iee one day workshop handout material, romania 5-9-13 [compatibility mode] (1)

© 1992-2013 by Smarter Solutions, Inc. Austin, TX www.smartersolutions.com

1

Integrated Enterprise Excellence

One-day Workshop

Smarter Solutions, Inc. www.smartersolutions.com [email protected]

512-918-0280

Referenced chapters, examples, and exercises are from

The Integrated Enterprise Excellence System: Volumes II

Forrest W. Breyfogle III, Bridgeway Books/Citius Publishing, 2008

Note

All contents of these materials are Copyright © 1992-2013 Smarter Solutions, Inc.. All rights reserved. The phrases 'smarter solutions', 'satellite-level', '30,000-foot-level' , '50-foot-level', Integrated enterprise excellence, IEE, and the logo featuring the words 'smarter solutions' and an upwardly moving arrow are each trademarks or registered trademarks of Smarter Solutions, Inc.

© 1992-2013 by Smarter Solutions, Inc. Austin, TX www.smartersolutions.com

2

Agenda

1. Business Management and Improvement Practices

Business Management Systems

Team Exercise: Assessment of current business management and improvement practices

2. Steps 1-2 of the 9-step Integrated Enterprise Excellence (IEE) Business Management System

Vision and mission

Value chain creation for integrating processes with performance measures

Issues with traditional performance metric reporting

An enhanced scorecard methodology with predictive scorecards

Team Exercise: Comparing performance reporting methodologies

Team Exercise: Creating an enterprise value chain with functional metrics

3. Steps 3-9 of the 9-step IEE Business Management System

Analysis of the enterprise

Establishment of financial goals for corporate and operational units

Creation of strategies

Identification of high-potential improvement areas & establishment of operational goals

Identification and execution of projects

Assessment of each project’s final impact on goals

Continuation of the gain

4. Linkage of IEE with Business Process Management (BPM)

Roadmap for IEE/BPM linkage

Team Exercise: Creation of a hospital’s business management & improvement system

5. Wrap-up

IEE business system checklist

Tabular comparison of systems, which illustrates the benefits of IEE

Business system maturity model

Individual Exercise: Determination of the maturity for your business management system

IEE evolution and its benefits

© Smarter Solutions, Inc. 1 www.SmarterSolutions.com

Integrated Enterprise ExcellenceOne-day Workshop

Forrest W. Breyfogle, IIISmarter Solutions IncSmarter Solutions, Inc.

www.SmarterSolutions.com

Learning Objectives

• Summarize problems with current business management systems.

• Describe issues with current process improvement efforts.

• Describe benefits of predictive scorecards.

• Describe an enhanced system where business metric improvement needs pull for projects that benefit the business as a whole.

Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 2


Reference Books

• Much of this workshop’s content is taken from the Integrated Enterprise Excellence five-book series.

References will be made during this training to book sections for • References will be made during this training to book sections for additional information about topics. – The primary workshop reference will be Integrated Enterprise Excellence

Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard (IEE Vol. II)


Business Management Practices

• Management by objectives (from Wikipedia)– Management by objectives (MBO), also known as management by results

(MBR), is a process of defining objectives within an organization so that (MBR), is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization in order to achieve them.

– The term "management by objectives" was first popularized by Peter Drucker in his 1954 book The Practice of Management.

– The essence of MBO is participative goal setting, choosing course of actions and decision making.

– An important part of the MBO is the measurement and the comparison of the


An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set.

– Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.



• Exception management (from Wikipedia)– Exceptions are special cases that deviate from the normal behavior in a

business process and need to be cared for exceptionally, normally by human business process and need to be cared for exceptionally, normally by human intervention.

– Their cause might include: process deviation, malformed data, infrastructure or connectivity issues, poor quality business rules, etc.

– Exception management is the practice of investigating, resolving and handling such occurrences by using skilled staff and software tools.



• Management by wandering around (from Wikipedia)– The term management by wandering around (MBWA), also management by

walking around, refers to a style of business management which involves walking around, refers to a style of business management which involves managers wandering around, in an unstructured manner, through the workplace(s), at random, to check with employees, or equipment, about the status of ongoing work.

– The emphasis is on the word wandering as an impromptu movement within a workplace, rather than a plan where employees expect a visit from managers at more systematic, pre-approved or scheduled times.

– The expected benefit is that a manager, by random sampling of events or


p g , y p gemployee discussions, is more likely to facilitate the productivity and total quality management of the organization, as compared to remaining in a specific office area and waiting for employees, or the delivery of status reports, to arrive there, as events warrant in the workplace.



• Quality Management System (QMS) [from Wikipedia]– QMS can be expressed as the organizational structure, procedures, processes

and resources needed to implement quality management. and resources needed to implement quality management.

– Early systems emphasized predictable outcomes of an industrial product production line, using simple statistics and random sampling.

– By the 20th century, labor inputs were typically the most costly inputs in most industrialized societies, so focus shifted to team cooperation and dynamics, especially the early signaling of problems via a continuous improvement cycle.

– In the 21st century, QMS has tended to converge with sustainability and transparency initiatives as both investor and customer satisfaction and


transparency initiatives, as both investor and customer satisfaction and perceived quality is increasingly tied to these factors.

– Of all QMS regimes, the ISO 9000 family of standards is probably the most widely implemented worldwide - the ISO 19011 audit regime applies to both, and deals with quality and sustainability and their integration.


• Total Quality Management (TQM) [from Wikipedia]– TQM is an integrative philosophy of management for continuously improving

the quality of products and processes. the quality of products and processes.

– TQM is based on the premise that the quality of products and processes is the responsibility of everyone involved with the creation or consumption of the products or services offered by an organization, requiring the involvement of management, workforce, suppliers, and customers, to meet or exceed customer expectations.




• Business process management (BPM) [from Wikipedia]– BPM has been referred to as a "holistic management" approach to aligning an

organization's business processes with the wants and needs of clients. organization s business processes with the wants and needs of clients.

– It promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. BPM attempts to improve processes continuously. It can therefore be described as a "process optimization process."

– It is argued that BPM enables organizations to be more efficient, more effective and more capable of change than a functionally focused, traditional hierarchical management approach.


g pp

– This foundation closely resembles other Total Quality Management or Continuous Improvement Process methodologies or approaches.

– BPM goes a step further by stating that this approach can be supported, or enabled, through technology to ensure the viability of the managerial approach in times of stress and change.

Team Exercise

• List the business management systems that your organizations are using. – List the positives and negatives of these systems

• Your executive management has concluded that the hospital where you are employed has excessive costs and unsatisfactory customer satisfaction. – You have a new position, Director of Business Operations

Systems and Improvement You report to the CEO


Systems and Improvement. You report to the CEO.

– Your team is to improve the hospital’s operations.• What improvement projects does your team suggest should be created?

• What else should be undertaken?


Team Exercise: Group Discussion

• Do you think that this situation could occur?

• Thoughts about typical business management systems that organizations are using; e.g., management by objective, management by exception, management by walking around, others?– What are the opportunities for improving these approaches?

• Share the name of one improvement project that your team


selected.– How did you select that project? Who owns completion?

– Do you think that the project could “fall off a process-improvement practitioner’s plate” because of other priorities?

Team Exercise: Group Discussion

• What else should be done when managing the hospital?

• Four years from now the company’s industry sector will experience hard times and even more financial pressures– Do you think that the process improvement function will survive

downsizing efforts?



Improvement Project Selection

• In process improvement programs, projects are typically selected from a ranked list of opportunities.– This push (using as a Lean term) for a project creation can lead to

significant resources being spent on the sub-optimization of processes, where the business as a whole does not benefit.

• What other methods have you encountered for selecting improvement projects?


Other Actions

• Organizational improvement efforts benefit if they are integrated with a predictive scorecard and

l ti ll /i ti l t t i l i t th t th analytically/innovatively strategic planning system so that the – organization can move toward achievement of the 3 Rs of business;

i.e., everyone doing the Right things, and doing them Right, at the Right time.

• This objective is achieved through the Integrated Enterprise Excellence (IEE) business system


Excellence (IEE) business system.


Graphic View on the 9 Steps to Excellence in Governance

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

6. Identify high potential improvement 7. Identify and

8. Assess project's completion impact 9 Maintain the


5. Create strategies.

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

execute projects.

completion impact on enterprise

goals.

9. Maintain the gain.

Figure 4.7 Integrated Enterprise Excellence, Volume II, Copyright 2008

1. Describe vision and mission

Mission, vision and values outlines

• Who we are.





• What we seek to achieve.

• When and how we want to achieve it.


4. Establish SMART satellite-level metric goals.


6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric

goals.





goals.


g

7. Identify and execute projects.

8. Assess project's completion impact on

enterprise goals.


g



enterprise goals.



2. Create the Enterprise Value Chain





Basic “Business Value Chain” chart represents activities, without regard





goals.





goals.

to the organization chart


g



enterprise goals.


g



enterprise goals.











goals.





goals.Basic value chain can be


g



enterprise goals.


g



enterprise goals.


Basic value chain can be expanded to include significant

inputs and outputs











goals.





goals.Activities outside of the main flow

Activities outside of the


g



enterprise goals.


g



enterprise goals.


Activities outside of the main flow can be added as standalone units

outside of the main flow can be added as standalone

units










goals.





goals.


g



enterprise goals.


g



enterprise goals.


Shaded steps can be “drilled down”


Develop Product

Market Product Sell ProductProduce &

Deliver Product

Invoice and Collect

Payment

Report Financials

InformationHuman

Days Sales Outstanding

(DSO)

Percent Annualized

Gain in Gross Revenue

Gross Revenue

Defective Rate

Lead Time

Developed Product Design

Quality

Product Development

Lead Time

Work in Process (WIP)

Voice of the Customer

(VOC)

Labor

Quote Quality

RFQ Response Acceptance

Rate

Quote Response

Time

Net Profit Margins

Existing Customer Additions

New Customer Additions

Timely Inputs

Effective Inputs






Step 1 Step 2 Decision Step 3No

Step 4

Yes

End

Start

Information Technology

(IT)

Human Relations (HR)

Enterprise Process

Management (EPM)

On-time Delivery

Labor Relations Safety and

Environment

Legal Finance

Internal Process Reworks

Product Margins

TOC Throughput

Learning and Growth





goals.





goals.


Step 5 Step 7Step 6

Process Step 6

Start Step 6A Step 6B Step 6C End

g



enterprise goals.


g



enterprise goals.


Subprocess drilldown example

VOC step drill down Complaints

Audits

Receive complaint

Evaluation of complaint by Enterprise Process

Management Department

Document complaint in

data warehouse

Document results in data warehouse and

give feedback to person who complained

Weekly someone acts as a customer and documents

findings

Document results in data

warehouse

Develop Product


Deliver Product

Invoice and Collect

Payment

Report Financials


(IT)Human Relations (HR)


(DSO)

Percent Annualized


Gross Revenue

Defective Rate

Lead Time


Quality

Product Development

Lead Time


On-time Delivery


(VOC)

Labor Relations

Safety and Environment

Quote Quality


Rate


Quote Response

Time

Net Profit Margins



Timely Inputs

Customer Satisfaction

with Feedback

Client turnover

Surveys

Internal Survey

Conduct random survey to 1% of end customers, asking about

system problems and one suggestion what should done

differently to improve.


warehouse

g

Conducts a survey of 1/12 of the employees every month; e.g., as

described in chapter 43 of I l ti Si Si


warehouse


Enterprise Process

Management (EPM)

Legal Finance

Reworks

Product Margins

TOC Throughput

Learning and Growth

Data Warehouse

Monthly statistically analyze complaint, audits, survey, and

retention data

Report on findings, making suggestions, when appropriate, for

improvement

Monthly evaluate 30,000-foot-level reported defective and on-time delivery metrics, checking

for metric degradation and improvement project(s) status

Implementing Six Sigma







Produce and Deliver Products





goals.





goals.

Adding enterprise & operational level f t i

Lead Time


g



enterprise goals.


g



enterprise goals.


performance metrics completes value chain

Defective RateWIPOn-time Del.

After determining what to measure, need to then select performance reporting methodology. Vol II, Fig. 7.1

Performance Reporting: Table of Numbers

What conclusion would you make from this report?

Performance Meas ure F Y 2001

Ac tual

F Y 2002

Ac tual

F Y 2003

Ac tual

F Y 2003

Amended

F Y 2004

Amended

Perc entage of cus tomers s atis fied

with dis patch s taff 99.99% 100% 99.99% 98% 98%

Perc entage of priority one c alls

dis patched to field c rews within

80 minutes of rec eipt 99.99% 99% 99.99% 95% 95%

L abor cos t per cus tomer c all

taken in Dis patch Operations $4.20 $5.31 $5.09 $4.88 $5.09

Number of c alls taken through

Dis patch Operations 62,054 59,828 63,046 60,000 60,000


Number of priority one c alls

dis patched to field c rews 5,797 4,828 6,686 5,000 6,500

Number of work orders and

component parts (s egments )

c reated in databas e 8,226 4,724 7,742 5,500 6,700

Reproduced from Table 3.1 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard


Performance Reporting

• The next four slides will describe/compare the revenue-generated performance of five sales personnel.– Instead of sales people, what is something similar in your

organization that could be compared?

– What response instead of revenue could be compared?


Performance Reporting: Pie Chart


12345

PersonSales

5

2

1

12345

PersonSales

2

15


4

3

4

3

Reproduced from Figure 3.1 of Integrated Enterprise Excellence Volume II, Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard


Performance Reporting: Line Chart


12345

PersonSales

60

140

100

nue

(Tho

usan

d D

olla

rs)


20

Rev

en

Months

5 6 7 8 9 11 12 1 2 34


Performance Reporting: Bar Chart


100

200

400

300

enue

(T

hous

and

Dol

lars

)

500

600

12345

PersonSales


100

Rev

e

05 6 7 8 9 10 11 12 1 24 3

Months



Performance Reporting: Bar Chart

What conclusion would you make from this report, where data are from several years?

200

400

300

ue (

Tho

usan

d D

olla

rs)

500

600

500


432143214321432143214321432143214321432143214321

100

Rev

enu

YearMonth 5 6 7 8 9 10 11 12 1 24 3


What conclusion would you make from this report?Monthly SCORECARDBusiness Unit Name

Measurement Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05CUSTOMERCustomer Metric A 0.63574 0.653576 0.660404 0.732996 0.62521 0.708566 0.641873 0.727115 0.687201 0.6123 0.670894 0.6341Yellow if equal to or higher than 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720

Performance Reporting: Stoplights

Green if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750Customer Metric B 1.866044 1.804823 1.777056 1.87373 1.791988 1.826504 1.824634 1.799849 1.822007 1.838969 1.87088 1.893155Yellow if equal to or higher than 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830Green if equal to or higher than 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860Customer Metric C 0.82475 0.730724 0.627179 0.728212 0.751174 0.801946 0.780248 0.761874 0.68133 0.790902 0.728168 0.790485Yellow if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750Green if equal to or higher than 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780

FINANCEFinance Metric A 3.387525 2.965966 3.042505 2.891057 3.485847 2.867981 2.764183 3.297147 3.301612 2.892969 2.737161 3.0936Yellow if equal to or higher than 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05Green if equal to or higher than 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1Finance Metric B 2.09819 2.254758 2.345674 2.207099 2.316309 2.214396 2.156223 2.493305 2.509988 2.163489 2.168469 2.288786Yellow if equal to or higher than 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25Finance Metric C 0.762611 0.958071 1.051227 0.867969 1.158351 0.82278 0.800541 0.989747 0.980718 0.611179 0.789868 1.035084Yellow if equal to or higher than 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9Green if equal to or higher than 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95Finance Metric H 0.222716 0.480099 0.296397 0.203 0.3541 0.2326 0.1693 0.4552 0.2278 0.194 0.288 0.321Yellow if equal to or higher than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21Green if equal to or higher than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25Finance Metric I 0.490024 0.27568 0.190908 0.357 0.5284 0.4058 0.3391 0.3347 0.3247 0.327 0.286 0.383Yellow if equal to or higher than 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3Green if equal to or higher than 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35

INTERNAL BUSINESS OPERATIONSIBO Metric A 1.7693 1.73499 1.80064 1.76888 1.76068 1.79877 1.863956 1.862206 1.829389 1.875557 1.741041 1.69758Yellow if equal to or higher than 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70Green if equal to or higher than 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73IBO Metric B 0.20531 0.18053 0.184817 0.16204 0.18 0.178 0.202 0.205 0.176 0.226 0.201 0.197Yellow if equal to or less than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25Green if equal to or less than 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22IBO Metric C 0.427692 0.505666 0.504354 0.568529 0.44906 0.464186 0.446241 0.422419 0.445758 0.475769 0.340339 0.366324Yellow if equal to or less than 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26Green if equal to or less than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21IBO Metric D 2.66634 2.64814 2.69324 2.67166 2.68 2.66 2.67 2.68 2.65 2.67 2.67 2.69Yellow if equal to or less than 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60Green if equal to or less than 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58 2 58

Let’s examine a different set

of data.


Green if equal to or less than 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58IBO Metric F 0.113318 0.157456 0.163175 0.146534 0.113 0.143 0.143 0.173 0.143 0.163 0.133 0.143Yellow if equal to or less than 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086Green if equal to or less than 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068IBO Metric G 0.043949 0.078984 0.051823 0.055083 0.110424 0.068515 0.080985 0.076333 0.07306 0.077379 0.103885 0.069867Yellow if equal to or less than 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06Green if equal to or less than 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05IBO Metric H 1.222222 1.222222 1.166667 1 1 1 1 1.166667 1.333333 1.25 1.230769 1.266667Yellow if equal to or higher than 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33Green if equal to or higher than 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45

LEARNING AND GROWTHL&G Metric A 4.47048 5.23666 4.17365 4.57158 4.54306 4.31449 4.67242 3.67574 4.94651 3.57205 4.92629 4.55868Yellow if equal to or less than 5 5 5 5 5 5 5 5 5 5 5 5 5Green if equal to or less than 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5L&G Metric B 68.1916 69.643 57.0598 62.4947 59.6528 74.1863 77.7315 54.8459 57.6235 83.5998 66.4914 54.2673Yellow if equal to or higher than 65 65 65 65 65 65 65 65 65 65 65 65 65Green if equal to or higher than 75 75 75 75 75 75 75 75 75 75 75 75 75



Performance Reporting: Stoplights

Red/Yellow/Green visuals are the most popular concept in scorecards because of the stoplight relationship.

– Only compares the instantaneous performance to a set goal

– No insight into trends or historical performance


historical performance

Graphics found at http://download.oracle.com/docs/cd/E15051_01/web.1111/b31973/dv_intro.htm

If the goal is not a specification, it is often ignored. Is that a good behavior?

Performance Reporting: Balanced Scorecard

Is your organization using the Balanced Scorecard?

Vision and Strategy

Financials

ProcessesCustomer

Balanced Scorecard

10 0

CUSTOMER SATISFACTION 30

PROFIT IN %

30

PROFIT IN %

30

PROFIT IN %

Each Category has:


Learning

0

QUA

LITY

SPEE

D

COU

RTES

Y

COMP

ETEN

CE

COM

MUNI

CATIO

N

HEL

PFU

LNES

S

!

0

10

20

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

!0

10

20

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

0

10

20

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

!

Each Category has:Objectives, measures, targets, and initiatives



Performance Reporting: Balanced Scorecard

Thoughts about the BSC approach methodology?


Vol. II, Fig. 3.6

Performance Reporting: AlternativesTabular Reporting

Performance Meas ure F Y 2001

Ac tual

FY 2002

Ac tual

F Y 2003

Ac tual

FY 2003

Amended

F Y 2004

Amended

Perc entage of cus tomers s atis fied

with dis patch s taff 99.99% 100% 99.99% 98% 98%

Perc entage of priority one c alls

dis patched to field c rews within

80 minutes of rec eipt99.99% 99% 99.99% 95% 95%

Financials

Balanced Scorecard

Classic Bar Charts

80 minutes of rec eipt

L abor cos t per cus tomer c all

taken in Dis patch Operations $4.20 $5.31 $5.09 $4.88 $5.09

Number of c alls taken through

Dis patch Operations 62,054 59,828 63,046 60,000 60,000

Number of priority one c alls

dis patched to field c rews 5,797 4,828 6,686 5,000 6,500

Number of work orders and

component parts (s egments )

c reated in databas e 8,226 4,724 7,742 5,500 6,700

600000

500000

400000

llars

)

12345

PersonSales

Vision and Strategy

Processes

Learning

Customer

0

10 0

QUAL

ITY

SPEE

D

COUR

TESY

COM

PETE

NCE

COMM

UNIC

ATIO

N

HELP

FULN

ESS

CUSTOMER SATISFACTION

!

0

10

20

30

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

PROFIT IN %

!0

10

20

30

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

PROFIT IN %

0

10

20

30

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

PROFIT IN %

!


Month 321121110987654

300000

200000

100000

0

Rev

enue

(D

ol

Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05Finance Metric B 2.10 2.25 2.35 2.21 2.32 2.21 2.16 2.49 2.51 2.16 2.17 2.29 2.14Yellow if equal to or higher than 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25

What other approach might we use to present data?


Process Tracking and Performance Metrics: Issues and Resolution

TYPICAL METRICS

• Based on fiscal yearBased on fiscal year

• Unrelated to improvement system

• Point to point comparisons



However …


Xs Xs Xs




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

improvement


Let’s next examine how we can create effective metrics.

Monthly SCORECARDBusiness Unit Name

Measurement Targets Aug'04 Sep'04 Oct'04 Nov'04 Dec'04 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05CUSTOMERCustomer Metric A 0.63574 0.653576 0.660404 0.732996 0.62521 0.708566 0.641873 0.727115 0.687201 0.6123 0.670894 0.6341Yellow if equal to or higher than 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720 0.720Green if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750Customer Metric B 1.866044 1.804823 1.777056 1.87373 1.791988 1.826504 1.824634 1.799849 1.822007 1.838969 1.87088 1.893155Yellow if equal to or higher than 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830 1.830Green if equal to or higher than 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860 1.860Customer Metric C 0.82475 0.730724 0.627179 0.728212 0.751174 0.801946 0.780248 0.761874 0.68133 0.790902 0.728168 0.790485Yellow if equal to or higher than 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750 0.750Green if equal to or higher than 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780 0.780

FINANCEFinance Metric A 3.387525 2.965966 3.042505 2.891057 3.485847 2.867981 2.764183 3.297147 3.301612 2.892969 2.737161 3.0936Yellow if equal to or higher than 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05 3.05Green if equal to or higher than 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1Finance Metric B 2.09819 2.254758 2.345674 2.207099 2.316309 2.214396 2.156223 2.493305 2.509988 2.163489 2.168469 2.288786Yellow if equal to or higher than 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25Finance Metric C 0.762611 0.958071 1.051227 0.867969 1.158351 0.82278 0.800541 0.989747 0.980718 0.611179 0.789868 1.035084Yellow if equal to or higher than 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9Green if equal to or higher than 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95Finance Metric H 0.222716 0.480099 0.296397 0.203 0.3541 0.2326 0.1693 0.4552 0.2278 0.194 0.288 0.321Yellow if equal to or higher than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21Green if equal to or higher than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25Finance Metric I 0.490024 0.27568 0.190908 0.357 0.5284 0.4058 0.3391 0.3347 0.3247 0.327 0.286 0.383Yellow if equal to or higher than 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3Green if equal to or higher than 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35

Let’s examine Finance Metric B

Stoplight Scorecard

q g

INTERNAL BUSINESS OPERATIONSIBO Metric A 1.7693 1.73499 1.80064 1.76888 1.76068 1.79877 1.863956 1.862206 1.829389 1.875557 1.741041 1.69758Yellow if equal to or higher than 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70Green if equal to or higher than 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73 1.73IBO Metric B 0.20531 0.18053 0.184817 0.16204 0.18 0.178 0.202 0.205 0.176 0.226 0.201 0.197Yellow if equal to or less than 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25Green if equal to or less than 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22IBO Metric C 0.427692 0.505666 0.504354 0.568529 0.44906 0.464186 0.446241 0.422419 0.445758 0.475769 0.340339 0.366324Yellow if equal to or less than 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26Green if equal to or less than 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21IBO Metric D 2.66634 2.64814 2.69324 2.67166 2.68 2.66 2.67 2.68 2.65 2.67 2.67 2.69Yellow if equal to or less than 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60Green if equal to or less than 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58IBO Metric F 0.113318 0.157456 0.163175 0.146534 0.113 0.143 0.143 0.173 0.143 0.163 0.133 0.143Yellow if equal to or less than 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086Green if equal to or less than 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068 0.068IBO Metric G 0.043949 0.078984 0.051823 0.055083 0.110424 0.068515 0.080985 0.076333 0.07306 0.077379 0.103885 0.069867Yellow if equal to or less than 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06Green if equal to or less than 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05IBO Metric H 1.222222 1.222222 1.166667 1 1 1 1 1.166667 1.333333 1.25 1.230769 1.266667Yellow if equal to or higher than 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33Green if equal to or higher than 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45

LEARNING AND GROWTHL&G Metric A 4.47048 5.23666 4.17365 4.57158 4.54306 4.31449 4.67242 3.67574 4.94651 3.57205 4.92629 4.55868Yellow if equal to or less than 5 5 5 5 5 5 5 5 5 5 5 5 5Green if equal to or less than 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5L&G Metric B 68.1916 69.643 57.0598 62.4947 59.6528 74.1863 77.7315 54.8459 57.6235 83.5998 66.4914 54.2673Yellow if equal to or higher than 65 65 65 65 65 65 65 65 65 65 65 65 65Green if equal to or higher than 75 75 75 75 75 75 75 75 75 75 75 75 75

Let’s examine this corporation’s red-yellow-green

scorecard


33% red & 50% green?Special or Common Cause?

Green if equal to or higher than 3.1 3.1 3.1 3.1 3.1 3.1Finance Metric B 2.09819 2.254758 2.345674 2.207099 2.316309Yellow if equal to or higher than 2.2 2.2 2.2 2.2 2.2 2.2Green if equal to or higher than 2.25 2.25 2.25 2.25 2.25 2.25

C 3.1 3.1 3.1 3.1 3.1 3.1 3.12.214396 2.156223 2.493305 2.509988 2.163489 2.168469 2.288786

2.2 2.2 2.2 2.2 2.2 2.2 2.22.25 2.25 2.25 2.25 2.25 2.25 2.25

0 82278 0 800541 0 989747 0 980718 0 611179 0 789868 1 035084


Traditional Performance Reporting Example – Red-Yellow-Green Scorecard


TRADITIONAL SCORECARD EXCERPT

Building a Better Scorecard

2.7

2.6

2.5

2.4

2.3

2.2

2.1

2.0

Res

pons

e

_X=2.2583

UCL=2.6192

Individuals Control Chart99

95

90

80

70

605040

30

20

10

5

Perc

ent

32.657

Normal Probability Plot

IEE Improved Reporting for Process Assessment and Improvement

q g

INDIVIDUALS CONTROL CHART

The metric is colored red when a goal is not being met and corrective action needs to be taken.

This can result in counter‐productive initiatives, 24/7 firefighting, the blame game, and proliferation of fanciful stories about why goals


4

2.2

Histogram

Aug'0

5Ju

l'05

Jun'05

May'05

Apr'0

5

Mar'05

Feb'0

5Jan

'05

Dec'0

4

Nov'0

4Oct'

04

Sep'0

4

Aug'0

4

1.9

Date

LCL=1.89742.62.52.42.32.22.12.01.9

1

Response

2.2

blame game, and proliferation of fanciful stories about why goals weren’t met.

Most importantly, it tells us nothing about what to expect in the future! Vol. II,

Example 3.3




1

Integrated Enterprise Excellence (IEE) Scorecard System

Process is predictable


So what do we predict?

If there is a recent region of stability, we can say that the process is predictable.



Individuals Control Chart

C

LCL=1.90

UCL= 2.62

1.8

2.0

2.2

2.4

2.6

Mean = 2.26

Res

pons

e


If a process is predictable, we can consider that data from the recent region of stability

are a random sample of the future.

Observation2 41 3 5 6 7 8 9 10 11 12 13

• The red criterion, of less than 2.2, can be applied to the histogram for

4

2.2

Normal Histogram of Response

Histogram

2.23

4

ency 2.2

Histogram


– estimation of the percentage below 2.2;

– however, it is difficult to estimate from this graphic.

1

2

Fre

que

02.0 2.1 2.2 2.3 2.4 2.5

Response

• A probability plot is a better approach since – if the sample data are from a predictable

2.0 2.1 2.2 2.3 2.4 2.5Response

t

99

95

80

Normal Probability PlotNormal Probability Plot


• Conclude: Approx. 32.6% is below 2.2.

if the sample data are from a predictable process, this tool can provide a long-term performance estimate.

2.2

32.657Per

cen

2.0 2.1 2.2 2.3 2.4 2.5 2.61.9Response

80

5030

10

1

2.2

32.6

1.9 2.0 2.1 2.2 2.3 2.4 2.5 2.6Response





1


Res

pons

e

LCL=1.90

UCL= 2.62

1 8

2.0

2.2

2.4

2.6

Mean = 2.26

2

2.2

32.657Pe

rce

nt

99

95

80

5030

10

1

2.2

32.6




Observation

1.82 41 3 5 6 7 8 9 10 11 12 13

2.0 2.1 2.2 2.3 2.4 2.5 2.61.9Response

1

The probability plot provides process variability insight, which Edwards Deming said was important.

IEE reporting assesses predictability & then if the process is predictable provides a prediction statement.




1


Res

pons

e

LCL=1.90

UCL= 2.62

1 8

2.0

2.2

2.4

2.6

Mean = 2.26

2

2.2

32.657Pe

rce

nt

99

95

80

5030

10

1

2.2

32.6




Observation

1.82 41 3 5 6 7 8 9 10 11 12 13

2.0 2.1 2.2 2.3 2.4 2.5 2.61.9Response

1

Predictable process with an approximate non-conformance rate of 32.6%

3



• IEE Enterprise Performance Reporting System (EPRS) scorecard report-out format


IEE Scorecard

2.62.42.22.0

99

95

80

50

20

5

1

l

Per

cent

2.2

32.657

Mean 2.258StDev 0.1297N 13AD 0.531P-Value 0.141

Aug'0

5Ju

l'05

Jun'0

5

May'05

Apr'0

5

Mar'05

Feb'0

5

Jan'0

5

Dec'0

4

Nov'0

4

Oct'04

Sep'0

4

Aug'0

4

2.6

2.4

2.2

2.0

Indi

vidu

al V

alue

_X=2.2583

UCL=2.6192

LCL=1.8974

Probability plotNormal

I-chart


The process is predictable since the last process changeThe process estimates about 32.657% non-conformance rate

Process valuesDate


Traditional Performance ReportingPie Chart

12345

PersonSales

5

11234

PersonSales

15

12345

PersonSales

140

100

san

d D

olla

rs)

Line Chart

Sales data presented in

different formats

Bar Charts

600000

500000

12345

PersonSales

4

3

2

452

4

3

20

60

Rev

enu

e (T

hou

Months

5 6 7 8 9 11 12 1 2 34

400nd D

olla

rs)

500

600

500

Bar Charts


Month 321121110987654

400000

300000

200000

100000

0

Rev

enue

(D

olla

rs)

432143214321432143214321432143214321432143214321

100

200

400

300

Rev

enue

(Tho

usa

n

YearMonth 5 6 7 8 9 10 11 12 1 24 3


IEE 30,000-foot-level Scorecard

IEE Scorecard for Sales

120000

100000

n

UCL=11404660000

iati

on

UCL=66576

I-chart of Mean I-chart of Std. Deviation

Sales data presented in IEE format (before

change)

99.9

99

90

50rcen

t

90

50

Mean 71884StDev 32910N 170AD 0.520P-Value 0.184

343128252219161310741

80000

60000

40000

Subgroup Period

Su

bg

rou

p M

ea

_X=71884

LCL=29721

343128252219161310741

45000

30000

15000

0

Subgroup Period

Su

bgr

oup

Std

. Dev

_X=31664

LCL=-3249



The process is predictable between subgroups and within subgroupsThe est. median is 71883. with 80% of the occurrences from 29708. to 114059

200000150000100000500000

10

1

0.1

Data values

Pe

1140

59

7188

4

2970

8

10



120000

100000

n

UCL=11404660000

iati

on

UCL=66576


Sales data presented in IEE format (before

change)

99.9

99

90

50rcen

t

90

50


107411074110741

80000

60000

40000

Subgroup Period

Su

bg

rou

p M

ea

_X=71884

LCL=29721

107411074110741

45000

30000

15000

0

Subgroup Period

Su

bgr

oup

Std

. Dev

_X=31664

LCL=-3249

160000

120000

80000

ta v

alu

es


Individual Value Plot of Sales


The process is predictable between subgroups and within subgroupsThe est. median is 71883. with 80% of the occurrences from 29708. to 114059

200000150000100000500000

10

1

0.1

Data values

Pe

1140

59

7188

4

2970

8

10

54321

40000

0

categories

Da




150000

n

UCL=136782

1(Baseline) 2(New)

60000

atio

n

1(Baseline) 2(New)


Sales data presented in IEE

format (after change)

99

90

50rcen

t

90

50


37332925211713951

100000

50000

Subgroup Period

Su

bgr

oup

Mea

n

_X=103046

LCL=69311

37332925211713951

45000

30000

15000

0

Subgroup Period

Su

bg

rou

p S

td. D

evia

_X=19362

UCL=41818

LCL=-3094


Copyright 1992 – 2013. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 49Vol. II, Figure 9.6

The process is predictable since the last process changeThe est. median is 103046 with 80% of the occurrences from 76160. to 129932

1500001250001000007500050000

10

1

Data values in current stage

Pe

1299

32

1030

46

7616

0 10



150000

n

UCL=136782

1(Baseline) 2(New)

60000

atio

n

1(Baseline) 2(New)


Sales data presented in IEE

format (after change)

99

90

50rcen

t

90

50


1951951951

100000

50000

Subgroup Period

Su

bgr

oup

Mea

n

_X=103046

LCL=69311

1951951951

45000

30000

15000

0

Subgroup Period

Su

bg

rou

p S

td. D

evia

_X=19362

UCL=41818

LCL=-3094

150000

125000

100000

s in

cu

rren

t st

age





1500001250001000007500050000

10

1


Pe

1299

32

1030

46

7616

0 10

54321

75000

50000

categories

Dat

a va

lues


Team Exercise: Comparing Performance Reporting Methodologies

• Describe the differences in reporting methodologies.

• What are the benefits of using predictive scorecards?

Pie Chart

12345

PersonSales

5

4

3

2

112345

PersonSales

2

15

4

3

12345

PersonSales

20

60

140

100R

eve

nu

e (T

ho

usa

nd D

olla

rs)

Months

5 6 7 8 9 11 12 1 2 34

Line Chart


1951951951

150000

100000

50000

Subgroup Period

Su

bgro

up

Mea

n

_X=103046

UCL=136782

LCL=69311

1(Baseline) 2(New)

1951951951

60000

45000

30000

15000

0

Subgroup Period

Su

bg

rou

p S

td. D

evia

tion

_X=19362

UCL=41818

LCL=-3094

1(Baseline) 2(New)


Traditional Performance Reporting IEE Scorecarding


Bar Charts

Month 321121110987654

600000

500000

400000

300000

200000

100000

0

Rev

enue

(D

olla

rs)

12345

PersonSales

432143214321432143214321432143214321432143214321

100

200

400

300

Rev

enue

(Tho

usa

nd D

olla

rs)

500

600

Year

500

Month 5 6 7 8 9 10 11 12 1 24 3

Bar Charts


1500001250001000007500050000

99

90

50

10

1


Per

cen

t

1299

32

90

1030

46

50

7616

0 10


54321

150000

125000

100000

75000

50000

categories

Dat

a va

lues

in c

urr

ent

stag

e



2. Create the Enterprise Value Chain1. Describe vision and

mission.




Produce and Deliver Products





goals.





goals.

The resulting value chain Lead Time


g



enterprise goals.


g



enterprise goals.


value chain functional linkages

bridging silos

Lead Time

Defective Rate

WIP

On-time Del.Figure 7.1 Integrated Enterprise

Excellence, Volume III, Copyright 2008


2. Create the Enterprise Value Chain• Stoplight Scorecard data linkage with IEE value

chainIEE S d





Develop Product


Deliver Product

Invoice and Collect

Payment

Report Financials


(IT)

Human Relations (HR)

Enterprise Process

Management (EPM)


(DSO)

Percent Annualized


Gross Revenue

Defective Rate

Lead Time


Quality

Product Development

Lead Time


On-time Delivery


(VOC)

Labor Relations Safety and

Environment

Legal Finance

Quote Quality


Rate


Product Margins

Quote Response

Time

TOC Throughput

Net Profit Margins



Timely Inputs

Effective Inputs

Learning and Growth

IEE Scorecard

99

95

80

50

20

5

Per

cent

32.657

Mean 2.258StDev 0.1297N 13AD 0.531P-Value 0.141

2.6

2.4

2.2

2.0

Indi

vidu

al V

alue

_X=2.2583

UCL=2.6192

LCL=1.8974


I-chart 3. Analyze enterprise.




goals.





goals.


The process is predictable since the last process changeThe process estimates about 32.657% non-conformance rate

2.62.42.22.01

Process values

2.2

Aug'0

5Ju

l'05

Jun'0

5

May'05

Apr'0

5

Mar'05

Feb'0

5

Jan'0

5

Dec'0

4

Nov'0

4

Oct'04

Sep'0

4

Aug'0

4

Date

g



enterprise goals.


g



enterprise goals.


• Together we will create the high-level functional steps of a hospital’s enterprise value chain.

Team Exercise: Creating an Enterprise Value Chain with Functional Metrics

• We will then break into groups where each team is assigned a function.

• Each team is to note on a flipchart – Performance metrics for their function.

– A comparison between this metric selection approach and others


that you have seen.

• Report out to the class.


3. Analyze the Enterprise

• Analyze the enterprise as a whole, looking for





– constraints

– defective reduction opportunities

– waste

– speed to market

– other restraints





goals.





goals.


g



enterprise goals.


g



enterprise goals.


4. Establish Financial Goals for Corporate and Operational Units• Satellite-level metric goals (e.g., profit

margins and revenue growth) are to be SMART S ifi M bl





SMART: Specific, Measurable, Actionable, Relevant, and Time-based.





goals.





goals.


g



enterprise goals.


g



enterprise goals.



5. Create Strategies

• Develop strategies to improve performance when satellite-level metrics are not achieving goals




2. Describe value chain, including satellite-level and 30,000-foot-level metrics.are not achieving goals.

– Focus on creating strategies that are specific and benefit the big picture.





goals.





goals.


g



enterprise goals.


g



enterprise goals.


6. Indentify High-Potential Imp. Areas & Establish Oper. Goals

• Identify high potential target areas – Set 30,000-foot-level (operational) metric performance





goals

– Other business area 30,000-foot-level metrics are not to degrade from current performance levels.

• Things to consider: – Performance of value-chain metrics

– Statistical analysis of value-chain drill downs

Competitive pressures





goals.





goals.


– Competitive pressures

– Business environment

– Bottle necks

– New business opportunities

g



enterprise goals.


g



enterprise goals.



6. Indentify High-Potential Imp. Areas & Establish Oper. Goals





Business Goal Strategies High Potential Areas Projects

Improve marketing ff ti

Improve product group C h i

Step 4 Step 5 Step 6 Step 7





goals.





goals.

Increase monthly profit

margins by 2% in 10 months.

Increase monthly gross revenue by 8% in 10 months.

Reduce DSO mean by 3

days in 7 mo.

Reduce DSO of product group D and leverage benefits to

other business groups.

effectiveness by 15% in 10

mo.

C search engine ranking by 25%.

Improve RFQ acceptance

rate by improving


g



enterprise goals.


g



enterprise goals.


p gquote response time so that all

quotes are completed in

14 days. To be completed in 5

mo.

Increase TOC

Developed in Example 12.1

Figure 12.1 Integrated Enterprise Excellence,

Volume II, Copyright 2008

Enterprise Improvement Plan (EIP)

7. Identify and Execute Projects

• Project execution could follow one of the following methodologies:





– Special cause condition (solution known)• Just do it

– Special cause condition (solution unknown)• Root Cause Analysis: Fault tree analysis

– Common cause condition (solution known)• Lean Project: 5S, kaizen, value stream map





goals.





goals.


j , , p(VSM), low hanging fruit

– Common cause condition (solution unknown) • Plan-Do-Check-Act (PDCA): Continuous

improvement

• Lean Six Sigma DMAIC or DMADV roadmap

g



enterprise goals.


g



enterprise goals.



7. Identify and Execute Projects

• A Lean Six Sigma project execution roadmap that truly integrates Lean and Six Si t l i





Sigma tools is:3. Analyze enterprise.




goals.





goals.

D M A I C

Plan Project Wisdomof theMSABaseline Lean

ControlAnalyzeDefine Measure Improve

D M A I C

Plan Project Wisdomof theMSABaseline Lean

ControlAnalyzeDefine Measure Improve


g



enterprise goals.


g



enterprise goals.


PROCESS IMPROVEMENT PROJECT: P-DMAIC

Plan Projectand Metrics of the

OrganizationMSABaseline

ProjectLean

Assessment

PROCESS IMPROVEMENT PROJECT: P-DMAIC

Plan Projectand Metrics of the

OrganizationMSABaseline

ProjectLean

Assessment

From Figure 2.1, Integrated Enterprise Excellence Volume III, Improvement Project Execution: A Management and Black Belt Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard, Copyright 2008

8. Assess Each Project’s Final Impact on Goals• Each project should be judged against

how well it positively impacted the 30 000 f t l l t i f





30,000-foot-level metric performance. 3. Analyze enterprise.




goals.





goals.


g



enterprise goals.


g



enterprise goals.



Example: Hospital 30,000-foot-level metric –Diagnosis to bed time

• Demonstrated project’s process improvement

9181716151413121111

300

200

100

0

Tim

e (M

inut

es)

_X=45.7

UCL=80.0

LCL=11.5

Diagnosis to Bed Before ChangeDiagnosis to Bed After Change

200150100500

99

90

50

10

1

Perc

ent

7.065

1.82930

45.72 10.69 50 0.191 0.893124.9 45.40 50 0.767 0.043

Mean StDev N AD P

Diagnosis to Bed After ChangeDiagnosis to Bed Before Change

sub

I Chart of DiagnosistoBed by sub Probability Plot of DiagnosistoBedNormal


Week 51 there was a reduction from about 98% to 93% non-conf rate to 30 min. or less criterion

Process is predictable since day 51 with approx 93 % non-conformance rate to 30 min. criteria

Day DiagnosistoBed

Example: Hospital 30,000-foot-level metric –Errors per 1000 patient days

• Demonstrated project’s process improvementI Chart of Errors

4137332925211713951

80

60

40

20

0

Week

Erro

rs p

er th

ousa

nd p

atie

nt d

ays

_X=10.84UCL=15.30

LCL=6.39

Med Errors Before Med Errors After

C a o o s


Pred proc since week 30 with approx 11 errors per 1000 patient days

Process improvement was made in week 30 where error reduced from 48 to 11

Week


9. Maintain the Gain

• Value-chain metrics are to be a part of company-wide management review meetings for the assessment of day-to-




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

day performance and process-steps execution.





goals.





goals.


g



enterprise goals.


g



enterprise goals.


Linkage of IEE with BPM


Reproduced from https://www.smartersolutions.com/business-system-iee/


Team Exercise: Objectives

• As a group, we will discuss how your organization’s structure would differ from the following hospital IEE value chain.

• After being shown various performance attributes of a hospital’s value chain After being shown various performance attributes of a hospital s value chain, your team is to present results from the following in a flip-chart presentation:

– Create an EIP for the determination of improvement projects, which would benefit the enterprise as a whole.

– List attributes of a business management policy (rules) that addresses day-to-day activities, performance monitoring, and improvement efforts.

D t diff b t th IEE/BPM t l ti t t diti l


– Document differences between the IEE/BPM system relative to traditional approaches in the following areas (include positives and negatives for each entry):

• Improvement project selection

• Business management

Team Exercise: Input

Vision Statement: Our hospital will maintain an occupancy




4. Establish SMART



6. Identify high potential improvement



8. Assess project's completion impact

on enterprise goals.


p p yrate in the top 10% in our city while maintaining a full staff of employees and providing quality of services equal to or better than other hospitals in our area for all forms of service, achieving a cost structure that allows for maintaining excellent physical condition of the property.


More on following slides






4. Establish SMART







on enterprise goals.


How would your organization’s value chain differ?


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


Report Finances: Value Chain Drill Down

Functional

Generic flowchart or value-stream map

metrics relative to quality, cost, and time


Y=f(X)



Report Finances: Profit Margins Drill Down

The process is predictable since the last process change. The estimated median is 9.9 with 80% of the occurrences from 8.7 to 11.2.


Comment: On 10/1/2007 profit margins declined from an estimated median of about 11.9% to about 9.9%.

Voice of the Customer: Value Chain Drill Down


Functional






Reporting VOC: Dissatisfaction Drill Down

The process is now predictable. The estimated performance or capability is a 0.131 non-conformance rate.


Comment: Customer feedback:Poor room cleanliness, unfriendly staff, and spent a of time waiting.

Sales and Marketing: Value Chain Drill Down


Functional






Reporting Sales & Marketing: Market share

Comment: On 9/1/2007 k t

Predictable process since last change. The estimated median is 52.6 with 80% of the occurrences between 51.3 to 53.8.


9/1/2007 market share decreased from about 56% to about 53%.

Delivery of Services: Value Chain Drill Down


Functional






Reporting Delivery of Services: LOS

The process is predictable between subgroups and within subgroups. The estimated median of 262 8 with 80% of the


Comment: There are no comments.

262.8 with 80% of the occurrences between 149.6 to 375.9


Reporting Del. of Services: Weekly Errors

The process is predictable. The estimated error rate is 10.84 per thousand.

Comment: Process


Comment: Process improvement was made in week 30 where error rate reduced from approximately 48 to 11 per 1000 patients


Housekeeping: Value Chain Drill Down


Functional





Reporting Housekeeping: Quality

Comment: On

The process is predictable since the last process change. The estimated median is 6.8 with 80% of the occurrences from 6.1 to 7.4.


Comment: On 9/1/2007 cleaning services quality decreased after being outsourced as part of a cost reduction program.


Patient Transportation: Value Chain Drill Down


Functional





Reporting Transportation: Diag. to Bed

Comment: Week 51

The process is predictable since the last process change. The process estimated non-conformance rate is about 92.9%


Comment: Week 51 there was a reduction from about 98% to 93% non-conformance rate relative to a criterion of 30 minutes or less.


Team Exercise: Revisiting Objectives

• Present results from the following in a flip-chart presentation:– Create an EIP for the determination of improvement projects, which would benefit

the enterprise as a whole.the enterprise as a whole.

– List attributes of a business management policy (rules) that addresses day-to-day activities, performance monitoring, and improvement efforts. Consider the 9-step IEE system with BPM integration.

• Example responses are: 1. Each process owner daily monitors their value chain 30,000-foot-level metric to determine if there any special cause events that need to be addressed. 2. Divisional management is given a monthly status update on how EIP targeted metrics are performing and status of related improvement projects.


– Document differences between the IEE/BPM system relative to traditional approaches in the following areas (include positives/negatives for each entry):

• Improvement project selection

• Business management

Revisiting: Graphic View on the 9 Steps to Excellence in Governance

4 Establish1. Describe vision and mission.



4. Establish SMART




areas and establish related SMART 30,000-



on enterprise goals



foot-level metric goals.goals.


Let’s now examine a checklist for accomplishing the IEE system attributes


IEE Business System Checklists

• Let’s collective look at the following IEE implementation checklists. Each person should highlight a couple important it th t diff ti t IEE f t diti l th d items that differentiate IEE from traditional methods. – Define: IEE Vol. II, Section 6.2, page 170

– Measure: IEE Vol. II, Section 7.2, page 194

– Analyze: IEE Vol. II, Section 8.2, page 229

– Improve: IEE Vol. II, Section 13.2, page 370

C t l IEE V l II S ti 14 2 397


– Control: IEE Vol. II, Section 14.2, page 397

• We will discuss items that were highlighted

Revisiting: Linkage of IEE with BPM

• IEE needs to be able to challenge or improve the or improve the rules/policies in an organization.

• Thoughts about IEE integration with BPM?


Reproduced from https://www.smartersolutions.com/business-system-iee/


SELECTED ATTRIBUTES Integrated Enterprise Excellence (IEE)

Typical MBA

Program

Traditional Six Sigma

Traditional Lean

Original Balanced Scorecard

Defines process for improvements at operational/project level ++ ‐ ++ ++ ‐

Defines a process for improvements at enterprise level ++ ‐ + + ‐

Comparison of Systems

++: Attribute included+: Partial/incomplete Inclusion- : Not included

Derives improvement projects from enterprise value chain metric performance needs ++ ‐ ‐ ‐ ‐

Uses DMAIC process to implement process improvements (P‐DMAIC) ++ ‐ ++ + ‐

Uses DMAIC process to integrate enterprise scorecards, strategic planning, business improvements, and control (E‐DMAIC)

++ ‐ ‐ ‐ ‐

Supports standardized graphical representation of selected data (dashboard) ++ + ‐ ‐ +

Aligns enterprise level business metrics (satellite‐ ++ ‐ ‐ ‐ ‐level) and operational metrics (30,000‐foot‐level) ++ ‐ ‐ ‐ ‐

Includes process for definition of rational metrics, aligned at operational and enterprise level ++ + ‐ ‐ ‐

Includes process for distinguishing between "common cause" and "special cause" problems so

as to eliminate firefighting

++ ‐ ‐ ‐ ‐

Integrates best practices of multiple disciplines: SS, Lean, DOE, etc. ++ ‐ ‐ ‐ ‐

Business System Maturity Model

• Attributes of a business system maturity model– EPM/BPM based Business System in Place

Process aligned metric usage A business system– Process aligned metric usage

– Predictive performance reporting

– Automation in reporting

– Decisions based on performance metrics

– Entire enterprise linked through a single reporting system

– Strategies developed from performance gaps

– Strategic alignment of improvement efforts

A business system maturity model form is

provided near the end of the course material.


g g p

• A 1-10 score is to determined for each attribute, where 10 is perfection. – The lowest of the eight attribute scores is the overall organization maturity

model score.


Individual Exercise: Your Business System Maturity Model Assessment

• Using the blank business system maturity model form that is provided near the end of the workshop hand-out material,

h t d t i ti ’ ll t it d l what do you rate your organization’s overall maturity model score to be?

• At the beginning of this workshop, I said you reported directly to your CEO. You now no longer have this reporting.

Wh t ld b t t f i i it b i t


• What could be your next step for increasing its business system maturity?

• To address this question, you could gain insight to addressing this question by examining the attributes that have the lowest maturity model scores.

IEE Business System Evolution



Integrated Enterprise Excellence System

• Can effectively integrate environmental impact efforts, VOC, supply chain, etc. activities; i.e., silo activity avoidance

One of the five book IEE series is available as a free e book• One of the five-book IEE series is available as a free e-book

• Descriptive IEE Videos – Issues with our Current Business Management System and Resolution

– The Integrated Enterprise Excellence Business Management System

• Documented IEE case study – Oracle Packaging, which manufactures aluminum foil


– Case study documentation in Smarter Solutions’ website resource library• American Management Association article

• Video

See www.smartersolutions.com

Readdressing Learning Objectives

• Summarize problems with current business management systems.

• Describe issues with current process improvement efforts.

• Describe benefits of predictive scorecards.

• Describe an enhanced system where business metric improvement needs pull for projects that benefit the business as a whole.



Q & A

Forrest W. Breyfogle III

Contact Information

Phone: 512.918.0280Email: [email protected]: www.smartersolutions.com


Potential Team Exercise Solution



Potential Team Exercise Solution

Step 4 Step 5 Step 6 Step 7


Business System Maturity

EPM/BPM based

Business System in

Place

Process aligned

metric usage

Predictive

performance

reporting

Automation in

reporting

Decisions based on

performance metrics

Entire enterprise

linked through a

single reporting

system

Strategies

developed from

performance gaps

Strategic alignment

of improvement

efforts

10EPM/BPM

part of

the culture

100%

100%

100%

100%

100%

100%

100%

990%

100%

100%

80%

85%

100%

100%

85%

880%

100%

85%

60%

70%

85%

100%

70%

770%

100%

70%

40%

55%

70%

80%

55%

655%

100%

55%

20%

40%

55%

60%

40%

540%

80%

40%

few

25%

40%

40%

25%

425%

60%

25%

few

10%

25%

20%

10%

310%

40%

10%

few

few

10%

Some

Some

25%

20%

few

few

few

few

Some

Some

1No uniform

business system

few

few

few

few

few

Some

Some

Description

There is an

orchestration of EPM

and BPM efforts throughout the business for the enterprise and daily

business processes, where the m

ost appropriate processes are automated

A EPM system is being used to determ

ine targeted strategies that are aligned to finan

cial m

etric

improvement desires, which results in tim

e‐series predictive m

easurement goals that pull process

improvement efforts, which in turn have enterprise‐as‐a‐whole benefit

Operational m

anagers are using predictive perform

ance reporting and statistical analyses in their status

meetings and decision‐m

aking process within their BPM implementation

Software is being used to automatically update the value chain’s operational and financial time‐series

predictive operational an

d finan

cial perform

ance m

etrics

A value chain is linking business and operational p

rocesses throughout the organization with predictive

scorecard perform

ance reports‐outs, when

appropriate

Business and operational processes are tim

e‐series tracked so that when a process is stab

le a predictive

statement is provided

Processes are being documented (and in some cases automated) through

a Business Process M

anagement

(BPM) initiative; a Lean Six Sigma process im

provemen

t program has been undertaken; an

d/or a Lean

program using Kaizen

events has been implemented with value‐stream assessmen

ts

KPIs’ perform

ance are being tracked and reported

over time; however, there is no systematic linkage betw

een

these m

etrics and a structured process improvement methodology

Executive m

anagement has identified some overall business KPIs an

d are using them is some decision m

aking

and strategic planning.

Limited

use of defined processes, perform

ance m

etrics.

V06-24-09

Smarter Solutions, Inc. COURSE EVALUATION

Name: _________________________________________________ Date: _________________________________ (Note: providing your name is optional, but it can help us address specific issues you may have.)

Course Name: _____________________________________________________________

Instructor (A): ______________________________________ Instructor (B): __________________________________

Previous Knowledge & Experience: The following information is requested for the purpose of generating a knowledge & experience

level baseline of the respondents.

1. To what extent have you previously learned and applied statistical concepts and tools in your work environment? To No To a Small To a Moderate To a Great To a Very Extent Extent Extent Extent Great Extent

1 2 3 4 5 1 2 3 4 5

2. To what extent have you previously learned and applied process improvement methodologies in your work environment?

To No To a Small To a Moderate To a Great To a Very Extent Extent Extent Extent Great Extent

1 2 3 4 5 1 2 3 4 5

Please use the following scale to indicate your level of agreement with the following statements and circle the appropriate rating. If you select a 2 or 1 rating, what should be improved? It was NOT satisfactory to you.

1 2 3 4 5

Strongly Disagree

(Unsatisfactory)

Disagree (Unsatisfactory)

Neither Agree or Disagree

(Neutral)

Agree (Satisfactory)

Strongly Agree (Satisfactory)

Unsatisfactory Satisfactory

Content 3. This course provided a good understanding of IEE and Lean Six Sigma techniques. 1 2 3 4 5

(If 2 or 1 what should be improved?)____________________________________________________________________________________

4. This course taught me something I can apply at work. 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________

5. Overall, this course provided a good balance between lecture, discussion, examples 1 2 3 4 5 and exercises. (If 2 or 1 what should be improved?)____________________________________________________________________________________

6. The content of this course was taught in a logical sequence. 1 2 3 4 5


Instructor(s) If there were multiple instructors delivering this session, please rate them independently.

7. The instructor demonstrated a thorough understanding of the content. (Instr A) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ (Instr B) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________

8. The instructor encouraged participation during the class. (Instr A) 1 2 3 4 5

(If 2 or 1 what should be improved?)____________________________________________________________________________________ (Instr B) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________

9. The instructor responded to the needs of the learners. (Instr A) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ (Instr B) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________

10. The instructor was well prepared. (Instr A) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ (Instr B) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________

11. Coaching sessions were effective (leave blank if course or instructor does not conduct formal coaching sessions). (Instr A) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________ (Instr B) 1 2 3 4 5 (If 2 or 1 what should be improved?)____________________________________________________________________________________

V06-24-09

Materials 12. The course materials were easy to follow and furthered the learning process. 1 2 3 4 5

(If 2 or 1 what should be improved?)____________________________________________________________________________________ 13. The examples presented enhanced my understanding of the content. 1 2 3 4 5

(If 2 or 1 what should be improved?)____________________________________________________________________________________ 14. The exercises helped me understand how to apply concepts presented. 1 2 3 4 5

(If 2 or 1 what should be improved?)____________________________________________________________________________________ 15. The homework reinforced my understanding of concepts presented each day (not all 1 2 3 4 5

courses have homework). (If 2 or 1 what should be improved?)____________________________________________________________________________________

16. The pace of this course was appropriate. 1 2 3 4 5

17. The amount of material was appropriate for the time allowed. 1 2 3 4 5

Facilities 18. The classroom was comfortable and conducive to learning. 1 2 3 4 5

(If 2 or 1 what should be improved?)____________________________________________________________________________________ 19. The frequency and length of breaks was appropriate. 1 2 3 4 5

(If 2 or 1 what should be improved?)____________________________________________________________________________________ 20. The meals were well prepared and served. 1 2 3 4 5


Overall Satisfaction 21. Overall, this course met my expectations. 1 2 3 4 5

(If 2 or 1 what should be improved?)____________________________________________________________________________________ 22. I would recommend this course to others. 1 2 3 4 5


23. Please list the 4 most important things you learned in this class.

a. __________________________________________ b. ____________________________________________________________

c. __________________________________________ d. ____________________________________________________________

24. What questions do you have that were not covered in this session?

a. _________________________________________________________________________________________________________

b. _________________________________________________________________________________________________________

c. _________________________________________________________________________________________________________

25. What could have been done to make this class more effective?

a. _________________________________________________________________________________________________________

b. _________________________________________________________________________________________________________

c. _________________________________________________________________________________________________________

26. We greatly appreciate quotable testimonials about our workshops, coaching, and other services.

Name & Title: ________________________________________________________________________________________

It is OK to quote me (company and title too?) _____Yes Company:____________________________________________

Quote: ____________________________________________________________________________________________________

___________________________________________________________________________________________________________

___________________________________________________________________________________________________________

27. May we contact you as a reference for this course? _____ Yes _____ No

E-mail address:

iee one day workshop handout material, romania 5-9-13 [compatibility mode] (1)

Business

wikipedia management

practice of management

words smarter solutions

phrases smarter solutions

term management

business deployment

objectives mbo

linkage of iee