Q 628. Explain process entitlement and illustrate various methods of calculating it. How does it help in process improvements?

 

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Process Entitlement is one of the best short-term performance level of a process when all input variables are in control. It can also be termed as the optimum process performance or utilization of resources without any deviations.
 

The value of Process Entitlement can be the higher average value, For example - If a production process produces 100 units per hour on any given day but 110-120 units during some hours in a day without any change in input values then the higher average of 120 can be called as Process Entitlement Value.
 

Process Entitlement helps us to identify the baseline metric, focus on realistic targets, provide a clear picture of process capability and instability.

Process entitlement is a concept to understand the scope of process improvement . Entitlement defined what is the possible to get best performance which we can expect to achieve from process optimization.  Let us suppose that entitlement is 1000 mobile assembly per hour in assembly division and baseline performance of production line is 500 mobile assembly per hour. We can say that there is a big gap between baseline performance and entitlement. On the other side, if baseline performance of production line is 950 mobile assembly per hour then can say there is a little scope of  improvement. If higher production rate is required, our existing process will not serve the purpose, we have to develop a new process which may require re-engineering process activity.
Entitlement can be helpful in DMAIC projects for goal setting, developing internal bench-marking, providing powerful insight to project team leader by determining major key parameters such as cost of poor quality, machine breakdown time, Rolled throughput yield, machine capacity, waste reduction and Name plate capacity projects etc.

 

Method of calculating entitlement and utilization in computing the target calculation:

Entitlement is considered as top performance of the process, as we are acquainted about lesser machine breakdown is required for consistent and better productivity so in a manufacturing unit, average machine breakdown is around 785 min per week and minimum breakdown is being achieved upto 640 min per week. In this case, we can say the entitlement 640 min/week.

 

Entitlement and baseline data can be helpful to set the first target value of the project with the help of below equation:

                                                         Computed Target= Baseline – ( Baseline-Entitlement)*70%
 

 

We may consider first target of reducing machine breakdown ( average) 684 min/week from baseline 640 min/week.

In case of process capability analysis, if process owner finds Cp=Ppk then he should understand that process is operating at its entitlement level of variation. He should keep monitoring the capability of process or can redesign the process to improve its entitlement level of performance.

Another example :
"Suppose manufacturing unit has operating cost 300 INR per product ( average) but had 200 INR per product for couple of days. This suggest that best operating performance should be 200 INR per product. After delving into further investigation, it observed that a linear relation generated defects and operating cost per product. Y=f(x) defects should be reduced at very low level to achieve process entitlement"

 

 How does it help in process improvement?

Process entitlement is a concept to understand the current performance of the process. It also very helpful to build up internal benchmark setting for project selection or goal setting. As we know that process entitlement is totally based on practical based data. Process leader can avoid to take idealistic project target such as
*Cost of poor quality target “ZERO”
*First Pass yield target “ 100%”
*Machine breakdown “ ZERO “

Suppose in manufacturing factory, first pass yield is running 90% in long term period but for couple of days first pass yield starts achieving 98% then we need to delve into the causes of such high improvement in the yield. If everything is OK in existing process as per defined specifications/ control plan then it depicts the possibility to achieve yield 98% on existing line.
Process Leader is supposed to find out the causes of this improvement like any change in bill of material, environment impact, machine behavior/ breakdown activity and other criteria to find out the actual cause rather than say “luck by chance, first pass yield achieved 98% yield for few days”.

 

 

Concept of Process entitlement is mainly used in improvement of process and selection of projects. Entitlement is known as the optimum performance which can be expected to be delivered from current process configuration without making any change.  Entitlement defines the optimum level of performance possible for process, it provides vision to reach best possible performance by determining the gap between current performance and entitlement.

 

To calculate or determine process entitlement, we need to review current performance, industry benchmark and process entitlement.

 

Let’s consider an example for performance of an organization which is indicated in scale of Level 1 to Level 10.

 

 

In above Fig-1 Current process performance (level-6) is close to process entitlement ( Level-7) but Industry benchmark or competitors ( Level-9) are  still ahead of process entitlement level, In this case process improvement by 1 level to match process entitled level would not be sufficient as it will not exceed performance beyond competitors performance (Level 9), this situation will require change in process design in order to be competitive in market.

 

 

In below Fig-2, Current process performance (Level-6) is below industry benchmark (Level-7) and entitlement (Level-9), by calculating the gap between industry benchmark (Level-7) and entitlement (Level-9) organization can deliver best possible result by focusing on improvement on 2 levels higher than current process performance.

 

Knowing process entitlement let us know what’s possible by comparing current performance with best possible performance. It provides benchmark that can be used to compare with processes in other organization as well as with processes within the organization. This concept can be used for improvement of all key processes like Yield, cost of poor quality, downtime, waste etc. in order to deliver the best performance within organization.

Process Entitlement is the best possible performance that a process can attain given its current design and structure, without any major adjustment. It shows the maximum that a process can actually deliver with its current capabilities.

 

Calculation Methods For Process Entitlement

 

1. Historical Best Performance 
We can refer the historical data and select the best performance the process has delivered by calculating the mean or median of the periodic parameter.

 

2. Engineering And Scientific Methods :
We can use theoretical engineering and scientific principles to arrive at a theoretical best performance . As this is an ideal circumstance we are considering , considering variations that may actually happen is crucial before we arrive at the theoretical best performance. 

 

3. Equipment Capacity 
Refer the best performance specified by the manufacturer of the equipment or machine being used while considering the real world limitations like operator skill , maintenance and other factors that have been observed before.

 

4. Benchmarking
We may refer to similar processes in other organizations or industries  to arrive at the Process Entitlement.

 

5. Statistical Analysis 
We may use suitable statistical methods to arrive at the Process Entitlement. 

 

How Does It Help In Process Improvement 

 

1. Deciding Achievable Target 
It helps us to set practical goals in six sigma green or black belt projects so that the chances of achieving the goal is very high.

 

2. Highlighting Areas Of Improvement
It highlights the gap between the current performance level of a process and the target performance level, resultantly highlighting the processes that need improvement the most urgently. 

 

3. Deciding the importance of improvement initiatives
Process Entitlement helps us to decide which are the lowest hanging fruits , which improvements will impact the bigger picture the most.

 

4. Measuring Progress
As soon as we start implementing measures for process improvement, Process Entitlement helps us to keep an eye on the delta between the current and target performance levels. Hence, we can keep track of the progress being made.

 

5. Keeping Wasteful Investments At Bay
It helps us invest resources proportionate to a process' current performance level. This way we can currently strategize how much , using which methods and when a resource must be invested in a process to effectively achieve improvement in the bigger picture.

Process Entitlement is defined as the ideal state of a process performing at its optimal level in a BAU scenario without any changes over some time. It’s a powerful concept of Six Sigma that’s used to determine the level of improvement in a process and is widely used for project selection. Entitlement will be determined for all the key process performance measures in a process [Yield, Cost of Poor Quality, Capacity, downtime, rework, waste]

Example:

A process in a BPO is operating at an average of 700 calls per day. They were able to increase the throughput to 850 calls per day without any changes to the set-up and they were able to sustain it over some time. In this case, the entitlement will be 850 for the process whilst the average is 700 calls per day. They have a scope to improve by 20% at least

Methods to Calculate Process Entitlement

There is a 3-step methodology to calculate the process entitlement

Align: The process entitlement has to be aligned with the organizational key imperatives like Vision, Long-term plan and short-term goals also the key processes that contribute to the business goals need to be considered

Assess: For all the key processes a Process Entitlement assessment has to be calculated with the below outcomes

·        Current Performance Baseline

·        Peak Performance sustained over some time

·        Potential Entitlement level

Approve: Map the improvement opportunities in line with the organizational key imperatives (Long-term goals, short-term goals, vision). Review the improvement opportunities and define a SMART goal and success criteria for each initiative. A roadmap is defined to implement the improvement initiatives governed and supported by the Six Sigma professionals in the organization

Benefits of Entitlement

Process Entitlement helps to

·        Identify the hidden potential within the process without impacting the set-up

·        Set realistic (SMART) goals for the process

·        Increase process efficiency, and revenues, optimize cost etc

·        Estimate a breakthrough level of Improvement within the process

While all published answers are correct. Sriya has provided the most comprehensive and complete answer and hence has been declared as the winner.