Note: This Case Study refers to specific OE21 surveys and tools (spreadsheets or docs). Please try the link(s) below to learn more about these surveys and tools:
OFT_6.1a_Operations_Excellence_Action_Plan (with added tasks)
OFT_7.1_PMS_Operations_Excellence_Metrics (with added metrics)
6.1b Process Management and Improvement
Assumption: The (Elafino Sports Center) organization has implemented the OE21 6.1b Process Management and Improvement process steps. The results and outcomes are as follows.
The Elafino Leadership Focus Team (LFT) CFO led the calculations of the cost of goods sold (COGS) for each significant product, service or program.
The example in Figure 6.1b-1 shows that the organization's product/service portfolio has winners and losers. The highest value contribution (Gross Profit) is from Category 1000 Total Ice Skate Revenue, and the lowest is Category 3000 Total Fitness Center, which is operating at a loss.
Figure 6.1b-1 Product/Service Value Contribution (example)
The Elafino CFO input the revenue and cost of goods sold (COGS) into the table from financial reports. At a glance, the Elafino focus teams could see that the most profitable service was Ice Skating (figure skating plus public skating).
The focus teams also noted that the least profitable service was Fitness Center (operating at a loss). After the extensive dialogue, the focus teams decided that the Youth Hockey service yield a small profit, however, a big opportunity for growth since the service region had a ton of youths that could be attracted to learn the game and techniques of hockey.
The steps the Operations and Customer focus teams took next were as follows:
1. They looked at the reasons why youth hockey was not attracting many members.
2. They discovered that there was no existing marketing outreach to youths (everyone just hoped they would sign up after someone told them about the Elafino organization.
3. They talked to a couple of outside marketing consultants who suggested they should pay attention to how the youth generation learns about sports like hockey, and consider social media, email and text communications with youth in the region.
4. The focus teams and outside marketing consultants used the OE21 Process Chart tool to plan the new Youth Hockey Process, using this sequence of steps:
a. Email Customers about Service Availability
b. The customer receives email or text message
c. Customer opens and reads email or text messages
d. Customer replies to email/text message (opt-in)
e. Receive opt-in reply; schedule the session
f. Update session schedule with customer registration
g. Publish schedule on Elafino public website; email schedule update alerts to OFT
h. Send a reminder email to youth day before service
Next, the Operations Focus Team (OFT) added more steps to the Process Chart to ensure that the services provided were available when needed and were as free of defects or problems as possible.
Labor resources are available including instructor
Non-labor resources are available and clean
Checklist: facility, equipment, utilities, materials are safe to use
Then, the OFT added customer intake process steps to the process chart, including:
A customer arrives; swipes card at Intake Booth
Intake card swipe initiates billing for the session
Credit card billing check - if card approved, then debit the customer credit card
IF Card Not Approved then notify the before service starts
Customer attends the session (instructor and support team delivery the youth hockey services)
End Session: Ask customers to check 1 to 5 on a Customer Satisfaction Card; drop the card in the box (offer a reward for their satisfaction rating)
Figure 6.1b-2 is the Process Chart for Youth Hockey (Elafino Sports Center)
Figure 6.1b-2 Process Chart for Youth Hockey (example)
PROJECT MANAGEMENT CASE STUDY
The Elafino Sports Center had learned from strategic planning (OE21 2.1 Strategy Development and 2.2 Strategy Implementation, that a new DanceSport Service was an important strategic objective.
The Operations Focus Team (OFT) worked with outside contractors to plan a project for the DanceSport Service. The Project Plan is for the re-purpose of Rink 3, for use in the DanceSport events.
The OFT used the OE21 Project Manager tool to plan and manage the DanceSport Project. The following images present sectional views (left to right) of the project plan.
View 1 - Tasks and Teams Responsible - DanceSport tasks (1 to 18) and the teams responsible for each task. Notice the tasks are in the sequence of expected performance.
View 2 - Project Planning Indicators - DanceSport project planning indicators:
Column D - dates that the project team input percent of completion and changes (if any) to start and finish dates
Column E - percent of completion of tasks, verified and input by the project manager
Column F - planned start date (might change as the project moves forward)
Column G - estimated finish date (might change as the project moves forward)
View 3 - Project Cost Estimates and Budget at Completion - DanceSport project estimates:
Column H - the Planned number of labor hours estimated by the project manager and the people doing the work. Note: if the task requires non-labor (material, contractor, or another non-labor effort) then a "0" is input in Column H (note the "0" alongside the $75,000 in Column I for the contractor effort)
Column I - If the task requires labor hours, the rate per hour is input in this column. If the task requires non-labor dollars, input the dollar value (example: the $75,000 for contractor effort)
Column J - If the project will track actual costs, then the project manager or team captures the actual costs that the Accounting system records for that period, which is normally the end of the calendar month)
Column K - (BAC) The BAC (budget at completion) is the planned budget for the task. The formula multiplies the number of hours (column H) by the rate-per-hour (column I) to estimate the planned BAC. The formula also adds the number of non-labor dollars to the BAC.
View 4 - Project Progress Indicators (Earned Value) - DanceSport project earned value formulas:
Column L - Formula is showing the cumulative percent of work scheduled (WS). The WS is the task's planned percent of completion added to the cumulative sum. Notice in View 4 that the WS rises from 0% to 100% for the project.
Column M - Formula showing the cumulative percent of the earned value (EV). The EV is the percent of completion of each task, added to the cumulative sum. View 4 shows that considering all completed tasks to date, that 53% of the project is completed. This 53% completion compares to the WS value of 69% which was the plan, which means the project is 16% behind schedule (53% - 60%). Column O (OV) displays -16%. SV stands for Schedule Variance.
Column N - A formula is showing actual cumulative costs to date divided by the BAC (column K). The amount shows considering all completed tasks to date and actual costs for those tasks, that 73% of the budget is spent. The 73% compares to the EV value of 53%, meaning the project is costing to cost 20% more than planned (53% - 73%). The -20% is displayed in Column P (CV). CV stands for Cost Variance.
View 5 - Project Summary Data - Project data calculations for the entire project; including:
Project Header (title, ID, project managers)
Project Start and estimated Finish Dates
Budget at Completion of $113,896 - total project
Earned Value cumulative - value of work performed in dollars = $69,850
Actual Cost cumulative = $82,815 spent to date
Work Scheduled (WS) cumulative = $88,600
Cost Variance (EV - AC) = -$12,965
Schedule Variance (EV-SV) = -$18,750
Projected Final Cost (formula) = $135,036
PM Estimated Final Cost (project manager estimated) = $130,000
As the Elafino focus teams learned, the use of "earned value" project management is valuable because it provides projections of final costs and schedule completions long before project completion. Projections can be used as a "flag" to take timely and effective corrective action before it is too late.
View 1 - Tasks and Teams Responsible
View 2 - Project Planning Indicators
View 3 - Project Cost Estimates & Budget at Completion
View 4 - Project Progress Indicators (Earned Value)
View 5 - Project Summary Data
Update Operations Excellence Action Plan - The Elafino Operations Focus Team (OFT) adds tasks, responsibilities and other information into the Operations Excellence Action Plan (project) to implement new initiatives as a result of this Process Management and Improvement Guide.
Input Process and Project Metrics into PMS - Unless the organization has a Performance Management System; the OFT uses the Excel Workbook named OFT-15F PMS Operations Excellence Metrics (spreadsheet model).
As a minimum, the OFT selects, input and tracks key measures for Process Management, including:
Process Cycle Time - The % of key processes meeting their Cycle time (Ct) targets
Process Cost - The % of key processes meeting their process cost ($) targets
Project Management - The % of projects meeting their schedule, cost, and technical requirements
On a quarterly basis, the OFT with support from all focus teams uses the Performance Measurement System to monitor trends of process management initiatives versus goals. Usually these are updated quarterly, or when changes in conditions require updates. The OFT appropriate action to drive measures towards their goals. When goals are met, the OFT may raise the goals higher, as appropriate.
Figure 6.1b-3 is an example Trend Chart and Action Plan for the % of Key Processes Charted.
Figure 6.1b-3 Example Trend Chart for Standard 6.1b Project Results
The Elafino LFT (IT Manager) published the 6.1b Project Management and Improvement output results on the Elafino INTRANET, and notified all focus teams and managers of these updates.