Partner P5 Leonardo da Vinci project RO/03/B/F/PP-175017

PROCESS MANAGEMENT

SME TRAINING MANUAL

PREPARED BY

GROEN QA EXPERT

THE NETHERLANDS

"This project has been funded with support from the European Commission. This publication
[communication] reflects the views only of the author, and the Commission cannot be held
responsible for any use which may be made of the information contained therein".

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 Partner P5 Leonardo da Vinci project RO/03/B/F/PP-175017

CONTENTS

1 KEYWORDS ....................................................................................................... 3

2 BACKGROUNDS................................................................................................ 3
2.1 Introduction....................................................................................................................................... 3

2.2 Terminology ...................................................................................................................................... 3

2.3 Field of utilization ............................................................................................................................. 3

2.4 Categories of users ............................................................................................................................ 4

2.5 Produced by Groen QA Expert......................................................................................................... 4

3 PROCESS MANAGEMENT MODEL .................................................................. 4

4 PROCESS DEFINITION...................................................................................... 7

5 PRODUCTION PROCESSES ............................................................................. 7

6 SUPPLY CHAIN MANAGEMENT....................................................................... 8

7 STUDY CASE ..................................................................................................... 9

8 WEBSITES.......................................................................................................... 9

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PROCESS MANAGEMENT

SME TRAINING MANUAL

1 KEYWORDS
Activities, assessment, changes, contracts, customers, critical parameter, inspection, key
processes, management, primary processes, process definition, processes, product, project,
quality, quality assurance, quality control, quality management, records, resource
management, services, supplier, supporting processes.

2 BACKGROUNDS

2.1 INTRODUCTION
According to the definition in ISO 9000 a process is built up from sets of interrelated or
interacting elements (systems) in which activities are performed and use is made of resources
to transform inputs into outputs. Inputs to a process are typically outputs of other processes.
Processes are planned and performed under controlled conditions to add value. In a process a
system is a set of interrelated or interacting elements which are consisting of human
resources, technical resources and procedures.

2.2 TERMINOLOGY
ISO 9000 = Vocabulary of terms and definitions
ISO 9001 = Quality Management System for processes, projects, production and services
ISO 14001 = Environmental Management System for production sites and laboratories
ISO/IEC 17025 = General Requirements for the Competence of Testing and Calibration
Laboratories
HSE = Health, Safety and Environment
QA = Quality Assurance
QC = Quality Control
QMS = Quality Management System

2.3 FIELD OF UTILIZATION

The principles of process management according to ISO 9001 are implemented and followed
in enterprises by top level management down to work floor employees in order to:
- Control and improve production processes for products, projects and services

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- Manage risks in production processes by assessment of critical parameters and failures in

order to prevent (re)occurrence of adverse effects
- Assure quality of products produced by these processes
- Measure, analyse and improve business results and quality of processes, materials,
products and services, and all documentation thereof.

2.4 CATEGORIES OF USERS

The categories of users are:
- Medium (and large) size enterprises producing quality level products and services.
- Top managers, middle managers, supervisors and employees.

2.5 PRODUCED BY GROEN QA EXPERT

Groen QA Expert is an independent consulting company, established in 1998 and has built up
a recognised position in the field of quality assurance in the Netherlands, as well as in foreign
countries of which can be mentioned in Eastern Europe: Ukraine, Poland, Romania, Slovakia
and Czech Republic. Groen QA Expert renders the following quality assurance services to
institutions and businesses: Implementation, auditing, management and improvement of
quality management systems. These services are performed according to the guidelines stated
in ISO 9001:2000, ISO/IEC 17025:2005, Good Practices: GLP/GMP/GCP, and HACCP
(Hazard Analysis and Critical Control Points). Services consist of consultancy, auditing,
training, and quality improvement management, nationally and internationally. Flexible,
tailor-made, ad hoc quality assurance activities according to actual quality guidelines are
comprised. Groen QA Expert also advises on resolving analytical chemical issues. In these
lines of business the product mix is widely spread and customised for each consumer.
Characteristic policy in all activities is the transfer of knowledge. Customers were attended in
the sphere of government and of private industry. Among the most important customers are
environmental and pharmaceutical laboratories, product control laboratories, research
institutes and consultancy firms. Use is made of a thorough scientific background combined
with professional ideas about quality management processes. Since the company is small
cooperation is sought with other consultants to participate in international projects. Each
project is performed in an enthusiastic and coaching manner while involving the organisation
by dedicated support to the management and hands on training for the work force.

3 PROCESS MANAGEMENT MODEL

As defined in ISO 9000 a process is a set of interrelated activities that is oriented to realise the
business goals. Each organisation works with processes. However, some organisations let
their processes originate and develop themselves, while other organisations develop them for
purpose. Processes form the heart core of the organisation. Only in processes people,
resources, methods and materials are used in combination to create added value for the
stakeholders. Still organisations present themselves in organograms showing the hierarchy of
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the organisation, while an organogram doesn’t explain how the processes related to the
business and production are implemented. In fact the organogram should be the result of the
design of the business organisation process model to support the main production processes.

In the figure an example of the primary production process of a manufacturer is presented

showing the main and supporting processes in the organisation placed in the ISO 9001
Quality Management System model to fulfil the requirements (left side) and satisfaction (right
side) of the customer.

Support:
ICT & Data Time sheets & Quality
Finances
Management Records
Management Accounting Assurance Reporting

BUSINESS PLANNING

Marketing
Research and Development
CUSTOMER REQUIREMENTS

CUSTOMER SATISFACTION
Personnel &
Procurement & Resource Management
Purchasing

Services and Contracts

Sales

After Sales Support

PRODUCTION

Facility, Equipment, Materials and Utilities Management

Receipt & Packaging & Warehousing Distribution &

Manufacturing
Inspection Inspection & Shipping Transportation

Incoming materials Product

Quality & HSE Control

In this process model the primary process is PRODUCTION that is strongly related with the
main processes belonging to the BUSINESS PLANNING. The business planning is related
with the main processes which on their turn have a relation with other supporting processes as
shown in the process model and the table below.

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BUSINESS PLANNING: SUPPORTED BY:

• Research and Development • Marketing
• Resource Management • Personnel & Procurement
• Services and Contracts • Procurement & Purchasing
• After Sales Support • Sales

The primary production process is consisting of the following main processes:

• Facility, equipment and materials management
• Production steps from incoming materials up to delivery of products
• In-process Quality Control of critical process parameters and health, safety and
environmental measures.

Supporting processes delivering records that are needed for performance measurement of the
business are shown in top of the process model:
• Data management and ICT
• Time sheets & Accounting
• Quality Assurance
• Finances
• Management Reporting.

For batch manufacturing this process model can be used as a reference model. We will look
now to the tasks and responsibilities of different departments in the organisation. The sales
department will cover the complete flow from negotiating and registering to controlling
customer requests (contracts, quotations and purchase orders) and invoicing. Beside the sales
flow, prices, discounts, commissions and rebates are also supported. Negotiating, registering
and controlling requests (contracts, quotations and purchase orders) to suppliers are supported
by the purchasing department. Managing incoming and outgoing products and controlling
stock is supported by Materials Management which is under the responsibility of Production.
Research and Development is cooperating closely with Marketing to define new product leads
on the basis of customers demand. Several types of planning are supported as derived from
the business planning on the highest level, but more concrete on the level of Production for
finite cyclic planning and control on manufacturing level. The quality control department
supports the defining and registering of customer specific requirements and executes in-
process quality inspections. The independent QA department supports the analysis of
inspection results and performs the batch record review after which a qualified person is held
responsible for final release of the products. The accounting department is supporting the
daily processing activities (accounts receivable, accounts payable, cash management,
collecting management information and reporting.

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4 PROCESS DEFINITION
The process model of the organisation needs to be broken down into the processes itself. The
input and output of these processes must be defined in relation to the primary process and
their supporting role for the business. For each process it will be important to identify a
process owner who is a functionary in the organisation. The process owner will describe the
scope of the process and the interrelated or interacting elements (systems) in which activities
are performed by responsible functionaries. The process will be documented in a procedure
containing a flowchart of the process, explanatory text and who is responsible for what in the
process and who has the power for approval and authorisation in relation to process decisions
and financials. How the activities are executed in the process can be described in work
instructions supported by checklists and forms.

Organisations that have implemented the process model for their business planning have
organised their hierarchy in such a way that functionaries from central departments can be
delegated to support the processes and activities taking place decentred in other parts of the
organisation. Three examples for elucidation are:
1. A functionary from the human resources department hires personnel and provides training
and assessment support for one specific department.
2. A functionary from the technical services department provides technical support to the
production for trouble shooting and repair of equipment and calibration services.
3. A functionary from the marketing department is delegated to the R&D department for the
business development of a new product.
When all processes are described and documented in the management system of the
organisation, the relation between the processes must be assessed to identify potential gaps or
missing links between processes and/or departments. When these issues are fully cleared, it
will be useful to define the objectives on the basis of the business mission. Performance
indicators will be identified and the actions to achieve the goals and milestones for
improvement of processes at all levels of the organisation from top management to middle
management, supervisors and employees. Balanced score cards can be developed and applied
to structure the improvements and make the achievements measurable.

5 PRODUCTION PROCESSES
A production process has to be described in great detail defining the characteristics of the
process and the critical parameters. Depending on the type of product manufactured different
reference models can be applied. Examples are presented in the table below.

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LOW VOLUME
Assembly / job Batch / Mix
• Machines • Food
• Tools • Beverages, Wine
• Equipment • Dairy products
DISCRETE

• Shutters • Pharmaceuticals

PROCESS
• Jewelry • Paint
High volume / Repetitive Process / Flow
• Electronic components • Refineries
• Spinning mills • Glass
• Pottery • Graphite
• Batteries • Paper-mills
• Tires • Steel
HIGH VOLUME

We will take the production of a bulk pharmaceutical chemical as an example which is

typically a batch manufacturing process. In the process of facility, equipment, materials and
utilities management the specifications of all manufacturing related items are defined and the
acceptance criteria (range or value within certain limits) are documented. At receipt
inspection takes place on all critical manufacturing related items by testing against the
specifications and acceptance criteria depending on the requirements for their intended use. In
order to keep overview a document, named Bill of Testing, can prepared that serves as an
overview of production and test results. Intermediate products are tested against
specifications. Final products are tested against specifications and formally released by review
of the batch records and approval of the Bill of Testing. Products can be produced in batches
followed by assembling or putting them in containers followed by packaging. Materials and
(intermediate) products may have a limited shelf-life which requires a strict supply chain
management with predetermined conditions for storage and stock levels. Packing of the
product is done on planned, fixed orders of the sales department. Manufacturing will be
forecast driven and therefore distribution requirements, planning and master production
schedules are very important.

6 SUPPLY CHAIN MANAGEMENT

Supply chain management could be classified as one of the key challenges in many types of
business for the coming decade. Consumer behaviour is individualizing rapidly causing a
movement from mass manufacturing to customized manufacturing. The changes in customer
behaviour have consequences for retailers and producers and will reset the goals for
optimization. The characteristics of product differentiation are dependent on the demands of
the customer as shown in the table below.

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GOALS FOR OPTIMIZATION

Former goals New goals

POINT OF SALE
• Cost reduction • Minimal time to the market
• Increase of quality • Maximum chain flexibility
STOCK

• Increase of productivity • Maximum process flexibility

Functional products Innovative products
• Satisfy basic needs • Unpredictable demand
• Stable, predictable demand • Large variety of products
• Long life cycle • Short life cycle
CUSTOMER DRIVEN

Retailers have nowadays an enormous amount of information about customer behaviour in an

early stage by the use of scanning systems. In this way retailers have a great source of
information about individual customer profiles. For supply chain management this
information should be used by producers to optimize the forecast of the customer demands
and the planning of production and innovation. In partnerships it will be the question which
partner is the pinch point in the supply chain having the best knowledge about future customer
demands. In general the information available at retailers by the use of scanning systems is
valuable for the producers and other partners in the supply chain. In sales of functional
products price competition is heavy with low profit margins. Development and sales of
innovative products should be made customer driven. Flexibility in production and
distribution may create a more satisfied customer that is willing to pay a higher price.

7 STUDY CASE
- To develop a process management model in view of supply chain management.
- For a functional product (bread produced in a factory) and an innovative product (Senseo
coffee machine).
- Define the key processes with input and output in the supply chain from suppliers of raw
materials to producers, wholesalers / distributors and retailers.
- Develop criteria for partnership relations.
- Define information systems and data management requirements.
- Integration needs (exchange of information, sharing information systems).

8 WEBSITES
www.prince2.com/whatisp2.html
www.bmi.omg.org
www.bpmn.org
www.isixsigma.com
www.control-es.com

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 Partner P5 Leonardo da Vinci project RO/03/B/F/PP-175017

"This project has been funded with support from the European Commission. This
publication [communication] reflects the views only of the author, and the Commission
cannot be held responsible for any use which may be made of the information contained
therein".

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