lean six sigma going beyond the project to the business in healthcare

Lean Six Sigma: Going Beyond g g ythe Project to the Business in

Healthcare Forrest W. Breyfogle, IIISmarter Solutions, Inc.

www.SmarterSolutions.com

Learning Objectives

• Describe issues with current process improvement efforts.

• Summarize problems with current business pmanagement system.

• Create predictive scorecardsCreate predictive scorecards.• Describe an enhanced system where

business metric improvement needs pull for business metric improvement needs pull for projects that benefit the business as a whole.

Copyright 1992 – 2011. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 2

Team Exercise: Selecting Improvement Projects for a HospitalImprovement Projects for a Hospital

• You work for a hospitalY t h b f d t i th h it l• Your team has been formed to improve the hospital

• Your team has five minutes to determine what projects to undertakeundertake

• Select a team spokesperson


Team Exercise: Report-out

• Do you think that this situation could occur?T ll th di th f j t th t t • Tell the audience the name of one project that your team selected.H did l t th t j t?• How did you select that project?

• Who owns completion of the project?D thi k th t th j t ld f ll ff b lt’ l t ?• Do you think that the project could fall off a belt’s plate?

• Four years from now the company’s industry sector will i h d ti d b lt ti ht iexperience hard times and belt tightening

– Do you think that the process improvement function will survive downsizing efforts?


downsizing efforts?

Improvement Project Selection

• In Lean Six Sigma, improvement projects are typically selected from a ranked list of opportunitiesopportunities– This push (using as a Lean term) for a project

creation can lead to significant resources being spent on the sub-optimization of processes, p p pwhere the business as a whole does not benefit


benefit

Improvement Project Selection

• Organizational improvement efforts need to be integrated with a predictive scorecard and analytically/innovatively strategic planning system y y y g p g yso that the – organization can move toward achievement of the 3 Rs of 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


Enterprise Excellence (IEE) business system.

Process Tracking and Performance Metrics: Issues and ResolutionMetrics: Issues and Resolution

TYPICAL METRICS• Fiscal year• Unrelated to improvement systemp y• Point to point comparisons



However …

Xs Xs Xs



EFFECTIVE METRICSVi th t i t f • View the enterprise as a system of processes

• Acknowledge the effect of variabilityS t l l ti t ti • Support long-lasting systematic process improvement


Graphic View on the 9 Steps to Excellence in GovernanceExcellence in Governance

1. Describe 2. Describe value chain, 3 Analyze4. Establish

SMARTvision and mission.

including satellite-level and 30,000-foot-level metrics.

3. Analyze enterprise.

SMART satellite-level metric goals.

5. Create strategies.

6. Identify high potential improvement

areas and establish related SMART 30 000-

7. Identify and execute projects

8. Assess project's completion impact

on enterprise 9. Maintain the

gain.related SMART 30,000-foot-level metric goals.

projects. goals.

Figure 4.7 Integrated Enterprise Excellence, Volume II, Copyright 2008


1. Describe vision and mission

Mission, vision and values outlines 1. Describe vision and mission.

2 Describe value chain

1. Describe vision and mission.


• Who we are• What we seek to achieve

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




• When and how we want to achieve it. 4. Establish SMART

satellite-level metric goals.


4. Establish SMART satellite-level metric goals.


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

goals.


goals.

7. Identify and execute projects.

8. Assess project's completion impact on

enterprise goals.



enterprise goals.


9. Maintain the gain.9. Maintain the gain.

2. Create the Enterprise Value ChainChain





Basic “Business Value Chain” chart t ti iti ith t d 2. Describe value chain,





represents activities, without regard to the organization chart






goals.


goals.



enterprise goals.



enterprise goals.







2 Describe value chain2. Describe value chain, including satellite-level and 30,000-foot-level metrics.









goals.


goals.Basic value chain can be d d t i l d i ifi t 7. Identify and execute

projects.


enterprise goals.



enterprise goals.

expanded to include significant inputs and outputs



2. Create the Enterprise Value Chain





Chain










goals.


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

Activities outside of the main flow can 7. Identify and execute

projects.


enterprise goals.



enterprise goals.

main flow can be added as standalone


9. Maintain the gain.9. Maintain the gain.units





2 Describe value chain2. Describe value chain, including satellite-level and 30,000-foot-level metrics.









goals.


goals.



enterprise goals.



enterprise goals.Shaded steps can be



Shaded steps can be “drilled down”


Develop Product Market Product Sell Product Produce &

Deliver Product

Invoice and Collect

Payment

Report Financials

Days Sales Outstanding

(DSO)

Percent Annualized

Gain in Gross Revenue

Gross Revenue

Defective Rate

Lead Time

Developed Product Design

Quality

Product Development

Lead Time

Voice of the Customer

(VOC)

Quote Quality

Quote Response

Time

Existing Customer Additions

New Customer Additions

Timely Inputs

Effective Inputs

Chain1. Describe vision and

mission.




Information Technology

(IT)

Human Relations (HR)

Enterprise Process

Management (EPM)

Work in Process (WIP)

On-time Delivery

Labor Relations Safety and

Environment

Legal Finance

RFQ Response Acceptance

Rate

Internal Process Reworks

Product Margins

TOC Throughput

Net Profit Margins

Learning and Growth





Step 1 Step 2 Decision Step 3No

Step 4

Yes

Start4. Establish SMART





Step 4

End

Step 5 Step 7Step 6


goals.


goals.

Process Step 6 Start Step 6A Step 6B Step 6C End



enterprise goals.



enterprise goals.



Subprocess drilldown example

VOC step drill down Complaints 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 drill down

Audits

Departmentwarehouse complained

Weekly someone acts Document

l i dAudits

Cond ct random s r e to 1% of

as a customer and documents

findings

results in data warehouse


Deliver Product

Invoice and Collect

Payment

Report Financials


(DSO)

Percent Annualized


Gross Revenue

Defective Rate

Lead Time


Quality

Product Development

Lead Time


(VOC)

Quote Quality

Quote Response

Time



Timely Inputs

Customer Satisfaction

with Feedback

Surveys

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

system problems and one suggestion what should done

differently to improve.

Document results in data

warehouse


(IT)Human Relations (HR)

Enterprise Process

Management (EPM)


On-time Delivery

Labor Relations

Safety and Environment

Legal Finance


Rate


Product Margins

TOC Throughput

Net Profit Margins

Learning and Growth

Client turnover

Internal Survey

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

described in chapter 43 of Implementing Six Sigma


warehouse

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


retention data improvementgimprovement project(s) status

VOC step drill down

Evaluation of complaintDocument Document results in

Complaints Receive complaint

Evaluation of complaint by Enterprise Process

Management Department

Document complaint in

data warehouse

data warehouse and give feedback to

person who complained

Audits

Weekly someone acts as a customer

Document results in dataas a customer

and documents findings

results in data warehouse


VOC step drill down

Surveys

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

system problems and one Document

results in data y psuggestion what should done

differently to improve.warehouse

Internal Survey

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

described in chapter 43 of Implementing Six Sigma


warehouse


VOC step drill down

DataMonthly statistically analyze complaint

Report on findings, making suggestions

Monthly evaluate 30,000-foot-level reported defective and on-Data

Warehouseanalyze complaint, audits, survey, and

retention data

making suggestions, when appropriate, for

improvement

ptime delivery metrics, checking

for metric degradation and improvement project(s) status







Produce and Deliver Products2. Describe value chain,










goals.


goals.

Adding enterprise & operational level

performanceLead Time



enterprise goals.



enterprise goals.

performance metrics completes

value chain

Defective Rate

WIP


9. Maintain the gain.9. Maintain the gain.On-time Del.

Business Goals and Measures: Traditional Approaches

Financials

Tabular Reporting Balanced ScorecardPerformance 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%

Traditional Approaches

Vision and Strategy ProcessesCustomer

with dis patch s taff Perc entage of priority one c alls dis patched to field c rews within

80 minutes of receipt 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 PROFIT IN %PROFIT IN %PROFIT IN %

LearningClassic Bar Charts

dis patched to field c rews 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 Sales

10 0

CUSTOMER SATISFACTION

!10

20

30

!10

20

30

10

20

30

!

These traditional performance measures often provide

500000

400000

300000

enue

(D

olla

rs)

12345

Person

0

QUAL

ITY

SPEE

D

COUR

TESY

COMP

ETEN

CE

COMM

UNICA

TION

HELP

FULN

ESS 0

1 2 3 4 5 6 7 8 9 10 11 120

1 2 3 4 5 6 7 8 9 10 11 120

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

p pstories of the past but do not provide a predict of the future or give direction where improvement efforts should focus

Month 321121110987654

200000

100000

0

Rev

e


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

Business Goals and Measures: Traditional ApproachesTraditional Approaches

Traditional Performance Reporting Example – Red-Yellow-Green ScorecardTargets 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'05

Finance 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 14

TRADITIONAL SCORECARD EXCERPT

Individuals Control Chart99

Normal Probability Plot

IEE Improved Reporting for Process Assessment and Improvement

Finance 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

INDIVIDUALS CONTROL CHART2.7

2.6

2.5

2.4

2.3

pons

e

_

UCL=2.6192

99

95

90

80

70

6050rc

ent

The metric is colored red when a goal is not being t d ti ti d t b t k2.2

2.1

2.0

1.9

Res

p X=2.2583

LCL=1.89742 62 52 42 32 22 12 01 9

40

30

20

10

5

1Pe

r

32.657

2.2

met and corrective action needs to be taken.

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

Date

2.62.52.42.32.22.12.01.9Response

Most importantly it tells us nothing about what to expect in the future!


to expect in the future!



Deliver Product

Invoice and Collect

Payment

Report Financials


(IT)



(DSO)

Percent Annualized


Gross Revenue

Defective Rate

Lead Time


Quality

Product Development

Lead Time


On-time


(VOC)


Environment

Quote Quality


Rate

Internal

Quote Response

Time

Net Profit Margins



Timely Inputs

Effective Inputs

Value Chain1. Describe vision and

mission.




(IT)

Enterprise Process

Management (EPM)

On time Delivery

Legal Finance

Process Reworks

Product Margins

TOC Throughput

Learning and Growth

TRADITIONAL PERFORMANCE REPORTING SCORECARD 2. Describe value chain, including satellite-level and 30,000-foot-level metrics.




TRADITIONAL PERFORMANCE REPORTING SCORECARDTargets 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'05

Finance 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


Individuals Control ChartIndividuals Control ChartIndividuals Control ChartIndividuals Control ChartIndividuals Control Chart1





2.7

2.6

2.5

2.4

2.3

2 2

_X=2.2583

UCL=2.6192

pons

e

2.7

2.6

2.5

2.4

2.3

2 2

_X=2.2583

UCL=2.6192

pons

e

2.7

2.6

2.5

2.4

2.3

2 2

_X=2.2583

UCL=2.6192

pons

e

2.7

2.6

2.5

2.4

2.3

2 2

_X=2.2583

UCL=2.6192

pons

e

2.7

2.6

2.5

2.4

2.3

2 2

_X=2.2583

UCL=2.6192

pons

e

PR

Process is P di t bl1

SAME DATA


goals.


goals.

Aug'0

5

Jul'0

5

Jun'

05

May

'05

Apr'0

5

Mar

'05

Feb '0

5

Jan'

05

Dec'0

4

Nov'0

4

Oct'04

Sep'

04

Aug'0

4

2.2

2.1

2.0

1.9 LCL=1.8974

Resp

Aug'0

5

Jul'0

5

Jun'

05

May

'05

Apr'0

5

Mar

'05

Feb '0

5

Jan'

05

Dec'0

4

Nov'0

4

Oct'04

Sep'

04

Aug'0

4

2.2

2.1

2.0

1.9 LCL=1.8974

Resp

Aug'0

5

Jul'0

5

Jun'

05

May

'05

Apr'0

5

Mar

'05

Feb '0

5

Jan'

05

Dec'0

4

Nov'0

4

Oct'04

Sep'

04

Aug'0

4

2.2

2.1

2.0

1.9 LCL=1.8974

Resp

Aug'0

5

Jul'0

5

Jun'

05

May

'05

Apr'0

5

Mar

'05

Feb '0

5

Jan'

05

Dec'0

4

Nov'0

4

Oct'04

Sep'

04

Aug'0

4

2.2

2.1

2.0

1.9 LCL=1.8974

Resp

Aug'0

5

Jul'0

5

Jun'

05

May

'05

Apr'0

5

Mar

'05

Feb '0

5

Jan'

05

Dec'0

4

Nov'0

4

Oct'04

Sep'

04

Aug'0

4

2.2

2.1

2.0

1.9 LCL=1.8974

Resp OPredictable1



enterprise goals.



enterprise goals.

If there is a recent region of stability then can say that the process is predictable

AJMAMFJDNOSA

Date

AJMAMFJDNOSA

Date

AJMAMFJDNOSA

Date

AJMAMFJDNOSA

Date

AJMAMFJDNOSA

Date



can say that the process is predictable



Deliver Product

Invoice and Collect

Payment

Report Financials


(IT)



(DSO)

Percent Annualized


Gross Revenue

Defective Rate

Lead Time


Quality

Product Development

Lead Time


On-time


(VOC)


Environment

Quote Quality


Rate

Internal

Quote Response

Time

Net Profit Margins



Timely Inputs

Effective Inputs


mission.




(IT)

Enterprise Process

Management (EPM)

On time Delivery

Legal Finance

Process Reworks

Product Margins

TOC Throughput

Learning and Growth

25





24

23

22






goals.


goals.



enterprise goals.



enterprise goals.If a process is predictable, we can

consider data from recent region of



consider data from recent region of stability is a random sample of the future



Deliver Product

Invoice and Collect

Payment

Report Financials


(IT)



(DSO)

Percent Annualized


Gross Revenue

Defective Rate

Lead Time


Quality

Product Development

Lead Time


On-time


(VOC)


Environment

Quote Quality


Rate

Internal

Quote Response

Time

Net Profit Margins



Timely Inputs

Effective Inputs


mission.




(IT)

Enterprise Process

Management (EPM)

On time Delivery

Legal Finance

Process Reworks

Product Margins

TOC Throughput

Learning and Growth

• Could 4

2.2

Normal Histogram of Response





estimate proportion

3

2

1

Freq

uenc

y





p pbelow 2.2 criterion using Normal

Normal Probability Plot

2.52.42.32.22.12.0

1

0

Response


goals.


goals.

criterion using histogramA b bilit

99

95

90

80

7060nt 7. Identify and execute

projects.


enterprise goals.



enterprise goals.

• A probability plot is a better

60504030

20

10

5

Per

cen

2

32.657


9. Maintain the gain.9. Maintain the gain.approach2.62.52.42.32.22.12.01.91

Response

2.



Deliver Product

Invoice and Collect

Payment

Report Financials


(IT)



(DSO)

Percent Annualized


Gross Revenue

Defective Rate

Lead Time


Quality

Product Development

Lead Time


On-time


(VOC)


Environment

Quote Quality


Rate

Internal

Quote Response

Time

Net Profit Margins



Timely Inputs

Effective Inputs


mission.




(IT)

Enterprise Process

Management (EPM)

On time Delivery

Legal Finance

Process Reworks

Product Margins

TOC Throughput

Learning and Growth

TRADITIONAL PERFORMANCE REPORTING SCORECARDTargets 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'05Targets 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'05 2. Describe value chain,





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

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 2.251

99

Normal Probability Plot2.7UCL 2 6192

Individuals Control Chart2.7

UCL 2 6192

Individuals Control Chart





SAME DATA

99

959080706050403020 32.657

2.62.52.42.32.22.12.0

_X=2.2583

UCL=2.6192

Resp

onse

2.62.52.42.32.22.12.0

_X=2.2583

UCL=2.6192

Resp

onse

Perc

ent


goals.


goals.

2.62.52.42.32.22.12.01.9

105

1

Response

2.2

Aug'0

5

Jul'0

5

Jun'0

5

May'05

Apr'0

5

Mar'05

Feb'0

5

Jan'0

5

Dec'0

4

Nov'04

Oct'04

Sep'0

4

Aug'0

4

1.9

Date

LCL=1.8974

Aug'0

5

Jul'0

5

Jun'0

5

May'05

Apr'0

5

Mar'05

Feb'0

5

Jan'0

5

Dec'0

4

Nov'04

Oct'04

Sep'0

4

Aug'0

4

1.9

Date

LCL=1.8974

IEE reporting assesses predictability 7. Identify and execute projects.


enterprise goals.



enterprise goals.

IEE reporting assesses predictability and then if predictable provides a prediction statement.



p



Deliver Product

Invoice and Collect

Payment

Report Financials


(IT)



(DSO)

Percent Annualized


Gross Revenue

Defective Rate

Lead Time


Quality

Product Development

Lead Time


On-time


(VOC)


Environment

Quote Quality


Rate

Internal

Quote Response

Time

Net Profit Margins



Timely Inputs

Effective Inputs


mission.




(IT)

Enterprise Process

Management (EPM)

On time Delivery

Legal Finance

Process Reworks

Product Margins

TOC Throughput

Learning and Growth

TRADITIONAL PERFORMANCE REPORTING SCORECARD 2. Describe value chain, including satellite-level and 30,000-foot-level metrics.




Normal Probability PlotIndividuals Control ChartIndividuals Control Chart

TRADITIONAL PERFORMANCE REPORTING SCORECARD

1







99

9590807060504030 32 657

Normal Probability Plot2.72.62.52.42.32.22.1

_X=2.2583

UCL=2.6192


Resp

onse

2.72.62.52.42.32.22.1

_X=2.2583

UCL=2.6192


Resp

onse

Perc

ent

23


goals.


goals.2.62.52.42.32.22.12.01.9

3020105

1

Response

32.6572.2

Aug'0

5

Jul'0

5

Jun'0

5

May'05

Apr'0

5

Mar'05

Feb'0

5

Jan'0

5

Dec'0

4

Nov'04

Oct'04

Sep'0

4

Aug'0

4

2.12.01.9

Date

LCL=1.8974

R

Aug'0

5

Jul'0

5

Jun'0

5

May'05

Apr'0

5

Mar'05

Feb'0

5

Jan'0

5

Dec'0

4

Nov'04

Oct'04

Sep'0

4

Aug'0

4

2.12.01.9

Date

LCL=1.8974

R P2



enterprise goals.



enterprise goals.

PREDICTABLE PROCESS WITH ~32.6% NONCONFORMANCE RATE



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

• “Diagnosis to bed time” against criterion of 30 min. l or less.

– One randomly selected sample was analyzed daily.300

200

tes

UCL=281.9 99

90

t

Mean 124.9StDev 45.40N 50AD 0.767P-Value 0.043

I Chart of Diagnosis to Bed Before Change Probability Plot of Diagnosis to Bed Before ChangeNormal

464136312621161161

100

0

Day

Min

ut

_X=124.9

LCL=-32.1

200150100500

50

10

1

Diagnosis to Bed Before Change

Perc

ent

1.82930

Data sets are from the book Lean Six Sigma in Sickness and in Health: an

Process may be from two distributions, but will disregard this

Process is pred. with approx 98% non-conformance to 30 min. or less than criteria

Day Diagnosis to Bed Before Change


and in Health: an IEE Novel

Example: Hospital 30,000-foot-level metric –Length of Stay (LOS) in Emergency Roomg y ( ) g y

• Six random daily selections I Ch t f M I Ch t f L StdD

350

300

250inut

es _X=262.8

UCL=354.55.2

4.8

4 4dual

Val

ue

_X=4 430

UCL=5.044

I Chart of Mean I Chart of LnStdDev

28252219161310741

200

150

Day

Mi

LCL=171.0

28252219161310741

4.4

4.0

Day

Indi

vid X=4.430

LCL=3.817

99.9

99

90 90

Probability Plot of A llDataNormal

6004503001500

50

10

1

0.1

Perc

ent

375.

9

50

262.

8

10

149.

6


Pred. proc. w/ est. med. LOS in emer room of 263 min. w/ 80% freq occ 150-376 min.

6004503001500Minutes

Example: Hospital 30,000-foot-level metric –Errors per 1000 patient daysp p y

70

60

ent d

ays

UCL=71.35

I Chart of Med Errors

50

40

er th

ousa

nd p

atie

_X=47.67

28252219161310741

30

Week

Erro

rs p

e

LCL=23.99

Predictable process with approx. 48 errors per 1000 patient days

Week







Produce and Deliver Products2. Describe value chain,










goals.


goals.

The resulting value chain

functional linkagesLead Time



enterprise goals.



enterprise goals.

functional linkages bridging silos Defective Rate

WIP


9. Maintain the gain.9. Maintain the gain.On-time Del.Figure 7.1 Integrated Enterprise

Excellence, Volume III, Copyright 2008

Team Exercise: Creating an enterprise value chain with an IEE scorecard

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

value chain with an IEE scorecard

• We will then break into groups where each team is assigned a function• Each team is to note in a template on the next slide their value chain function with

their team members1. Document the high-level value chain steps identified by the class2. Circle function that your team is assigned3. List team members here: _____________________________________________________

• Each functional group is to create a list of 30,000-foot-level metrics for their function with its reporting details (e.g., subgrouping) on the template

• Report-outs are to be made to the class


Team Exercise Template




4. Establish SMART


5. Create strategies


areas and establish 7. Identify and

execute


on enterprise9. Maintain the

gainTemplate

1. Document the high-level value chain steps identified by the class2. Circle function that your team is assigned3. List team members here:

strategies. related SMART 30,000-foot-level metric goals.

projects. on enterprise goals.

gain.

3. List team members here: _____________________________________________________

Value chain 30,000-foot-level value chain metrics with reporting details, including p g gsubgrouping frequency

____________________________________________________________________________________________________________________________________________________________________________________________________


__________________________________________________________________

3. Analyze the Enterprise

• Analyze the enterprise as a whole, l ki f




2 Describe value chainlooking for – constraints





– defective reduction opportunities – waste





– speed to market – other restraints


goals.


goals.



enterprise goals.



enterprise goals.



4. Establish Financial Goals for Corporate and Operational UnitsCorporate and Operational Units





• Satellite-level metric goals (e.g., profit margins and revenue growth)





are to be SMART: Specific, Measurable, Actionable, Relevant,





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

goals.


goals.



enterprise goals.



enterprise goals.



5. Create Strategies

• Develop strategies to improve performance when satellite level




2 Describe value chainperformance when satellite-level metrics are not achieving goals.

Focus on creating strategies that





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





picture6. Identify high potential improvement areas and establish related SMART 30,000-foot-level metric

goals.


goals.



enterprise goals.



enterprise goals.



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

• Identify high potential target areas 1. Describe vision and

mission.



2 Describe value chainy g p g

• Set 30,000-foot-level (operational) metric performance goals





metric performance goals • Other business area 30,000-foot-

level metrics are to maintain current





level metrics are to maintain current performance levels.


goals.


goals.



enterprise goals.



enterprise goals.



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





Business Goal Strategies High Potential Areas Projects




3. Analyze enterprise.Increase

monthly gross revenue by 8%

Improve marketing

effectiveness by 15% in 10

mo.

Improve product group C search engine ranking by 25%.




5. Create strategies.Increase

monthly profit

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.


goals.


goals.

ymargins by 2% in 10 months.

Improve RFQ acceptance

rate by improving

quote response time so that all Developed in

Example 12 1 7. Identify and execute projects.


enterprise goals.



enterprise goals.

quotes are completed in

14 days. To be completed in 5

mo.

Example 12.1

Figure 4.7 Integrated Enterprise Excellence,

Volume II, Copyright 2008



Increase TOC

Volume II, Copyright 2008

7. Identify and Execute Projects

• Project execution follows a roadmap th t t l i t t d L d Si




2 Describe value chainthat truly integrated Lean and Six Sigma tools










goals.


goals.

D M A I C

ControlAnalyzeDefine Measure Improve

D M A I C




enterprise goals.



enterprise goals.PROCESS IMPROVEMENT PROJECT: P-DMAIC

Plan Projectand Metrics

Wisdomof the

OrganizationMSABaseline

ProjectLean

Assessment

PROCESS IMPROVEMENT PROJECT: P-DMAIC


Wisdomof the


ProjectLean

Assessment



Integrated Enterprise Excellence (IEE) System(IEE) SystemD

Define Product/Process

MMeasure

Product/Process

AAnalyze

Product/Process

DDesign

Product/Process

VVerify

Product/Process

DDefine

Product/Process

MMeasure

Product/Process

AAnalyze

Product/Process

DDesign

Product/Process

VVerify

Product/Process





DESIGN FOR IEE (DFIEE): DMADV

Product/Process Product/Process Product/Process Product/Process Product/Process

CAMD I


Product/Process Product/Process Product/Process Product/Process Product/Process

CAMD I





ENTERPRISE PROCESS: E-DMAIC

ControlAnalyzeMeasureDefine Improve

ENTERPRISE PROCESS: E-DMAICENTERPRISE PROCESS: E-DMAIC

ControlAnalyzeMeasureDefine Improve 4. Establish SMART satellite-level metric goals.




D M A I C


D M A I C



goals.


goals.



Wisdomof the


ProjectLean

Assessment



Wisdomof the


ProjectLean

Assessment



enterprise goals.



enterprise goals.


9. Maintain the gain.9. Maintain the gain.Figure 2.1 Integrated Enterprise Excellence, Volume III, Copyright 2008

8. Assess Each Project’s Final Impact on GoalsImpact on Goals

• Each project should be judged i t h ll it iti l




2 Describe value chainagainst how well it positively impacted the 30,000-foot-level

t i f





metric performance. 4. Establish SMART satellite-level metric goals.





goals.


goals.



enterprise goals.



enterprise goals.



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

• Demonstrated project’s process improvement

300Diagnosis to Bed Before ChangeDiagnosis to Bed After Change

99Diagnosis to Bed After Changesub

I Chart of DiagnosistoBed by sub Probability Plot of DiagnosistoBedNormal

200

100

Tim

e (M

inut

es)

_UCL=80.0

90

50

Perc

ent

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

9181716151413121111

0

Day

T

X=45.7

LCL=11.5

200150100500

10

1

DiagnosistoBed

7.065

1.82930

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


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

• Demonstrated project’s process improvement

80

60nt d

ays

Med Errors Before Med Errors After

I Chart of Errors

60

40

20per t

hous

and

patie

n

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

41373329252117139510

Week

Erro

rs _

X=10.84UCL=15.30

LCL=6.39

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


9. Maintain the Gain

• Value-chain metrics are to be a part of company-wide




2 Describe value chainpart of company wide management review meetings for the assessment of day-to-day

f d t





performance and process-steps execution.






goals.


goals.



enterprise goals.



enterprise goals.



IEE Enterprise Measurements, Analyses, and Improvements

Capacity of

ProcessStep 1 Process

Step 6

ProcessStep 5Process

Step 4

ProcessStep 3Process

Step 2

CustomerWork

p

30,000-Foot-Level

Satellite-Level

p yprocess step

CustomerDemand

Work

Capacity is less than demand

Organization’s Vision and Mission

CControl

AAnalyze

MMeasure

DDefine

IImprove

Mission

Voice of Customer


ControlAnalyzeDefine ImproveCustomer

Business Goal Strategies High Potential Areas Projects

Gross RevenueLead Time

Product Development

Lead Time

Quote Response

Time

New Customer AdditionsEffective Inputs

FMEA Risk Analysis

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.

Improve marketing

effectiveness by 15% in 10

mo.

Improve product group C search engine ranking by 25%.

Improve RFQ acceptance

rate by improving

quote response time so that quotes are

completed in

Developed in Example 12.1


Deliver Product

Invoice and Collect

Payment

Report Financials


(IT)


Enterprise Process

Management (EPM)


(DSO)

Percent Annualized


Defective RateDeveloped

Product Design Quality


On-time Delivery


(VOC)

Safety and Environment

Quote Quality


Rate


Net Profit Margins


Timely Inputs

VSM

Copyright 1992 – 2011. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 46R d

Reduce costs from d f t t 4 b 1 5 %

completed in 14 days. To be completed in 5

mo.

Increase TOC throughput by 2% in 7 mo.

Developed in Example 12.2

Labor Relations LegalFinance

Reworks

Product Margins

TOC Throughput

IEE System


DDefine

Product/Process

MMeasure

Product/Process

AAnalyze

Product/Process

DDesign

Product/Process

VVerify

Product/Process


DDefine

Product/Process

MMeasure

Product/Process

AAnalyze

Product/Process

DDesign

Product/Process

VVerify

Product/Process


CControl

AAnalyze

MMeasure

DDefine

IImprove


CControl

AAnalyze

MMeasure

DDefine

IImprove


y p


y p

D M A I C


D M A I C


PROCESS IMPROVEMENT PROJECT: P DMAIC


Wisdomof the


ProjectLean

Assessment

PROCESS IMPROVEMENT PROJECT: P DMAIC


Wisdomof the


ProjectLean

Assessment


PROCESS IMPROVEMENT PROJECT: P-DMAICPROCESS IMPROVEMENT PROJECT: P-DMAIC

Figure 4.2 Integrated Enterprise Excellence, Volume II, Copyright 2008

E-DMAIC ChecklistsC

Control

AAnalyze

MMeasure

DDefine

IImprove


• Let’s collective look at the checklists from the f ll i E DMAIC h d h following E-DMAIC phases and each person should highlight a couple important items that diff ti t IEE f t diti l th d differentiate IEE from traditional methods – Define: Vol. II, Section 6.2, page 170– Measure: Vol. II, Section 7.2, page 194– Analyze: Vol. II, Section 8.2, page 229– Improve: Vol. II, Section 13.2, page 370– Control: Vol. II, Section 14.2, page 397

Copyright 1992 – 2011. All rights reserved. Smarter Solutions, Inc. (www.SmarterSolutions.com) 48• We will discuss items that were highlighted

Team Exercise: IEE Project Selection ProcessSelection Process




4. Establish SMART


6. Identify high t ti l i t 7 Identify and 8. Assess project's

Vision Statement: Our hospital will maintain an


potential improvement areas and establish

related SMART 30,000-foot-level metric goals.


p jcompletion impact

on enterprise goals.

9. Maintain the gain.

poccupancy rate in the top 10% in our city while maintaining a full staff of employees and achieving g p y ga profitability level to allow for maintaining excellent physical condition of the property.p y p p y



Value chain functions 1. Describe vision and mission.



4. Establish SMART


6. Identify high t ti l i t 7 Identify and 8. Assess project's


potential improvement areas and establish

related SMART 30,000-foot-level metric goals.


p jcompletion impact



Delivery of clinical Sales and

marketingVoice of the

customerInvoice and

collectReport

financialsservicesmarketingcustomer collect financials

IT House Keeping Food Service Patient IT House Keeping Food Service Transportation


Team Exercise: IEE Project Selection Process




4. Establish SMART


6. Identify high 8 A j t'

Value chain functions with some performance metrics5. Create strategies.

y gpotential improvement

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





Return on

Delivery of

DSOHCHAP scores

Length of Stay

Market share

Return on marketing

DollarsComplaints

Profit margins

Total revenue

Errors and unexpected

complications

Delivery of clinical

services

Sales and marketing

Voice of the customer

Invoice and collect

Report financials

IT House Keeping Food Service Patient Transportation

Fixed costs

Mortality

Average daily census

TOC variable costs

Cost/patient day

Quality

cost/patient-day

Quality of food

Response time

Wait time

Fixed costs

Efficiency

Repeat admission

Mortality

Cleaning time per room

Fixed costs

Fixed costs

Quality of presentation

Delivery time

Rescheduled repeat

Effectiveness


TOC variable costs Efficiency Cost/patient

day





4. Establish SMART




areas and establish l t d SMART 30 000

7. Identify and execute projects


on enterprise 9. Maintain the

gain.

Delivery o clinical

services

Sales and marketing


Invoice and collect

Report financials

DSOHCHAP scores

Length of Stay

Market share

Return on marketing

Dollars

Fixed costs

Complaints

Profit margins

Total revenue


complications• Profit Margins

g related SMART 30,000-foot-level metric goals.

projects. pgoals.

g


Repeat admission

Mortality


Fixed costs

TOC variable costs

Cost/patient day

Quality


Fixed costs

TOC variable

cost/patient-day

Quality of food

Fixed costs


Response time

Wait time

Delivery time

Rescheduled repeat

Cost/patient

Fixed costs

Efficiency

Effectiveness


day

14

Profit margins1 profit margins299

90 90

Profit margins1profit margins2

StagePM

I Chart of Profit Margins by StagePM Probability Plot of Profit MarginsNormal

12

10

8

Indi

vidu

al V

alue

_X=10.115

UCL=12.88290

50

10Pe

rcen

t

105

417

90

944

115

50

783

14

10

11.94 0.9057 43 0.499 0.19910.12 1.016 7 0.685 0.041

Mean StDev N AD P

About 7 months profit margins declined from median of 11.9% to 10.1%

464136312621161161Months

LCL=7.348

14121081

Profit Margins

13.1

11.4

11.9

10.1

10.7

8.81


Current perf. is predictable with median about 10.1% with 80% freq occ 8.8-11.4





4. Establish SMART





execute



gain

Delivery o clinical

services

Sales and marketing


Invoice and collect

Report financials

DSOHCHAP scores

Length of Stay

Market share

Return on marketing

DollarsComplaints

Profit margins

Total revenue


complications• Market Share



gain.


Repeat admission

Mortality


Fixed costs

TOC variable costs

Cost/patient day

Quality


cost/patient-day

Quality of food

Fixed costs

Response time

Wait time

Delivery time

Fixed costs

Efficiency

Effectiveness

admission

Fixed costs

TOC variable costs


Efficiency

Rescheduled repeat

Cost/patient day

58marketshare1 marketshare2

99StageMS

I Chart of Marketshare by StageMS Probability Plot of MarketshareNormal

56

54

52Indi

vidu

al V

alue

_X=52.571

UCL=55.53690

50

Perc

ent

90

50

55.19 0.8005 37 0.502 0.19452.57 0.9915 7 0.309 0.458

Mean StDev N AD P

marketshare1marketshare2

StageMS

M k t h d d 7 f b t 56% t 53%

4137332925211713951

52

50

Months

I

LCL=49.605

5856545250

10

1

Marketshare

56.2

20

53.8

41

55.1

94

52.5

71

10

54.1

68

51.3

00


Market share decreased 7 mo. ago from about 56% to 53%

Current process is predict. w med about 52.6% & 80% occ freq betwe 51.3 & 51.8





4. Establish SMART





execute



gain

Delivery o clinical

services

Sales and marketing


Invoice and collect

Report financials

DSOHCHAP scores

Length of Stay

Market share

Return on marketing

Dollars

Fixed costs

Complaints

Profit margins

Total revenue


complications• Cleaning Quality



gain.


Repeat admission

Mortality


TOC variable costs

Cost/patient day

Quality


Fixed costs

cost/patient-day

Quality of food

Fixed costs


Response time

Wait time

Delivery time

Rescheduled repeat

Fixed costs

Efficiency

Effectiveness


day

9

CleaningQuality1 CleaningQuality299

CleaningQuality1CleaningQuality2

StageCQ

I Chart of CleaningQuality by StageCQ Probability Plot of CleaningQualityNormal

8

7

6

Indi

vidu

al V

alue

_X=6.783

UCL=8.107

LCL=5 460

90

50

10

Perc

ent

90

66

50

63

10

70

8.596 0.2182 25 0.504 0.1856.783 0.5252 7 0.167 0.894

Mean StDev N AD P

Cleaning Quality degraded from median about 8.1 to 5.5 about 7 mo. ago

31282522191613107415

Month

LCL=5.460

98761

CleaningQuality

8.87

6

7.45

6

8.59

6

6.78

3

8.31

7

6.11

0


Cleaning Quality current median about 6.8 with 80% freq occ. 6.1 to 7.5





4. Establish SMART





execute



gain

Analysis highlights• Voice of the customer social network feedback indicates from the



gain.

• Voice of the customer social network feedback indicates from the social network that customers have not been pleased recently for primarily three reasons: room cleanliness, unfriendly staff, and they spent a lot of time waiting

• Cleaning services were out sourced seven months ago as part of a cost reduction effortcost reduction effort

• About a year ago a new hospital moved to town• The 30,000-foot-level metrics diagnosis to bed time, LOS in g

emergency room, and errors per 1000 patients are operating at the levels previously reported in this presentation






4. Establish SMART





execute



gainSelection Process

Bus. Fin. Goal Strategy High Potential AreaImplementations and Improvement Projects



gain.

Your team is to quickly netto quickly net

out an EIP



• Prepare two plus and delta sheet comparing the IEE t t diti l h f IEE to traditional approach for – process improvement project selection; e.g., original

t iteam exercise– business system of scorecards, strategic planning, and

controlcontrol• Prepare to present to class


IEE Business System VOCIntegrationIntegration


SELECTED ATTRIBUTES Integrated Enterprise Excellence (IEE)

Typical MBA

Traditional Six Sigma

Traditional Lean

Original Balanced

Comparison of Systems

++: Attribute included ( )Program

gScorecard

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

Defines a process for improvements at ++ + +

+: Partial/incomplete Inclusion- : Not included

e es a p ocess o p o e e ts atenterprise level ++ ‐ + + ‐

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

Uses DMAIC process to implement process ++ ++ +p p pimprovements (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

++ ‐ ‐ ‐ ‐as to eliminate firefighting

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

Integrated Enterprise Excellence SystemSystem

• Can effectively integrate Green, VOC, supply chain, t ti iti i il ti it idetc. activities; i.e., silo activity avoidance

• One of the five-book IEE series is available as a free e-book (www.SmarterSolutions.com)

• Documented IEE case study y– Oracle Packaging, which manufactures aluminum foil– Case study documentation in Smarter Solutions’ Case study documentation in Smarter Solutions

(www.SmarterSolutions.com) resource library• American Management Association article


• Video

Readdressing Learning Objectives

• Describe issues with current process improvement efforts.

• Summarize problems with current business pmanagement system.

• Create predictive scorecardsCreate predictive scorecards.• Describe an enhanced system where

business metric improvement needs pull for business metric improvement needs pull for projects that benefit the business as a whole.


Q & A

Forrest W Breyfogle IIIForrest W. Breyfogle, III

Contact InformationPhone: 512.918.0280Email: [email protected] b t l tiWeb: www.smartersolutions.com


lean six sigma going beyond the project to the business in healthcare

Documents

t th t j t

th f j t th t t

t ll th

business metric improvement

rs of business

hospitaly t h b f d

process improvement

th t th j t ld f ll