Webinar: Tools and Concepts for Operational Excellence · – Operational Excellence (OpEx) is an element of organizational leadership that stresses the application of a variety of

Webinar: Tools and Concepts for Operational Excellence

Tools and Concepts for Operational Excellence Achievement!

Presented by:Eric Roe, Ph.D.Executive DirectorCenter for Lifelong Engineering Education, UT [email protected]

Forrest BreyfogleCEOSmarter Solutions, Inc. [email protected]

http://lifelong.engr.utexas.edu/ | www.SmarterSolutions.com Copyright 2016. All rights reserved. 3

Building Lean Management Systems for Healthcare – June 13-15

Lean for Healthcare – June 13-15

Beyond Lean Six Sigma and the Balanced Scorecard – June 22

Lean Six Sigma Master Black Belt – July 18-22 & August 15-19

Lean Six Sigma Green Belt – July 25-29 & August 22-26

Lean Six Sigma Black Belt – September 19-23 & October 17-21

Operational Excellence – Upcoming Courses


Select the issues that you have seen occurring in organizational Operational Excellence (OpEx) and/or Lean Six Sigma deployments (multiple selections are acceptable):• A consistent detailed OpEx and/or LSS roadmap is not followed.• Improvement projects are not linked to scorecard improvement

needs.• Improvement LSS projects take a long time to complete, if ever.• I have not seen the above issues occur in OpEx or LSS

deployments.• Not familiar with OpEx and/or LSS and their deployments.

Polling Question 1


• Wikipedia states: – Operational Excellence (OpEx) is an element of organizational leadership that

stresses the application of a variety of principles, systems, and tools toward the sustainable improvement of key performance metrics.

• Take-aways from this OpEx definition:– If one is to improve key performance metrics, organizational scorecard

measurements need to be reported from a process point of view.– Lean Six Sigma (LSS) improvement projects need to be identified that benefit

the enterprise’s key performance metrics; e.g., an organizational scorecard improvement need pulls for the creation of a LSS improvement project.

– Lean Six Sigma needs to have a consistent roadmap so that the right tool is used at the right time to improve identified key performance metrics.

– Organizations need a system for sustaining LSS process enhancements after the completion of projects.

How to Effectively Implement an Operational Excellence System

These OpEx needs will be addressed in this session.


At the conclusion of this session, attendees should be able to• Describe origination of Six Sigma and Lean process improvement

methodologies.• Describe execution of an enhanced Operational Excellence System

roadmap for Lean Sigma process improvement project execution.• Describe an Operational Excellence System/Culture that identifies

improvement efforts so that the big picture benefits and process enhancements are maintained after projects are completed.

Learning Objectives

Is there a better way?


At the conclusion of this session, attendees should be able to• Describe Six Sigma and Lean process improvement




Learning Objectives


Lean Six Sigma

• Motorola initiated Six Sigma in the 80’s to improve product quality.

• GE deployed Six Sigma in the mid 90’s so that improvement projects had financial benefits.

• Around the turn of the century the inclusion of Lean with Six Sigma gave focus to not only reducing defects but also the reduction of waste, when executing improvement projects.


Lean Six Sigma Roles

Champion

Black Belt

Black Belt

Black Belt

Green Belt

Green Belt

Green Belt

Team Member

Team member

Team Member

TeamMember

TeamMember

1 Champion/3 BBs

1 FT BB/3-5 GBs

Execs=100%

BB=1% total employees

GB=3-5%

Team Members =as needed for teams

100% of all employees receive general awareness training

Executive Training & Mentoring

All employee awareness training


How did you obtain your Lean Six Sigma training? (More than one response may be appropriate)• New to Lean Six Sigma and have not taken any training• 4 week Black Belt or 2 week Green Belt classroom course• Black Belt or Green Belt course taking less than 4 or 2 weeks

respectively• On-line Lean Six Sigma Black Belt or Green Belt training

Polling Question 2


How did you obtain your Lean Six Sigma certification? (More than one response may be appropriate)• New to Lean Six Sigma and have not taken any training• Certification by taking an ASQ/IASSC test with a refresher course• Certification by taking an ASQ/IASSC test without refresher course• Training required a project for certification• Certification was part of a Lean Six Sigma corporate initiative

Polling Question 3


At the conclusion of this session, attendees should be able to• Describe Six Sigma and Lean process improvement methodologies.• Describe execution of an enhanced Operational Excellence System



Learning Objectives



The Lean Six Sigma project execution roadmap is DMAIC, which has the basic steps:

– Define– Measure– Analyze– Improve– Control

Lean Six Sigma Project Roadmap



An Integrated Enterprise Excellence (IEE) Lean Six Sigma project execution roadmap structurally integrates Lean in the Measure and Improve phases:

Lean Six Sigma Project Roadmap

D M A I C

Plan Projectand Metrics

Wisdomof the

OrganizationMSABaseline

ProjectLean

Assessment

ControlAnalyzeDefine Measure Improve

D M A I C


Wisdomof the


ProjectLean

Assessment



Books to Execute DMAIC Roadmap

D M A I C


Wisdomof the


ProjectLean

Assessment


D M A I C


Wisdomof the


ProjectLean

Assessment


IEE Volume III and Lean Six Sigma Project Execution Guide books describe the details of executing this roadmap


D M A I C


Wisdomof the


ProjectLean

Assessment


D M A I C


Wisdomof the


ProjectLean

Assessment


IEE DMAIC Illustration: Define Phase

To determine business issue and define the scope of the project

• Key deliverables– Problem Statement– Team Charter– SIPOC– Initial estimate of Financial

Benefits

Define

• Tools– Problem Statement– Project Charter– SIPOC– Cost of Poor Quality (COPQ)

or Cost of Doing Nothing Differently (CODND)


Example problem statement:– On-time deliveries of product ABC ordered from our

website are averaging 70%, as measured from shipping reports, where on-time shipment is defined as arriving on the date requested by the customer.• This resulted in increased customer complaints and shipping

costs, along with lost sales.• Shipping penalties totaled $120,000 in the last six months;

lost sales have not yet been quantified but are thought to exceed $1 million.

IEE DMAIC Illustration: Define Phase

From IEE Volume III, Section 4.7


D M A I C


Wisdomof the


ProjectLean

Assessment


D M A I C


Wisdomof the


ProjectLean

Assessment


IEE DMAIC Illustration: Measure Phase

To generate a list of possible causes for the defined business problemMeasure

• Key deliverables– Project plan– Predictability statement– Capability statement– Assessment of

Measurement system– List of possible causes

• Tools– Control Charting– Capability Analysis– Measurement Analysis– Wisdom of the

Organization– Lean Assessment Tools


30,000-foot-level base-line chart


IEE Scorecard for Overall Wastage

Considered that one red out-of-control point that occurred was from common-cause variability.The current process is predictable.The estimated performance is 5.305 per Week.

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6.0

5.5

5.0

4.5

4.0

Week

Per

cen

tage

_X=5.305

UCL=6.460

LCL=4.149

1I-chart

Reporting Delivery of Services: WastageSince the out-of-control point was close to the UCL limit, this value was considered in this analysis to be a response from common-cause process variability.

The estimated wastage from this process, not only now but in the future, is 5.3%.


• Could the measurement system for yield impact the accuracy and precision of this metric?

• If so, a Measurement Systems Analysis (MSA) should be conducted.



Process Flow Chart


Start Oper. A Oper. B Inspect Pass?Yes

Rework

No

End

From IEE Volume III, Figure 16.1


• Lean value-stream map


Customer

5/day 10 Tech

Review5/day

120 min.1 35 10

80%Receive

RFQEnter in System

Modify Drawing

Generate RFQ

Supplier Select Vendor

quote generation

work time 10 min. 10 min. Known Producibility 60 min 10 min. 40 min. 80 min.Shifts 1 1 15% 1 1 +8hr time 3 -8hr time 1 1

Reject rate 0% 0% 0% 10% zone chg 5% zone chg 20% 0%Qty per RFQ 1 1 1 3 per item 3 suppliers Keep 1 1

1hr 2 hr 16 hr 2 hr 1 hr 56 hr 16 hr 24 hr 330 hr lead time

10m 10m 120m 60m 10m 40m 80 min 5.5hr work time

4.5% efficient

Production Control (prioritization)

Unkno

wn

Produc

ibility

85%


• A cause-and-effect diagram can be used in structured brainstorming when looking for improvement opportunities. – Areas often considered are materials, machine, method,

personnel, measurement, and environment




D M A I C


Wisdomof the


ProjectLean

Assessment


D M A I C


Wisdomof the


ProjectLean

Assessment


IEE DMAIC Illustration: Analyze Phase

• Key deliverables– Data relationships– Validated input and output

process variables– Prioritized input variables

as sources of variation in the output variable

• Tools– Data Collection Plans– Visualization

• Box Plots, Dot Plots, Marginal Plots, Pareto Charts

– Confidence Intervals, Hypothesis Testing

– Scatter Plots / Regression– Analysis of Variance (ANOVA)

To identify and analyze actual variation sources and potential variation sourcesAnalyze


Statistical hypothesis tests and data visualization of brainstormed items can give insight to what might be done differently to improve; e.g., an Analysis of Means (ANOM) plot

IEE DMAIC Illustration: Analyze Phase

7654321

72

70

68

66

64

62

60

Type

Mea

n

64.56

60.49

68.63



D M A I C


Wisdomof the


ProjectLean

Assessment


D M A I C


Wisdomof the


ProjectLean

Assessment


IEE DMAIC Illustration: Improve Phase

To improve process performance based on data analysis

• Key deliverables– Quantified relationships between

input and output variables– Definition of improved process

and baseline capability– Improve material and information

workflows– Implement changes– Demonstrated improvements

• Tools― Creativity Tools― Design of Experiments― Lean Improvement tools

― 5S (Sort, Straighten, Shine, Standardize, Sustain)

― Mistake proofing― Future state value stream

mapping― Improvement Selection Matrix― Demonstration of improvements

Improve


• Improvements are made to a process; e.g., error proofing and waste reduction.

• A Design of Experiment (DOE) could be used to assess how factors and their interaction can affect a response.

– Can you think of any factors that could be considered in a DOE for improving one of your processes?


Factor Designation A B C D E F G Output 1 + + + + + + + x1 2 + + - + - - - x2 3 + - + - - + - x3 4 + - - - + - + x4 5 - + + - + - - x5 6 - + - - - + + x6 7 - - + + - - + x7 8 - - - + + + - x8


• Improvements are identified when there is a shift in the 30,000-foot-level chart response.



The process is predictable.The estimated performance is 4.3 percent wastage.

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6

5

4

3

Week

Per

cen

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_X=4.343

UCL=5.489

LCL=3.198

Old Method New Method1

I-chart


IEE DMAIC Illustration: Control Phase

• Key deliverables– Documentation of Process

Changes– Control Plan

• Hand off to process owner– New process capability– Final Project Report – Communication of results– Leverage opportunities– Financial audit of results

To control variation sources and to hold the gains realized from the improvement actions takenControl

D M A I C


Wisdomof the


ProjectLean

Assessment


D M A I C


Wisdomof the


ProjectLean

Assessment


• Tools– Process Metrics– Process Mapping & SOPs– Mistake Proofing– 50-foot-level and 30,000-

foot-level Control Charts– Control Plan


• Process should be mistake-proofed as much as possible.• A control chart at the 50-foot level can be used to identify

when an undesirable occurrence occurred and action should be taken.

• What process parameters in your organization should be:– Made more error-proof?– Have improved controls?

IEE DMAIC Illustration: Control Phase


• DMAIC Check Sheets are available:– IEE Volume III, Tables

E1-E9– Lean Six Sigma

Project Improvement Guide

IEE DMAIC Check Sheets

Description Questions Yes/No NA

Tool/MethodologyProject selection Is the project aligned with a company goal and current needs?

Is this the best project to be working on at this time?COPQ/CODND Was a rough estimate of COPQ/CODND used to determine potential benefits?

Is there agreement on how hard/soft financial benefits will be determined?Problem Statement KPOV primary and secondary metrics are defined and quantifiable?

KPOV links to customer requirements and business goals?Impact is quantified based on process data?Data source and measurement method are indicated?No stated or predetermined solutions?Outlines scope of the project?

Project description Completed a gap analysis of what the customer/stakeholder of the process needs versus what the process is delivering?Completed a goal statement with measurable targets?Created an SIPOC which includes the primary customer and key requirements of the process?Completed a visual representation of what high-level value chain metric is to be improved by the project?Completed an EIP visual representation of how the project aligns with the organization's goals?

Project charter Are the roles and goals of the team clear to all members and upper management?

Has the team reviewed and accepted the charter?Is the project scoped sufficiently?

Communication planIs there a communication plan for communicating project status and results to appropriate levels of the organization?Has the project been recorded in an IEE database?

Team

Resources Does the team include cross-functional members/process experts?Are all team members motivated and committed to the project?Is the process owner supportive of the project?Is the champion supportive of the project?Has a kickoff team meeting been held?

Next PhaseApproval to proceed Did the team adequately complete the above steps?

What is the detailed plan for the Measure Phase?Are barriers to success identified and planned for?

Define Phase Check Sheet


At the conclusion of this session, attendees should be able to• Describe Six Sigma and Lean process improvement methodologies.• Describe execution of an enhanced Operational Excellence System

roadmap for Lean Sigma process improvement project execution.• Describe an Operational Excellence System/Culture that

identifies improvement efforts so that the big picture benefits and process enhancements are maintained after projects are completed.

Learning Objectives



Process Tracking and Performance Metrics: Issues and Resolution

TYPICAL METRICS• Fiscal year• Unrelated to improvement system• Point to point comparisons


Xs Xs Xs


However …



EFFECTIVE METRICS• View the enterprise as a system of processes • Acknowledge the effect of variability• Support long-lasting systematic process

improvement


• Integrated Enterprise Excellence (IEE) where improvement projects are step 7 in a 9-step business management system.

Improvement Project Selection

1. Describe vision and mission.

2. Describe value chain, including satellite-level and 30,000-foot-level metrics.

3. Analyze enterprise.

4. Establish SMART

satellite-level metric goals.

5. Create strategies.

6. Identify high potential improvement

areas and establish related SMART 30,000-foot-level metric goals.

7. Identify and execute projects.

8. Assess project's completion impact

on enterprise goals.

9. Maintain the gain.


Hospital IEE Value Chain Illustration

Step 2 IEE Value Chain

A clickable Enterprise Performance Reporting System (EPRS) approach can integrate “real-time” predictive performance metrics with processes; i.e., Y=f(X).

Delivery of clinical

services

Sales and marketing

Voice of the customer

Invoice and collect

Report financials

Housekeeping Food service Patient transportationIT

Enterprise Process

Management (EPM)


Hospital IEE Value ChainDelivery of

clinical services

Sales and marketing

Voice of the customer

Invoice and collect

Report financials

Housekeeping Food service Patient transportationIT

Enterprise Process

Management (EPM)

Generic flowchart or value-stream map

Functional metrics relative to quality, cost, and time

Metrics:Delivery of

Clinical Services

Process: Delivery of

Clinical Services

Length of Stay Repeat admissionMortalityAverage daily

censusFixed costs TOC variable costs

Weekly errors per 1000 patients

Step 1 ?

Step B1

No

Step A2 Step A3Start

Step B2

YesEnd

Top Level Value ChainY

x

Y=f(x)


Hospital IEE Value ChainMetrics:

Delivery of Clinical

Services


Clinical Services




Step 1 ?

Step B1

No


Step B2

YesEnd

Top Level Value Chain

Step A2

Step A2.1 Step A2.2 Step A2.3 Step A2.4


Start End

PDF document, spreadsheet, etc. link

Website Link

IEE Value Chain can be a repository for information, which describes what the organization

does and how it performs.


Hospital IEE Value Chain

Reporting Delivery of Services: LOS

Comment: There are no comments.

The process is predictable between subgroups and within subgroups. The estimated median of 262.8 with 80% of the occurrences between 149.6 to 375.9

Metrics:Delivery of

Clinical Services


Clinical Services




Step 1 ?

Step B1

No


Step B2

YesEnd



Enterprise Process Improvement

1. Describe vision and mission.

2. Describe value chain, including satellite-level and 30,000-foot-level metrics.

3. Analyze enterprise.

4. Establish SMART

satellite-level metric goals.

5. Create strategies.

6. Identify high potential improvement

areas and establish related SMART 30,000-foot-level metric goals.

7. Identify and execute projects.

8. Assess project's completion impact

on enterprise goals.

9. Maintain the gain.

Enterprise Improvement

Plan

Business Goal Strategies High Potential Areas Projects

Return reported

monthly profit margin median to 11.9% in 14

months.

Return market share to a

monthly mean of 56% in 14

months.

Improve customer view

of services satisfaction.

Return level of customer dis-satisfaction to no higher than a proportion of

0.10 in 14 months

Return level of house keeping

quality to a monthly mean

of 8.1 in 14 months.

Increase monthly revenue

Marketing

Housekeeping

Patient transportation

Reduce diagnosis to

bed time compliance rate of 30

minutes from 93% to 50% in

14 months.

Reduce costsDelivery of

clinical services

Reduce wastage by 10% in 10 months.

Step 4 Step 5 Step 6 Step 7

Improvement projects

aligned to enterprise

performance metric

improvement needs


Frequency of non-conformance

Customerneeds


Customerneeds

Measurement Improvement Need Pulls for Project Creation

30,000 Foot-Level Metric

Key Process Output Variable

Bottom-line benefit is the translation of these differences into money

Continuous Response

The roadmap

Measurement pulls for the creation of a project

_X=2.33

UCL=5.66

1 2

LCL=-0.99

_X=2.33

UCL=5.66

1 2

LCL=-0.99

D M A I C


Wisdomof the


ProjectLean

Assessment


D M A I C


Wisdomof the


ProjectLean

Assessment




Measurement Improvement Need Pulls for Project Creation

30,000 Foot-Level Metric

Bottom-line benefit is the translation of these differences

into money

Key Process Output Variable

Attribute Response

The roadmap

Measurement pulls for the creation of a project

_X=2.33

UCL=5.66

1 2

LCL=-0.99

D M A I C


Wisdomof the


ProjectLean

Assessment


D M A I C


Wisdomof the


ProjectLean

Assessment



• An improvement was demonstrated from the “new method” as a stage in the individuals chart

Process Improvement



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_X=4.343

UCL=5.489

LCL=3.198


I-chart

Business Goal Strategies High Potential Areas Projects

Return reported

monthly profit margin median to 11.9% in 14

months.

Return market share to a

monthly mean of 56% in 14

months.

Improve customer view

of services satisfaction.

Return level of customer dis-satisfaction to no higher than a proportion of

0.10 in 14 months

Return level of house keeping

quality to a monthly mean

of 8.1 in 14 months.

Increase monthly revenue

Marketing

Housekeeping

Patient transportation

Reduce diagnosis to

bed time compliance rate of 30

minutes from 93% to 50% in

14 months.

Reduce costsDelivery of

clinical services

Reduce wastage by 10% in 10 months.

Step 4 Step 5 Step 6 Step 7

10% improvement objective was achieved (i.e., 5.3% to 4.3%)

Use 30,000-foot-level Predictive Performance Reporting for the Right

Behaviors!


• The initial cost to an organization for a 5.3% wastage level is the cost of doing nothing differently (CODND) in the process.

• The improvement project’s financial benefit is the monetary gain achieved through the reduction of waste from 5.3% to 4.3%.

Process ImprovementIEE Scorecard for Overall Wastage


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_X=4.343

UCL=5.489

LCL=3.198


I-chart

Note:• A traditional Lean Six Sigma deployment approach tends to have a “push for

project creation”; i.e., practitioners and others hunting for improvement projects, which can have questionable financial benefit.

• An IEE strategic project approach has metric improvement needs pulling for improvement efforts that benefit the big picture.



• Wikipedia states: – Operational Excellence (OpEx) is an element of organizational leadership that

stresses the application of a variety of principles, systems, and tools toward the sustainable improvement of key performance metrics.

• Take-aways from this OpEx definition:– If one is to improve key performance metrics, organizational scorecard

measurements need to be reported from a process point of view.– Lean Six Sigma (LSS) improvement projects need to be identified that benefit

the enterprise’s key performance metrics; e.g., an organizational scorecard improvement need pulls for the creation of a LSS improvement project.

– Lean Six Sigma needs to have a consistent roadmap so that the right tool is used at the right time to improve identified key performance metrics.

– Organizations need a system for sustaining LSS process enhancements after the completion of projects.

Revisiting: How to Effectively Implement an Operational Excellence System

These OpEx needs were addressed in this session.


At the conclusion of this session, attendees should be able to• Describe origination of Six Sigma and Lean process improvement




Readdressing Learning Objectives



• Executive (1 day)• Champion (3 days)• Master Black Belt ( 2 weeks over 2 months)• Black Belt (4 weeks over 4 months)• Green Belt (2 weeks over 2 months)• Yellow Belt (3 days)• White Belt (3-4 hours)

IEE Lean Six Sigma Deployment Roles and Training

UTCLEE/ Smarter Solutions offers most of the above training as a public session, on-site workshop, or on-line option


Building Lean Management Systems for Healthcare – June 13-15

Lean for Healthcare – June 13-15

Beyond Lean Six Sigma and the Balanced Scorecard – June 22

Lean Six Sigma Master Black Belt – July 18-22 & August 15-19

Lean Six Sigma Green Belt – July 25-29 & August 22-26

Lean Six Sigma Black Belt – September 19-23 & October 17-21

Operational Excellence – Upcoming Courses


As a Webinar Attendee, You Can:• View an IEE DMAIC roadmap (enhanced for your success!) • Receive a free PDF of the IEE DMAIC roadmap

(can be printed as a wall chart!) Available through public training sessions!

• Get references to Lean Six Sigma body of knowledge books (and a special discount code!) www.SmarterSolutions.com/store Discount code: (fb2016)

• Access a free Minitab software add-in(help baseline and quantify process improvement efforts!) Email to request the link: [email protected]

What’s in it for me? (WIFM)


Share Your Thoughts!

Forrest Breyfogle512.918.0280www.SmarterSolutions.com

[email protected]@forrestbreyfogllinkedin.com/company/smarter-

solutions-inc./

CLEE512-232-5154www.utclee.org

[email protected]@UTCLEElinkedin.com/company/center-for-lifelong-engineering-education-at-the-university-of-texas-at-austin

Submit questions through the GoToWebinar chat function!

Documents

Webinar: Tools and Concepts for Operational Excellence · – Operational Excellence (OpEx) is an element of organizational leadership that stresses the application of a variety of