Chapter 6: Qualitative Process Analysis

Contents
1. Value-Added Analysis
2. Waste Analysis
3. Stakeholder Analysis & Issue Documentation
4. Root-Cause Analysis
5. Recap

SEITE 1
 Process Analysis in the BPM Lifecycle

Management Processes

Define Vision Develop Strategy Implement Manage Risk

Strategy

Core Processes

Manage
Procure Procure Market Deliver
Customer
Materials Products Products Products
Service

35h B 30h Support Processes

15h Manage
Manage Personnel Information Manage Assets

A E
D
5m 3m 5m 10m 30m 2h 10m

15m 1.5h 10min

Qualitative Process Analysis: Overview

Stakeholder
analysis
Value-
Added & Root-Cause
Waste Analysis
Analysis
Issue
Register
& Pareto
Chart
Chapter 6: Qualitative Process Analysis

Contents
1. Value-Added Analysis
2. Waste Analysis
3. Stakeholder Analysis & Issue Documentation
4. Root-Cause Analysis
5. Recap

SEITE 4
Qualitative Process Analysis

This chapter, introduces a few basic principles and techniques for qualitative process
analysis.:
 First, it presents principles aimed at making the process leaner by identifying
unnecessary parts of the process in view of their elimination.
 Next, it presents techniques to identify and analyze the weak parts of the
process, meaning the parts that create issues that negatively affect the
performance of the process. In particular, it discusses how to analyze the impact
of issues in order to prioritize redesign efforts.

SLIDE 5
Qualitative Process Analysis

1. Value-Added Analysis:
Value-added analysis is a technique aimed at identifying
unnecessary steps in a process in view of eliminating them (a
step may be a task in the process, or part of a task, or a
handover between two tasks).

Value-added analysis consists of two stages:

1. value classification,
2. and waste elimination.

SLIDE 6
1) Value Classification

 First: Decorticate the process into steps

 Steps performed before a task
 The task itself, possibly decomposed into smaller steps
 Steps performed after a task, in preparation for the next task
 Second: Classify each step
Having decomposed the process into steps, a second prerequisite for value-added
analysis is to identify who is the customer of the process and what are the
positive outcomes that the customer seeks from the process .These outcomes are
said to add value to the customer, in the sense that fulfilling these outcomes is in the
interest or for the benefit of the customers, and then classified these steps into one
of three categories:
1. Value-adding (VA)
2. Business value-adding (BVA)
3. Non-value-adding (NVA)
 For example, if a task “Check purchase order” ends with the Purchase Order
(PO) being sent by internal mail to a supervisor, and the next task “Approve
purchase order” starts when the supervisor receives and checks the PO, then
we can say that the transportation of the PO via internal mail is a step—a
potentially unnecessary (non-value-adding) step in this context. It is often the
case that one task involves several steps.
 For example, a task “Check invoice” may involve the following steps:
1. Retrieve the PO(s) that corresponds to the invoice.
2. Check that the amounts in the invoice and those in the PO coincide.
3. Check that the products or services referenced in the PO have been delivered.
4. Check that the supplier’s name and banking details in the invoice coincide with
those recorded in the Supplier Management System.

SLIDE 8
1) Value-adding activities (VA)

 Produces value or satisfaction to the customer.

 Criteria:
 Is the customer willing to pay for this step?
 Would the customer agree that this step is necessary to achieve their
goals?
 If the step is removed, would the customer perceive that the end
product or service is less valuable?
 Examples:
 Order-to-cash process: Confirm delivery date, Deliver products
 University admission process: Assess application, Notify admission
outcome
2) Business value-adding activities (BVA)

 Necessary or useful for the business to operate.

 Criteria
 Is this step required in order to collect revenue, to improve or grow the
business?
 Would the business (potentially) suffer in the long-term if this step was
removed? Does it reduce risk of business losses?
 Is this step required in order to comply with regulatory requirements?
 Example
 Order-to-cash process: Check purchase order, Check customer’s credit
worthiness, Issue invoice, Collect payment, Collect customer feedback
 University admission process: Verify completeness of application, Check
validity of degrees, Check validity of language test results
3) Non-value-adding activities (NVA)

 Everything else besides VA and BVA

 Incudes:
 Handovers
 Waiting times, delays
 Rework or defect correction
 Examples
 Order-to-cash: Forward PO to warehouse, Re-send confirmation, Receive rejected
products
 University admission: Forward applications to committee, Receive admission results
from committee

(Generally, handover steps between process participants, such as sending

and receiving internal messages, are not value-adding).
Extract of Equipment Rental Process

Fill request (VA)

Send request to clerk
(NVA)

Check equipment availability (VA) – 1st time

Record recommended equipment (BVA)
Forward request to works engineer (NVA)

Produce PO (BVA)
Open and read request (NVA)
Submit PO to supplier (VA)
Select suitable equipment (VA) – 1st time

Open and examine request (BVA)

Communicate issues (BVA)
Forward request back to clerk (NVA)
Equipment Rental Process – VA Analysis
Exercise

 Pharmacy prescription process (Exercise 1.6)

 Identify at least three VA steps, at least three BVA steps and at least
three NVA steps
Chapter 6: Qualitative Process Analysis

Contents
1. Value-Added Analysis
2. Waste
1. Move
2. Hold
3. Overdo
3. Stakeholder Analysis & Issue Documentation
4. Recap

SEITE 15
Waste analysis

"All we are doing is looking at the time line, from the moment the
customer gives us an order to the point when we collect the cash.
And we are reducing the time line by reducing the non-value-
adding wastes ”
Taiichi Ohno
Waste Elimination

 Having identified and classified the steps of the process, one can then proceed
to determining how to eliminate waste.
 A general rule is that one should strive to minimize or eliminate NVA
steps.
 Some NVA steps can be eliminated by means of automation.
(This is the case of handovers for example, which can be eliminated by putting in
place an information system that allows all stakeholders to know what they need
to do in order to move forward the rental requests).
 A more radical approach to eliminating NVA steps is to eliminate the clerk
altogether from the process. This means moving some of the work to the site
engineer so that there are less handovers in the process. Of course, the
consequences of this change in terms of added workload to the site engineer
need to be carefully considered.

17
Seven sources of waste

A)Move
• 1) Unnecessary Transportation
• 2) Motion
B) Hold
• 3) Inventory
• 4) Waiting (and idleness)
C)Over-do
• 5) Defects
• 6) Over-Processing
• 7) Over-Production
A) Move

19
1) Unnecessary transportation

 Send or receive materials or documents (incl. electronic)

taken as input or output by the process

Example:
 To apply for admission at a University, students fill in an online form.
When a student submits the online form, a PDF document is generated.
The student is requested to download it, sign it, and send it by post
together with the required documents: 1. Certified copies of degree and
academic transcripts. 2. Results of language test. 3. CV.
When the documents arrive to the admissions office, an officer checks
their completeness. If a document is missing, an e-mail is sent to the
student. The student has to send the missing documents by e-mail or
post depending on document type.
2) Motion

 Motion of resources internally within the process

 Common in manufacturing processes, less common in business
processes

Examples
 Vehicle inspection process, a process worker moves with the
inspection forms from one inspection base to another; in some cases
inspection equipment also needs to be moved around
 Approval process, a process workers moves around the organization
to collect signatures
B) Hold

22
3) Inventory

 Materials inventory
 Work-in-process (WIP)

Examples
 Vehicle inspection process, when a vehicle does not pass the first
inspection, it is sent back for adjustments and left in a pending status.
At a given point in time, about 100 vehicles are in the “pending” status
across all inspection stations
 University admission process: About 3000 applications are handled
concurrently
4) Waiting

 Waiting for materials or input data

 Task waiting for a resource
 Resource waiting for work (resource idleness)

Examples
 Vehicle inspection process: A technician at a base of the inspection
station waiting for the next vehicle
 Approval process: Request waiting for approver
 University admission process: Incomplete application waiting for
additional documents; batch of applications waiting for committee to meet
C) Over-do

25
5) Defects

 Correcting or compensating for a defect

 Rework loops

Examples
 Vehicle inspection: A vehicle needs to come back to a station due
to an omission
 Travel approval: Request sent back to requestor for revision
 University admission: Application sent back to applicant for
modification; request needs to be re-assessed later due to
incomplete information
6) Over-processing

 Tasks performed unnecessarily given the outcome of the process

 Unnecessary perfectionism

Examples
 Vehicle inspection: Technicians take time to measure vehicle emissions with higher
accuracy than required, only to find that the vehicle clearly does not fulfill the required
emission levels
 Travel approval: 10% of approvals are trivially rejected at the end of the process due
to lack of budget
 University admission: Officers spend time verifying the authenticity of degrees,
transcripts and language test results. In 1% of cases, these verifications uncover
issues.
Verified applications are sent to the admissions committee. The admission committee
accepts 20% of the applications it receives
7) Over-production

 Unnecessary process instances are performed, producing outcomes that do not

add value upon completion

Examples
 Order-to-cash: In 50% of cases, issued quotes do not lead to an order
 Travel approval: In 5% of cases, travel requests are approved but the travel is
cancelled
 University admission: About 3000 applications are submitted, but only 800 are
considered eligible after assessment
Equipment rental process: wastes

Send request to clerk (Transp.)

Defect

Open and read request Forward request to

(Handover  works engineer
transportation) (Transp.)

Forward request back

to clerk (Transp.)
Equipment rental process: wastes

Transportation
• Site engineer sends request to clerk
• Clerk forwards to works engineer
• Works engineer send back to clerk

Inventory
• Equipment kept longer than needed

Waiting
• Waiting for availability of works engineer to
approve
Equipment rental process: wastes

Defect
• Selected equipment not available, alternative
equipment sought
• Incorrect equipment delivered and returned to
supplier

Over-processing
• Clerk finds available equipment and rental request is
rejected because equipment not needed
• Rental requests being approved and then canceled by
site engineer

Over-production
• Equipment being rented and not used at all
Exercise

 Pharmacy prescription process (Exercise 1.6)

 Identify wastes in this process
Chapter 6: Qualitative Process Analysis

Contents
1. Value-Added Analysis
2. Waste Analysis
3. Root-Cause Analysis
1. Cause-Effect Diagram
2. Why-Why Diagram
4. Stakeholder Analysis & Issue Register

SEITE 33
Root-cause analysis

Why-why diagram

Factors Issue

Cause-effect
diagram
 Root-cause analysis

 Root cause analysis is a family of techniques to help analysts identify and

understand the root cause(s) of problems or undesirable events.

 Root cause analysis is helpful to identify and to understand the issues that
prevent a process from having a better performance.

 Root cause analysis encompasses a variety of techniques. In general, these

methods include guidelines for interviewing and conducting workshops
with relevant stakeholders, as well as techniques to organize and to
document the ideas generated during these interviews or workshops. It has
two techniques: cause-and-effect diagrams and why–why diagrams.

35
1) Cause-effect Diagrams

 Cause–effect diagrams depict the relationship between a given negative

effect and its causes (a negative effect is usually either a recurrent issue or
an undesirable level of process performance).
 In a cause–effect diagram, factors are grouped into categories and possibly also
sub-categories. These categories are useful in order to guide the search for
causes.
(For example, when organizing a brainstorming session for root cause analysis,
one way to structure the session is to first go around the table asking each
participant to give their opinion on possible causes of the issue at hand. The
causes are first written down in any order. Next, the identified causes are
classified according to certain categories and the discussion continues in a
more structured way using these categories as a framework).

36
Cause-effect (Fishbone) diagram
Template of a cause–effect diagram based on the 6M’s
Categories of causes: Six Ms

1. Machine: factors stemming from technology used

 Lack of suitable functionality in the supporting software applications
 Poor User Interface (UI) design
 Lack of integration between systems
2. Method: factors stemming from the way the process is designed, understood or
performed
 Unclear assignments of responsibilities
 Unclear instructions
 Insufficient training
 Lack of timely communication
3. Material: factors stemming from input materials or data
 Missing, incorrect or outdated data
Categories of causes: Six Ms

4. Man: factors stemming from wrong assessments or incorrect performance of

steps attributable to:
 Lack of training and clear instructions
 Lack of motivation
 Too high demands towards process workers
5. Measurement: factors stemming from reliance on:
 Inaccurate estimations
 Miscalculations
6. Milieu: factors outside the scope of the process
 Delays caused because of unresponsive external actors
 Sudden increases of workload due to special circumstances
Cause-effect diagram example
2) Why-why diagram (Tree Diagram)

 Why–why diagrams are a technique for structuring brainstorming sessions

(e.g. workshops) for root cause analysis. Such a session would start with an
issue.
 The first step is to give a name to the issue that stakeholders agree on.
Sometimes it is found that there is not one issue, but multiple issues, in which
case they should be analyzed separately.
 Once the issue has been identified and a name has been agreed upon, this
becomes the root of the tree.
 Then at each level the following questions are asked: “Why does this
happen?” and “What are the main sub-issues that may lead to this issue?”.
 Possible factors are then identified. Each of these factors is then analyzed using
the same questions.

41
Template of a why-why diagram

Contributing
Factor

Contributing ...
Factor

Contributing
Factor Five
Issue levels of
Contributing nesting
Factor

Contributing
Factor ... “Five
Contributing
Why’s”
Factor
Why-why diagram example

Site engineers keep equipment longer, why?

 Site engineer fears that equipment will not be available
later when needed, why?
 time between request and delivery too long, why?
 excessive time spent in finding suitable equipment and
approving the request, why?
 time spent by clerk contacting possibly multiple suppliers
sequentially;
 time spent waiting for works engineer to check the requests;
Why-why diagram example

Issue 1 Site engineers sometimes reject delivered equipment, why?

Wrong equipment is delivered, why?
– miscommunication between site engineer and clerk, why?
• site engineer provides only brief/inaccurate description of what they
want
• site engineer does not (always) see the supplier catalogs when making
a request and does not communicate with the supplier, why?
・ site engineer generally does not have Internet connectivity
• site engineer does not check the choice of equipment made by the
clerk
– equipment descriptions in supplier’s catalog not accurate
44
Why-why diagram example

Issue 2 Site engineers keep equipment longer than needed via deadline
extensions,
why?
Site engineer fears that equipment will not be available later when needed, why?
– time between request and delivery too long, why?
• excessive time spent in finding a suitable equipment and approving the
request, why?
・ time spent by clerk contacting possibly multiple suppliers sequentially
・ time spent waiting for works engineer to check the requests

45
 Why-why diagram example

Issue 3 BuildIT often has to pay late payment fees to suppliers, why?
Time between invoice received by clerk and confirmation is too long, why?
– clerk needs confirmation from site engineer, why?
• clerk cannot assert when was the equipment delivered and picked-up, why?
・ delivery and pick-up of equipments are not recorded in a shared information
system
・ site engineer can extend the equipment rental period without informing the
clerk
• site engineer takes too long to confirm the invoice, why?
confirming invoices is not a priority for site engineer

46
Exercise

 Pharmacy prescription process (Exercise 1.6)

 Select one of the previously identified issues and analyze it using a
why-why diagram
Chapter 6: Qualitative Process Analysis

Contents
1. Value-Added Analysis and Waste Analysis
2. Root-Cause Analysis
1. Cause-Effect Diagram
2. Why-Why Diagram
3. Stakeholder Analysis & Issue Register
1. Stakeholder Analysis
2. Issue Register
3. Pareto & PICK Chart
4. Recap

SEITE 48
Identifying and documenting process issues

 1) Stakeholder analysis: allows us to collect issues from complementary

perspectives.
 2) Issue register: allows us to document issues and their impact in a structured
manner
 3) Pareto analysis and PICK charts: allow us to select a subset of issues for
further analysis and redesign.

SLIDE 49
1) Stakeholder Analysis

Stakeholder analysis is about gathering data from multiple sources by interviewing

stakeholders of different types and reconciling their viewpoints
In BPM, stakeholder analysis is commonly used to gather information
about issues that affect the performance of the process from different perspectives.
There are typically five categories of stakeholders:
 The customer(s) of the process.
 The process participants.
 The external parties (e.g., suppliers, sub-contractors) involved in the process.
 The process owner and the operational managers who supervise the process
participants.
 The sponsor of the process improvement effort and other executive managers who
have a stake in the performance of the process.

SLIDE 50
Typical Stakeholder Concerns

 Customers are often concerned about slow cycle time, defects, lack of transparency, or
lack of traceability (inability to observe the current process status).
 Process participants might be rather concerned about:
 High resource utilization, working under stress.
 Defects arising from handoffs in the process and wastes.
 External parties (e.g. suppliers and sub-contractors) are generally concerned about
having a steady or growing stream of work from the process, being able to plan their work
ahead, and being able to meet contractual requirements.
 The process owner is usually concerned with performance, be it high cycle times or high
processing times. Also be concerned about common defects and wastes, and compliance
with internal policy and external regulations.
 The sponsor and other high-level managers are generally concerned with the strategic
alignment of the process and the contribution of the process to key performance indicators.
Also concerned about the ability of the process to adapt to evolving customer
expectations, competition, and market conditions.
SLIDE 51
2) Issue register
 The issue register complements the output of root cause analysis by
providing a more detailed analysis of individual issues and their
impact.
 The purpose of the issue register is to determine how and to what extent
each issue is impacting on the performance of the process.
 The impact of an issue can be described quantitatively, for example in
terms of time or money lost, or qualitatively, in terms of perceived
nuisance to the customer or perceived risks that the issue entails.

 Purpose: to maintain, organize and prioritize perceived weaknesses of the process

(issues)
 Sources of issues:
 Input to a process modelling project
 Collected as part of ongoing process improvement actions
 Collected during process discovery (modelling)
 Value-added/waste analysis
Issue register structure

 Can take the form of a table with:

 Issue identifier
 Short name
 Description
 Assumptions
 Impact: Qualitative and Quantitative
 Possible improvement actions
 Larger process improvement projects may require issue trackers
Example of an issue documentation

Issue name
• Equipment kept longer than needed

Description
• Site engineers keep rented equipment longer than needed by
asking for deadline extensions

Assumptions
• 3000 pieces of equipment rented p.a.
• In 10% of cases, equipment is kept two days more than needed
• Average rental cost is 100 per day

Quantitative impact
• 0.1 × 3000 × 2 × 100 = 60,000 p.a
Issue Register Example
Name Explanation Assumptions Qualitative Quantitative
Impact Impact

Equipment Site engineers keep 3000 pieces of equipment rented p.a. 0.1 × 3000
kept longer equipment longer In 10% of cases, equipment kept two × 2 × 100
than than needed via days longer than needed. = 60,000
needed deadline extensions Rental cost is 100 per day p.a.

Rejected Site engineers 3000 pieces of equipment rented p.a. Disrupted 3000 ×
equipment reject delivered 5% of them are rejected due to an schedules. 0.05 × 100
equipment due to internal mistake Employee = 15,000
non-conformance to For each equipment rejected due to stress and p.a.
their specifications an internal mistake, BuildIT is billed frustration
100.

Late Late payment fees 3000 pieces of equipment rented p.a. Poor 0.1 × 3000
payment incurred because Average rental time is 4 days reputation × 4 × 100
fees invoices are not Rental cost is 100 per day. with × 0.02 =
paid by their due Each rental leads to one invoice. suppliers 2400 p.a.
date About 10% of invoices are paid late.
Penalty for late payment is 2%.
3) Pareto chart

 The impact assessment conducted while building the issue register can
serve as input for Pareto analysis.
 The aim of Pareto analysis is to identify which issues or which
causal factors of an issue should be given priority.
 Pareto analysis rests on the principle that a small number of factors are
responsible for the largest share of a given effect.
Pareto chart

A typical approach to conduct Pareto analysis is as follows:

1. Define the effect to be analyzed and the measure via which this effect will be
quantified. The measure might be for example:
• Financial loss for the customer or for the business.
• Time loss by the customer or by the process participants.
• Number of occurrences of a negative outcome, such as number of
unsatisfied customers due to errors made when handling their case.

2. Identify all relevant issues that contribute to the effect to be analyzed.

57
 Pareto chart

3. Quantify each issue according to the chosen measure. This step can be done
on the basis of the issue register, in particular, the quantitative impact
column of the register.
4. Sort the issues according to the chosen measure (from highest to lowest
impact) and draw a so-called Pareto chart.
A Pareto chart consists of two components:
a. A bar chart where each bar corresponds to an issue and the height of the bar
is proportional to the impact of the issue or factor.
b. A curve that plots the cumulative percentage impact of the issues. For
example, if the issue with the highest impact is responsible for 40 % of the
impact, this curve will have a point with a y-coordinate of 0.4 and an x-
coordinate positioned so as to coincide with the first bar in the bar chart.

58
Pareto chart

 Useful to prioritize a collection of issues

 Bar chart where the height of the bar denotes the impact of each issue
 Bars sorted by impact
 Superposed curve of cumulative percentage impact

59
 Pareto chart example

Pareto chart for excessive equipment rental expenditure

This slides will be added for the next year

 It is worth highlighting that Pareto analysis focuses on a single dimension. In the

 example above, the dimension under analysis is the impact in monetary terms. In
 other words, we focus on the estimated payoff of addressing an issue. In addition
to
 payoff, there is another dimension that should be taken into account when deciding
 which issues should be given higher priority, namely the level of difficulty of
 addressing an issue. This level of difficulty can be quantified by the investment
 required to change the process, such that the issue in question is addressed.
 A type of chart that can be used as a complement to Pareto charts in order to
 take into account the difficulty dimension is the PICK chart.

61
Two-Dimensional Prioritization: PICK Chart
Two-Dimensional Prioritization: PICK Chart

 PICK chart is the type of chart that can be used as a complement to

Pareto charts in order to take into account the difficulty dimension.
 The horizontal axis captures the difficulty of addressing the issue (or
more specifically the difficulty of implementing a given improvement idea
that addresses the issue) while the vertical axis captures the payoff. The
horizontal axis (difficulty) is split into two sections (easy and hard) while
the vertical axis (payoff) is split into low and high.
 These splits lead to four quadrants that allow analysts to classify issues
according to the trade-off between payoff and difficulty.

63
Two-Dimensional Prioritization: PICK Chart

The four quadrants :

 Possible (low payoff, easy to do): issues that can be addressed if there
are sufficient resources for doing so.
 Implement (high payoff, easy to do): issues that should definitely be
implemented as a matter of priority.
 Challenge (high payoff, hard to do): issues that should be addressed but
require significant amount of effort. In general one would pick one of these
challenges and focus on it rather than addressing all or multiple
challenges at once.
 Kill (low payoff, hard to do): issues that are probably not worth addressing
or at least not to their full extent.

64
Exercise

 Pharmacy prescription process (Exercise 1.6)

 Identify and document at least two issues in an issue register
Chapter 6: Qualitative Process Analysis

Contents
1. Value-Added Analysis
2. Waste Analysis
3. Root-Cause Analysis
4. Stakeholder Analysis & Issue Documentation
5. Recap

SEITE 66
Recap

1. Segregate value-adding, business value-adding and non-value-adding steps

2. Identify waste: move, hold, overdo
3. Collect and systematically organize issues, assess their impact, priotirize
4. Analyze root causes of issues

SLIDE 67