Lean Transformation in Office, Service, and Knowledge Work Enviroments

Company

LOGO

Lean Transformation in Office,

Service, and Knowledge Work

Environments

July 13, 2010

© 2010 Karen Martin & Associates

Your Instructor

Early career as a scientist; migrated to

quality & operations design in the mid-80’s.

Launched Karen Martin & Associates in

1993; applied Total Quality Management.

Introduced to Lean in 2000.

Specialize in Lean transformations in non-

manufacturing environments.

Co-author of The Kaizen Event Planner;

co-developer of Metrics-Based Process

Mapping: An Excel-Based Solution.

Instructor in University of California, San

Diego’s Lean Enterprise program.

2

Karen Martin,

Principal

Karen Martin &

Associates


Learning Objectives

Participants will learn:

Organizational benefits of Lean and timeframes for

achieving them.

Lean as an overall business management philosophy

vs. “Lean Lite” for process improvement.

Core Lean principles and tools.

How Lean shifts culture.

Key success factors in the transformation process.

3


What Lean Is….

A proven business management approach that

results in fiscal strength, customer and

employee loyalty, and organizational agility.

4

© 2010 Karen Martin & Associates 5

Typical Benefits Realized

5

Lead Time Reduction

0% 25% 50% 75% 100%

Productivity Increase

WIP Reduction

Quality Improvement

Space Utilization

WIP = Work in process


Lean Financial Benefits

5 Year Net Income - Toyota vs. GM Toyota: + $48.7 billion

GM: – $ 81.3 billion

DJO – medical brace manufacturer Increased inventory turns from 7 to 22 in 4 years

$7 million cash conversion

Grew market share from 20% to 40% in 3 years

Tripled revenues with doubled costs in 4-year period

Bank of America – $2 billion in benefits* directly tied to Lean Six Sigma efforts over 3 years. * Includes cost avoidance


Lean Financial Benefits (continued)

Park Nicollet Healthcare – Saved $7.5 million in expenses, which they reinvested in patient care.

Global investment management firm – $3M labor expense reduction over 18 month period Attritted workforce/freed capacity

Medical Device Manufacturer Pre-lean – 3.00 per share

Purchased – $78 per share (12 yrs later)


The Lean Enterprise

Based on the Toyota Production

System

Spawned by weaving process

Modeled after U.S. grocery stores

Popularized by Jim Womack in Lean

Thinking (1996)

Key tenets

Minimum effort and expense necessary

to achieve maximum results.

Reduce waste to create flow.

Primary metric - time

8


Performance Measures

9

Quality

Cost

Delivery Safety

Morale Optimal

Performance


The Toyota Way – Key Principles

Think long term

Have respect for people

Standardize work

Error-proof work

Make problems visible

Fix problems immediately

Develop exceptional people

Gain consensus

Go and see (gemba)

Continuously improve (kaizen)

50% effort working in the business; 50% on the business

Reflect relentlessly (hansei)

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Problem-Solving Steps

1. Identify the problem

2. Explore the problem What’s the true root cause?

3. Consider potential solutions Hypothesize

4. Test solutions Confirm hypothesis

5. Implement solution(s)

6. Measure results Did the hypothesis prove out?

7. Adjust as needed

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Plan

Do

Check

Act

{ 50-80%

of the

total

time


Most People…

Underestimate the power of Lean.

Underestimate what it takes to “become”

Lean.

12


Transforming Takes Time

Lean is a

long-term

business

strategy.

13

Journey to a Lean Enterprise

14

Heavy support from

seasoned improvement

professionals

Light support from

seasoned improvement

professionals

Support needed only for

audits, bandwidth gaps,

continued learning

Years 1 & 2 Small percentage of staff

engaged – project-based

Years 3 & 4 Greater staff engagement –

reduced need for formal

Kaizen Events

Years 5 & Beyond Company-wide engagement –

everywhere, all the time

“Settling In” Stage

• Demonstrating learned

competencies

• Process owners manage

performance

• Becoming more proactive

“Life is Good” Stage

• Daily kaizen is the norm

• “Action now” dominates

• Most processes are

stabilized with minimal waste

and output variation

“Disruption” Stage

• Sensei-dominated

• Much mentoring & learning

• Heavy use of Kaizen Events

• Many issues to be resolved


Competencies That Must Be

Developed

Lean Leadership

Problem-solving

Setting clear strategies

Developing and entrusting the frontlines with tactics

Modeling Lean behaviors

Improvement Professionals

Problem-solving

Technical skills – Lean tools

Change management / psychology

Workforce

Problem-solving

15


Where to Begin?

Systematic Approach

Define product families

Select one for improvement

Create Value Stream Maps

Begin implementing improvement

The “Fire” Approach

Select a problem to be solved

Tied to business goals

Use A3 Problem-Solving to solve it

16

Building a Lean Enterprise

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Customer-Defined Value

Value-Adding (VA) - any operation or activity your external customers value and are (or would be) willing to pay for.

Non-Value-Adding (NVA) - any operation or activity that consumes time and/or resources but does not add value to the product (good or service) the customer receives.

Necessary – support processes, regulatory requirements, etc.

Unnecessary – everything else - WASTE

Unnecessary Non-valueadding

Necessary Non-value-adding

Value-adding

Work Effort as Defined by the

External Customer


Eight Wastes (Muda)

Overproduction

Inventory

Waiting

Over-Processing

Errors

Motion (people)

Transportation (material/data)

Underutilized

people

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Value Stream Defined

Value Stream: All of the activities, required to fulfill a customer request from order to delivery (and beyond to cash received).

Customer

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Value Stream

Process Process Process

Customer

Request

Customer

Receipt


Why Value Stream Mapping?

To set strategy before diving into tactics.

Enables us to SEE the process.

Promotes systems thinking / seeing the whole

Helps us avoid sub-optimizing

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VSM Goal: System Efficiency

23

Traditional Improvement

Creates Point Efficiency

(Sub-optimization)

Value Stream

Management Creates

System Efficiency

Current State Value Stream Map

Outpatient Imaging Services

Demand = 15 CTs per day

Customer Demand:

15 patients per Day

(Takt Time 1920 seconds)

8 hours per day

Referring

Physician

% C&A = 65 %

Check-in

Patient

(Admitting)

Cycle Time = 2 mins.

% C&A = 90 %

5

Send

Reports

(Imaging)


% C&A = 90 %

6

Hospital

5 mins.

Schedule

Appointment


Lead Time = 12 mins.

% C&A = 98 %

6

Pre-register

Patient



% C&A = 100 %

5

CT=Cycle Time

LT=Lead Time

%C&A=% Complete & Accurate

0.0833 hrs.

2 mins.

0.0833 hrs.

1 mins.

0.75 hrs.

10 mins.

0.5 hrs.

15 mins.

0.0833 hrs.

3 mins.

4.13 hrs.

15 mins.

6.08 hrs.

5 mins.

16 hrs.

1 mins.

1.83 hrs.

1 mins.

2 hrs.

3 mins.

LT = 32.5 hrs.

CT = 56 mins.

CT/LT Ratio = 2.87%

Lead Time = 12 mins.Lead Time = 990 mins.

Prep

Patient

(Tech)


% C&A = 100 %

2

Check-in

Patient

(Imaging)


% C&A = 98 %

3

Complete

Exam

(Tech)


% C&A = 90 %

2

Transmit

Images

(Tech)


% C&A = 100 %

2

Read/Dictate

Exam

(Radiologist)


% C&A = 95 %

2

Transcribe

Report

(MDI)


% C&A = 75 %

6

Review

Draft/Sign

(Radiologist)


% C&A = 95 %

2

Print

Reports

(Imaging)


% C&A = 99 %

230 mins. 5 mins. 248 mins. 365 mins. 960 mins. 110 mins. 120 mins.45 mins.

E Pay

Excel

ADS

Symposium

Internet

Waiting Room

Management

System

Fax Order

Solutions

PACS

5 mins.

Lead Time = 24 days

Meditech

123

4

5 6 7 8 9 10 11 12 13 14

Auto Fax 50%

Us Mail 25%

MD Mailbox 25%

Rework Loop via Fax 25% of the time

Rolled First Pass

yield = 29%


Key Metrics: Time

Process time (PT)

The time it takes to actually perform the work, if one is

able to work on it uninterrupted

Includes task-specific doing, talking, and thinking

aka “touch time,” work time, cycle time

Lead time (LT)

The elapsed time from the time work is made available

until it’s completed and passed on to the next person or

department in the chain

aka throughput time, turnaround time, elapsed time

Includes Process Time, not merely waiting time.

25


Lead Time vs. Process Time

26

Lead Time

Work

Received

Work passed

to next step

Process Time

LT = PT + Waiting / Delays

Activity Ratio = (LT ÷ PT) x 100


Key Metrics: Quality

%Complete and Accurate (%C&A)

The percentage of input that’s deemed “usable as is”

by the person doing the work

% of incoming work where the downstream customer

can perform task without having to “CAC”:

Correct information or material that was supplied

Add information that should have been supplied

Clarify information that should have or could have been

clearer

Measured by the immediate downstream customer

and all subsequent downstream customers.

Similar to first pass yield in manufacturing.

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Summary Metrics: Quality

Rolled First Pass Yield (RFPY)

The percent of value stream output that passes

through the process “clean,” with no “hiccups,”

no rework required.

RFPY = %C&A x %C&A x %C&A…

Common finding = 0-15%

Multiply ALL %C&A’s, even if parallel processes

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Outpatient Imaging

Projected Results

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Metric

Current

State

Projected

Future State

%

Improvement

Lead Time 32.5 hrs

Process Time 56 mins

Percent Activity 2.9%

Rolled First Pass Yield 29%

Labor requirements 1.9 FTEs

# Handoffs 14

Tech Turnover 100% (6 mos)

Future State Value Stream Map

Outpatient Imaging Services Demand = 15 CTs per day

Referring

Physician

% C&A = 85 %

Send

Reports

(Imaging)


% C&A = 90 %

6

Hospital

Schedule appt

Pre-register



% C&A = 98 %

6

CT=Cycle Time

LT=Lead Time

%C&A=% Complete & Accurate

0.0833 hrs.

1 mins.

0.583 hrs.

10 mins.

0.333 hrs.

10 mins.

0.0833 hrs.

2 mins.

2 hrs.

15 mins.

7 hrs.

1 mins.

0.0333 hrs.

1 mins.

0.5 hrs.

3 mins.

LT = 11.3 hrs.

CT = 43 mins.

CT/LT Ratio = 6.32%

Lead Time = 45 mins.Lead Time = 15 days

Prep

Patient

(Tech)


% C&A = 100 %

2

Check-in

Patient

(Imaging)


% C&A = 98 %

3

Complete

Exam

(Tech)


% C&A = 90 %

2

Transmit

Images

(Tech)


% C&A = 100 %

2

Read/Dictate

Exam

(Radiologist)


% C&A = 95 %

2

Review

Draft/Sign

(Radiologist)


% C&A = 95 %

2

Print

Reports

(Imaging)


% C&A = 99 %

220 mins. 5 mins. 120 mins. 420 mins. 2 mins. 30 mins.35 mins.

E Pay

Excel

Symposium

Internet

Waiting Room

Management

System

Fax Order

Solutions

PACS

5 mins.

Set-upReduction

Remove Check in

and ReduceSystem Access

Work Balancing

StandardWork

Pull System(Supplies Kanban)

VisualWorkplace

Voice Recognition

Batch Reductions

5S

Co-locate

StandardWork

Work Balance

ContinuousFlow

Value StreamAlignment

Auto Fax 80%

Us Mail 15%

MD Mailbox 5%

Rolled First Pass

yield = 40%

Rework Loop via Fax 10% of the time

Customer Demand:

15 patients per Day

(Takt Time 1920 seconds)

8 hours per day

12

3

45 6 7 8 9 10 11

Risk Reduction

(Joint Commision)

Meditech


Outpatient Imaging

Projected Results

31

Metric

Current

State

Projected

Future State

%

Improvement

Lead Time 32.5 hrs 11.3 hrs 65%

Process Time 56 mins 43 mins 23%

Percent Activity 2.9% 6.3% 117%

Rolled First Pass Yield 29% 40% 38%

* Labor requirements 1.9 FTEs 1.6 FTEs 16%

# Handoffs 14 11 21%

Tech Turnover (6 mos) 100% 25% 75%

* Created the capacity to generate $500,000 in additional annual revenue with no

increase in labor or equipment expense.

Value Stream

1 2 3 4 5 6 7 8 9 10 11 12

2 Improve quality of referral KE Sean O'Ryan

3, 4Reduce lead time beween schedulingand

preregistration stepsPROJ

Dianne

Prichard

5, 6Eliminate the need for two patient check-

insKE

Michael

O'Shea

6 Eliminate bottleneck in waiting area KEDianne

Prichard

9Eliminate lead time associated with

transcription stepPROJ Sam Parks

10 Eliminate batched reading KE Sam Parks

7Reduce inventory costs, regulatory risk

and storage needsKE

Michael

O'Shea

12 Reduce delay in report delivery PROJ Martha Allen

12 Reduce delay in report delivery KE Martha Allen

Implement voice recognition technology

Reduce setup required

Cross-train and colocate work teams

Implement additional fax ports

Collect copays in Imaging

Balance work / level demand

5S CT supplies area; implement kanban

Value Stream Mapping Facilitator

Increase percentage of physicians

receiving electronic delivery (rather than

hard copy)

Approvals

Executive Sponsor Value Stream Champion

Signature:

Date: Date: Date:

Signature: Signature:

Block

#Goal / Objective Improvement Activity

Implement standard work for referral

process

Type OwnerImplementation Schedule (weeks) Date

Complete

Date Created

11/21/2007

Allen Ward

Sally McKinsey

Dave Parks 12/13/2007

10/18/2007 1/10/2008

Future State Implementation Plan

Executive Sponsor

Value Stream Champion

Value Stream Mapping Facilitator

Implementation Plan Review Dates

11/1/2007

Outpatient Imaging



Kaizen Defined

KAIZEN

Kai Zen

Break apart

To change

Study

Make better

Kaizen = Continuous Improvement

Kaizen Event = Rapid Improvement


Who? Accountability Tool

Leadership “What has to happen” Value Stream

Mapping

Workforce “How it will happen” Kaizen Events,

Just-do-its,

and Projects

Improvement Roles S

tra

teg

ic

Tac

tic

al

Middle

Management


Kaizen Event – Definition

A two- to five-day focused improvement

activity during which a sequestered,

cross-functional team designs and fully

implements improvements to a defined

process or work area, generating rapid

results and learned behavior.

Karen Martin & Mike Osterling

The Kaizen Event Planner, 2007


When do you need a Kaizen Event?

Rapid change is desired.

Hands-on learning is desired.

You want to “bake” the improvement

process into the organizational DNA

You want to shift culture by engaging the

frontlines in problem solving.

Leadership stays out of tactical details.


5-Day Kaizen: Sample Structure

Day 1 & 2

(Plan)

Day 3 & 4

(Do, Check)

Day 5

(Check, Act)

Kick-off (executive presence)

Analyze current state

Perform root cause analysis

Design future state

Interim briefing

Design & test improvements

Obtain buy-in

Interim briefing

Finalize improvements

Train process workers & stakeholders

Present results

CELEBRATE!


Process

Stabilization

Tools


Flow Enabling

Tools


Kaizen Event Results

Reduced medication delivery interruptions by 75%.

Secured an exclusive 2-year contract with key

customer.

Freed 1.4 FTEs in streamlined discharge process.

Reduced scrap by $6,876 per year.

Produced twice as much “road mix” at half the

cost.

Reduced lead time for purchasing process from 10

to 2.5 days.

41

A3 Problem-Solving

42

Lean Transformation vs. “Lean Lite”

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Lean Transformation “Lean Lite”

Full leadership engagement &

development 1 or 2 leaders leading the way

Improvement heavily strategic;

closely tied to business goals “Random acts of kaizen”

Full adoption of the Lean philosophy Selective use of the tools

Dedicated internal resources Shared resources

Significant investment in skill

development Expected to “figure it out”

Heavy use of external support for

first 1-2 years Internal resources only

Holistic approach to improvement Silo’d thinking & behaving

Frontlines heavily engaged in the

improvement process

Improvement resources or

leadership drive improvement


The Transformation Process:

Key Success Factors

Strong sense of urgency / burning platform

Leadership alignment around strategy

Improvement priorities are closely tied to organizational strategy

and annual business goals.

Value-stream driven improvements.

To avoid change fatigue, improve one value stream at a time.

Heavy use of Kaizen Events in first 1-3 yrs.

4 Events per 100 employees per year

Dedicated improvement resources.

1 FTE: 100 employees

Entire workforce receives exposure to Lean and becomes

skilled in problem-solving.

Concurrent leadership development.


Lean Benefits - Financial

Reduced expenses

Reduced requirements for equipment and supplies

Reduced space requirements

Reduced head count for existing work

Improved cash flow

Faster billing and collections

Increased revenue

Recaptured lost revenue

New revenue sources

Greater market share – customers want the highest

quality products, delivered the fastest, at lowest cost.

45


Lean Benefits - People

Improved productivity

Reduced sick time, workers’ comp,

etc.

Better safety

Less stress / frustration

Reduced interpersonal and

interdepartmental tension

Greater engagement / higher

satisfaction

Improved ability to attract and

retain talent

Greater innovation

46


Lean Benefits – Risk Mitigation

Improved compliance

(regulatory / accreditation)

Reduced litigation

Reduced risk of unionization

or strikes

Improved safety – customers,

employees, and community

47


Lean Benefits – Happier Customers

48


Learning Objectives

Participants will learn:

Organizational benefits of Lean and timeframes for

achieving them.

Lean as an overall business management philosophy

vs. “Lean Lite” for process improvement.

Core Lean principles and tools.

How Lean shifts culture.

Key success factors in the transformation process.

49

Upcoming Webinars

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Topic Date

Kanban Pull Systems Tuesday, July 20

Work Standardization & Metrics-

Based Process Mapping

Tuesday, August 10

Error-Proofing Thursday, August 12

Kaizen Events – Part I Tuesday, August 31

Kaizen Events – Part II Thursday, September 2

A3 Problem-Solving – Part I Tuesday, September 28

A3 Problem-Solving – Part II Thursday, September 30

Register at www.ksmartin.com/webinars

http://www.ksmartin.com/webinars


Karen Martin, Principal

7770 Regents Road #635

San Diego, CA 92122

858.677.6799

[email protected]

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Lean Transformation in Office, Service, and Knowledge Work Enviroments