals, and thus the strategic goals are referred to as the Big Y and are considered outputs in operational processes.  These organizational drivers are linked to the downstream key metrics of processes.

Metrics are process and operational level measurements of the efficiency and effectiveness of processes.  Operation level metrics are measurements that relate to the efficiency or effectiveness of cost, performance, time, and much more.  They provide inputs to constantly gauge the effectiveness and efficiency of process improvement efforts.  Efficient processes help an organization meet the three to five year strategic goals.  Gauging the organization and its processes is dependent on the selection and use of these metrics.  Operational and process level metrics are considered to be the ‘X’s and inputs for organizational drivers or the Big Y.  Metrics are tactical in nature, measured often, and are easily impacted.  Organizations can achieve the Big Y by monitoring and controlling these Xs.

A balanced scorecard (BSC) is a strategic performance management framework for measuring the impact of strategic decisions across all organizational drivers of an organization.  BSCs provide a wider perspective on strategic decisions by measuring the impact on key business drivers, such as finance, customer requirements, internal processes, innovation, and growth perspectives.  The BSC is intended to overcome the limitations of traditional performance measurement tools.  Managers can use it to track the activities of their direct reports and monitor the impacts of their actions.  In the decision making levels, a BSC is utilized as a tool that facilitates strategic decision making and provides insight into future performances.

Six Sigma is a process improvement approach that seeks to enhance quality and efficiency by eliminating the causes of defects and variation in a process.  Sigma represents standard deviation and is used by statisticians to measure process variation.  The Six Sigma approach is customer focused and aims at achieving increased bottom-line profitability.  The goal is zero defects.   Six Sigma is driven by a complete grasp of customer requirements, data-driven decision making, and statistical analysis to promote the improvement of business processes.

Standard deviation is a statistical measure of variation from the mean in a distribution or set of data.

Defects per million opportunities (DPMO) is the average number of defects across a million opportunities for a defect to appear.

A defect is a product, service, or parameter that fails to meet customer requirements.  A Six Sigma quality performance indicates that less than 3.4 DPMO are present.

Process variation occurs whenever a process or set of processes delivers variable output.

Sigma levels provide a measure of the performance level of a process.

Six Sigma provides a means of handling declining product prices in the market to allow an organization to compete with the top companies in business.  A common performance goal for the entire company helps to target the desire for zero defects.  Six Sigma helps the organization achieve increased profitability and quality improvement rates, keeping it ahead of its competitors.  Companies seeking to achieve Six Sigma see reduced scrap-related costs, improved yield, and increased customer satisfaction.

Work is a process that requires inputs to produce outputs and asserts that variations in the quality of the output can be reduced by controlling the inputs.  The process is one that can be defined, measured, analyzed, improved, and thus controlled.  If output = Y and input =X, the process is expressed as Y=f(X).

The primary goal of Six Sigma is to implement a measurement based strategy in an organization that concentrates on process improvement and reducing variation.  Other goals include:

• Reducing the number of defects to improve the quality of a product or service
• Achieving customer satisfaction and ensuring customer expectations are met
• Reducing cycle time to enable the faster delivery of products
• Improve efficiency and effectiveness of the organization to raise profitability

Six Sigma is a combination of the best elements of various quality improvement methodologies and is a rigorous statistical-driven approach to performance improvement.  The term was coined by Bill Smith, an engineer at Motorola.

• Uniformity System –Introduced by Eli Whitney in 1798.  Created necessity for measuring dimensions and evolved into specifications
• Moving Assembly Line – Introduced by Henry Ford in 1913.  Highlighted importance of maintaining a regular supply of parts that fit to ensure that the production assembly line would not be forced to slow down or stop.  Led to the sampling method, replacing 100% inspection.
• Control Charts –  Introduced by Walter Shewhart in 1924 and signaled the age of statistical quality control
• Quality Movement – Pioneered by the Japanese in 1945.  Uses data to quantify variation and integration of quality across all levels of an organization.
• Customer Centric Products –Focuses on eliminating defects and reducing cycle-time to result in the production of high-quality, efficient, and customer-centric products.
• Zero Defects Concept –Introduced by Philip Crosby in 1980.  Perfection in a product, process, or service is attainable.
• Quality Standards – Introduced by the International Organization for Standardization (ISO) in 1987.  Global quality standard, leading to uniformity in quality practices across countries.
• Six Sigma – Motorola won the first Malcom Baldridge National Quality award in 1987, confirming that its metric-based, customer-centric quality approach worked and leading to the present Six Sigma methodology.

A process is a set of structured activities or tasks that produce a specific output or product that meets customer specifications or requirements.  A process may lead to a sequence of interrelated processes where the culmination of one process is the beginning of another.  Process inputs can be data, services, or materials that a process converts into outputs.  The recipient of a process input is the process itself.  Components, dimensions, and process settings can be considered process inputs for the organization itself.

If the process is developed per Six Sigma goals, process inputs are referred to by the term ‘X’, and are the focus of attention due to their vitality in meeting customer specifications.  Process inputs are referred to as Key Performance Input Variables (KPIVs) or the independent variables, causes, problems, or metrics, which can be controlled.

A process output is the material, service, or data that results from the operation of a process.  The recipient of a process is usually the customer or client.  In some processes, the output is then used as the input for the next stage of the process or for a different process.  A process can result in more than one output.  If the process is developed per the goals of Six Sigma, then the process output (referred to as ‘Y’) is a good measure of customer requirements.  Customer requirements are met by the process consistently delivering on the output metric.  Process outputs are also referred to as Key Performance Output Variables (KPOVs) or the dependent variables, effects, symptoms, or metrics which will be monitored.