february 10-12, 2006 san diego, ca · improves process variation improving flow… improves process...

18th AnnualSociety for Health Systems

Management Engineering ForumFebruary 10-12, 2006

San Diego, CA

All materials contained herein are the sole property of Value Innovation Partners, Ltd. and unauthorized

use is strictly prohibited without the expressed written consent of Value Innovation Partners, Ltd.

LeanSigma for the

Service BusinessValue Innovation Partners, Ltd.

Patrick Lucansky

41966 N US Hwy. 45

Antioch, IL 60002

001-847-395-7076

[email protected]

www.vipgroup.us

© Copyright 2006 All rights reserved VIPGroup

The Agenda• What is LeanSigma

• Lean

• Six Sigma

• Lean Sigma

• Designing LeanSigma for the Service Business

• Strategy

• Methodology

• Deployment

• Case Studies

• Issues

• Methods

• Results

• Questions and Answers


Evolution of Lean and Six Sigma

Mid 1800’s: Interchangeable parts

Late 1800’s: Pork disassembly lines – Chicago

1913: Moving assembly line at Ford

Pre-WW2: Toyoda invents “Jidoka” on looms

Post-WW2: Toyota Develops a Production System For High-Variety, Low Volume.

1980’s: MIT Study of Toyota

1996: James Womack Documents General Applications of TPS and For Any Organization and Calls It “Lean Thinking”

TQC

Employee Involvement

Waste Elimination

Supplier Development

Business Process Reengineering

Cost Management (ABC)

TQM

LeanEnter-prise

WorldClassMfg

BPMBPM

JITJIT

Lean

Sigma

Six Sigma

LeanLean

66

TQC

Employee Involvement

Waste Elimination

Supplier Development

Business Process Reengineering

Cost Management (ABC)

TQM

LeanEnter-prise

LeanEnter-prise

WorldClassMfg

WorldClassMfg

BPMBPM

JITJIT

Lean

Sigma

Lean

Sigma

Six Sigma

LeanLean

66

1970’s 1990’s1980’s 2000’s


What is Lean Enterprise

A Group of individuals, functions, and sometimes legally

separate but operationally synchronized organizations. The

value stream defines the Lean Enterprise. The objectives of

the Lean Enterprise are to:

• correctly identify and specify “value to the ultimate

customer / consumer” in all its products and services

• analyze and focus the value stream so that it does

everything form product development and production to

sales and service in a way that activities that do not

create value are removed and actions that do create value

proceed in a continuous flow as pulled by the customer.

Lean is focused on reducing waste through increasing speed, reducing process inventory and decreasing process cycle times

Lean is focused on reducing waste through increasing speed, reducing process inventory and decreasing process cycle times


Six Sigma - The Short Story• Pioneered by Motorola in 1980s

• Discovered that products with high first-pass yield (the amount of product that made it through defect-free) seldom failed in use

• Focused on creating strategies to reduce defects in own products

• Won Baldrige Award in 1988

• Some key players in Six Sigma history

• Mikel Harry - one of the original Motorola architectswho later founded Six Sigma Academy

• Jack Welch, CEO General Electric

• Larry Bossidy, CEO Allied Signal

• Philosophy: Promote excellence in all business processes -- improve productivity, profits, and customer satisfaction

• Methodology: A 5-phase process for continuous improving quality by reducinginherent variability

• Statistic: Numerically describes amount of variation in a process

• Benchmark: Normalized measure to compare performance of many processes andprocess types

• Goal: 6 Sigma performance -- a process which produces less than 3.4 defects per million opportunities (DPMO).

• A tool to reduce or eliminate variation

What is Six Sigma (6 )?


What is Six Sigma…the TheoryA 3 process because 3 standard deviations fit

between target and spec

Target CustomerSpecification

1

2

3

3

6.6% Defects

Before

Reduced VariationReduced Variation

TargetCustomer

Specification

After

2

6

6No Defects!

1

3

4

5


What is Lean Sigma

Lean = Balanced Flows Through WasteElimination

6s =ReducedVariation

ProcessProcessStep 1 Step 1




6s =ReducedVariation






Lean Sigma “DMAIC” Approach

Define Measure Analyze Improve Control

Understandcurrent state & potential

factors

ConfirmKey factors

Optimize &implement

improvement

Defineproject & commit

resources

Sustainthe gain

Improving Capabilities…

Improves Process Variation

Improving flow…

Improves Process Balance

Tim

e

Step 1 Step 2 Step 3 Step 4

ImprovedProcess

+

=

Common Phases

“VOC”Identify Big “Y” Business Case,

StrategyAlignment,

Project charters,Value Stream

Map,Muda Matrix,

QFD,CTQ’s,CSF’s

20 Keys

6

Understand Y variable Capability

SOE’sValue Stream Map

Measure known X’s

LEAN

AnalyzeMeasurement

System,Understand Y

variable,Capability

Map potential X’sFilter X’s to

“LikelySuspects”

Identify Key X’swith data

Cycle Time andNVA Analysis

Finalize CharterC & E Matrix

Pareto AnalysisFishboneDiagramsANOVA

RegressionAnalysis

Chi SquareP & T Values

Determine Lean improvements

Implementimprovements to

X’sLine Balance

HeijunkaPoka Yoke

Determineoptimal

improvementsConfirm effect of

improvementsImplement

improvementson the X’s,

DOE’s, DFSS

Control X’sto sustain the gain,Hand-off

process to ProcessOwner,Gains

Verified,Demonstrate

ImprovedCapability,

SPC,VFM

Customer -Focused Quality

Balance, Smooth, Capable

9


What is difference between the two methods?

Lean Six Sigma

• Attacks waste through smoothing flow and reducing cycle time and NVA”

• Anyone in the organizationcan participate

• Does not require a format to make change happen

• Investment in Lean is low to moderate

• Many resources and books available

• Leadership can come from anywhere within the organization

• Attacks variation through statistical tools

• Requires a higher level of education, thus may exclude some

• Uses the DMAIC methodology to make change happen

• Investment in Six Sigma is moderate to high

• Books are limited in scope and tend to be technical

• Leadership is through a rigid structure of green and black belts with Masters and a Sensei

Note: none of these differences are obstacles to success, just areas to be addressed prior to implementation to ensure a smooth flow.

Note: none of these differences are obstacles to success, just areas to be addressed prior to implementation to ensure a smooth flow.


Lean Sigma Exceptions?

Lean Sigma Does NOT apply to functions on the Exception List

Lean Sigma Applies

Exception List -- LeanSigma Does Not Apply

in these Functions

Sales

Manufacturing

Engineering

Technical Support

Finance

Administration

Emergency Rooms

Research

Human Resources

Food Services, …


Is it Lean, Six Sigma or Lean Sigma?

QUESTIONS

• Which should we do first?

• What are the prerequisites of each?

• Can I do them concurrently?

• Which will deliver the biggest bang for the buck?

Six Sigma -- 6 :

Six Sigma, a vehicle for strategic change…anorganizational approachto performance excellence. Six Sigma creates transformationalchange throughout the organization, processes,culture and customers.Six Sigma creates transactional change by applying tools and methodologies targetedat reducing variationand drastically improving processes.

Six Sigma (6 ):99.99966%accuracy – 3.4defects per million

ToolsTools:Design for ManufacturabilityDesign for Six Sigma, 6 TolerancingProduct Scorecard

ToolsTools::Process characterization (mapping, MSA, etc…)Process optimization (DOE, etc…)

Tools:Tools:Seven basic tools (paretos, fishbones, etc…)

Tools:Tools:Common senseTribal knowledge

6

5

4

3

1-2

What tool(s) should we focus our efforts on?

Where is your organization? What kind of tools should you be using?

ToolsTools:Design for ManufacturabilityDesign for Six Sigma, 6 TolerancingProduct Scorecard

ToolsTools::Process characterization (mapping, MSA, etc…)Process optimization (DOE, etc…)

Tools:Tools:Seven basic tools (paretos, fishbones, etc…)

Tools:Tools:Common senseTribal knowledge

6

5

4

3

1-2

6

5

4

3

1-2

What tool(s) should we focus our efforts on?

Where is your organization? What kind of tools should you be using?

6 Sigmatactics

Leantactics


Healthcare Facts• The IOM report noted at least 99,000 deaths

are caused by errors each year. In reality the figure is probably higher.

• 2002 estimated cost of care $1.76 trillion.

• Shortage in the available, trained staff.

• Regulations and compliance is becoming more stringent.

• Administrative costs account for as much as 40% of the Total Cost of Healthcare.

• $483 Billion was spent by the Federal Government in 2004 on Medicare and Medicaid.


Potential Benefits

Lean Sigma Potential ResultsLean Sigma Potential Results

• Productivity +20% per year

• Lead Time Reduced to a Few Days (75%)

• Manufacturing Space Cut in Half

• Reduce Overhead and Quality Cost 20% /yr

• Inventory Turns +25% Per Year

• Little or No Capital Investment

• Cycle times at 3 to 4 times “one piece touch time”


Where are Businesses Today?Most business processes are around 3

• 99% results in:

• 20,000 lost articles ofmail per hour

• 5,000 incorrect surgical operations per week

• 200,000 wrongprescription drugseach year

• Even at 99.9% quality(= 4.6 sigma)

• 20,000 wrong drug prescriptions per year

• Two short or long landings at O’Hareairport each day

• 99% results in:

• 20,000 lost articles ofmail per hour

• 5,000 incorrect surgical operations per week

• 200,000 wrongprescription drugseach year

• Even at 99.9% quality(= 4.6 sigma)

• 20,000 wrong drug prescriptions per year

• Two short or long landings at O’Hareairport each day

Process Sigma

DPMO

0

1

10

100

1000

10000

100000

1000000

0 1 2 3 4 5 6 7

IRS

answ

ers

21%

of c

alls

Ontim

efli

ght arriv

als

(all

carr

iers

)

Mis

handle

dbag

gage

(all

carr

iers

)

Ove

rnig

ht deliv

ery

of 1st

Cla

ss M

ail

Corr

ect l

egal

advi

ce fr

om IR

S

Wire

tran

sfer

s

Res

taura

nt bills

Payro

ll pro

cess

ing

Dom

estic

airl

ine

fata

lity

rate

(0.4

3ppm

)



• Lean

• Six Sigma

• Lean Sigma


• Strategy

• Methodology

• Deployment

• Case Studies

• Issues

• Methods

• Results



Principles of a LeanSigma Service

• Positive, clear communications.

• Ensure “no-blame” culture.

• Work through cross functional teams.

• Staff involvement at every stage.

• Process maps on display for comments.

• Remove non-value added steps, hand-off`s, rework loops.

• Agree design principles with All.

• Fix the root cause not the symptom.

• Ensure solution supports departmental interfaces.

• Incorporate Continuous Improvement


LeanSigma is Achieved Through:

Simplifying……………………...Processes

Integrating…………....…Across Organizations

Automating………. Utilizing IT functionality and

connectivity


WASTE or “MUDA”

. . . Any resource-consuming activity

that delivers NO value to the customer


Lean Sigma Means…

Identifying and Eliminating the 7 Wastes

PEOPLE

TYPESOF

WASTE

Processing

Motion

Waiting

Defects

Making TooMuch

MovingThings

Inventory

QU

AL

ITY

QUANTITY

TAIICHI OHNO, ARCHITECT OF THE TOYOTA PRODUCTION SYSTEM


Waste In The Service Business

THE PROCESS

Handle

COUNT

File

SORT

Track

Retrieve

Record

HIDE . . . . . . FIND

INSPECT

Excess Paperwork

Multiple forms

DamageMovement

INPUT OUTPUT

. . . NONE OF THESE ADD VALUE !. . . NONE OF THESE ADD VALUE !


The analysis and redesign requires a clear understanding of:

Value Added, Non Value Added, and Sustaining Activities

The value related attribute of an activity

can only be assessed in the context of

the process, never in isolation–Considering other activities upstream and downstream

Value Added activities are those absolutely

necessary to deliver the customer’s requirements–These are colored green on the flowcharts

–They are later re-designed into the new process

Non Value Added activities are those that are not

necessary to deliver the customer’s requirements

and can be eliminated in the re-design

–These are colored red on the flowcharts

Sustaining activities are those that are not

necessary to deliver the customer’s

requirements but are either: –absolutely necessary to sustain the business or:

–cannot be eliminated due to known

severe constraints (often external)

–These are colored blue on the flowcharts

–They are later re-designed into the new process

Sustaining activities are targeted for gradual

elimination during the ContinuousImprovement process

NVAVA SNVA

VANVA

Sustaining Activities


How to Determine VA / NVA / SNVA?

Necessaryto Produce

Output?

Adds Value

to Customer?

Non-ValueAdded

SustainingCustomer

Value Added

YesYes

No

NoYes

ActivityActivity

No

Review & ApprovalReworkFilingCopyingReconciliation

Agree SpecificationsManufacturing

VA SNVA NVA

Contributesto Business

Effectiveness?

PayrollTestingDevelopment ActivityBack-up Data BaseChangeoversRegulatory


Value Added Assessment of a RN’s Time

Non Value Added Time

• Rework

• Correcting

• Clarifying

• Searching

• Waiting

• Enforcing Rules

• Duplication of Effort

Administrative Time

• Compliance & Quality requirements

Patient Value Added Time

• Providing Care• Listening• Assisting

33%

43%

24%

• Queuing

The opportunity is to eliminate the NVA, reduce the effect of the SNVA, optimize the VA time providing patients with more quality time for care. Healthcare facilities further

benefit from the increase in patient safety, patients/nursing, and cost reduction.

The opportunity is to eliminate the NVA, reduce the effect of the SNVA, optimize the VAtime providing patients with more quality time for care. Healthcare facilities further

benefit from the increase in patient safety, patients/nursing, and cost reduction.

Adapted from John W. Kenagy, 2002

• VA) = Value Added Activities• (NVA) = Non-Value Added Activities• (SNVA) Sustaining Non-Value Added Activities


TRADITIONAL APPROACH

Focus on Value AddedResources through . . .

• Time Study

• Work Study

• Outsourcing

• Utilization

• Automation

Approaches to Process Excellence

11%

72%17%

Most organizations struggle with complex dysfunctional systems, which have a top-down focus and often demonstrate a perceived value for profits over the customer service.

Most organizations struggle with complex dysfunctional systems, which have a top-down focus and often demonstrate a perceived value for profits over the customer service.

Source VIPGroup database, 2004

Process Excellence Approach

Focus on the 89%

Non-Value Added

Resources Through . . .

• Total Quality Control

• Total Waste Elimination

• Enforced Problem Solving

• Information Technology as an enabler

• Process Focus (Value Stream)

Challenge is to Reduce the Need

for Imposed Quality Requirements

• Total Staff Involvement• Staff Reductions

Accept Imposed Quality Requirements


Lead Time Analysis ... Service Processes

TYPICALLY . . . 75% PLUS OF LEAD TIMES ARE NON-VALUE ADDED

NON-VALUE ADD

- Corrections

- Filing

- Retrieving

- Recording

- Reconciliation

- Sorting

- Copying

- Etc

- Counting

- Tracking

VALUE ADD

- Purpose25%

75%

$BIN

- Stocking/restocking


Non-Value Added Activities in Healthcare

• Waiting

• Patient traveling around

• Terrible outcomes

• Unnecessary procedures

• Too many patients waiting

• Empty beds

• Hunting for supplies, staff

• Process inefficiencies

• Queuing

• Moving Materials around

• Product defects

• Over Production

• Too much inventory

• Excess Capacity

• Too much motion

• Process inefficiencies

A side by side comparison to Manufacturing

Healthcare Manufacturing

According to Taiichi Ohno (Architect of the TPS) there are 7 wastes which manifests in three formats, people, quality and quantity. Clearly, people are not wasteful, it is what we asked them to do that is non-value added. It is said there is an 8th waste … lost creativity

According to Taiichi Ohno (Architect of the TPS) there are 7 wastes which manifests in three formats, people, quality and quantity. Clearly, people are not wasteful, it is what we asked them to do that is non-value added. It is said there is an 8th waste … lost creativity


Basically, we’ve taken a simple process . . .

Inbound Customer

Management

Employees

RECEIVE PROCESSSEND to

Next Process

Step


. . . & Complicated it!

Ex-RayDiagnosis ReleaseRegis-tration

TriageCareDelivered

Billing

Inbound

CustomerDelivery

FUNCTIONAL MEASURES

• Efficiencies

• Finance Related

• Utilization

• Variances

DEPARTMENTAL BARRIERS

SYSTEMS BARRIERS• Bureaucracy• Delays

• Island of Autonomy• Aligned to Functions


Important Concepts About Processes….

Lean Sigma uses the VSM (Value Stream Map)

format of process flowcharts.

A B C DxS1xS2 xA1 xB1

xB2

xC1 xD1xA2 xC2 xD2

CustomerSupplier Customer

SIPOC =SIPOC =S = SuppliersI = InputsP = ProcessesO = OutputsC = Customers

S = SuppliersI = InputsP = ProcessesO = OutputsC = Customers

X1 X2 + X3… Y

• What is your Y?

• What are the possible x’s?

• How does it flow?

• What is your Y?

• What are the possible x’s?

• How does it flow?


VSM the Process “E2E”…Depicting the process as it is done today

C/T= 45 secC/O= 2 Hrs

3 Shifts150 Operators

3% RejectWIP= 45 DOS

C/T= 30 secC/O= 30 min

3 Shifts15 Operators

8% RejectWIP=10 DOS

ReceiveMaterial

InspectManufacturing

Produce

ReturnTo

Vendor

TestAccept Accept Accept

Scrap4%

Scrap10%

ReworkReworkRetest

Yes

No

Retest= 8%

Rework= 25%

No

Pack& Ship

C/T= 10 min1 Shift

5 Operators95 orders/day

DOSFG= 55

DOSR= 77

No

Yes Yes

No

C/T= 45 min1 Shift

5 Inspectors95 receipts/day

15% Reject

Rework=13%

4 Days 8 Days 45 Days 5 Days 3 Days 1 Day

4 Days 12 Days 57Days 62 Days 65 Days 66 Days

Customer

Planning & Scheduling

OrdersMaterial

Raw

Inventory

FG

Inventory

8 Handoffs7 Steps Critical Path

17 Steps if all Loops Executed4 Rework/Retest Loops66 Days Critical Path

Value Add

Non-Value Add

Sustaining Non-Value Add

1

6

1


x\x\

BUSYNESSQALITY IS OUR


Everyone must have… …ownership of quality

End

Self

Source

Towards Lean ‘Inspection’

Successive

Type of ‘inspection’


The Quality Dilemma

You are now inspectors of the office process of creating invoices. Count the number of basketball passes the team in the white shirtsmake. Each pass is a poor quality invoice.

copyright (© 2003, Daniel J. Simons, President, VisCog Productions, Inc.)

How many bad invoiceswere caught?

How many bad invoiceswere caught?

Did you see the Defect?

Did you see the Defect?



• Lean

• Six Sigma

• Lean Sigma


• Strategy

• Methodology

• Deployment

• Case Studies

• Issues

• Methods

• Results



Strategy Deployment requires a disciplined approach and a robust management system

• Structured Management

• Communications Program

• Voice of the Customer (VOC)

• Lean System for Managing

• Deployment Strategy

• Culture Change

• Reward and Recognition

• Metrics

Office waste is harder to recognize!



• Lean

• Six Sigma

• Lean Sigma


• Strategy

• Methodology

• Deployment

• Case Studies

• Issues

• Methods

• Results



Use a disciplined methodology toachieve consistency and sustainability

A clear, structured, step by step process

Define top level

processroad map

Detailedprocessmap(s)

Identifywastefulactivities

DefineLean

SigmaPrinciples

DesignNew

Process

DevelopImplementapproach

ObtainManagement

approvalImplement

Quantitative&

Qualitativeanalysis

Voice of theCustomer

• External/regulatory requirements

• Internal requirements - global

• Internal requirements - local

• Future requirements

EvaluateBenefits/

GapAnalysis

You

Are

Here

ObtainRegulatory

Approvalif required


Voice of Customer is a necessary first stepin DMAIC along with Value Stream Mapping

Value Stream Map

Quality Function Deployment

• What do they need?

• When do they need it?

• How do you know if they received it?

• What will they want?

• What do they want it to do?

Control

Improve

Analyze

Measure

Define



• Lean

• Six Sigma

• Lean Sigma

Designing LeanSigma for the Service Business

• Strategy

• Methodology

• Deployment

• Case Studies

• Issues

• Methods

• Results



Possible Approaches to Deployment

Autonomy

Business independence and self-deployment

Pros: Local owners, some zealots, low stress

Cons: No focus, minimal bottom line impact. No common language ortalent pool. Wastedefforts, re-inventing of the wheel. Incorrect applications.

Mandate

Corporate edict, deployment focus

Pros: Quick to the bottom line, full participation

Cons: No real ownership orsustainability. Many “weak” projects and implementations. Used fora ”ticket punch” not for its power.

Process Focus

Value stream process map, data driven methodology selection

Pros: Customer focused, consistent across the business, can be applied anywhere, has bottom line impact, relies upon lean and proper six sigma

Con: A bit more bureaucratic for lean and upfront homework before projects


Deployment Strategy must be easy to follow, consistent and repeatable

Structured approach to Lean performance . .

minimizing the time to Realize Sustainable BenefitsRealize Sustainable Benefits

DRAMATICSHORT TERM

GAINS

CONTINUOUSLONG TERM

GAINS

Mobilization Implementation

Stabilization

ContinuousImprovement

Time

Performance

Benefit

1 2

3

4

Sustainable Benefits

•Pick Pilot & Implement

•Stabilize Process

•Rollout to Other Areas

•Measure Results

•Adjust Process As

Needed / Determined By

Metrics

A structured process provides your team(s) with formal training along with responsibility and ownership, thereby ensuring program success and continuation.

A structured process provides your team(s) with formal training along with responsibility and ownership, thereby ensuring program success and continuation.


Critical Success Factors

• Voice of Customer

• Compliance

• Measures

• Senior Management Commitment

• Middle Management

• Skill Matrix

• Culture Change


LeanSigma Performance Measurements. . . Apply to all the Supply Chain & Business Processes

Lead Time

Effectiveness

PERFORMANCE MEASUREMENTS

Flexibility

Cost

CustomerService

OUTPUT

CustomerService

INPUT

Quality

(No. of Defects)

(On-time

Delivery)

100%

100%

100%

NVAVA

Quality

0%

• What is the right thing to measure?• Set the Target Goals to strive for• Make measures visible.

• What is the right thing to measure?• Set the Target Goals to strive for• Make measures visible.


Senior Management and Team Structure

• Senior Management efforts across the Company including:

• Communication Strategy

• Reward and Recognition systems

• Goal Alignment

• Project over-site management

• Prioritization

• Process Alignment

• Collaborative environment

• Scorecard/Dashboard

• Roles & Responsibilities

Keep all informed through a “LeanSigma Project” Folder on a shared drive

• Give Strategic Direction• Agree Recommendations• Resolve Issues• Remove obstacles• Support & coach

Steering Team

QA/QC/Mfg Expertise

• Cross-functional ‘users’• Full Time Team• Make Recommendations

• Cross-functional ‘experts’• Milestone Delivery

• Give Tactical Direction• Agree Recommendations• Resolve Issues• Support & coach• Implement Recommendations

Pilot Project Team

Ad hocProject Groups


Experts Role in Facilitating LeanSigma

Exp

erts

Co

mp

an

y

Cu

ltu

re

Ow

ners

hip

Time

Training & FacilitationLean & Supply Chain ToolsLeanSigma ExpertiseProject Management

Auditing

Monitoring

Guidance

Driving Force

Sustainability

Internal Experts

Implementation Ownership

Need

Desire

Transfer

Point



• Lean

• Six Sigma

• Lean Sigma


• Strategy

• Methodology

• Deployment

• Case Studies

• Issues

• Methods

• Results



Lean Healthcare in Action

$20 Million Emergency Room Management Group

Pareto Analysis of Injuries Treated

0%

20%

40%

60%

80%

100%

Percent

Inju

ry T

yp

e

Series1 28% 49% 68% 84% 91% 95% 98% 100%

Knee Elbow Head Foot Back Pelvic Internal Face

Key Benefits•Labor and Over-time reduced 5%

•Maintained compliance and quality

•$250k annual operatingexpense reduction

Key Benefits•Labor and Over-time reduced 5%

•Maintained compliance and quality

•$250k annual operatingexpense reduction

The demand analysis allow the treatment centers to reset stocking levels oftreatment carts in line with the demand. Local activities (skate boarding contests) accounted for the increase number of knee, elbow and head trauma treated. Drs and nurses spent less time hunting for the right materials and implements.

80% of all injurieswere knee, elbow, head and foot


Lean Healthcare through……“Value Stream Mapping”

$350 Million Hospital Group

• The issue : could only get 2 knee operations per day accomplished.

• Perceived constraints: Drs blamed the nursing staff, Nursing staff blamed Administration and Administration blamed the Drs. and Nurses.

• Actual constraint found through VSM: Sterilizer could only process 2 cycles per day.

Current State MapKey Benefits

•89% of process steps were NVA and removed reducingthe process time by 65%.

•New process freed up the sterilizer thereby allowing for an additional 2-4 surgeries per day to be done.

•Current sterilizer was not capable of more than 3 cyclesper day. However, a new unit would allow for up to 10 cycles/day. The Hospital purchased a new unit and was able to perform 4-8 more surgeries per day. The new unitwas paid for within 3 months.

•Cost per procedure was reduced 8%.

Key Benefits•89% of process steps were NVA and removed reducingthe process time by 65%.

•New process freed up the sterilizer thereby allowing for an additional 2-4 surgeries per day to be done.

•Current sterilizer was not capable of more than 3 cyclesper day. However, a new unit would allow for up to 10 cycles/day. The Hospital purchased a new unit and was able to perform 4-8 more surgeries per day. The new unitwas paid for within 3 months.

•Cost per procedure was reduced 8%.Sterilization Process

Document

Type ofPayment

Flow ofInformation

Flow of Money

PPO

PreferredProviderOrganization

3rd PartyBilling

Service

Outside CareProvider

“A”


“Z”

Hospital

BillingProcess at

Hospital

IndicatesSeveral Inside

Providers

Indicatesseveral outside

providers

PolicyOwner

PatientBillingInfo

RemittanceAdvice

EmployerOf

PolicyHolder

Explanation

OfBenefits

PatientBillingInfo.

RemittanceAdvice

InsuranceCarrier

“A”

InsuranceCarrier

“Z”

...

...

PatientPayment

PatientPayment

ClaimsPayment

ClaimsPayment

CareProvider

“A”

CareProvider

“Z”

...

Claims& Fee

Summary

Co-payDeductible

Balance DueOr Direct Bill

Co-payDeductible


Claims& FeePayment

Document

Type ofPayment

Flow ofInformation

Flow of Money

Document

Type ofPayment

Type ofPayment

Flow ofInformation

Flow of Money

PPO


3rd PartyBilling

Service


“A”


“Z”

Hospital

BillingProcess at

Hospital


Providers


providers

PolicyOwner

PatientBillingInfo

RemittanceAdvice

EmployerOf

PolicyHolder

Explanation

OfBenefits

PatientBillingInfo.

RemittanceAdvice

InsuranceCarrier

“A”

InsuranceCarrier

“Z”

...

...

PatientPayment

PatientPayment

ClaimsPayment

ClaimsPayment

CareProvider

“A”

CareProvider

“Z”

...

Claims& Fee

Summary

Co-payDeductible


Co-payDeductible


PPO


3rd PartyBilling

Service


“A”


“Z”

Hospital

BillingProcess at

Hospital


Providers


providers

PolicyOwner

PatientBillingInfo

RemittanceAdvice

EmployerOf

PolicyHolder

Explanation

OfBenefits

PatientBillingInfo.

RemittanceAdvice

InsuranceCarrier

“A”

InsuranceCarrier

“Z”

...

InsuranceCarrier

“A”

InsuranceCarrier

“Z”

...

...

PatientPayment

PatientPayment

PatientPayment

PatientPayment

ClaimsPayment

ClaimsPayment

ClaimsPayment

ClaimsPayment

CareProvider

“A”

CareProvider

“Z”

...

Claims& Fee

Summary

Co-payDeductible


Co-payDeductible


Claims& FeePayment


Lean Procurement Utilizing LeanSigma

$1.2 B Medical Device Operation(a division of J & J)

Supplier performance improved to better than 98% while reducing their inventory hold by 50%

91

31SNVA

60NVA

11SNVA

Defect:Process and tolerance variabilityDMAIC Project:

50

27SNVA

17NVA

Lean out the Supply Network, reduce Supplier parts variability and install a pull replenishment model$34M

$31M

6 VA 6 VA

5 SNVA 21

210

ReworkLoops

RMSSteps

PFGSSteps

Handoffs Raw MaterialInventory

Procurement lead-time was reduced from 4-5 weeks down to 1 day


Lean Procurement Model for Success

MfgPlants Distribution

Supplier• focus on small batch

and short LT• plan using Kanban

board

• High flexibility to match demand

SupplierPlanner• replenishes

to stock

Buyer Planner• co-located• manages customer (Mfr)

demand• sequence plan to simple

capacitymodel

• plans custom orders• RBS, KB, MRP

MTO

FGStores

FinishedGoods

Visiblemeasures

PKB

Planned Raw Stock Store

RawSupplier 2

MKB

Customer

RawSupplier 1

MKB

PKB

PKB

MKB

PKB

MKB

Item A

Item C

KANBAN CONTROL BOARDKANBAN CONTROL BOARD

URGENT

Item D

Item B

LESS URGENT

Green Yellow Red

$$$

$$$

Scheduling Wheels

Rate BasedScheduled

1000 5000 10000

Item aItem bItem c

SPCDOE DFMA DMAICSIPOC

LeanSigma Principles

BUILD A STRONG,

SUSTAINABLE

STRUCTURE


ClientLogo

Client Location

Example 2- Pharmacovigilance…

As-is Map

Process

Steps

QC

Steps

Reg

Steps

S&DS

Steps

Total

Steps

Error Loops,

F/U's &

Cosuspect

Total

Steps

Report

Type

Process

structur

e

US-CT 47 11 29 0 87 17 104 15 day IND Parallel

Non US-CT 35 11 22 0 68 9 77 15 day IND Parallel

Non US-Spont 32 13 21 19 85 45 130 15 day NDA Parallel

US-Spont 79 12 21 19 131 35 166 Spont Sequentia

477


Example 2a – Pharmacovigilance…

As-is Flow Diagram

• 4560 cases times .5 miles/case =2780 miles traveled/year.

• The distances result in increases in:

• lead times

• batching

• processdelays

MDMD

MD

MDAdmin Temp

Admin

Admin

MD

MDTemp

Temp

Regulatory

Data Mgt

Corp

FilesFDA

2nd Floor

1st Floor

Garden Level

The current layout leads to a case travelling about 1/2 mile from case receipt to submission

The current layout leads to a case travelling about 1/2 mile from case receipt to submission


Example 2b – Pharmacovigilance…

Redesigned Process Map

Actual redesigned process

Process

Steps

QC

Steps

Reg

Steps

S&DS

Steps

Total

Steps

Error Loops,

F/U's &

Cosuspect

Total

Steps NVA VA SNVA

All 17 0 0 0 17 0 17 0 8 9

Client


Serious Case Path Sequence1. Receive case by fax and sent

to hub-bin2. Initial Triage of case and

place in appropriate hub-bin3. Assessment and data entry4. Submission and printing of

required documents5. File Pending awaiting further

action6. File Archive awaiting further

action7. Offsite storage

DSS

DSC

Archive FilesArchive Files

Hub-Bin

Faxes FU’s

1

3

4

6

5

Off-sitestorage7

Distance traveled reduced by 96%

Approx. 100 ft/case

2

Example 2c – Pharmacovigilance…

Redesigned Flow Diagram


Lean Office in Action $4.8 B Pharmaceutical/Biotech/Chemical Operation

• Case travel distance was reduced by 96% from 1/2 mile to 100ft.

• All NVA steps wereremoved (400+)

• Global complianceimproved from 30% to better than 97% pa

• Case processing time was reduced from 21 days to 11

• Internally generateddocuments were reduced from 32 to 1

• Improved productivity by105% with existing staff

• Reduced process steps from 477 to 17

Source:

Client Process Maps

includes rework loops

Number of process steps and hand-offs

NVA

78%

VA

3%SNVA

19%

104

15

0

20

40

60

80

100

120

140

160

180

Old Process

10

25

Redesigned

Process

SNVA

55%

VA

45%

Before

76%

After

Steps

Handoffs



• Lean

• Six Sigma

• Lean Sigma

• Designing LeanSigma for the Service Business Strategy• Methodology

• Deployment

• Case Studies

• Issues

• Methods

• Results



QUESTIONS?