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Lean Transformation in Office,
Service, and Knowledge Work
Environments
July 13, 2010
Company

LOGO
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 nonmanufacturing 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.
© 2010 Karen Martin & Associates

Karen Martin,
Principal
Karen Martin &
Associates

2
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.

© 2010 Karen Martin & Associates

3
What Lean Is….
A proven business management approach that
results in fiscal strength, customer and
employee loyalty, and organizational agility.

© 2010 Karen Martin & Associates

4
Typical Benefits Realized

0%

25%

50%

75%

100%

Lead Time Reduction
Productivity Increase
WIP Reduction
Quality Improvement
Space Utilization

WIP = Work in process

© 2010 Karen Martin & Associates

5

5
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

© 2010 Karen Martin & Associates

6
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)

© 2010 Karen Martin & Associates

7
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

© 2010 Karen Martin & Associates

8
Performance Measures

Quality
Morale

Cost
Optimal
Performance

Safety
© 2010 Karen Martin & Associates

Delivery
9
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)
© 2010 Karen Martin & Associates

10
Problem-Solving Steps

{

Plan

50-80%
of the
total
time

Do
Check
Act

© 2010 Karen Martin & Associates

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
11
Most People…
Underestimate the power of Lean.
Underestimate what it takes to “become”
Lean.

© 2010 Karen Martin & Associates

12
Transforming Takes Time

Lean is a
long-term
business
strategy.

© 2010 Karen Martin & Associates

13
Journey to a Lean Enterprise
“Life is Good” Stage

Years 5 & Beyond
Company-wide engagement –
everywhere, all the time

Support needed only for
audits, bandwidth gaps,
continued learning

• Daily kaizen is the norm
• “Action now” dominates
• Most processes are
stabilized with minimal waste
and output variation

“Settling In” Stage

Years 3 & 4
Greater staff engagement –
reduced need for formal
Kaizen Events

Light support from
seasoned improvement
professionals

• Demonstrating learned
competencies
• Process owners manage
performance
• Becoming more proactive

“Disruption” Stage

Years 1 & 2
Small percentage of staff
engaged – project-based

Heavy support from
seasoned improvement
professionals

• Sensei-dominated
• Much mentoring & learning
• Heavy use of Kaizen Events
• Many issues to be resolved
14
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

© 2010 Karen Martin & Associates

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

© 2010 Karen Martin & Associates

16
Building a Lean Enterprise
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
18
Work Effort as Defined by the
External Customer

Unnecessary Non-value
adding
Necessary Non-valueadding
Value-adding
Eight Wastes (Muda)

Overproduction
Inventory
Waiting
Over-Processing
Errors

© 2010 Karen Martin & Associates

Motion (people)
Transportation
(material/data)

Underutilized
people

20
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

© 2010 Karen Martin & Associates

Customer
Receipt

21
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

© 2010 Karen Martin & Associates

22
VSM Goal: System Efficiency

Value Stream
Management Creates
System Efficiency

Traditional Improvement
Creates Point Efficiency
(Sub-optimization)

© 2010 Karen Martin & Associates

23
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%
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.

© 2010 Karen Martin & Associates

25
Lead Time vs. Process Time

Lead Time

Process Time
Work passed
to next step

Work
Received

LT = PT + Waiting / Delays

Activity Ratio = (LT ÷ PT) x 100
© 2010 Karen Martin & Associates

26
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.

© 2010 Karen Martin & Associates

27
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

© 2010 Karen Martin & Associates

28
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

© 2010 Karen Martin & Associates

1.9 FTEs
14
100% (6 mos)

29
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%
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.
© 2010 Karen Martin & Associates

31
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
Building a Lean Enterprise
Kaizen Defined

KAIZEN
Kai

Zen

Break apart

Study

To change

Make better

Kaizen = Continuous Improvement
Kaizen Event = Rapid Improvement
© 2010 Karen Martin & Associates

34
Improvement Roles

Strategic

Who?

Accountability

Tool

Leadership

“What has to happen”

Value Stream
Mapping

“How it will happen”

Kaizen Events,
Just-do-its,
and Projects

Tactical

Middle
Management
Workforce

© 2010 Karen Martin & Associates

35
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

© 2010 Karen Martin & Associates

36
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.

© 2010 Karen Martin & Associates
5-Day Kaizen: Sample Structure
Day 1 & 2
(Plan)

Day 3 & 4
(Do, Check)
Day 5
(Check, Act)

© 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!
38
Building a Lean Enterprise

Process
Stabilization
Tools
Building a Lean Enterprise

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.

© 2010 Karen Martin & Associates

41
A3 Problem-Solving

42
Lean Transformation vs. “Lean Lite”
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
43
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.
© 2010 Karen Martin & Associates

44
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.

© 2010 Karen Martin & Associates

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
© 2010 Karen Martin & Associates

46
Lean Benefits – Risk Mitigation
Improved compliance
(regulatory / accreditation)
Reduced litigation
Reduced risk of unionization
or strikes
Improved safety – customers,
employees, and community

© 2010 Karen Martin & Associates

47
Lean Benefits – Happier Customers

© 2010 Karen Martin & Associates

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.

© 2010 Karen Martin & Associates

49
Upcoming Webinars
Topic

Kanban Pull Systems
Work Standardization & MetricsBased Process Mapping
Error-Proofing
Kaizen Events – Part I
Kaizen Events – Part II
A3 Problem-Solving – Part I
A3 Problem-Solving – 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
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

© 2010 Karen Martin & Associates

51

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Project Brief & Information Architecture Report
 

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  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 nonmanufacturing 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. © 2010 Karen Martin & Associates Karen Martin, Principal Karen Martin & Associates 2
  • 3. 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. © 2010 Karen Martin & Associates 3
  • 4. What Lean Is…. A proven business management approach that results in fiscal strength, customer and employee loyalty, and organizational agility. © 2010 Karen Martin & Associates 4
  • 5. Typical Benefits Realized 0% 25% 50% 75% 100% Lead Time Reduction Productivity Increase WIP Reduction Quality Improvement Space Utilization WIP = Work in process © 2010 Karen Martin & Associates 5 5
  • 6. 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 © 2010 Karen Martin & Associates 6
  • 7. 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) © 2010 Karen Martin & Associates 7
  • 8. 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 © 2010 Karen Martin & Associates 8
  • 10. 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) © 2010 Karen Martin & Associates 10
  • 11. Problem-Solving Steps { Plan 50-80% of the total time Do Check Act © 2010 Karen Martin & Associates 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 11
  • 12. Most People… Underestimate the power of Lean. Underestimate what it takes to “become” Lean. © 2010 Karen Martin & Associates 12
  • 13. Transforming Takes Time Lean is a long-term business strategy. © 2010 Karen Martin & Associates 13
  • 14. Journey to a Lean Enterprise “Life is Good” Stage Years 5 & Beyond Company-wide engagement – everywhere, all the time Support needed only for audits, bandwidth gaps, continued learning • Daily kaizen is the norm • “Action now” dominates • Most processes are stabilized with minimal waste and output variation “Settling In” Stage Years 3 & 4 Greater staff engagement – reduced need for formal Kaizen Events Light support from seasoned improvement professionals • Demonstrating learned competencies • Process owners manage performance • Becoming more proactive “Disruption” Stage Years 1 & 2 Small percentage of staff engaged – project-based Heavy support from seasoned improvement professionals • Sensei-dominated • Much mentoring & learning • Heavy use of Kaizen Events • Many issues to be resolved 14
  • 15. 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 © 2010 Karen Martin & Associates 15
  • 16. 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 © 2010 Karen Martin & Associates 16
  • 17. Building a Lean Enterprise
  • 18. 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 18
  • 19. Work Effort as Defined by the External Customer Unnecessary Non-value adding Necessary Non-valueadding Value-adding
  • 20. Eight Wastes (Muda) Overproduction Inventory Waiting Over-Processing Errors © 2010 Karen Martin & Associates Motion (people) Transportation (material/data) Underutilized people 20
  • 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 © 2010 Karen Martin & Associates Customer Receipt 21
  • 22. 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 © 2010 Karen Martin & Associates 22
  • 23. VSM Goal: System Efficiency Value Stream Management Creates System Efficiency Traditional Improvement Creates Point Efficiency (Sub-optimization) © 2010 Karen Martin & Associates 23
  • 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 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. © 2010 Karen Martin & Associates 25
  • 26. Lead Time vs. Process Time Lead Time Process Time Work passed to next step Work Received LT = PT + Waiting / Delays Activity Ratio = (LT ÷ PT) x 100 © 2010 Karen Martin & Associates 26
  • 27. 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. © 2010 Karen Martin & Associates 27
  • 28. 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 © 2010 Karen Martin & Associates 28
  • 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 © 2010 Karen Martin & Associates 1.9 FTEs 14 100% (6 mos) 29
  • 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. © 2010 Karen Martin & Associates 31
  • 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
  • 33. Building a Lean Enterprise
  • 34. Kaizen Defined KAIZEN Kai Zen Break apart Study To change Make better Kaizen = Continuous Improvement Kaizen Event = Rapid Improvement © 2010 Karen Martin & Associates 34
  • 35. Improvement Roles Strategic Who? Accountability Tool Leadership “What has to happen” Value Stream Mapping “How it will happen” Kaizen Events, Just-do-its, and Projects Tactical Middle Management Workforce © 2010 Karen Martin & Associates 35
  • 36. 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 © 2010 Karen Martin & Associates 36
  • 37. 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. © 2010 Karen Martin & Associates
  • 38. 5-Day Kaizen: Sample Structure Day 1 & 2 (Plan) Day 3 & 4 (Do, Check) Day 5 (Check, Act) © 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! 38
  • 39. Building a Lean Enterprise Process Stabilization Tools
  • 40. Building a Lean Enterprise Flow Enabling Tools
  • 41. 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. © 2010 Karen Martin & Associates 41
  • 43. Lean Transformation vs. “Lean Lite” 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 43
  • 44. 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. © 2010 Karen Martin & Associates 44
  • 45. 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. © 2010 Karen Martin & Associates 45
  • 46. 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 © 2010 Karen Martin & Associates 46
  • 47. Lean Benefits – Risk Mitigation Improved compliance (regulatory / accreditation) Reduced litigation Reduced risk of unionization or strikes Improved safety – customers, employees, and community © 2010 Karen Martin & Associates 47
  • 48. Lean Benefits – Happier Customers © 2010 Karen Martin & Associates 48
  • 49. 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. © 2010 Karen Martin & Associates 49
  • 50. Upcoming Webinars Topic Kanban Pull Systems Work Standardization & MetricsBased Process Mapping Error-Proofing Kaizen Events – Part I Kaizen Events – Part II A3 Problem-Solving – Part I A3 Problem-Solving – 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 © 2010 Karen Martin & Associates 51