Organizational Process Management and Measures
Process thinking
Distinguish core processes (customer-facing, value-creating) from support processes. Know the mapping levels: SIPOC for scope, swimlane/functional maps for handoffs and ownership, detailed flowcharts for decision logic, and value stream maps for flow, wait time, and information. Understand process owners, RACI assignment, and the hidden factory - rework loops that consume capacity invisibly and never appear on the standard cost report.
Measures
Group measures into three families: process (cycle time, lead time, takt, percent complete and accurate, RTY), customer (satisfaction, loyalty, complaints), and business/financial (COPQ, margin, revenue). Know the four scale types - nominal, ordinal, interval, ratio - because the scale determines which statistics are legal. Keep validity (measures the right thing) separate from reliability (repeatable).
Traps
- Confusing DPMO with yield: rolled throughput yield multiplies step yields and is always lower than the average step yield.
- Computing capability indices without first confirming stability and reasonable normality.
- Defining benchmarking as copying a competitor rather than comparing to best practice and adapting it.
Rule of thumb: sigma level = NORMSINV(1 − DPMO/1,000,000) + 1.5, so six sigma maps to about 3.4 DPMO once the 1.5σ long-term shift is applied. Ten steps at 99% yield give an RTY of 0.99^10 ≈ 90.4%, a useful sanity check on “we are already at 99%.”