Post on 19-Feb-2019
17th AnnualSociety for Health Systems
Management Engineering ForumFebruary 12-13, 2005
Dallas, Texas
All materials contained herein are the sole property of Value Innovation Partners, Ltd. and unauthorizeduse is strictly prohibited without the expressed written consent of Value Innovation Partners, Ltd.
LeanSigma in the OfficeValue Innovation Partners, Ltd.Patrick Lucansky41966 N US Hwy. 45Antioch, IL 60002001-847-395-7076plucansky@vipgroup.uswww.vipgroup.us
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The Agenda• What is LeanSigma
• Lean• Six Sigma• Lean Sigma
• Designing LeanSigma for the Office• Strategy• Methodology• Deployment
• Case Studies• Issues• Methods• Results
• Questions and Answers
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Evolution of Lean and Six Sigma
Mid 1800’s: Interchangeable partsLate 1800’s: Pork disassembly lines – Chicago1913: Moving assembly line at FordPre-WW2: Toyoda invents “Jidoka” on loomsPost-WW2: Toyota Develops a Production System For High-Variety, Low Volume.1980’s: MIT Study of Toyota1996: James Womack Documents General Applications of TPS and For Any Organization and Calls It “Lean Thinking”.
TQC
Employee Involvement
Waste Elimination
Supplier Development
Business Process Reengineering
Cost Management (ABC)
TQM
Lean Enter-prise
World Class Mfg
BPMBPM
JITJIT
Lean
Sigma
Six Sigma
LeanLean
6 σ6 σ
TQC
Employee Involvement
Waste Elimination
Supplier Development
Business Process Reengineering
Cost Management (ABC)
TQM
Lean Enter-prise
Lean Enter-prise
World Class Mfg
World Class Mfg
BPMBPM
JITJIT
Lean
Sigma
Lean
Sigma
Six Sigma
LeanLean
6 σ6 σ
1970’s 1990’s1980’s 2000’s
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What is Lean EnterpriseA Group of individuals, functions, and sometimes legally separate but operationally synchronized organizations. The value stream defines the Lean Enterprise. The objectives of the Lean Enterprise are to:
• correctly identify and specify “value to the ultimate customer / consumer” in all its products and services
• analyze and focus the value stream so that it does everything form product development and production to sales and service in a way that activities that do not create value are removed and actions that do create value proceed in a continuous flow as pulled by the customer.
Lean is focused on reducing waste through increasing speed, reducing process inventory and decreasing process cycle timesLean is focused on reducing waste through increasing speed,
reducing process inventory and decreasing process cycle times
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Six Sigma - The Short Story• Pioneered by Motorola in 1980s
• Discovered that products with high first-pass yield (the amount of product that made it through defect-free) seldom failed in use
• Won Baldrige Award in 1988• Some key players in Six Sigma history
• Mikel Harry - one of the original Motorola architectswho later founded Six Sigma Academy
• Jack Welch, CEO General Electric• Larry Bossidy, CEO Allied Signal
• Philosophy: Promote excellence in all business processes -- improve productivity, profits, and customer satisfaction
• Methodology: A 5-phase process for continuous improving quality by reducing inherent variability
• Statistic: Numerically describes amount of variation in a process • Benchmark: Normalized measure to compare performance of many
processes and process types • Goal: 6 Sigma performance -- a process which produces less than 3.4
defects per million opportunities (DPMO).• A tool reduce or eliminate variation
What is Six Sigma (6σ)?
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What is Six Sigma…the TheoryA 3σ process because 3 standard deviations fit
between target and specTarget Customer
Specification
1σ
2σ
3σ
3σ
6.6% Defects
Before
Reduced VariationReduced VariationTarget Customer
Specification
After2σ
6σ
6σNo Defects!1σ
3σ4σ
5σ
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What is Lean Sigma
Lean = Balanced Flows Through WasteElimination
6s =ReducedVariation
Process Process Step 1 Step 1
Process Process Step 2 Step 2
Process Process Step 3 Step 3
Process Process Step 4 Step 4
6s =ReducedVariation
Process Process Step 1 Step 1
Process Process Step 2 Step 2
Process Process Step 3 Step 3
Process Process Step 4 Step 4
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Lean Sigma “DMAIC” ApproachLean Sigma& Process
Improvement
Tim
e
Step 1 Step 2 Step 3 Step 4
Cap
abili
ty
Capability / Variability / $COPQBalance / Time / $Inventory
D efineVoice Of the CustomerValue Stream MappingProduct Family MatrixMuda Matrix
Cycle Time Measurement5S, Quick Hits, OTD, LTSequence Of EventsSpaghetti Diagram
Quality BasicsMinitab, Basic Graphical AnalysisZ Calc, Capability metricsMeasurement Systems Analysis
Takt Time DeterminationMixed Model Line Balance Cause& Effect, FMEA
Statistical Hypothesis Testing
Heijunka, Kanban, PullOMS, Visual Management Flexing, Daily Rate Planning
Design Of Experiments, TolerancePoka- YokeSPC, Control Plan
M easure
A nalyze
I mproveC ontrol
Select projects within the process
Understand current state and potential factorsConfirm Vital Few factorsOptimize,ImplementSustain
Lean/ Supply Chain Six Sigma
Improving Capabilities…Enhances Process Balance
Customer Focused Quality
Improving Balance…Enhances Process Capabilities
Typical Process
Reduced VariationBalanced Steps
Tim
e
Step 1 Step 2 Step 3 Step 4
Improved Process
Phases Deliverables
Vendor Managed Inventory
9
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What is difference between the two methods?
Lean Six Sigma• Attacks waste through
smoothing flow and reducing cycle time and NVA”
• Anyone in the organization can participate
• Does not require a format to make change happen
• Investment in Lean is low to moderate
• Many resources and books available
• Leadership can come from anywhere within the organization
• Attacks variation through statistical tools
• Requires a higher level of education, thus may exclude some
• Uses the DMAIC methodology to make change happen
• Investment in Six Sigma is moderate to high
• Books are limited in scope and tend to be technical
• Leadership is through a rigid structure of green and black belts with Masters and a Sensei
Note: none of these differences are obstacles to success, just areas to be addressed prior to implementation to ensure a smooth flow.
Note: none of these differences are obstacles to success, just areas to be addressed prior to implementation to ensure a smooth flow.
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Lean Sigma Exceptions?Lean Sigma Does NOT apply to functions on the Exception List
Lean Sigma Applies Exception List -- Lean Sigma Does Not Apply in these Functions
SalesManufacturingEngineeringTechnical SupportFinanceAdministrationEmergency RoomsResearchHuman ResourcesFood Services, …
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Is it Lean, Six Sigma or Lean Sigma?QUESTIONS
• Which should we do first?• What are the prerequisites of each?• Can I do them concurrently?• Which will deliver the biggest bang for
the buck?
Six Sigma -- 6σ:Six Sigma, a vehicle for
strategic change…an organizational approach to performance excellence. Six Sigma creates transformational change throughout the organization, processes, culture and customers. Six Sigma creates transactional change by applying tools and methodologies targeted at reducing variation and drastically improving processes.
Six Sigma (6σ): 99.99966% accuracy – 3.4 defects per million
ToolsTools:Design for ManufacturabilityDesign for Six Sigma, 6ơ TolerancingProduct Scorecard
ToolsTools::Process characterization (mapping, MSA, etc…)Process optimization (DOE, etc…)
Tools:Tools:Seven basic tools (paretos, fishbones, etc…)
Tools:Tools:Common senseTribal knowledge
6σ
5σ
4σ
3σ
1-2σ
What tool(s) should we focus our efforts on?
Where is your organization? What kind of tools should you be using?
ToolsTools:Design for ManufacturabilityDesign for Six Sigma, 6ơ TolerancingProduct Scorecard
ToolsTools::Process characterization (mapping, MSA, etc…)Process optimization (DOE, etc…)
Tools:Tools:Seven basic tools (paretos, fishbones, etc…)
Tools:Tools:Common senseTribal knowledge
6σ
5σ
4σ
3σ
1-2σ
6σ
5σ
4σ
3σ
1-2σ
What tool(s) should we focus our efforts on?
Where is your organization? What kind of tools should you be using?
6 Sigmatactics
Leantactics
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Potential Benefits
Lean Sigma Potential ResultsLean Sigma Potential Results
• Productivity +20% per year• Lead Time Reduced to a Few Days (75%)• Manufacturing Space Cut in Half• Reduce Overhead and Quality Cost 20% /yr• Inventory Turns +25% Per Year• Little or No Capital Investment• Cycle times at 3 to 4 times “one piece touch time”
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Where are Businesses Today?Most business processes are around 3σ
• 99% results in:• 20,000 lost articles of
mail per hour• 5,000 incorrect
surgical operations per week
• 200,000 wrong prescription drugs each year
• Even at 99.9% quality (= 4.6 sigma)
• 20,000 wrong drug prescriptions per year
• Two short or long landings at O’Hare airport each day
• 99% results in:• 20,000 lost articles of
mail per hour• 5,000 incorrect
surgical operations per week
• 200,000 wrong prescription drugs each year
• Even at 99.9% quality (= 4.6 sigma)
• 20,000 wrong drug prescriptions per year
• Two short or long landings at O’Hare airport each day
Process Sigma
DPMO
0
1
10
100
1000
10000
100000
1000000
0 1 2 3 4 5 6 7
IRS answ
ers 21
% of call
s
Ontime f
light a
rriva
ls (al
l carr
iers)
Mishan
dled bag
gage (
all ca
rriers
)
Overnight d
elive
ry of 1
st Clas
s Mail
Correct
legal
advic
e from IR
S
Wire tra
nsfers
Restau
rant bills
Payroll p
rocess
ing
Domestic
airlin
e fata
lity ra
te
(0.43
ppm)
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Healthcare Facts• The IOM report noted at least 99,000 deaths
are caused by errors each year. In reality the figure is probably higher.
• 2002 estimated cost of care $1.76 trillion.• Shortage in the available, trained staff.• Regulations and compliance is becoming
more stringent. • Administrative costs account for as much as
40% of the Total cost of Healthcare.• $483 Billion was spent by the Federal
Government in 2004 on Medicare and Medicaid.
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The Agenda• What is LeanSigma
• Lean• Six Sigma• Lean Sigma
• Designing LeanSigma for the Office• Strategy• Methodology• Deployment
• Case Studies• Issues• Methods• Results
• Questions and Answers
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Principles of a LeanSigma Office• Positive, clear communications.• Ensure “no-blame” culture.• Work through cross functional teams.• Staff involvement at every stage.• Process maps on display for comments.• Remove non-value added steps, hand-off`s, rework loops.• Agree design principles with All. • Fix the root cause not the symptom.• Ensure solution supports departmental interfaces.• Incorporate Continuous Improvement
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LeanSigma is Achieved Through:
Simplifying……………………...Processes
Integrating…………....…Across Organizations
Automating………. Utilizing IT functionality and connectivity
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WASTE or “MUDA”. . . Any resource-consuming activity
that delivers NO value to the customer
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Lean Sigma Means…Identifying and Eliminating the 7 Wastes
PEOPLE
TYPESOF
WASTE
Processing
Motion
Waiting
Defects
Making TooMuch
MovingThings
Inventory
QUALITY
QUANTITY
TAIICHI OHNO, ARCHITECT OF THE TOYOTA PRODUCTION SYSTEM
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Waste In The OfficeTHE PROCESS
Handle
COUNT
File
SORT
Track
Retrieve
Record
HIDE . . . . . . FIND
INSPECT
Excess Paperwork
Multiple forms
DamageMovement
INPUT OUTPUT
. . . NONE OF THESE ADD VALUE !. . . NONE OF THESE ADD VALUE !
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The analysis and redesign requires a clear understanding of:
Value Added, Non Value Added, and Sustaining ActivitiesThe value related attribute of an activitycan only be assessed in the context of the process, never in isolation–Considering other activities upstream and downstream
Value Added activities are those absolutelynecessary to deliver the customer’s requirements–These are colored green on the flowcharts–They are later re-designed into the new process
Non Value Added activities are those that are not necessary to deliver the customer’s requirements and can be eliminated in the re-design–These are colored red on the flowcharts
Sustaining activities are those that are not necessary to deliver the customer’s requirements but are either: –absolutely necessary to sustain the business or:–cannot be eliminated due to known severe constraints (often external)
–These are colored blue on the flowcharts–They are later re-designed into the new process
Sustaining activities are targeted for gradual elimination during the Continuous Improvement process
NVAVA SNVA
VA NVA
Sustaining Activities
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How to Determine VA / NVA / SNVA?
Necessaryto Produce
Output?
Adds Valueto Customer?
Non-ValueAddedSustainingCustomer
Value Added
YesYes
No
NoYes
ActivityActivity
No
Review & ApprovalReworkFilingCopyingReconciliation
Agree SpecificationsManufacturing
VA SNVA NVA
Contributesto Business
Effectiveness?
PayrollTestingDevelopment ActivityBack-up Data BaseChangeoversRegulatory
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Value Added Assessment of a RN’s TimeNon Value Added Time
• Rework• Correcting• Clarifying• Searching• Waiting
• Enforcing Rules• Duplication of Effort
Administrative Time• Compliance & Quality requirements
Patient Value Added Time• Providing Care• Listening• Assisting
33%
43%
24%
• Queuing
The opportunity is to eliminate the NVA, reduce the effect of the SNVA, optimize the VA time providing patients with more quality time for care. Healthcare facilities further
benefit from the increase in patient safety, patients/nursing, and cost reduction.
The opportunity is to eliminate the NVA, reduce the effect of the SNVA, optimize the VA time providing patients with more quality time for care. Healthcare facilities further
benefit from the increase in patient safety, patients/nursing, and cost reduction.
Adapted from John W. Kenagy, 2002
• VA) = Value Added Activities• (NVA) = Non-Value Added Activities• (SNVA) Sustaining Non-Value Added Activities
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TRADITIONAL APPROACHFocus on Value AddedResources through . . .
• Time Study• Work Study• Outsourcing• Utilization• Automation
Approaches to Process Excellence
11%
72%17%
Most organizations struggle with complex dysfunctional systems, which have a top-down focus and often demonstrate a perceived value for profits over the patient care. Most organizations struggle with complex dysfunctional systems, which have a top-
down focus and often demonstrate a perceived value for profits over the patient care.
Source VIPGroup database, 2004
Process Excellence ApproachFocus on the 89%Non-Value AddedResources Through . . .
• Total Quality Control
• Total Waste Elimination
• Enforced Problem Solving
• Information Technology as an enabler
• Process Focus (Value Stream)Challenge is to Reduce the Need
for Imposed Quality Requirements
• Total Staff Involvement• Staff Reductions
Accept Imposed Quality Requirements
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Lead Time Analysis ... Office Processes
TYPICALLY . . . 75% PLUS OF LEAD TIMES ARE NON-VALUE ADDED
NON-VALUE ADD
- Corrections
- Filing
- Retrieving
- Recording
- Reconciliation
- Sorting
- Copying
- Etc
- Counting
- Tracking
VALUE ADD- Purpose25%
75%
$BIN
- Stocking/restocking
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Non-Value Added Activities in Healthcare
• Waiting• Patient traveling around • Terrible outcomes• Unnecessary procedures• Too many patients waiting• Empty beds• Hunting for supplies, staff• Process inefficiencies
• Queuing• Moving Materials around• Product defects• Over Production• Too much inventory• Excess Capacity• Too much motion• Process inefficiencies
A side by side comparison to Manufacturing
Healthcare Manufacturing
According to Taiichi Ohno (Architect of the TPS) there are 7 wastes which manifests in three formats, people, quality and quantity. Clearly, people are not wasteful, it is what we asked them to do that is non-value added. It is said there is an 8th waste … lost creativity
According to Taiichi Ohno (Architect of the TPS) there are 7 wastes which manifests in three formats, people, quality and quantity. Clearly, people are not wasteful, it is what we asked them to do that is non-value added. It is said there is an 8th waste … lost creativity
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Basically, we’ve taken a simple process . . .
InboundData
Customer
Management
Employees
RECEIVE PROCESSSEND to
Next ProcessStep
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. . . & Complicated it!
OperationsPurchasing Finance& Admin
Sales &Marketing
Design &Develop Quality Customer
Service
Inbounddata
CustomerDelivery
FUNCTIONAL MEASURES
• Efficiencies• Finance Related
• Utilization• Variances
DEPARTMENTAL BARRIERS
SYSTEMS BARRIERS• Bureaucracy• Delays
• Island of Autonomy• Aligned to Functions
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Important Concepts About Processes….Lean Sigma uses the VSM (Value Stream Map)format of process flowcharts.
A B C DxS1xS2 xA1 xB1
xB2
xC1 xD1xA2 xC2 xD2
CustomerSupplier Customer
SIPOC =SIPOC =S = SuppliersI = InputsP = ProcessesO = OutputsC = Customers
S = SuppliersI = InputsP = ProcessesO = OutputsC = Customers
X1 X2 + X3… Y
• What is your Y?• What are the possible x’s?• How does it flow?
• What is your Y?• What are the possible x’s?• How does it flow?
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VSM the Process “E2E”…Depicting the process as it is done today
C/T= 45 secC/O= 2 Hrs
3 Shifts150 Operators
3% RejectWIP= 45 DOS
C/T= 30 secC/O= 30 min
3 Shifts15 Operators
8% RejectWIP=10 DOS
ReceiveMaterial Inspect Manufacturing
Produce
ReturnTo
Vendor
TestAccept Accept Accept
Scrap4%
Scrap10%
Rework ReworkRetest
Yes
No
Retest= 8%
Rework= 25%
No
Pack& Ship
C/T= 10 min1 Shift
5 Operators95 orders/day
DOSFG= 55
DOSR= 77
No
Yes Yes
No
C/T= 45 min1 Shift
5 Inspectors95 receipts/day
15% Reject
Rework=13%
4 Days 8 Days 45 Days 5 Days 3 Days 1 Day
4 Days 12 Days 57Days 62 Days 65 Days 66 Days
CustomerPlanning & Scheduling
OrdersMaterial
RawInventory
FGInventory
8 Handoffs7 Steps Critical Path
17 Steps if all Loops Executed4 Rework/Retest Loops66 Days Critical Path
Value Add
Non-Value Add
Sustaining Non-Value Add
1
6
1
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x\x\
BUSYNESSQALITY IS OUR
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Everyone must have… …ownership of quality
End
Self
Source
Towards Lean ‘Inspection’
Successive
Type of ‘inspection’
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The Quality DilemmaYou are now inspectors of the office process of creating invoices. Count the number of basketball passes the team in the white shirts make. Each pass is a poor quality invoice.
VideoHow many
bad invoiceswere caught?
How many bad invoiceswere caught?
Did you see the Defect?
Did you see the Defect?
copyright (© 2003, Daniel J. Simons, President, VisCog Productions, Inc.)
© Copyright 2004 All rights reserved VIPGroup
The Agenda• What is LeanSigma
• Lean• Six Sigma• Lean Sigma
• Designing LeanSigma for the Office• Strategy• Methodology• Deployment
• Case Studies• Issues• Methods• Results
• Questions and Answers
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Strategy Deployment requires a disciplined approach and a robust management system
• Structured Management• Communications Program• Voice of the Customer (VOC)• Lean System for Managing• Deployment Strategy• Culture Change• Reward and Recognition• Metrics
Office waste is harder to recognize!
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The Agenda• What is LeanSigma
• Lean• Six Sigma• Lean Sigma
• Designing LeanSigma for the Office• Strategy• Methodology• Deployment
• Case Studies• Issues• Methods• Results
• Questions and Answers
© Copyright 2004 All rights reserved VIPGroup
Use a disciplined methodology to achieve consistency and sustainability
A clear, structured, step by step process
Define top level
processroad map
Detailedprocessmap(s)
Identify wastefulactivities
DefineLean
Sigma Principles
DesignNew
Process
Develop Implementapproach
Obtain Management
approvalImplement
Quantitative&
Qualitativeanalysis
Voice of theCustomer
• External/regulatory requirements
• Internal requirements - global
• Internal requirements - local
• Future requirements
EvaluateBenefits/
GapAnalysis
YouAreHere
Obtain Regulatory
Approval if required
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Communication Programs are a key ingredient to any change process• Distribute communication through a variety of
media and communications channels• Publications
• Newsletters, magazines• Memos, bulletins, handbooks, manuals
• Formal presentations• Meetings, conferences• Training
• Video, film, audio, computer• In-person informal socializing• Email• Voice Mail• One-on-one meetings• Town Hall meetings
Communicate !Communicate !
Communicate !Communicate !
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Voice of Customer is a necessary first stepin DMAIC along with Value Stream Mapping
Value Stream Map
Quality Function Deployment
• What do they need?
• When do they need it?
• How do you know if they received it?
• What will they want?
• What do they want it to do?
Control
Improve
Analyze
Measure
Define
© Copyright 2004 All rights reserved VIPGroup
The Agenda• What is LeanSigma
• Lean• Six Sigma• Lean Sigma
• Designing LeanSigma for the Office• Strategy• Methodology• Deployment
• Case Studies• Issues• Methods• Results
• Questions and Answers
© Copyright 2004 All rights reserved VIPGroup
Possible Approaches to Deployment
AutonomyBusiness independence
and self-deploymentPros: Local owners, some
zealots, low stressCons: No focus, minimal
bottom line impact. No common language or talent pool. Wasted efforts, re-inventing of the wheel. Incorrect applications.
MandateCorporate edict,
deployment focusPros: Quick to the bottom
line, full participationCons: No real ownership or
sustainability. Many “weak” projects and implementations. Used for a ”ticket punch” not for its power.
Process FocusValue stream process
map, data driven methodology selection
Pros: Customer focused, consistent across the business, can be applied anywhere, has bottom line impact, relies upon lean and proper six sigma
Con: A bit more bureaucratic for lean and upfront homework before projects
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Deployment Strategy must be easy to follow, consistent and repeatable
Structured approach to Lean performance . . minimizing the time to Realize Sustainable BenefitsRealize Sustainable Benefits
DRAMATIC SHORT TERM
GAINS
CONTINUOUS LONG TERM
GAINS
Mobilization Implementation
Stabilization
Continuous Improvement
Time
Performance
Benefit
1 2
34
Sustainable Benefits•Pick Pilot & Implement•Stabilize Process•Rollout to Other Areas•Measure Results•Adjust Process As Needed / Determined By Metrics
A structured process provides your team(s) with formal training along with responsibility and ownership, thereby ensuring program success and continuation.
A structured process provides your team(s) with formal training along with responsibility and ownership, thereby ensuring program success and continuation.
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Critical Success Factors
• Voice of Customer• Compliance• Measures• Senior Management Commitment • Middle Management• Skill Matrix• Culture Change
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LeanSigma Performance Measurements. . . Apply to all the Supply Chain & Business Processes
Lead Time
Effectiveness
PERFORMANCE MEASUREMENTS
Flexibility
Cost
CustomerService
OUTPUT
CustomerService
INPUT
Quality(No. of Defects)
(On-time Delivery)
100%
100%100%
NVAVA
Quality
0%
• What is the right thing to measure?• Set the Target Goals to strive for• Make measures visible.
• What is the right thing to measure?• Set the Target Goals to strive for• Make measures visible.
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Senior Management and Team Structure
• Senior Management efforts across the Company including:• Communication Strategy • Reward and Recognition systems• Goal Alignment• Project over-site management• Prioritization• Process Alignment• Collaborative environment• Scorecard/Dashboard• Roles & Responsibilities
Keep all informed through a “LeanSigma Project” Folder on a shared drive
• Give Strategic Direction• Agree Recommendations• Resolve Issues• Remove obstacles• Support & coach
Steering Team
QA/QC/Mfg Expertise
• Cross-functional ‘users’• Full Time Team• Make Recommendations
• Cross-functional ‘experts’• Milestone Delivery
• Give Tactical Direction• Agree Recommendations• Resolve Issues• Support & coach• Implement Recommendations
Pilot Project Team
Ad hocProject Groups
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Experts Role in Facilitating LeanSigma
ExpertsCo
mpa
ny
Cul
ture
Ow
ners
hip
Time
Training & FacilitationLean & Supply Chain ToolsLeanSigma ExpertiseProject Management
AuditingMonitoringGuidance
Driving ForceSustainability
Internal ExpertsImplementation Ownership
NeedDesire
TransferPoint
© Copyright 2004 All rights reserved VIPGroup
The Agenda• What is LeanSigma
• Lean• Six Sigma• Lean Sigma
• Designing LeanSigma for the Office• Strategy• Methodology• Deployment
• Case Studies• Issues• Methods• Results
• Questions and Answers
© Copyright 2004 All rights reserved VIPGroup
Lean Healthcare in Action $20 Million Emergency Room Management Group
Pareto Analysis of Injuries Treated
0%
20%
40%
60%
80%
100%
Percent
Inju
ry T
ype
Series1 28% 49% 68% 84% 91% 95% 98% 100%Knee Elbow Head Foot Back Pelvic Internal Face
Key Benefits•Labor and Over-time reduced 5%•Maintained compliance and quality•$250k annual operating expense reduction
Key Benefits•Labor and Over-time reduced 5%•Maintained compliance and quality•$250k annual operating expense reduction
The demand analysis allow the treatment centers to reset stocking levels of treatment carts in line with the demand. Local activities (skate boarding contests) accounted for the increase number of knee, elbow and head trauma treated. Drs and Nurses spent less time hunting for the right materials and implements.
80% of all injurieswere knee, elbow, head and foot
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Lean Healthcare through……“Value Stream Mapping”
$350 Million Hospital Group
• The issue : could only get 2 knee operations per day accomplished.• Perceived constraints: Drs blamed the nursing staff, Nursing staff blamed Administration and
Administration blamed the Drs. and Nurses. • Actual constraint found through VSM: Sterilizer could only process 2 cycles per day.
Current State Map Key Benefits•89% of process steps were NVA and removed reducing the process time by 65%.•New process freed up the sterilizer thereby allowing for an additional 2-4 surgeries per day to be done.•Current sterilizer was not capable of more than 3 cycles per day. However, a new unit would allow for up to 10 cycles/day. The Hospital purchased a new unit and was able to perform 4-8 more surgeries per day. The new unit was paid for within 3 months. •Cost per procedure was reduced 8%.
Key Benefits•89% of process steps were NVA and removed reducing the process time by 65%.•New process freed up the sterilizer thereby allowing for an additional 2-4 surgeries per day to be done.•Current sterilizer was not capable of more than 3 cycles per day. However, a new unit would allow for up to 10 cycles/day. The Hospital purchased a new unit and was able to perform 4-8 more surgeries per day. The new unit was paid for within 3 months. •Cost per procedure was reduced 8%. Sterilization Process
Document
Type ofPayment
Flow ofInformation
Flow of Money
PPO
Preferred Provider Organization
3rd PartyBilling
Service
Outside Care Provider
“A”
Outside Care Provider
“Z”
Hospital
Billing Process at
Hospital
Indicates Several Inside
Providers
Indicatesseveral outside
providers
PolicyOwner
PatientBillingInfo
RemittanceAdvice
EmployerOf
PolicyHolder
ExplanationOf
Benefits
PatientBillingInfo.
RemittanceAdvice
Insurance Carrier
“A”
InsuranceCarrier
“Z”
...
...
Patient Payment
Patient Payment
Claims Payment
Claims Payment
Care Provider
“A”
Care Provider
“Z”
...
Claims& Fee
Summary
Co-payDeductible
Balance DueOr Direct Bill
Co-payDeductible
Balance DueOr Direct Bill
Claims& FeePayment
Document
Type ofPayment
Flow ofInformation
Flow of Money
Document
Type ofPaymentType ofPayment
Flow ofInformation
Flow of Money
PPO
Preferred Provider Organization
3rd PartyBilling
Service
Outside Care Provider
“A”
Outside Care Provider
“Z”
Hospital
Billing Process at
Hospital
Indicates Several Inside
Providers
Indicatesseveral outside
providers
PolicyOwner
PatientBillingInfo
RemittanceAdvice
EmployerOf
PolicyHolder
ExplanationOf
Benefits
PatientBillingInfo.
RemittanceAdvice
Insurance Carrier
“A”
InsuranceCarrier
“Z”
...
...
Patient Payment
Patient Payment
Claims Payment
Claims Payment
Care Provider
“A”
Care Provider
“Z”
...
Claims& Fee
Summary
Co-payDeductible
Balance DueOr Direct Bill
Co-payDeductible
Balance DueOr Direct Bill
PPO
Preferred Provider Organization
3rd PartyBilling
Service
Outside Care Provider
“A”
Outside Care Provider
“Z”
Hospital
Billing Process at
Hospital
Indicates Several Inside
Providers
Indicatesseveral outside
providers
PolicyOwner
PatientBillingInfo
RemittanceAdvice
EmployerOf
PolicyHolder
ExplanationOf
Benefits
PatientBillingInfo.
RemittanceAdvice
Insurance Carrier
“A”
InsuranceCarrier
“Z”
...
Insurance Carrier
“A”
InsuranceCarrier
“Z”
...
...
Patient PaymentPatient Payment
Patient PaymentPatient Payment
Claims PaymentClaims Payment
Claims Payment
Claims Payment
Care Provider
“A”
Care Provider
“Z”
...
Claims& Fee
Summary
Co-payDeductible
Balance DueOr Direct Bill
Co-payDeductible
Balance DueOr Direct Bill
Claims& FeePayment
© Copyright 2004 All rights reserved VIPGroup
Lean Procurement Utilizing LeanSigma$1.2 B Medical Device Operation(a division of J & J)
Supplier performance improved to better than 98% while reducing their inventory hold by 50%
91
31SNVA
60NVA
11SNVA
Defect: Process and tolerance variabilityDMAIC Project:50
27SNVA
17NVA
Lean out the Supply Network, reduce Supplier parts variability and install a pull replenishment model$34M
$31M6 VA 6 VA
5 SNVA 21
2 10
ReworkLoops
RMSSteps
PFGSSteps
Handoffs Raw MaterialInventory
Procurement lead-time was reduced from 4-5 weeks down to 1 day
© Copyright 2004 All rights reserved VIPGroup
Lean Procurement Model for Success
MfgPlants Distribution
Supplier• focus on small batch
and short LT• plan using Kanban
board
• High flexibility to match demand
Supplier Planner• replenishes
to stock
Buyer Planner• co-located • manages customer (Mfr)
demand• sequence plan to simple
capacity model
• plans custom orders• RBS, KB, MRP
MTO
FG Stores
FinishedGoods
Visible measures
PKB
Planned Raw Stock Store
RawSupplier 2
MKB
Customer
RawSupplier 1
MKB
PKB
PKB
MKB
PKB
MKB
Item A
Item C
KANBAN CONTROL BOARDKANBAN CONTROL BOARD
URGENT
Item D
Item B
LESS URGENT
Green Yellow Red
$$$
$$$
Scheduling Wheels
Rate BasedScheduled
1000 5000 10000
Item aItem bItem c
SPCDOE DFMA DMAICSIPOC
LeanSigma Principles
BUILD A STRONG, SUSTAINABLE STRUCTURE
© Copyright 2004 All rights reserved VIPGroup
LeanSigma Distribution ExampleJapan Distribution Center for a $40B Medical Device Company
Defect: Process and compliance variabilityDMAIC Project: Lean out the Distribution Center
InOut
Unpacking (Outer carton)
LibraryMJ
Storage Obsolete Demo. Hold
Domesticprocured
MJStorage
VJOperationStorage
NTStoragePacking material
MJ Storage
MJ StoragePacking
Packing material
VJ
Hart Valve operationINC
Office
OfficeRepair
Experiment
CheckReceiving Material & labelstorage
Telemetry check
Hard product
Labeling Assembly Appearance checkQA check
Receiving registration
Decision for release
MJ NT・VJ
Shipping
Import product receiveReturn product receive
Return operationDecision for release Rework
1F
2F
3F
4F
6F
MJStoragePacking material
MJ Stock MJ Stock
MJ Stock MJ Stock
VJ
Hart Valve operationINC
Customer Service
OfficeRepair
Experiment
Receiving Unpacking FG
MJ
Shipping
Import product receiveReturn product receive
Return operationDecision for release Rework
1F
2F
3F
4F
6F
Pick Label Pack and ShipStaging
MJStorage
Office Space for Kawasaki
MJStoragePacking material
MJ Stock MJ Stock
MJ Stock MJ Stock
VJ
Hart Valve operationINC
Customer Service
OfficeRepair
Experiment
Receiving Unpacking FG
MJ
Shipping
Import product receiveReturn product receive
Return operationDecision for release Rework
1F
2F
3F
4F
6F
Pick Label Pack and ShipStaging
MJStorage
Office Space for Kawasaki
After (4Q ‘ 04)
2 days lead time, 3 floors, 18 FTEs$1M savings, + office space
Before
13 days lead time, 5 floors38 FTEs
© Copyright 2004 All rights reserved VIPGroup
ClientLogo
Client Location
Example 2- Pharmacovigilance… As-is Map
Process Steps
QC Steps
Reg Steps
S&DS Steps
Total Steps
Error Loops, F/U's & Cosuspect
Total Steps
Report Type
Process structure
US-CT 47 11 29 0 87 17 104 15 day IND ParallelNon US-CT 35 11 22 0 68 9 77 15 day IND ParallelNon US-Spont 32 13 21 19 85 45 130 15 day NDA ParallelUS-Spont 79 12 21 19 131 35 166 Spont Sequentia
477
© Copyright 2004 All rights reserved VIPGroup
Example 2a – Pharmacovigilance…As-is Flow Diagram
• 4560 cases times .5 miles/case = 2780 miles traveled/year.
• The distances result in increases in:
• lead times• batching• process
delays
MD MD
MD
MDAdmin Temp
Admin
Admin
MD
MDTemp
Temp
Regulatory
Data Mgt
Corp
FilesFDA
2nd Floor
1st Floor
Garden Level
The current layout leads to a case travelling about 1/2 mile from case receipt to submissionThe current layout leads to a case travelling about 1/2 mile from case receipt to submission
© Copyright 2004 All rights reserved VIPGroup
Example 2b – Pharmacovigilance…Redesigned Process Map
Actual redesigned process
Process Steps
QC Steps
Reg Steps
S&DS Steps
Total Steps
Error Loops, F/U's & Cosuspect
Total Steps NVA VA SNVA
All 17 0 0 0 17 0 17 0 8 9
Client
© Copyright 2004 All rights reserved VIPGroup
Serious Case Path Sequence1. Receive case by fax and sent
to hub-bin2. Initial Triage of case and
place in appropriate hub-bin3. Assessment and data entry4. Submission and printing of
required documents5. File Pending awaiting further
action6. File Archive awaiting further
action7. Offsite storage
DSS
DSC
Archive FilesArchive Files
Hub-Bin
Faxes FU’s
1
3
4
6
5
Off-sitestorage7
Distance traveled reduced by 96%
Approx. 100 ft/case2
Example 2c – Pharmacovigilance… Redesigned Flow Diagram
© Copyright 2004 All rights reserved VIPGroup
Lean Office in Action $4.8 B Pharmaceutical/Biotech/Chemical Operation
• Case travel distance was reduced by 96% from 1/2 mile to 100ft.
• All NVA steps were removed (400+)
• Global compliance improved from 30% to better than 97% pa
• Case processing time was reduced from 21 days to 11
• Internally generated documents were reduced from 32 to 1
• Improved productivity by 105% with existing staff
• Reduced process steps from 477 to 17
Source:Client Process Mapsincludes rework loops
Number of process steps and hand-offs
NVA78%
VA3%
SNVA19%
104
15
0
20
40
60
80
100
120
140
160
180
Old Process
10
25
RedesignedProcess
SNVA55%
VA45%
Before
76%After
Steps
Handoffs
© Copyright 2004 All rights reserved VIPGroup
… support processes constrain production with many rework loops, long leadtimes, excessive waste and handoffs.
Equipment Commissioning VANumber of Steps
Equipment Validation VANumber of Steps 0
3NVA12
SNVA0
14NVA
6SNVA
SNVA
33.6%NVA
66.4%
AS-IS Process Analysis
Equipment Validation As-Is process of a $6B PharmaActual touch time for the work is approx. 30 days
Total Lead-time for Equipment Validation is approx. 116 days
55
22410226
20
3550
0
20
40
60
80
100
120
140
Writ
e IQ
/OQ
Peer
Rev
iew
Valid
atio
nAp
prov
al L
oop
Exec
ute
IQ
Dev
iatio
nLo
op
QA
Appr
oval
Loop
Fix
Erro
r(s)
Loop
Exec
ute
OQ
Dev
iatio
nLo
op
QA
Appr
oval
Loop
Fix
Erro
r(s)
Loop
Writ
e Fi
nal
Rep
ort
Peer
Rev
iew
Aver
age
Lead
-tim
e (d
ays)
© Copyright 2004 All rights reserved VIPGroup
22510
2210
0102030405060708090
100110120130140
Writ
e C
PP
QA
Appr
oval
Loop
Fix
Erro
r(s)
Loop
Exec
ute
CPP
Writ
e Fi
nal
Rep
ort
QA
Appr
oval
Loop
Fix
Erro
r(s)
Loop
Aver
age
Lead
-tim
e (d
ays Interim Process Analysis
Integrated Process VANumber of Steps 5Blue Sky Process SNVA VANumber of Steps 0
NVA SNVA4
NVA0 3
0
Minimize the number of steps to be performed to reduce levels of waste, handoffs, leadtime and cost
Equipment Validation process of a $6B Pharmaceutical Lead-time redesigned to approx. 33 days
Critical Steps
NVA to meet conformance
Current lead-time 116 days
Lead-time with Process Redesign 33 days
SNVA
87.9%
NVA
12.1%
© Copyright 2004 All rights reserved VIPGroup
The Agenda• What is LeanSigma
• Lean• Six Sigma• Lean Sigma
• Designing LeanSigma for the Office• Strategy• Methodology• Deployment
• Case Studies• Issues• Methods• Results
• Questions and Answers
© Copyright 2004 All rights reserved VIPGroup
QUESTIONS?
© Copyright 2004 All rights reserved VIPGroup