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Waterfall Chart

February 2, 2011

Waterfall Chart Defined

The waterfall chart is a useful graphing tool used by the financial community, business analyst community or anyone interested in graphically displaying quantitative variances for a single variable. I have also heard the Term “Bridge” used to reference the waterfall chart. The term “Bridge” is often used in the financial community.

Possible variables used in a waterfall chart may include:

  • Sales
  • Hours
  • EBIT
  • Inventory
  • Etc.

Waterfall Chart Creation

The waterfall chart is nothing more than a combined column chart with certain columns hid to help the viewer digest the information. The set-up of the data and understanding how this floating column chart works is a straight forward exercise once you understand the technique. Some of the formulas used in automating this chart are moderately complicated, but the concept is sound. A down-loadable example can be grabbed here for your own use, “Download Waterfall Chart.”

Example Data and Corresponding Chart

In this example I will use sales as our variable, though in this example I would hate to be this sales manager.

Description Amount
Sales Goal $10,000
Lost Sales ($1,000)
New Product $550
Lost Sales Channel ($11,000)
New Sales Channel $6,000
Specials $1,000
Recall ($1,000)
Misc. Adj. ($4,000)
New Big Box Deal $7,000

I developed this example to show how the large swings would appear in the graph. Notice how easy it is to visually view these variable lined up now. The graph provides a richer visualization for the user to discern what happened during the year. Instead of just knowing that you achieved or missed your goal is not enough, you need to look at the granularity to determine what actions you can take now or plan on taking in the future to remedy any shortfalls, and in this case there are a lot.

If you Google Waterfall chart you will find many variations of this chart in excel, some examples may be easier to understand so explore and report back on your findings. Also, a great article on how to use Tableau, (a tool I use regularly), to generate the waterfall chart can be found here “link to Tableau Waterfall Chart.”

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Process Model With Downloadable Examples

January 29, 2011

Process Model Definitions Part 3 of a 3 part series

  1. Part 1 Defines a Business Process Model
  2. Part 2 Provide Process Definitions
  3. Part 3 Walk through of a Complete Process with Down Loadable Examples

As mentioned in the previous posts, this is the final series in process model definitions; this post will tie the three part series together and provide examples you can download.

A completed process should contain:

  • A goal “milestone(s)”
  • Process flow, some type of ordered steps
  • Inputs
  • Outputs
  • Roles/owners “see previous post on RACI”, Responsible, Accountable, Consult, Inform.”
  • Metrics
  • Referenced documents or tools

In addition you should develop the process so it is easy to understand for any user and contain institutional knowledge specific to your company. The nomenclature you use in your process is important also. These examples represent a small sampling of the nomenclature available to model processes; try and use a set that is tailored to your company needs or one that may be specified by your company.

These process samples are examples only; there would be many additional steps with more detail and flow than what is presented here (this is just set up to show how a process flow may look.)

The first document is the process flow itself. The image below shows an example of cycle counting equipment. You can download this Visio sample here “Process Visio Example.”

Process Example

The second document to consider is the process matrix. The matrix contains information at the task level and defines:

  • Task Step
  • Task Description
  • Timing
  • SOP
  • Input
  • Output
  • Software “if used”
  • Misc. Notes

Again, this document was generated in Visio and the file can be downloaded here “Process Visio Matrix Example.”

Process Matrix Example

As mentioned in a previous post, the RACI diagram is useful in identifying roles within your process. An example of the RACI diagram can be downloaded here “RACI Excel Example.”

Building off this process example, an SOP can also be developed. An example of a write-up can be downloaded here “Write-Up Word Example.”

And finally, when you roll out a new process it must be agreed upon by the major process shareholders. This document should briefly describe the process, present a way to measure the effectiveness of the process through metrics, and present some type of sign-off document. An example of a sign-off document can be downloaded here “Sign-Off Document Power Point Example.”

If you have additional thoughts on this subject or would like to share your examples please let me know.

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Process Model Definitions

April 14, 2009

Process Model Definitions Part 2 of a 3 part series

  1. Part 1 Defines a Business Process Model
  2. Part 2 Provide Process Definitions
  3. Part 3 Walk through of a Complete Process with Down Loadable Examples

A process model ties together processes in a similar class. Models can be defined at many levels:

  • Corporate (Core Processes)
  • Business Teams (Sub Processes)
  • Natural Work Teams (Activities)
  • Individuals (Tasks)

Each process can have many or few steps depending on the nature.  In general though each levels is typically made up of 3 to 12 definable work groupings.  A generic corporate process to help you on the way is shown below.

Corporate Process

Corporate Process

The processes can be further defined with:

  1. Overall Objectives
  2. High Level Inputs
  3. High Level Outputs
  4. Technology Enabler
  5. Process Owner
  6. Timing
  7. Process Metrics (if you can’t measure it look at it a different way)
  8. Additional items may also include RACI ownerships and GAPS.  See my previous posts on RACI

A Corporate Process may then look like this:

Corporate Process Define

Corporate Process Define

What is inherently missing from this view thought is 7.0 supporting the value chain.  A typical sub-process definition with a value chain input is shown below:

Sub Process

Sub Process

Value Chain Process

Value Chain Process

Visit back here next week and I will lead you through a complete process definition through the task level with down loadable examples.


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What Is A Process Model?

April 10, 2009

Part 1 of a 3 part series

  1. Part 1 Defines a Business Process Model
  2. Part 2 Provide Process Definitions
  3. Part 3 Walk through of a Complete Process with Down Loadable Examples

An enterprise, or business-level, process model is a tool that clearly identifies the processes that the entity engages in during the value creation process. It helps communicate to individuals what their role is with respect to the overall organization. It clearly defines, at an individual level, the tasks to be accomplished.

But what is a business process?

An enterprise, or business-level, process model is a tool that clearly identifies the processes that the entity engages in during the value creation process. It helps communicate to individuals what their role is with respect to the overall organization. It clearly defines, at an individual level, the tasks to be accomplished. Thomas Davenport Process Innovation. 1993

A process, then, is a specific ordering of work activities across time and place, with a beginning, an end and clearly identified inputs and outputs. These processes almost always cut across the functional boundaries that exist within a company.

Process Model Entities

  1. Core Process
  2. Sub Process
  3. Activities
  4. Tasks
Process Model Entities

Process Model Entities

The next step in defining a process model is to then define the Model Hierarchy.  The hierarchy is different from company to company.

Business process can be specified in terms of level of detail.  Each level is typically made-up of 3 to 12 definable work groupings.  As defined earlier with the process levels, a generic process model hierarchy along with process levels is shown below.

Process Model Hierarchy

Process Model Hierarchy

Visit back here next week to discover straight forward process definitions followed up with business process examples.

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Show Me the Money, How to Find it

March 29, 2009

Show me the money, but where do you look?

If you are looking for areas to reduce cost, then analyze your data and find your own gold.  In order to keep focus, follow these simple dimensioning techniques and then dive into the details.

Dimension By

  • Relevance
  • Size of Benefit
  • Potential Penetration
  • Ease of Capture
  • Sustainability

When you add a dimension to your analysis either through a data warehouse, or through simple thought experiments you can quickly pinpoint the quick hits to that of the slow brew money makers.

When you look at the relevance you are exploring weather the opportunity ties to a key value driver, and when you look at the size of benefit you need to tie in the estimated saving potential time frame.  Likewise, will the potential penetration get you more than 50% of the value.  Remember, your resources are scarce so pay particular attention to the ease of capture dimension.  Lastly, will the cost saving initiative be sustainable or will it only be a quick hit that will quickly dissipate over time.

A visual analysis of this technique is shown below.  Hopefully some of this information will lead you through a  thought provoking analysis that will help you find your money quicker through a cost saving portfolio of projects.

Additional filters to apply to the analysis will be:

  • Your current organizational skills
  • Your current knowledge
  • Your prior initiatives and how closely they dovetail with your short list of opportunities

Enjoy and remember, Show me the money!

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