operational excellence through enterprise risk reduction (err)
TRANSCRIPT
About The Presenter• UC COE for Healthcare Injury Prevention• Previously worked with:
UCLAFender Guitars BoeingE! Network
About the presentation:• Presentation will be sent to all attendees – email list is in back.• Will cover many concepts very fast, if you have questions I will be available
afterwards.• “Key Concepts” will be pointed out – take not of these.
Before We Get Started
• Define ERR• ERR Background• ERR Concepts• High Reliability Organization• The “Enterprise” in ERR• Opportunity to Apply Concepts• Review and Summary
Overview
4
Enterprise Risk Reduction (ERR) is:• Combination of age old concepts on productivity, quality, and safety.• A revised approach with ERM in mind.• A systemized process to improve operations as a whole.
What is Enterprise Risk Reduction?
ERR Goals• As a team of SME’s, address ALL risks together – Not just individually for your
subject areas.• Improve the Output of the process/job/operation.• Eliminate all failure points.• Create a “High Reliability Organization”.
What are the Goals of ERR?
Operations encompass all business processes.
All operations are based off of one key similarity:
Operational Excellence through ERR
OUTPUT(creating a product or service)
….which is reliant on
BUT WE'RE RISK!!! Why look at efficiency?
EFFICIENCY
Efficiency is how fast you can get something done….. Right?
First we must answer: What is efficiency?
EFFICIENCY ...is theCOST PER
UNIT
Unit = “Value” Measurement
In ERR, everything is a risk!
ERR Risks are broken down into Risk Variables• Operational Risk (task time, productivity, reliability, user interaction, etc)• Loss/Hazard Risk (assets, materials, safety, injuries, etc)• Regulatory/Compliance Risk• Quality Risk (Right First Time, liability risk, product/service failure , etc)• Financial Risk (pricing, currency, liquidity , etc)• Reputational Risk (brand, customer satisfaction , etc)• Strategic Risk (competition, capital availability , etc)• and many more….
All risks tie in together.
Efficiency Risks
Operations
Output
Efficiency
Risks
Everything is a Risk
Key Concepts
DependentOn
DependentOn
BasedOn
ERR Strategies:• LEAN• Hazard Analysis• Six Sigma• Ergonomics• Organizational Behavior Management• Failure Mode & Effects Analysis
These strategies address:• Productivity• Loss• Quality• Predictability• Reliability
ERR Strategies to Identify Risks
Background - Started by Henry Ford in early 1900’s - Improved by Toyota in 1930’s – Continually improving ever since…
LEAN focuses on:• “Value Add” and “Non-Value Add” task steps• Operational “wastes”• Optimizing processes
Typical types of “waste”:• Non “Value Add” processes or steps• Non “Value Add” movement, or travel• Material waste• Overprocessing (rely on inspections rather than having an efficient process) – We often do this
in Risk disciplines• “Wait time” – caused by an uneven process• Supply chain management
ERR Goals: 1. Break down and outline all task steps2. Identify which steps add value to your “Output”3. Eliminate or control wastes and non value add tasks
LEAN in ERR (Productivity)
Background - Started at the dawn of time…
HA focuses on:• Identifying potential “loss” of life, health, or property
Typical types of “loss”:• Property (Fire, flood, etc)• Employee injury (lacerations, ergonomics, falls, death, etc)• Tool/equipment breakdown
ERR Goals: 1. Break down and outline all task steps2. Identify where loss may occur3. Eliminate or control loss
Hazard Analysis (HA) in ERR (Loss)
Background - Developed by Motorola in 1986 to reduce quality errors
Six Sigma focuses on:• Identifying & removing the causes of defects (errors)• Minimizing variability of processes (Ensure consistency & predictability)• Defect/error metrics
Typical types of metrics:• # of errors per operation/process cycle• # of injuries, lost time days, modified duty days• Lost/wasted assets
ERR Goals: 1. Identify, track, & trend defect (errors) metrics2. Review metrics for cause & effect trends3. Remove causes of defects/errors to create a consistent & predictable process.
Six Sigma in ERR (Quality)
Background – May have started as early as ancient Greek & Egyptian times.
Ergonomics focuses on:• Physical risk factors where musculoskeletal stress occurs.• User interaction with a process (is the process intuitive).• Tool design
Typical ergonomic risks:• Waste movements• Static postures• High or repetitive forces (not necessarily movements)• User interaction with the task (easy to use….dummyproof)
ERR Goals: 1. Identify musculoskeletal stress factors.2. Engineer out stress factors3. Dummyproof the process
Ergonomics in ERR (Productivity, Loss, Quality)
Background – Started at the dawn of time… Successfully modified by marketing strategists who found a way to control consumer behavior.
OBM focuses on:• How people interact and act at both work and at home.• Based on foundations of motivation (“SIRE”)• A carrot just big enough to chase, but not too big to weigh down the rabbit
What is SIRE?• Status – Status in social heirarchy• Incentive – Physical or monetary reward• Recognition – Recognition for actions• Encouragement – Support for desirable action
*This is what casino/store rewards are based off of…
ERR Goals: 1. Identify possible negative behavioral outcomes2. Design SIRE based rewards system to direct employees toward desirable goals
Organizational Behavior Management (OBM) in ERR (Predictability)
Background – Developed by military reliability engineers in the 1950’s to ensure high reliability. Used heavily in weapons design and airplane manufacturing.
FMEA focuses on:• Where a process can fail.• Testing a process with the goal of making it fail.
Typical failure points:• User interaction & behavior• Equipment• Process design• The design of your control methods
ERR Goals: 1. Anticipate failure points (especially the failure points of your controls)2. Test the revised process and try to make it fail 3. Plan for failure mitigation
Failure Mode & Effects Analysis (FMEA) in ERR (Reliablility)
Throwing a ball
Need 3 volunteers to throw a ball at a target1. Manually throw the ball
Were their mechanics consistent?Was the outcome predictable? Accurate?What could have failed? How likely is each?
2. Throw the ball with a lacrosse stick 3. Launch the ball with a catapult
A process vetted by failure modes will be: 4. Consistent5. Predictable6. Reliable
Failure Mode Examples
Almost all failures are indicated by “something”• This makes failure predictable… if you’ve identified the indicators.
How to identify failure indicators• Start with the problem• Identify sources of the problem• Accumulate metrics on each source• Identify the sources of the sources• And so on….
ERR Goals: 1. Anticipate failure points (especially the failure points of your controls)2. Test the revised process and try to make it fail 3. Plan for failure mitigation
Failure Indicators
Identifying & controlling them will prevent the
claims
Example – Patient falls in the hospital
How to Identify Failure Indicators
Patient Fall Injury Claims
Overall # of patient falls
IndicatedBy
IndicatedBy
Patient Mobility Factors
(balance, cognitive status, etc)
These are the “source”
indicatorsShould we track and trend these?
CausedBy Unstable Patients
Base your solutions on quantifiable data when possible:• Time• Repeatability• Accuracy• Force output• Behavior Reliability• Rate of failure per cycle
All risks are quantifiable to an extent, you’ll just need to define how you are quantifying each
ERR Solutions are based on ideas• Encouraged to be creative• Some will be bad… that‘s okay (I have many bad ideas)• A bad idea often has merit and can be used to better another idea• Just don’t follow bad ideas to a dead end street…
Developing Solutions for ERR Risks
FMEA ImproveEfficiency
Key Concepts
Six SigmaEliminate
Errors
ErgonomicsEliminateStressors
EliminateFailure
LEANEliminate
Waste
Crea
tes
a H
igh
Relia
bilit
y O
rgan
izati
on
Hazard Analysis
ControlLoss
(Reduce the Cost per Unit)
OBMEncourage
desired behavior
An organization where:• Cost per unit is optimized• Operations are reliable and predictable• Adverse events are very rare• Expectations are very well defined• Everyone takes ownership for all risk areas, not just their own
Background:• Concept developed @ UC Berkeley in 1987• Initially focused on adverse events in high risk tasks• Over time, morphed to include reliability in business operations
What is a High Reliability Organization?
Breaking the SilosRi
sk M
anag
emen
t
EH&
S &
Wor
k Co
mp
Rese
arch
ers
Ope
ratio
ns
Supp
ort S
ervi
ces
Liability, Property, Litigation,
etc…
Injuries, Environmen
tal, Regulatory,
etc…
Grants, Chemicals,
Data Security
etc…
Equipment, Quality,
Productivity, etc…
Material costs,
Productivity, etc…
Lead
ersh
ip
Operations costs, Reputation,
Capital availability
HR
Employee turnover,
regulatory, etc…
BARRIER
Leadership’s Glass Barrier• Is in place to prevent overloading of
insignificant problems.• Is difficult to penetrate by a singular risk
group.• Is broken by large adverse events, or losses.
One Big Silo
Collaborative approach penetrates the barrier
Lead
ersh
ip
Operations costs, Reputation,
Capital availability
Entire Organization
Everyone:• Considers all risks.• Leads for their subject area.• Takes ownership of all other
subject areas.
ALL Risks
BARRIER
Include everyone in ERR projects, but keep member size manageable• Actively engage primary risk holders• Keep secondary risk holders informed in real time• Report findings to all
Know your project groups personality types:• Program builders• Visionaries/Innovators• Devil’s advocates• Program managers• Sustainers• People Leaders
Assign responsibilities in line with personalities.
Working Together
Who Owns the ERR Process?
Project Owner
Keeps Project On Target
Removes ObstaclesOwns Project Success
Or Failure
Addresses ProblemsHead On
Considers All RiskControl Ideas
Business Case
Quantifiable ROI metric examples
• Cost per unit• Time improvements (productivity)• Employee injury cost savings
(medical, lost time, mod time, replacements, training, litigation)
• Quality improvement (Less waste, happier customer, minimized errors)
• Insurance benefits (lower rates, increased rebates)
Difficult to quantify ROI metric examples
• Liability savings• Employee satisfaction &
retention• Brand improvement• Competitive edge
Executives rely on Return on Investment (ROI) estimatesIn order to have ROI estimates, you must have metrics
If it was a risk it can be estimated in the ROI.
COST PER UNIT
This all boils down to the
Sustain & Continually Improve
• Track & review metrics
• Audit checks and balances
• Report metrics to stakeholders
• Re-evaluate if metrics are off.
• Implement solutions
• ERR process• Create checks
and balances• Establish metrics
PLAN DO
CHECKACT
A group of 100 employees in a medical billing office have all complained of injuries from working at their computer. You have one ergonomics specialist.
• What is your cost per unit? (wages, benefits, injury costs, equipment breakdown, new equipment, etc)
• What risks (efficiencies) are there? • Who should be involved in the ERR project?• How can you control the risks?• What are the failure modes?• How can you sustain risk control?
Now plan for 50,000 of these employees at UC… You still only have one ergonomics specialist.
• Do your risks change?• How can you control the risks?• What are the failure modes?• How can you sustain risk control?
Hands on Scenario - Job
Your custodial department for your office building needs to cut 40% of its budget & staff, but still maintain the same level of service to the university. The major tasks that they do are: empty all large & small trash bins in the building, vacuum all carpets weekly, mop floors every day, clean the grounds, & clean the restrooms 3x daily.
• What is your cost per unit? (wages, benefits, injury costs, equipment breakdown, new equipment, etc)
• What risks (efficiencies) are there? • Who should be involved in the ERR process?• How can you control the risks?• What are the failure modes?• How can you sustain risk control?
Hands on Scenario - Process
• PI just received a grant to perform research on a newly discovered, and highly contagious, infectious disease. He/she has nothing set up… no lab, no equipment, no staff, no procedures.
• What risks are there to this research? • Who should be involved in the ERR process?• How can you control the risks?• What risks can you anticipate and control to help them optimize their research
dollars?• How will they transport, receive, handle, & dispose of this new disease?• What happens if something goes wrong in the research? (foreseen reactive
controls)
Hands on Scenario – Entire Operation
Operations
Output
Efficiency
Risks
Everything is a Risk
Key Concepts
DependentOn
DependentOn
BasedOn
FMEA ImproveEfficiency
Key Concepts
Six SigmaEliminate
Errors
ErgonomicsEliminateStressors
EliminateFailure
LEANEliminate
Waste
Crea
tes
a H
igh
Relia
bilit
y O
rgan
izati
on
Hazard Analysis
ControlLoss
(Reduce the Cost per Unit)
OBMEncourage
desired behavior
BARRIER
One Big Silo
Lead
ersh
ip
Operations costs, Reputation,
Capital availability
Entire Organization
Everyone:• Considers all risks.• Leads for their subject area.• Takes ownership of all other
subject areas.
ALL Risks
Collaborative approach penetrates the barrier
Who Owns the ERR Process?
Project Owner
Keeps Project On Target
Removes ObstaclesOwns Project Success
Or Failure
Addresses ProblemsHead On
Considers All RiskControl Ideas
Sustain & Continually Improve
• Track & review metrics
• Audit checks and balances
• Report metrics to stakeholders
• Re-evaluate if metrics are off.
• Implement solutions
• ERR process• Create checks
and balances
PLAN DO
CHECKACT