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How to Achieve Superior Performance
Improvement by Integrating Constraints
Management with Lean and Six Sigma
Examples fro...
Agenda

 Why integrate Lean Six Sigma and
Constraints Management?
 Where to Focus Performance
Improvement efforts?
 Exa...
About NOVACES
An implementer of today’s most powerful performance
improvement and project management methodologies.
Core C...
What is the Capacity of the System?

A
26 units/hr

B
13 units/hr

C
22 units/hr

Demand: 10 units/hr
4

Copyright © 2013 ...
Systems & Processes
A system is “not the sum of its parts. It is the product of parts’ interactions.”
- Russell L. Ackoff
...
Integration of Best Practices
Complementary Features

Lean – a rapid and simple approach to
drive non-value added activiti...
Testimony

 “It is not always about a process
and looping all those processes
together and fixing a piece and
putting it ...
Three Windows
 The Constraints Management
window: looking at the forest and
selecting the best tree to pick the fruit
fro...
Complementary Methodologies

Constraints Management
Purpose

Helps focus improvement
efforts on areas of maximum
impact

L...
Goal Tree for Performance Improvement
In order to have…

Goal (Objective)

High Impact Superior
Performance Improvement

I...
Focusing Steps of Constraints Management
1. Identify the constraint
 Or control point / leverage point
1. Squeeze the mos...
Value Stream Analysis (VSA)
 A Lean tool that allows an organization
to:
– Define the entire value stream.
– Identify val...
Process Analysis

Physician
Decision
To Admit

10 min

Unit
Clerk

PSCU
Consult

25 min

55 min

Diagnostics

8 min

Trans...
Seven Deadly Wastes - TIMWOOD
Transport
Inventory

Having more material or information than you
need

Motion

Moving peopl...
DMAIC Roadmap Review

Copyright © 2013 NOVACES, LLC. All rights reserved.
The Best of the Breed

 Robust Design
– Greenfield
– Revitalization
– New Heights
 Transitions strategic planning to tac...
Selection Tree
System Value
Stream
Analysis

Strategic
Gap
Analysis

System
Constraint
Analysis

Problem / Opportunity
Ide...
Example: Texas Workforce Commission
 Work Opportunity Tax Credit
Program
– # of applications exceeds capacity
to make det...
Performance Improvement in Hospitals
The ASQ Hospital Lean Six Sigma Study
(2009)
 Survey of 77 Hospitals
 First study t...
Healthcare Example: Door to Balloon Time

 Decreased door to balloon time will improve patient outcomes as
measured by qu...
Example: Door to Balloon Time
Interference Diagram

21

Copyright © 2013 NOVACES, LLC. All rights reserved.
Example: Door to Balloon Time
Current - Ideal - Future States

Future State

Current State

Ideal State

22

Copyright © 2...
Results Before and After VSA
Metric

Pre-Event

Post-Event

Improvement

81

49

-32

37 %

61 %

24 %

19

14

-5

66 Min...
Example: Outpatient Appointment & Scheduling
 Better slot planning for physicians
 Reducing waiting time for patients
 ...
Example: Emergency Department Critical Lab
Tests
Current State

Future State

Steps: 117
Non-Value Added Steps: 73
Handoff...
Example: CHF Discharge Current State and
Future State
Future State

Current State

Total Steps
NVA Steps
Handoffs
26

=
=
...
Where to Focus?

Re-determinations
Paper
application
Mail
processing

Electronic
application
Data
entry

Eligibility
match...
Number of Applications Data Entered and Major
Process Changes

2012

Utilized Lean Six Sigma Tools
 5S, Visual Display, V...
TWC Results

29

Copyright © 2013 NOVACES, LLC. All rights reserved.
Example: Contracting Processes
Current – Ideal – Future States
Current

Ideal
Commission
Action

Programmatic
Development
...
Handoffs of Request for Proposals

BEFORE: 16

AFTER: 1
WDD

CSD

CSD/FIN/

A two week long process is reduced to 34 min...
Examples from Government
Reduction of Cycle Time for Memorandums of Understanding
 Agency required numerous MOUs with out...
Why Integrate?
 12. Focus
 11. Leverage
 10. Waste
 9. Inertia
 8. Risk
 7. Measurement
 6. Toolset
 5. Analytics
...
Why Integrate?

1. RESULTS
Immediate significant
results
Integrating Lean Six
Sigma with Constraints
Management often
yi...
Summary
Using the right tool, on the right problem, at the right time
– but always from a systems perspective
 Effective ...
Publications

36

Copyright © 2013 NOVACES, LLC. All rights reserved.
Questions?

New Orleans, LA | Toms River, NJ | New York City , NY

Bahadir Inozu, Ph.D.
CEO

Corporate Headquarters
650 Po...
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How to Achieve Superior Performance Improvement by Integrating Constraints Management with Lean and Six Sigma : Examples from Government, Public Services and Healthcare - Bahadir Inozu @ PSE 2013 Vilnius

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Dr. Bahadir Inozu, CEO, NOVACES, LLC (USA) @ TOCICO International Public Sector Effectiveness Conference 2013 Vilnius

- Focusing on everything is synonymous with not focusing on anything.

- Flow concept in public sector.

- Complementary features of Integration of best practices.

- Purpose, focus and application guidelines of Constraints Management, Lean and Six Sigma.

- Reaching operational excellence: systematic tools that turn any organisation into Best-In-Class one.

More information - http://pse.lt

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  • Started with LSS – had breakthrough with TOC LSS in Naval Aviation
  • IN order to answer this question it will be helpful to look at flow from a different perspective.
  • CM is a management philosophy which focuses on identifying and controlling key leverage points within the system or process.
    CM is a management philosophy which focuses on process improvement through identification and effective management of constraints in a given system.
    Based on Goldratt’s Theory of Constraints, Constraints Management enables a systematic approach to management of organizations by identifying and controlling key leverage points – constraints - within the system or process. An it is synergistic to Lean and Six Sigma by providing the right focus for project selection. In addition it allows dynamic management of processes to get the most profits.
  • We need to use all three windows – how we are gonna know which window to look through and when
  • What is the narrowest section of the pipe – last example first E then B
  • 1.5M additional revenue
  • Explain that each swim lane is a different dept in the process and the lines between lanes represent handoffs.
    Focus on amt of red, and yellow to green and the no of steps and handoffs (opportunity for defects). Focus in on all of handoffs between doctors..docs must feel like they are being paged constantly. If they say still red and yellow, say this is not the ideal state. The ideal state is in the appendix and there are some reasons why we with this event cannot achieve the ideal state, which will be shown later.
    Decreased steps by 30 and handoffs by 15
  • Explain that each swim lane is a different dept in the process and the lines between lanes represent handoffs.
    Focus on amt of red, and yellow to green and the no of steps and handoffs (opportunity for defects). Focus in on all of handoffs between doctors..docs must feel like they are being paged constantly. If they say still red and yellow, say this is not the ideal state. The ideal state is in the appendix and there are some reasons why we with this event cannot achieve the ideal state, which will be shown later.
    Decreased steps by 30 and handoffs by 15
  • BETWEEN JAN AND JUNE CAPACITY INCREASED 125%
  • the introduction to TOC and the Lean/Six Sigma quality tools that enhance it has changed the way I manage and interact with everyone organizationally.
  • #12.  Focus Focusing on everything is synonymous with not focusing on anything. Constraints Management provides a focusing mechanism for Lean Six Sigma.
    #11. LEVERAGEA chain is only as strong as its weakest link. Constraints Management concentrates Lean Six Sigma improvements at the point of maximum leverage for the entire business or “system.
    ”#10. WASTE All waste is not created equal. An hour of cycle time reduction on a non-bottleneck is not an hour gained in throughput of your products or services. It is a mirage. If one of the objectives of Lean Six Sigma is to eliminate waste, then Theory of Constraints is necessary to prevent waste from chasing mirages.
    #9. INERTIA Do not let inertia cause a constraint in your system. Constraints Management fulfills Lean Six Sigma’s mandate for continuous improvement by constantly refocusing your energy on newly emerged constraints. You will avoid stagnation and generate momentum.
    #8. RISK What can go wrong will go wrong. Constraints Management supplements Lean Six Sigma with robust risk management created specifically to combat the effects of Murphy’s Law.
    #7. MEASUREMENTTell me how you measure me and I will tell you how I will behave. Align measurements to the organizational goal and harmonize incentives to drive the desired human behavior. Constraints Management provides the system perspective to incentivize behaviors based on global performance measures in any data-driven organization
    .# 6. TOOLSET When you are good with a hammer, everything looks like a nail. Let the problem define the tool. Avoid diminishing returns due to an incomplete toolset. Constraints Management includes a range of applications unique to process improvement such as supply chain logistics, finance, strategy, marketing and more.
    #5. ANALYTICSOur current analytics point us in the wrong direction. Constraints Management applies thinking techniques and graphical analytics to harness intuition, solve problems and build rigorous improvement roadmaps aimed at achieving stability, growth, and prosperity – while safeguarding against the Law of Unintended Consequences.
    #4. EXECUTIONPerformance improvement initiatives are projects. When projects are poorly executed, benefits are lost and penalties are incurred. This includes opportunity costs associated with wasted resource potential. Critical Chain Project Management, a component of the Theory of Constraints toolkit, accelerates Lean Six Sigma projects and is the gold standard for resource management.#3. WIN-WINA house divided cannot stand. People want to do good, but sometimes our perspective of the system gets in the way. Constraints Management fosters a scientific, humanistic, win-win approach where all stakeholders benefit. Resistance to change is therefore minimized, speeding up the rate of adoption and improving the likelihood of success for Lean Six Sigma efforts
    .#2.        SynergyTogether we are stronger. Constraints Management strives to reduce variability, fix the root cause, increase value flow, pursue perfection and demolish organizational silos in synergy with Lean Six Sigma.
    #1. RESULTSImmediate, significant results. Integrating Lean Six Sigma and Theory of Constraints yields 10 to 20 times greater returns than implementing Lean Six Sigma alone. Case studies in almost every industry and in both public and private sector organizations prove the breakthrough results that can be realized quickly from this best of breed approach to improving a business.
  • Countless case studies from organizations in almost every industry, public and private, prove the breakthrough bottom line results that can be realized quickly with Constraints Management.
  • We are T driven driving additional sales using same resources
    An hour saved at the bottleneck is an hour gained by the entire system – that means the capacity of the system has increase by an hour – assuming make and sell more units
    Translates into effective capacity
    Effective capacity of your system is determined by the capacity of the system constraints.
    An hour saved at a non-bottleneck is a mirage
    CC can lead to greater than 50% improvement in project performance
    CC not just a methodology but a change in culture
    CC is a logical extension of CPI
    CPI for Program & Project Management
    , hour saved at a non-bottleneck is a mirage
  • Transcript of "How to Achieve Superior Performance Improvement by Integrating Constraints Management with Lean and Six Sigma : Examples from Government, Public Services and Healthcare - Bahadir Inozu @ PSE 2013 Vilnius"

    1. 1. How to Achieve Superior Performance Improvement by Integrating Constraints Management with Lean and Six Sigma Examples from Government, Public Services and Healthcare Bahadir Inozu, Ph.D. October 24, 2013, Vilnius 1 Copyright © 2013 NOVACES, LLC. All rights reserved.
    2. 2. Agenda  Why integrate Lean Six Sigma and Constraints Management?  Where to Focus Performance Improvement efforts?  Examples from Government, Public Services, and Healthcare  Recap - Top reasons for using Constraints Management with Lean Six Sigma 2 Copyright © 2013 NOVACES, LLC. All rights reserved.
    3. 3. About NOVACES An implementer of today’s most powerful performance improvement and project management methodologies. Core Competencies:  Performance improvement for organizations, programs and project portfolios in the public sector, military, healthcare, and maritime industries.  Capturing emerging management methodologies from various industries and global markets and helping our clients to adopt them.  Transferring knowledge and skills to deliver self-sufficiency to our clients. Copyright © 2013 NOVACES, LLC. All rights reserved.
    4. 4. What is the Capacity of the System? A 26 units/hr B 13 units/hr C 22 units/hr Demand: 10 units/hr 4 Copyright © 2013 NOVACES, LLC. All rights reserved.
    5. 5. Systems & Processes A system is “not the sum of its parts. It is the product of parts’ interactions.” - Russell L. Ackoff “Organizations live or die as integrated systems, NOT as a collection of 5 discrete, independent processes.” Copyright © 2013 NOVACES, LLC. All rights reserved.
    6. 6. Integration of Best Practices Complementary Features Lean – a rapid and simple approach to drive non-value added activities, or waste, out of processes Six Sigma – a rigorous, data-driven problem-solving method that is used to reduce variation and defects to achieve near-perfect quality Constraints Management – a systematic approach to managing complex organizations by identifying and controlling key leverage points within the system or process. Focusing on what is critical to the organization the Right Problem – the Right Time – the Right Tool 6 © 2006-2012 NOVACES, LLC. All Rights Reserved.
    7. 7. Testimony  “It is not always about a process and looping all those processes together and fixing a piece and putting it together with another piece”  “If you don’t deal with the system and the issues that are going on within the system and the conflicts that exist, you are never going to get to the root cause and really be able to make a difference.” 7  "This is an experience that I am totally shocked at the outcome.”  “This is by far the best event yet!" Copyright © 2013 NOVACES, LLC. All rights reserved.
    8. 8. Three Windows  The Constraints Management window: looking at the forest and selecting the best tree to pick the fruit from.  The Lean window: the simplest way to pick the low hanging fruits as well as the fruits on the floor with very little effort.  The Six Sigma window: how to consistently pick the bulk of the sweeter fruits, without bruising them, at higher, difficult to reach branches of the tree. 8 Copyright © 2013 NOVACES, LLC. All rights reserved.
    9. 9. Complementary Methodologies Constraints Management Purpose Helps focus improvement efforts on areas of maximum impact Lean Emphasizes improved flow via streamlined process efficiencies Six Sigma Emphasizes predictability, measurement, and control of key process metrics System Constraint Focus Application Guidelines 9 Flow Maximizing throughput of the primary process bottleneck Creating smooth process flow Decreasing rework and reducing variation Focusing Steps 1. Identify constraint 2. Squeeze constraint 3. Subordinate everything to the constraint 4. Elevate constraint 5. Repeat Creating Value 1.Specify value 2.Identify value stream 3.Improve flow 4.Increase pull 5.Pursue perfection 6.Replicate Reducing Variation 1.Define 2.Measure 3.Analyze 4.Improve 5.Control Copyright © 2013 NOVACES, LLC. All rights reserved. Control
    10. 10. Goal Tree for Performance Improvement In order to have… Goal (Objective) High Impact Superior Performance Improvement I must have… Critical Success Factors Improvement Focusing Strategy Waste Reductio n Strategy Variation Reduction Strategy Process to Identify System Constraint Process to Identify Waste in the System Process to Identify Variation in the System Working Knowledge of Constraints Management Working Knowledge of Lean Working Knowledge of Six Sigma In order to have… I must have… Necessary Conditions © 2013 NOVACES, LLC. All Rights Reserved.
    11. 11. Focusing Steps of Constraints Management 1. Identify the constraint  Or control point / leverage point 1. Squeeze the most out of the constraint without spending money 2. Synchronize/subordinate the system to the constraint 3. Elevate the constraint  Often by spending money 1. Repeat 11 Copyright © 2013 NOVACES, LLC. All rights reserved.
    12. 12. Value Stream Analysis (VSA)  A Lean tool that allows an organization to: – Define the entire value stream. – Identify value-added procedures and bottlenecks. – Eliminate non-value-added activities. – Arrange steps for continuous flow.  Effective when used at the right time, for the right purpose. Criteria for Non-Added Value Work 1.Moves the thing through the process and changes it. 2. The customer will pay for it. 3.It is done right the first time. 12 Copyright © 2008 – 2009 NOVACES, LLC. All rights reserved.
    13. 13. Process Analysis Physician Decision To Admit 10 min Unit Clerk PSCU Consult 25 min 55 min Diagnostics 8 min Transport 20 min RN Available 19 min Patient In Bed 8 min Patient Flow  Where is the constraint in this process?  If we wanted to improve the throughput of this process, we must focus on its weakest link.
    14. 14. Seven Deadly Wastes - TIMWOOD Transport Inventory Having more material or information than you need Motion Moving people to access/process material or information Waiting Waiting for material or information, or material or information waiting to be processed Over-Production Creating too much material or information Over-Processing Processing more than necessary to achieve the desired output – too much paperwork Defects Requiring Rework or Scrap 14 Moving material or information Errors or mistakes causing rework to correct the problem Copyright © 2013 NOVACES, LLC. All rights reserved.
    15. 15. DMAIC Roadmap Review Copyright © 2013 NOVACES, LLC. All rights reserved.
    16. 16. The Best of the Breed  Robust Design – Greenfield – Revitalization – New Heights  Transitions strategic planning to tactical focus  Integrates effective continuous process improvement approaches  Recognizes organization-specific needs and preferences 16 Copyright © 2013 NOVACES, LLC. All rights reserved.
    17. 17. Selection Tree System Value Stream Analysis Strategic Gap Analysis System Constraint Analysis Problem / Opportunity Identified Yes Is it a Flow Issue? No Yes Yes Process Value Stream Analysis Quick Hit or CM Solution Solution Known? Root Cause Known ? No No Rapid Improveme nt Workshop Copyright © 2013 NOVACES, LLC. All rights reserved. Six Sigma/DMAIC or CM Solution
    18. 18. Example: Texas Workforce Commission  Work Opportunity Tax Credit Program – # of applications exceeds capacity to make determinations in a timely manner  The goal is to increase the number of applications processed & reduce the amount of time in days to process applications … 18 Copyright © 2013 NOVACES, LLC. All rights reserved.
    19. 19. Performance Improvement in Hospitals The ASQ Hospital Lean Six Sigma Study (2009)  Survey of 77 Hospitals  First study to investigate the implementation of Lean & Six Sigma in U.S. hospitals.  53% report some level ("minor," "moderate" or "full") of lean deployment  42% report some level of Six Sigma deployment.  Few hospitals report "full deployment" of either Lean (4%) or Six Sigma (8%). TOC is not well known in US hospitals − Air Force Medical Service (1992) − Univ. of Michigan Hospital (1996) − Emory University Hospital (2009) − DMC Detroit Receiving Hospital (2009) TOC Applications Around the World: South Africa, New Zealand, Israel, UK, Singapore, Japan, Turkey, Netherlands "It is remarkable how popular the TOC is in the Dutch health care...If a hospital has a process improvement methodology applied, then one third chooses TOC … TOC is significantly more popular in hospitals than in manufacturing!"
    20. 20. Healthcare Example: Door to Balloon Time  Decreased door to balloon time will improve patient outcomes as measured by quality metrics  In an ideal state, there is no waste…no waiting, no searching for supplies, no excess transport time, etc..  The patient arrives, transported to an ED room and examined by the doctor. Patient Arrives 1 Minute ED Interventions 20 Minutes Cath Lab Interventions 12.5 Minutes  In the real world, waste does exist so we must minimize the waste to create a future state 20 Copyright © 2008 NOVACES, LLC. All rights reserved.
    21. 21. Example: Door to Balloon Time Interference Diagram 21 Copyright © 2013 NOVACES, LLC. All rights reserved.
    22. 22. Example: Door to Balloon Time Current - Ideal - Future States Future State Current State Ideal State 22 Copyright © 2012 NOVACES, LLC. All rights reserved.
    23. 23. Results Before and After VSA Metric Pre-Event Post-Event Improvement 81 49 -32 37 % 61 % 24 % 19 14 -5 66 Min ~53 Min ~ -13 Min 13 6 -7 # of Green Steps 26 (3) 29 (3) +3 (0) # of Yellow Steps 16 (3) 10 (4) -6 (+1) # of Red Steps 27 (6) 3 (0) -24 (-6) Total Number of Steps % of Value-Added Steps # of Swim Lanes Cycle Time # of Decisions For every minute delayed in inflating the balloon, much more heart muscle dies! Note: # inside ( ) equals # of steps for Triage
    24. 24. Example: Outpatient Appointment & Scheduling  Better slot planning for physicians  Reducing waiting time for patients  Increasing patient volume  Addressing performance limiting policies  Increasing call center response rates 24 Copyright © 2013 NOVACES, LLC. All rights reserved.
    25. 25. Example: Emergency Department Critical Lab Tests Current State Future State Steps: 117 Non-Value Added Steps: 73 Handoffs: 25 Steps: 45 Non-Value Added Steps: 8 Handoffs: 12 25 Copyright © 2013 NOVACES, LLC. All rights reserved.
    26. 26. Example: CHF Discharge Current State and Future State Future State Current State Total Steps NVA Steps Handoffs 26 = = = 99 30 36 Total Steps NVA Steps Handoffs Copyright © 2009 NOVACES, LLC. All rights reserved. = = = 69 5 21
    27. 27. Where to Focus? Re-determinations Paper application Mail processing Electronic application Data entry Eligibility matching Certification determination Needs determination Staff review Denial determination 27 Copyright © 2013 NOVACES, LLC. All rights reserved. Quality review Determination issued Document storage
    28. 28. Number of Applications Data Entered and Major Process Changes 2012 Utilized Lean Six Sigma Tools  5S, Visual Display, Value Stream Analysis and Quick Hits  SIPOC, VOC measures and Root Cause Analysis  “The pilot benefited significantly from TWC’s decision to apply the Theory of Constraints (TOC) methodology as a strategy to focus, prioritize, compel solutions, and solve problems while integrating methods and concepts of Lean and Six Sigma.” 28 Copyright © 2013 NOVACES, LLC. All rights reserved.
    29. 29. TWC Results 29 Copyright © 2013 NOVACES, LLC. All rights reserved.
    30. 30. Example: Contracting Processes Current – Ideal – Future States Current Ideal Commission Action Programmatic Development Integrated Review Future Publishing Before After 15 Green 16 Green 11 Yellow 2 Yellow Creating contracts that achieve agency objectives faster and faster, within the parameters of the rules. 18 Red 0 Red Total: 44 18 Steps
    31. 31. Handoffs of Request for Proposals BEFORE: 16 AFTER: 1 WDD CSD CSD/FIN/ A two week long process is reduced to 34 minutes! OGC/WDD
    32. 32. Examples from Government Reduction of Cycle Time for Memorandums of Understanding  Agency required numerous MOUs with outside agencies, including specialty services.  The lengthy cycle time to complete and certify MOUs resulted in numerous delays in receiving services.  The cycle time was reduced from average of 29 days to 14 days. New Employee Check-in Procedures  The check-in process for contractors was reduced from as long as 2 weeks to 2 hours.  New civilian employee hires check-in was reduced from 2 weeks to 3 hours. Productivity was increased by approximately 7,680 man hours. 32 Copyright © 2013 NOVACES, LLC. All rights reserved.
    33. 33. Why Integrate?  12. Focus  11. Leverage  10. Waste  9. Inertia  8. Risk  7. Measurement  6. Toolset  5. Analytics  4. Execution  3. Win-Win  2. Synergy 33 Copyright © 2013 NOVACES, LLC. All rights reserved.
    34. 34. Why Integrate? 1. RESULTS Immediate significant results Integrating Lean Six Sigma with Constraints Management often yields 10 to 20 times greater returns than implementing Lean Six Sigma alone. 34 Copyright © 2013 NOVACES, LLC. All rights reserved.
    35. 35. Summary Using the right tool, on the right problem, at the right time – but always from a systems perspective  Effective capacity of your system is determined by the capacity of the system constraint.  An hour saved at the bottleneck is an hour gained by the entire system  Constraints Management, Lean and Six Sigma are complementary  Constraints Management provides the right focus for Lean Six Sigma efforts Integrating Lean Six Sigma with Constraints Management often yields 10 to 20 times greater returns on investment than Lean and/or Six Sigma alone 35 Copyright © 2011 NOVACES, LLC. All rights reserved.
    36. 36. Publications 36 Copyright © 2013 NOVACES, LLC. All rights reserved.
    37. 37. Questions? New Orleans, LA | Toms River, NJ | New York City , NY Bahadir Inozu, Ph.D. CEO Corporate Headquarters 650 Poydras Street #2320 New Orleans, LA 70130, U.S.A. Northeast U.S. 48 Wall Street, 16th Floor New York, NY 10005 ---------------------------8 Robbins Street #101 Toms River, NJ 08753 (504) 208-0610 binozu@novaces.com www.novaces.com

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