Process Development in ABB Oy Transformer's After Sales: Challenges and Improvements, Summaries of Engineering

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Varpu Pajukoski

DEVELOPING A MORE EFFICIENT

AFTER SALES PROCESS

ABB Oy Transformers, After Sales Services

Business Economics

VAASAN AMMATTIKORKEAKOULU

International Business

TIIVISTELMÄ

Tekijä Varpu Pajukoski Opinnäytetyön nimi Jälkimarkkinointiprosessien kehittäminen Vuosi 2015 Kieli Englanti Sivumäärä 83 + 15 Ohjaaja Kim Skåtar

Globalisaatio, tietoverkkojen kehitys, lisääntynyt liikkuvuus sekä monet muut tekijät ovat muuttaneet merkittävästi organisaatioiden toimintaympäristöä vuosien saatossa. Jotta uusiin haasteisiin voidaan vastata tehokkaasti, tulee päivittäisen tekemisen olla sujuvaa ja tehokasta. Tämän opinnäytetyön tarkoituksena on kartoittaa ABB Oy Muuntajien jälkimarkkinointiprosesseja sekä niissä esiintyviä haasteita, jotta nykyisiä prosesseja voidaan tehostaa ja tehdä niistä vakaampia.

Teoreettinen viitekehys rakentui prosessin kehittämisen ympärille. Prosessin kehittämisen lähtökodaksi tarkentui itse prosessi ja sen määritelmä, josta oli luontevaa jatkaa prosessin kehittämiseen ja sen eri vaiheisiin. Lisäksi korostui prosessin mallintaminen ja jatkuva parantaminen, jotka ovat tärkeä osa prosessin kehittämistä.

Tutkimuksen aikana paljastui useita ongelmakohtia. Suurimmat ongelmat liittyivät tiedonkulkuun sekä selkeiden toimintamallien puuttumiseen, joka puolestaan aiheutti epävakautta prosessissa. Koska jälkimarkkinoinnin resurssit ovat rajalliset, oli erityisen tärkeää keventää prosesseja mahdollisuuksien mukaan. Tämän työn puitteissa tehtiin uudet prosessikuvaukset, joilla pyrittiin selkeyttämään prosesseja. Uudet prosessit otettiin käyttöön vuonna 2013, mutta parhaan hyödyn saamiseksi ne vaativat jatkuvaa parantamista. Prosessinkuvauksia tulisi jatkossa päivittää tarpeen mukaan ja muuttaa tarvittaessa olemassa olevia käytäntöjä.

Avainsanat Prosessi, prosessin kuvaus, prosessin kehittäminen, mallinnus, jatkuva parantaminen

CONTENTS

TIIVISTELMÄ

• 1 INTRODUCTION ABSTRACT
  • 1.1 Problem Statement
  • 1.2 Structure of the Study
• 2 PROCESS
  • 2.1 Description
  • 2.2 Process Division
    • 2.2.1 Core and Support Process
    • 2.2.2 Current and Target Process
• 3 PROCESS DEVELOPMENT
  • 3.1 Description
  • 3.2 Two Models for Process Development
    • 3.2.1 Principles of Process Development by Moisio and Ritola
    • 3.2.2 Principles of Process Development by Martinsuo & Blomqvist
  • 3.3 Pressure to Change
    • 3.3.1 Typical Areas of Improvement......................................................
  • 3.4 Goals
  • 3.5 Controlled Change
    • 3.5.1 Four Rooms of Change
• 4 PROCESS MODELLING
  • 4.1 Description
  • 4.2 Why to Model......................................................................................
  • 4.3 How to Model......................................................................................
    • 4.3.1 Current Process.............................................................................
    • 4.3.2 Target Process
    • 4.3.3 Logical Level................................................................................
  • 4.4 Flowchart
    • 4.4.1 Different Types of Flowcharts
• 5 CONTINUOUS IMPROVEMENT
  • 5.1 Measuring
  • 5.2 Benefits of Continuous Improvement
• 6 INTRODUCTION OF A CASE COMPANY
  • 6.1 ABB Oy Transformers
    • 6.1.1 ABB Oy Transformers After Sales
• 7 AFTER SALES: CURRENT STATE
  • 7.1 Interviews
  • 7.2 Sales Statistics
    • 7.2.1 Sales Order Types
    • 7.2.2 Customers
    • 7.2.3 Sales Order Material
  • 7.3 Tools and Resources
    • 7.3.1 Resources
    • 7.3.2 Computer Programs
    • 7.3.3 Measuring Competence Matrix
    • 7.3.4 Customer Complaint Resolutions Process, CCRP
  • 7.4 Current Processes
    • 7.4.1 Warranty and Repair Done at Factory
    • 7.4.2 Process for Site Work
  • 7.5 Problems in Existing Processes in Different Departments
    • 7.5.1 After Sales
    • 7.5.2 Order Handling
    • 7.5.3 Electrical and Mechanical Design
    • 7.5.4 Purchasing
    • 7.5.5 Production
    • 7.5.6 Dispatch and Forwarding
    • 7.5.7 Conclusions about the Problems
• 9 AFTER SALES: TARGET STATE............................................................
  • 9.1 Gate1-Meeting
  • 9.2 Delivery Request
  • 9.3 Inventory Reduction
  • 9.4 New Processes
    • 9.4.1 Warranty repair at factory
  • 9.4.2 Sending warranty parts to site
  • 9.4.3 Warranty Repair at Site
  • 9.4.4 Commissioning Engineering
  • 9.4.5 Processes Concerning Customer A................................................
• 10 DIFFERENCES BETWEEN CURRENT AND TARGET STATE.............
• 11 VALIDITY AND RELIABILITY
• 12 OPPORTUNITIES AND IDEAS FOR THE FUTURE
• 13 CONCLUSIONS........................................................................................
• REFERENCES
• Figure 1 Porter’s Value Chain. p. LIST OF FIGURES AND TABLES
• Figure 2 Relationship between core and support process. p.
• Figure 3 Unclear and clear process. p.
• Figure 4 Steps of process development by Moisio and Ritola. p.
• Figure 5 Systematic process development model p.
• Figure 6 Steps of process development p.
• Figure 7 Four rooms of change. p.
• Figure 8 Three forms of flows p.
• Figure 9 Benefits of continuous improvement p.
• Figure 10 New sales order lines. p.
• Figure 11 Customers in relation to sales order rows. p.
• Figure 12 Value of sales order rows and how they are divided p.
• Figure 13 The most used dummy-codes. p.
• Figure 14 After sales resources in 2013. p.
• Figure 15. Warranty and repair done at factory. p.
• Figure 16. Warranty and repair done at factory. p.
• Figure 17. Warranty and repair done at factory. p.
• Figure 18. Warranty and repair done at factory. p.
• Figure 19. Site work process. p.
• Figure 20. Site work process. p.
• Figure 21. Overview of warranty repair at factory. p.
• Figure 22. Warranty repair at factory. p.
• Figure 23. Warranty repair at factory. p.
• Figure 24. Overview of sending parts to site: Stock material. p.
• Figure 25. Overview of sending parts to site: Ordered material. p.
• Figure 26. Sending parts to site: Stock material. p.
• Figure 27. Sending parts to site: Ordered material. p.
• Figure 28. Overview of warranty repair at site. p.
• Figure 29. Overview of commissioning. p.
• Figure 30. Vacuum and testing for Customer A. p.
• Figure 31. Overview of winding manufacturing for Customer A. p.

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1 INTRODUCTION

The operating environments of organizations’ are undergoing fundamental changes due to globalization, increased mobility, e-business models, new productivity requirements as well as evolution of information networks and digitalization. This has increased the importance of competence, speed, flexibility and innovativeness. This kind of complexity has made organizations to become more specialized and to focus their know-how on smaller areas. (Laamanen & Tinnilä, 2009)

Process modeling and development has been an essential means of improving company’s performance since the 1970’s. Process thinking has been a central part of Japanese quality philosophy for decades and it has also had a strong influence on western production operations. It can be applied to almost every private business, to public administration as well as to non-profit organizations to increase their performance. (Martinsuo, M. & Blomqvist, M., 2010, 3)

The key features of process thinking are systematic thinking, issue-centered thinking, goal orientation, focusing on value adding actions, utilization of feedback as well as systematic improvement of the performance by improving the process. Process thinking is often related to removing the unnecessary work and making the work more efficient. Sometimes process thinking can also highlight tools, documentation and information systems since they are important ways of spreading the practices and automate work phases. (Martinsuo, M. & Blomqvist, M., 2010,

Even though the goals are quite the same, the means of how to achieve the goals are different from those used previously. Hard personal goals have been changed to organization-wide co-operation and emphasis on team-work. The focus on cost- effectiveness has been expanded to cover also speed and flexibility. The relationship between the supplier and the customer has changed – before suppliers had to compete for bids and the customers were seen as a necessary sales targets whereas now they are partners in a value-creating network. (Laamanen & Tinnilä, 2009, 7)

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The main aim of this study is to find out how a process can be improved and what the effects are in real life. In today’s world we are forced to find out better practices to be competitive. By improving processes we are able to create steadier processes with less errors and also to reduce costs which is very important factor in today’s business world as well. I am choosing this topic because I have worked for a case company and seen the problems in its every day operations. It seems that by improving the process it could be possible to improve the flow of information and to make the work easier and more transparent. This could help several departments, shorten lead times and make the process steadier. Unnecessary work could be avoided and even customer satisfaction could be eventually increased.

1.1 Problem Statement

The research problem is to improve the case company’s after sales process. In order to solve this problem, the following plan is made. The first objective is to examine the existing processes and examine how well the existing process charts describe the current situation. This is done by working in group gathered from different departments and also by conducting interviews. The second objective is to analyze sales statistics and to find out what tools and resources are available. By examining this data it will be possible to find out some areas of improvement. The third objective is to set the target state and see what kind of changes should be made in order to reach the target state. Finally, the changes will be implemented in practice.

1.2 Structure of the Study

The theoretical study is divided into four main sections. The first section is about the process; what the process is and how it can be divided into different groups. The second section is about process development. It shows the principles of process development as well as finds out why the process is going through changes, how the changes should be made and what the goals are. The third section reveals what process modeling is and why and how to model a process. The final section, continuous improvement, is an important area of process development so that the improvements are made also in the future and the process is developed further as

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2 PROCESS

In this chapter a basic description of a process is introduced. This will give the basic knowledge on what is meant by process and how it can be divided into smaller areas like for example core and support process or current and target process.

2.1 Description

Any activity or change can be described as a process. Process is a set of logically related activities and resources which are used to transform inputs to outputs. (Laamanen & Tinnilä 2009, 121-122) It is an entity that is assembled from multiple actions and tasks and it is a way of working efficiently and seamlessly in order to fulfill a customer’s needs. (Laatujohtamisen tiimi 2009, 2)

Process is a chain of actions that creates added value to the customer and in which a company uses its resources. A customer can be an internal or an external customer, known or unknown but there are always expectations, needs and demands from the customer towards the process. (Martinsuo & Blomqvist 2010, 4) A process can go from customer to customer crossing departmental and organizational boundaries. (Laamanen & Tinnilä 2009, 121-122) Pocess creates added value to the inputs when transforming them into outputs. Added value is related to the customer’s expectations, needs or demands and as an output it can mean, for example, a product, a solution or a service. (Martinsuo & Blomqvist 2010, 4)

Process may involve any part of the company’s business or other organizations’ activities seeking for benefits; creation of new innovations, production, products and services, finance or customer relations etc. (Martinsuo & Blomqvist 2010, 3) In a process the value adding action is formed from several actions connected to each other. The chain of actions can be simple or complicated, pre-determined or un-determined. Resources like raw material, labor, capacity, money, equipment or information are needed in the process. Resources can be owned by the company or acquired externally but they always cause costs and the resources available are limited. (Martinsuo, M. & Blomqvist, M., 2010, 4)

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The basic elements of efficient processes are functional processes, efficient production equipment as well as advanced practices. Operational excellence is built on these factors and it aims at a work culture where problem solving, development and an innovative mindset are seen as an asset. (Jatkuva Parantaminen ABB Oy:ssa 2005, 5)

The process starts from the customer’s needs and ends after the needs have been fulfilled (Laatujohtamisen tiimi ABB Oy 2009, 2). The relationship between the customer and the company is extremely important. In the business world the interest is mainly in those processes which are critical to success. These processes are known as key processes, business processes or main processes and are often presented by using process charts. (Laamanen & Tinnilä 2009, 121-122) It is very important for companies to lead and guide their processes in order to reach their objectives (Martinsuo & Blomqvist 2010, 5).

2.2 Process Division

Especially in the business world there is a difference between process and business process. Business process describes those processes which are used to make money whereas process can describe any process. (Martinsuo & Blomqvist 2010, 3) This study deals with processes in general.

2.2.1 Core and Support Process

Processes can be divided into core and support processes. Core processes are always connected to external customer whereas support processes are internal and support core processes. Different level processes are called main process, sub process and part process. The main process can be divided into several sub or part processes and in that way it can be modeled on several levels. (Martinsuo & Blomqvist 2010, 4)

Porter’s value chain (Porter 1985, 87), presented below in Figure 1., shows the core and support processes. The core processes are flowing across the bottom of the figure whereas the support processes are layered above them. Together they form the margin. (Harmon 2011)

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Core processes are critical to a company’s success. (Martinsuo & Blomqvist 2010,

9. They deliver value straight to the external customer. These kinds of processes are for instance product development and order-delivery process where the products and services are delivered to an external customer. Core processes generate the company’s cash flow and are vital to the company’s survival. (Laatujohtamisen tiimi 2009, 2) To enable the core processes, the organization must also have support processes (Laamanen & Tinnilä 2009, 121-122).

Support process is critical for the functionality and improvement of the core process. Processes that support core processes are, for example, strategic planning, financial planning and information systems maintenance. (Laatujohtamisen tiimi ABB Oy 2009, 2.)

A core process can be divided in to sub processes. As an example a sales process can be separated from the order-delivery process. A key process, on the other hand, can be core, support or even sub process but it is always an essential process for the company’s success. (Laatujohtamisen tiimi ABB Oy 2009)

2.2.2 Current and Target Process

A current process describes the current situation and a target process describes the process as it should be in order to fulfill the goals of performance. The difference between a current process and a target process shows the concrete changes that should be made in order to reach the target. (Martinsuo, M. & Blomqvist, M., 2010,

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3 PROCESS DEVELOPMENT

Process development is a wider concept that includes process improvement. This chapter introduces the basics of process development and improvement. The development process is led by process owners who are in charge of development, whereas the involvement of employees is more important in process improvement. In this chapter, also the goals and reasons behind the changes are discussed as well as typical areas of improvement.

3.1 Description

Process development begins by understanding the process. Even the hardest work is not enough if the entity is not in control and processes are unclear. A functional process requires continuous listening of the customer, common goals and measurements in the organization, fluent flow of information and material, well planned, instructed and trained actions, quick response to changing conditions and know-how. (Laatujohtamisen tiimi 2009, 4-5)

The aim is to change the process so that it becomes more effective and it focuses directly on action. People are not expected to do more but to do things differently. (Laamanen & Tinnilä 2009) Tasks are done in their natural order and place. Loops, waste and work in progress are minimized so that work would be smooth, clear and as fast as possible. (Martinsuo, M. & Blomqvist, M., 2010, 14)

Process development includes both process modelling, and process improvement and measurement. Process modelling produces process descriptions which can describe either the current or the target state. Current state descriptions show the current ways of working and how different functions and tasks work together whereas target state descriptions works as a plan for creating and implementing new ways of working. Process development must to be aligned as a part of organizational development. (COALA, 1.2.2014)

A customer can be internal or external but the customer always values on-time deliveries, high-quality products and services and, of course, a competitive price. This makes reliability and fluent processes high in priority. In Figure 3. unclear and

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a process as well as continuous improvement. A development projects are usually bigger changes that require bigger investments. Development process starts when there is a problem that needs to be solved. (Kollanus, S. 2014) In the following two chapters two different approaches are presented.

3.2.1 Principles of Process Development by Moisio and Ritola

According to Moisio & Ritola (2005) there are four steps of process development and they are shown in Figure 4. The first step of process development is to identify the process. It includes grouping but also defining limitations that will help in seeing the process. If there are no limitations the process will be never ending and there will be problems in the next step which is process modeling. (Moisio & Ritola 2005, 6.)

Process modeling helps to see the process as a whole and how different parts of the process are linked to each other. The third step is to implement the process in daily operations. This phase needs to have full support from the management because it is important get the whole organization to commit to the change. (Moisio & Ritola 2005, 6.)

The fourth step is continuous improvement. The process can be developed even further by measuring, analyzing, evaluating and comparing information and experiences received from the implemented processes. After finding out the problems in the processes it is good to return to process modeling to fix the problems. (Moisio & Ritola 2005, 6.)

Figure 4. Steps of process development by Moisio and Ritola.

Principles of process development are shown in Figure 5. systematic process development model by Moisio and Ritola (2005). When developing a better process

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there are a lot of factors to consider. It is important to listen to the customer, reduce unnecessary work, simplify the process and take advantage of the opportunities offered by the technology among others.

Figure 5. Systematic process development model by Moisio and Ritola (2005).

3.2.2 Principles of Process Development by Martinsuo & Blomqvist

Developing a company’s performance through processes can mean extensive transition to process related approach, introduction of one new process, re- engineering or making smaller improvements to the existing processes. Even though these development methods are implemented differently, there are some basic steps that are similar and are shown in figure 6. (Martinsuo & Blomqvist 2010, 6)