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Lean Transformation in Office, Service, and Knowledge Work Enviroments
1. Lean Transformation in Office,
Service, and Knowledge Work
Environments
July 13, 2010
Company
LOGO
2. Your Instructor
īļ Early career as a scientist; migrated to
quality & operations design in the mid-80âs.
īļ Launched Karen Martin & Associates in
1993; applied Total Quality Management.
īļ Introduced to Lean in 2000.
īļ Specialize in Lean transformations in nonmanufacturing environments.
īļ Co-author of The Kaizen Event Planner;
co-developer of Metrics-Based Process
Mapping: An Excel-Based Solution.
īļ Instructor in University of California, San
Diegoâs Lean Enterprise program.
Š 2010 Karen Martin & Associates
Karen Martin,
Principal
Karen Martin &
Associates
2
3. Learning Objectives
īļParticipants will learn:
ī
ī
ī
ī
ī
Organizational benefits of Lean and timeframes for
achieving them.
Lean as an overall business management philosophy
vs. âLean Liteâ for process improvement.
Core Lean principles and tools.
How Lean shifts culture.
Key success factors in the transformation process.
Š 2010 Karen Martin & Associates
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4. What Lean IsâĻ.
A proven business management approach that
results in fiscal strength, customer and
employee loyalty, and organizational agility.
Š 2010 Karen Martin & Associates
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6. Lean Financial Benefits
īļ5 Year Net Income - Toyota vs. GM
ī
ī
Toyota: + $48.7 billion
GM:
â $ 81.3 billion
īļDJO â medical brace manufacturer
ī
Increased inventory turns from 7 to 22 in 4 years
ī§ $7 million cash conversion
ī
ī
Grew market share from 20% to 40% in 3 years
Tripled revenues with doubled costs in 4-year period
īļBank of America â $2 billion in benefits* directly
tied to Lean Six Sigma efforts over 3 years.
ī
* Includes cost avoidance
Š 2010 Karen Martin & Associates
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7. Lean Financial Benefits (continued)
īļPark Nicollet Healthcare â Saved $7.5
million in expenses, which they reinvested in
patient care.
īļGlobal investment management firm â $3M
labor expense reduction over 18 month period
ī
Attritted workforce/freed capacity
īļMedical Device Manufacturer
ī
ī
Pre-lean â 3.00 per share
Purchased â $78 per share (12 yrs later)
Š 2010 Karen Martin & Associates
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8. The Lean Enterprise
īļBased on the Toyota Production
System
ī
ī
Spawned by weaving process
Modeled after U.S. grocery stores
īļPopularized by Jim Womack in Lean
Thinking (1996)
īļKey tenets
ī
ī
ī
Minimum effort and expense necessary
to achieve maximum results.
Reduce waste to create flow.
Primary metric - time
Š 2010 Karen Martin & Associates
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10. The Toyota Way â Key Principles
īļ Think long term
īļ Have respect for people
īļ Standardize work
īļ Error-proof work
īļ Make problems visible
īļ Fix problems immediately
īļ Develop exceptional people
īļ Gain consensus
īļ Go and see (gemba)
īļ Continuously improve (kaizen)
ī
50% effort working in the business; 50% on the business
īļ Reflect relentlessly (hansei)
Š 2010 Karen Martin & Associates
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11. Problem-Solving Steps
{
Plan
50-80%
of the
total
time
Do
Check
Act
Š 2010 Karen Martin & Associates
1. Identify the problem
2. Explore the problem
ī
Whatâs the true root cause?
3. Consider potential solutions
ī
Hypothesize
4. Test solutions
ī
Confirm hypothesis
5. Implement solution(s)
6. Measure results
ī
Did the hypothesis prove out?
7. Adjust as needed
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12. Most PeopleâĻ
īļUnderestimate the power of Lean.
īļUnderestimate what it takes to âbecomeâ
Lean.
Š 2010 Karen Martin & Associates
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14. Journey to a Lean Enterprise
âLife is Goodâ Stage
Years 5 & Beyond
Company-wide engagement â
everywhere, all the time
Support needed only for
audits, bandwidth gaps,
continued learning
âĸ Daily kaizen is the norm
âĸ âAction nowâ dominates
âĸ Most processes are
stabilized with minimal waste
and output variation
âSettling Inâ Stage
Years 3 & 4
Greater staff engagement â
reduced need for formal
Kaizen Events
Light support from
seasoned improvement
professionals
âĸ Demonstrating learned
competencies
âĸ Process owners manage
performance
âĸ Becoming more proactive
âDisruptionâ Stage
Years 1 & 2
Small percentage of staff
engaged â project-based
Heavy support from
seasoned improvement
professionals
âĸ Sensei-dominated
âĸ Much mentoring & learning
âĸ Heavy use of Kaizen Events
âĸ Many issues to be resolved
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15. Competencies That Must Be
Developed
īļLean Leadership
ī
ī
ī
ī
Problem-solving
Setting clear strategies
Developing and entrusting the frontlines with tactics
Modeling Lean behaviors
īļImprovement Professionals
ī
ī
ī
Problem-solving
Technical skills â Lean tools
Change management / psychology
īļWorkforce
ī
Problem-solving
Š 2010 Karen Martin & Associates
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16. Where to Begin?
īļSystematic Approach
ī
ī
ī
ī
Define product families
Select one for improvement
Create Value Stream Maps
Begin implementing improvement
īļThe âFireâ Approach
ī
Select a problem to be solved
ī§ Tied to business goals
ī
Use A3 Problem-Solving to solve it
Š 2010 Karen Martin & Associates
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18. Customer-Defined Value
īļValue-Adding (VA) - any operation or
activity your external customers value
and are (or would be) willing to pay for.
īļNon-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.
ī
ī
Necessary â support processes, regulatory
requirements, etc.
Unnecessary â everything else - WASTE
18
19. Work Effort as Defined by the
External Customer
Unnecessary Non-value
adding
Necessary Non-valueadding
Value-adding
21. Value Stream Defined
Value Stream: All of the activities, required to
fulfill a customer request from order to delivery
(and beyond to cash received).
Value Stream
Process
Process
Process
Custom er
Customer
Request
Š 2010 Karen Martin & Associates
Customer
Receipt
21
22. Why Value Stream Mapping?
īļTo set strategy before diving into
tactics.
īļEnables us to SEE the process.
īļPromotes systems thinking /
seeing the whole
ī
Helps us avoid sub-optimizing
Š 2010 Karen Martin & Associates
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23. VSM Goal: System Efficiency
Value Stream
Management Creates
System Efficiency
Traditional Improvement
Creates Point Efficiency
(Sub-optimization)
Š 2010 Karen Martin & Associates
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24. Current State Value Stream Map
Outpatient Imaging Services
Pre-register
Patient
Customer Demand:
15 patients perDay
(Takt Time 1920seconds)
8 hours per day
Schedule
Appointment
Referring
Physician
Hospital
4
3
5
Lead Time = 24 days
2
6
Lead Time = 990 mins.
Cycle Time = 30 mins.
Lead Time = 990 mins.
% C&A = 100 %
Demand = 15 CTs per day
1
Lead Time = 12 mins.
Cycle Time = 11 mins.
Lead Time = 12 mins.
% C&A = 98 %
% C&A = 65 %
CT=Cycle Time
LT=Lead Time
%C&A=% Complete & Accurate
Symposium
E Pay
Excel
ADS
Internet
Meditech
Fax Order
Solutions
Waiting Room
Management
System
PACS
Auto Fax 50%
Us Mail 25%
MD Mailbox 25%
Rework Loop
via Fax 25% of
the time
Check-in
Patient
(Admitting)
Prep
Patient
(Tech)
Check-in
Patient
(Imaging)
Complete
Exam
(Tech)
Transmit
Images
(Tech)
Read/Dictate
Exam
(Radiologist)
Transcribe
Report
(MDI)
Review
Draft/Sign
(Radiologist)
Print
Reports
(Imaging)
Send
Reports
(Imaging)
5 mins.
5
5
5 mins.
Cycle Time = 2 mins.
% C&A = 90 %
0.0833 hrs.
3
Cycle Time = 1 mins.
% C&A = 98 %
0.0833 hrs.
2 mins.
6
45 mins.
2
0.75 hrs.
1 mins.
7
30 mins.
Cycle Time = 10 mins.
% C&A = 100 %
2
0.5 hrs.
10 mins.
8
5 mins.
Cycle Time = 15 mins.
% C&A = 90 %
2
0.0833 hrs.
15 mins.
9
248 mins.
Cycle Time = 3 mins.
% C&A = 100 %
2
10
4.13 hrs.
3 mins.
365 mins.
Cycle Time = 15 mins.
% C&A = 95 %
6
11
6.08 hrs.
15 mins.
960 mins.
Cycle Time = 5 mins.
% C&A = 75 %
2
12
16 hrs.
5 mins.
110 mins.
Cycle Time = 1 mins.
% C&A = 95 %
2
1.83 hrs.
1 mins.
13
120 mins.
Cycle Time = 1 mins.
% C&A = 99 %
6
2 hrs.
1 mins.
14
Cycle Time = 3 mins.
% C&A = 90 %
LT = 32.5 hrs.
3 mins.
CT = 56 mins.
CT/LT Ratio = 2.87%
Rolled First Pass
yield = 29%
25. Key Metrics: Time
īļProcess time (PT)
ī
ī
ī
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 âtouch time,â work time, cycle time
īļLead time (LT)
ī
ī
ī
The elapsed time from the time work is made available
until itâs 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.
Š 2010 Karen Martin & Associates
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26. Lead Time vs. Process Time
Lead Time
Process Time
Work passed
to next step
Work
Received
LT = PT + Waiting / Delays
Activity Ratio = (LT Ãˇ PT) x 100
Š 2010 Karen Martin & Associates
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27. Key Metrics: Quality
īļ%Complete and Accurate (%C&A)
ī
ī
The percentage of input thatâs deemed âusable as isâ
by the person doing the work
% of incoming work where the downstream customer
can perform task without having to âCACâ:
ī§ Correct information or material that was supplied
ī§ Add information that should have been supplied
ī§ Clarify information that should have or could have been
clearer
ī
ī
Measured by the immediate downstream customer
and all subsequent downstream customers.
Similar to first pass yield in manufacturing.
Š 2010 Karen Martin & Associates
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28. Summary Metrics: Quality
īļRolled First Pass Yield (RFPY)
ī
ī
ī
ī
The percent of value stream output that passes
through the process âclean,â with no âhiccups,â
no rework required.
RFPY = %C&A x %C&A x %C&AâĻ
Common finding = 0-15%
Multiply ALL %C&Aâs, even if parallel processes
Š 2010 Karen Martin & Associates
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29. Outpatient Imaging
Projected Results
Metric
Current
State
Lead Time
%
Improvement
32.5 hrs
Process Time
Projected
Future State
56 mins
Percent Activity
2.9%
Rolled First Pass Yield
29%
Labor requirements
# Handoffs
Tech Turnover
Š 2010 Karen Martin & Associates
1.9 FTEs
14
100% (6 mos)
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30. Future State Value Stream Map
Outpatient Imaging Services
Standard
Work
Work
Balance
Demand = 15 CTs per day
Customer Demand:
15 patients perDay
(Takt Time1920 seconds)
8 hours per day
Co-locate
Schedule appt
Pre-register
Referring
Physician
Hospital
3
Lead Time = 15 days
2
6
1
Lead Time = 45 mins.
Cycle Time = 11 mins.
Lead Time = 45 mins.
% C&A = 98 %
% C&A = 85 %
Risk
Reduction
(Joint
Commision)
Symposium
E Pay
Excel
Internet
Waiting Room
Management
System
Work
Balancing
Standard
Work
3
35 mins.
4
Cycle Time = 1 mins.
% C&A = 98 %
0.0833 hrs.
2
Complete
Exam
(Tech)
5
20 mins.
Cycle Time = 10 mins.
% C&A = 100 %
0.583 hrs.
1 mins.
2
Transmit
Images
(Tech)
6
5 mins.
Cycle Time = 10 mins.
% C&A = 90 %
0.333 hrs.
10 mins.
Visual
Workplace
Set-up
Reduction
Prep
Patient
(Tech)
Check-in
Patient
(Imaging)
Fax Order
Solutions
PACS
Auto Fax 80%
Us Mail 15%
MD Mailbox 5%
5S
Value Stream
Alignment
Pull System
(Supplies
Kanban)
Remove
Check in
and Reduce
System Access
5 mins.
Meditech
CT=Cycle Time
LT=Lead Time
%C&A=% Complete & Accurate
2
7
120 mins.
2
Review
Draft/Sign
(Radiologist)
420 mins.
Cycle Time = 15 mins.
% C&A = 95 %
2 hrs.
2 mins.
8
Batch
Reductions
Voice
Recognition
Read/Dictate
Exam
(Radiologist)
Cycle Time = 2 mins.
% C&A = 100 %
0.0833 hrs.
10 mins.
Continuous
Flow
2
Print
Reports
(Imaging)
9
2 mins.
Cycle Time = 1 mins.
% C&A = 95 %
7 hrs.
15 mins.
Rework Loop
via Fax 10% of
the time
2
30 mins.
Cycle Time = 1 mins.
% C&A = 99 %
0.0333 hrs.
1 mins.
10
Send
Reports
(Imaging)
6
0.5 hrs.
1 mins.
11
Cycle Time = 3 mins.
% C&A = 90 %
LT = 11.3 hrs.
3 mins.
CT = 43 mins.
CT/LT Ratio = 6.32%
Rolled First Pass
yield = 40%
31. Outpatient Imaging
Projected Results
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%
1.9 FTEs
1.6 FTEs
16%
14
11
21%
100%
25%
75%
Metric
* Labor requirements
# Handoffs
Tech Turnover (6 mos)
* Created the capacity to generate $500,000 in additional annual revenue with no
increase in labor or equipment expense.
Š 2010 Karen Martin & Associates
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32. Future State Implementation Plan
Value Stream Outpatient Imaging
Implementation Plan Review Dates
Executive Sponsor Allen Ward
11/1/2007
Value Stream Champion Sally McKinsey
11/21/2007
Value Stream Mapping Facilitator Dave Parks
12/13/2007
Date Created 10/18/2007
Block
#
2
Goal / Objective
Improve quality of referral
Improvement Activity
Type
KE
Implement standard work for referral
process
Owner
Sean O'Ryan
PROJ
1/10/2008
Implementation Schedule (weeks)
2 3 4 5 6 7 8 9 10 11 12
Dianne
Prichard
3, 4
Reduce lead time beween schedulingand
Cross-train and colocate work teams
preregistration steps
5, 6
Eliminate the need for two patient checkins
Collect copays in Imaging
KE
Michael
O'Shea
6
Eliminate bottleneck in waiting area
Balance work / level demand
KE
Dianne
Prichard
9
Eliminate lead time associated with
transcription step
Implement voice recognition technology
PROJ
Sam Parks
10
Eliminate batched reading
Reduce setup required
KE
Sam Parks
7
Reduce inventory costs, regulatory risk
and storage needs
5S CT supplies area; implement kanban
KE
Michael
O'Shea
12
Reduce delay in report delivery
Implement additional fax ports
PROJ
Martha Allen
12
Reduce delay in report delivery
Increase percentage of physicians
receiving electronic delivery (rather than
hard copy)
KE
1
Martha Allen
Approvals
Executive Sponsor
Value Stream Champion
Value Stream Mapping Facilitator
Signature:
Signature:
Signature:
Date:
Date:
Date:
Date
Complete
36. Kaizen Event â 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
Š 2010 Karen Martin & Associates
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37. When do you need a Kaizen Event?
īļRapid change is desired.
īļHands-on learning is desired.
īļYou want to âbakeâ the improvement
process into the organizational DNA
īļYou want to shift culture by engaging the
frontlines in problem solving.
ī
Leadership stays out of tactical details.
Š 2010 Karen Martin & Associates
38. 5-Day Kaizen: Sample Structure
Day 1 & 2
(Plan)
Day 3 & 4
(Do, Check)
Day 5
(Check, Act)
Š 2010 Karen Martin & Associates
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!
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41. Kaizen Event Results
īļReduced medication delivery interruptions by 75%.
īļSecured an exclusive 2-year contract with key
customer.
īļ Freed 1.4 FTEs in streamlined discharge process.
īļReduced scrap by $6,876 per year.
īļProduced twice as much âroad mixâ at half the
cost.
īļReduced lead time for purchasing process from 10
to 2.5 days.
Š 2010 Karen Martin & Associates
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43. Lean Transformation vs. âLean Liteâ
Lean Transformation
âLean Liteâ
Full leadership engagement &
development
1 or 2 leaders leading the way
Improvement heavily strategic;
closely tied to business goals
âRandom acts of kaizenâ
Full adoption of the Lean philosophy Selective use of the tools
Dedicated internal resources
Shared resources
Significant investment in skill
development
Expected to âfigure it outâ
Heavy use of external support for
first 1-2 years
Internal resources only
Holistic approach to improvement
Siloâd thinking & behaving
Frontlines heavily engaged in the
improvement process
Improvement resources or
leadership drive improvement
43
44. The Transformation Process:
Key Success Factors
īļ Strong sense of urgency / burning platform
īļ Leadership alignment around strategy
ī
Improvement priorities are closely tied to organizational strategy
and annual business goals.
īļ Value-stream driven improvements.
ī
To avoid change fatigue, improve one value stream at a time.
īļ Heavy use of Kaizen Events in first 1-3 yrs.
ī
4 Events per 100 employees per year
īļ Dedicated improvement resources.
ī
1 FTE: 100 employees
īļ Entire workforce receives exposure to Lean and becomes
skilled in problem-solving.
īļ Concurrent leadership development.
Š 2010 Karen Martin & Associates
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45. Lean Benefits - Financial
īļReduced expenses
ī
ī
ī
Reduced requirements for equipment and supplies
Reduced space requirements
Reduced head count for existing work
īļImproved cash flow
ī
Faster billing and collections
īļIncreased revenue
ī
ī
ī
Recaptured lost revenue
New revenue sources
Greater market share â customers want the highest
quality products, delivered the fastest, at lowest cost.
Š 2010 Karen Martin & Associates
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46. Lean Benefits - People
īļ Improved productivity
īļ Reduced sick time, workersâ comp,
etc.
īļ Better safety
īļ Less stress / frustration
īļ Reduced interpersonal and
interdepartmental tension
īļ Greater engagement / higher
satisfaction
īļ Improved ability to attract and
retain talent
īļ Greater innovation
Š 2010 Karen Martin & Associates
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47. Lean Benefits â Risk Mitigation
īļImproved compliance
(regulatory / accreditation)
īļReduced litigation
īļReduced risk of unionization
or strikes
īļImproved safety â customers,
employees, and community
Š 2010 Karen Martin & Associates
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49. Learning Objectives
īļParticipants will learn:
ī
ī
ī
ī
ī
Organizational benefits of Lean and timeframes for
achieving them.
Lean as an overall business management philosophy
vs. âLean Liteâ for process improvement.
Core Lean principles and tools.
How Lean shifts culture.
Key success factors in the transformation process.
Š 2010 Karen Martin & Associates
49
50. Upcoming Webinars
Topic
Kanban Pull Systems
Work Standardization & MetricsBased Process Mapping
Error-Proofing
Kaizen Events â Part I
Kaizen Events â Part II
A3 Problem-Solving â Part I
A3 Problem-Solving â Part II
Date
Tuesday, July 20
Tuesday, August 10
Thursday, August 12
Tuesday, August 31
Thursday, September 2
Tuesday, September 28
Thursday, September 30
Register at www.ksmartin.com/webinars
50
51. For Further Questions
Karen Martin, Principal
7770 Regents Road #635
San Diego, CA 92122
858.677.6799
ksm@ksmartin.com
To register for our newsletter:
www.ksmartin.com/subscribe
Š 2010 Karen Martin & Associates
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