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Six Sigma Integration, Inc.1 March 20103 Steps for ReducingSupply Chain Complexity:Creating Safer Operations              ...
Introductions                                              James William Martin is a consultant and president of a        ...
Our Competitive Advantage                                                                                            We ca...
Complexity is: “the condition of being difficult to analyze,   understand, or solve …. the condition of being   made up o...
You can see it in these ways:     Higher level symptom:                       Measured by:     Organizational cultural   ...
How is it measured?• Item proliferation• High percentage non-value  adding steps (time)• Long lead-times• High demand vari...
It is most dangerous if: Dangerous equipment Dangerous application environment People dependent or cognition issues Si...
We analyzed the effects of complexity:    Complexity increases demand     variation and lead-time, requires     higher in...
What are recurrence risks?Risk                                            Example                                         ...
Supply chain complexity causes                               process breakdownsOperations                                 ...
Behavior influences supply chain complexity•   Cognition and group behavior    influence how products and    services are ...
There are universal principles for good             design of supply chain operations                                     ...
Cognition influences process complexity, how people      work and misuse products and services         Interpret ambiguous...
Cognitive errors cause mistakes               • Forgetfulness ( not concentrating)               • Misunderstanding ( jump...
Things fail because error conditions align                                                                                ...
Organizational structure and culture can     help or hinder complexity reduction   Transportation … Inventory … Motion … W...
4 hour executive workshop agenda: 3 steps forreducing supply chain complexity:The workshop goal: become familiar with the ...
Questions?                                             18Copyright 2010 Six Sigma Integration, Inc.
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2 1 13 short presentation_ steps for reducing complexity

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  • The Law of Praganaz recognizes the fact that people interpret ambiguous information as complete i.e. create and see patterns where there are none. The effect occurs when a person mentally fills in blanks between visual elements arranged as a shape or pattern, but, incomplete in form. An example is a visual pattern of a series of lines which contain intermittent blank spaces. People will tend to mentally fill in the blanks between the lines and perceive the actual and imagined lines form a shape or pattern. This perceptual effect can be either useful or dangerous depending on the application. It is useful if the design intent is to convey information in this manner, but, dangerous if people misinterpret the intended pattern. It’s usually best to not leave anything to chance in these circumstances by creating partially completed shapes and leaving their interpretation to a user. This phenomenon is also called closure because people close a shape’s outline. Closely associated with closure is the design principle called continuation. People tend to more easily understand how to use a design’s functions and features when they are arranged in straight lines since they are perceived as being more connected or related. This implies designers should consider arranging functions and features in this way to show related functions and features unless there are reasons for not doing so. It is known fact that people often misinterpret visual information for several reasons. A physiological example is visual cortex adjustments of brightness and color variation to view an object. These are called correction errors and a primary example is constancy. Constancy occurs when the visual cortex attempts to maintain a constant image as the size and color of objects change relative to their environment. Correction errors also occur when the brain minimizes variations of light or sound. The existence of correction errors increases the likelihood of failures when alarms and controls are not highly differentiated from normal or safe conditions. A common design principle is to use color to compensate for constancy. Examples include, using red for danger and green for calm and normal. But, the use of color is culturally dependent. This implies designers should understand how their customers perceive the colors of new products; to the extent color is used for making decisions. This is also true for service systems.
  • Attitudes: Expressions of approval or disapprovalPersonal prejudices and biases which determine beliefs influencing the types of work activities, their priority and how they should be performed. In the absence of facilitation, incorrect work activities will be selected, prioritization will be ineffective and required information may not be acquired or analyzed correctly.Persuasion: Methods used to influence adoption of an attitudeFacilitative methods are used to obtain consensus for team behavior, members are removed or added to a team, members are counseled regarding their behavior. Correct persuasive methods will move a team to a high performance stage otherwise it becomes dysfunctional and fails to achieve its goals in a timely and efficient manner.Social cognition: Perception formation of others or patterns including filtering of environmental stimuliTeams which are not diverse, balanced with respect to required work activities or do not use facilitative tools will filter out important information. Incorrect goals will be selected and information will be incorrect interpreted resulting in wrong conclusions.Self-concept: Comparisons to others or standards which contribute to self-esteemSome team members have low self-esteem and others are egotistical. Failure to propose correct ideas, engage in group activities, and oppose incorrect ideas or behavior. Incorrect goals will be selected, not prioritized and team issues will not be effectively facilitated.Cognitive dissonance: Inconsistencies between personal actions and beliefsTeam members have not been persuaded to agree with group’s goals and work activities. Cannot support the group. Information is leaked. Work tasks not completed. Dysfunctional behavior occurs, People may leave the team.Social influence: Influence of group size, beliefs and status on individual behavior.Team cohesiveness and its maturity stage depend on group cultural norms and values. Flexibility is required for multi-cultural teams. Group size must be managed to control dynamics. People may engage in dysfunctional behavior if social norms and values can not be effectively communicated to them.Group dynamics: Rules, norms and relationships which people within a group use to influence each other, differentiate themselves from other groupsThe dynamics of a group change as its membership changes as a result group norms, values must be clearly communicated and facilitated. If not properly facilitated the group may break up into subgroups and engage in dysfunctional behavior.Interpersonal relationships: The ways in which people interact with each other both positively and negativelyRelated to group dynamics, interpersonal interactions must be facilitated to manage personal attitudes, social influence and group dynamics. If not properly facilitated the group may break up into subgroups and engage in dysfunctional behavior.Interpersonal attraction: Factors which influence the desire of people to associatePeople have different reasons for wanting to join a development team based on perceived value of rewards and recognition. People need to see an advantaged of associating otherwise other priorities receive their attention.
  • Arbitrary goalsConflicts of interestTolerating a violation of organizational policies, procedures or laws and regulations.Tolerating incompetenceViolations of law or regulationsLying and falsifying informationMaking threats to othersEngaging in disruptive or demoralizing conduct with peers, employees, customers or suppliersLeaking or misusing confidential informationStealing propertyMisrepresenting intellectual capital and other rightsMaking untrue claims regarding product or service features
  • Transcript of "2 1 13 short presentation_ steps for reducing complexity"

    1. 1. Six Sigma Integration, Inc.1 March 20103 Steps for ReducingSupply Chain Complexity:Creating Safer Operations James William Martin (2011), Unexpected Consequences,- Why The Things We Trust Fail, Copyright 2011 by Praeger Publications . Publishing date July 2011. Not to be reproduced or modified without written permission from Praeger Publications. 1 Copyright 2010 Six Sigma Integration, Inc.
    2. 2. Introductions James William Martin is a consultant and president of a management consulting firm, located south of Boston. He is also the author of several books focused on product and process design. He has coached thousands of people across Japan, China, Korea, Singapore, Malaysia, Thailand, Aust ralia, and North America to use fact based methods to improve their products and services. As a management consultant and teacher for more than twenty years, he also served as an instructor at the Providence’s College Graduate School of Business where he instructed courses in decision analysis and related courses, and counseled graduate students from government organizations and leading corporations in the greater Boston/Providence area. His interests include environmental friendly design as well as personal and organizational ethics, productivity and change management. He holds a Master of Science in Mechanical Engineering, Northeastern University; Master of Business Administration Providence College; and Bachelor of Science degrees in Industrial Engineering, and Biology from the University of Rhode 2 Island.Copyright 2010 Six Sigma Integration, Inc.
    3. 3. Our Competitive Advantage We can sustain results Our mission: Reducing supply chain complexity, improving productivity and safety We know how to reduce risk We know complexity and risk We know supply chain 3Copyright 2010 Six Sigma Integration, Inc.
    4. 4. Complexity is: “the condition of being difficult to analyze, understand, or solve …. the condition of being made up of many interrelated parts” (Encarta Dictionary) 4 Copyright 2010 Six Sigma Integration, Inc.
    5. 5. You can see it in these ways: Higher level symptom: Measured by: Organizational cultural • Item proliferation issues resulted in significant • High percentage non-value previous failures adding operations (time) A lack of risk analysis and • Long lead-times contingency planning • High demand variation Dependent on complicated • • Low productivity Low asset utilization logistical systems and resources for failure • High unit costs mitigation • Near misses • Poor root cause analysis and • Known issues Accidents mitigation • Etc. 5 Copyright 2010 Six Sigma Integration, Inc.
    6. 6. How is it measured?• Item proliferation• High percentage non-value adding steps (time)• Long lead-times• High demand variation• Low productivity• Low asset utilization• High unit costs• Near misses NVA BVA VA• Known issues• Accidents• Etc.You must identify and measure complexity drivers toimprove performance 6 Copyright 2010 Six Sigma Integration, Inc.
    7. 7. It is most dangerous if: Dangerous equipment Dangerous application environment People dependent or cognition issues Significant potential financial loss or loss of life if failure occurs Would impact many people across large geography Politically sensitive 7 Copyright 2010 Six Sigma Integration, Inc.
    8. 8. We analyzed the effects of complexity: Complexity increases demand variation and lead-time, requires higher inventory levels and lowers asset utilization. Increases operating cost, reduces cash flow and lowers revenues. Increases risk and the likelihood of unsafe operations. We wrote the books for supply chain complexity reduction…. 8Copyright 2010 Six Sigma Integration, Inc.
    9. 9. What are recurrence risks?Risk Example Risk Example1. Organizational cultural 8. Significant potential Interference by key stakeholders, misalignment of Operations which pose risks of injuries and death,issues resulted in financial loss or loss of life resources, ethical lapses. widespread damage or environmental contamination.significant previous failure if failure occurs 9. Would impact many Typically natural events or man-made events such as2. A lack of risk analysis Project the future using historical information rather people across large environmental contamination over wide areas. Also,and contingency planning than considering worst case scenarios. geography poor relief responses to such events. Inefficient or ineffective laws and regulations which 10. Politically sensitive If these occur, the public and media complain to the3. Regulatory laxness permit an industry to short-cut and take inordinate extent politicians become engaged. risks. 11. Application technology Creating systems for production without systems to Rotating equipment which can injure or kill people.4. Dangerous equipment ahead of control monitor, and control them to prevent injury, deaths or Equipment which can crush people. technology property and environmental damage. 12. Dependent on5. Dangerous application Non-existent, resource starved or poorly managed Environmental extremes of temperature, noise, light, complicated logisticalenvironment logistical systems to coordinate and provide relief vibration or other dangerous conditions. systems and resources for after a catastrophic event. failure mitigation6. Complex systems Systems relying on combinations of people, A chronic failure to investigate the causal factors for 13. Poor root cause technology and information for their operation. These failure or to implement effective solutions to prevent may be best solutions and cannot be simplified. analysis and mitigation their recurrence.7. People dependent or Systems requiring people gather , interpret and act oncognition issues information. 9 James William Martin (2011), Unexpected Consequences,- Why The Things We Trust Fail, Copyright 2011 by Praeger Publications . Publishing date July 2011. Not to be reproduced or modified without written permission from Praeger Publications. Copyright 2010 Six Sigma Integration, Inc.
    10. 10. Supply chain complexity causes process breakdownsOperations Billing Administration Finance•Lead-times too long •Billing errors •High utilities expense •Accounts payable cycle time•Late orders •Excess mailing expense •High insurance costs per employee •Variance to budget•Average cycle time per order too •High facility costs per employee •Margin improvementlong Purchasing •High material and supplies expense •Overtime expense•Emergency maintenance •Suboptimum year over year cost •Account receivable cycle time reduction •Too many suppliers HRDistribution •Too many contractors •HR staff per total employees Quality Assurance•Shipments exceeding standard •High cost per invoice •Absenteeism rate •Defects•Excess freight charges (inbound •Purchasing errors •Training hours per employee •Customer complaintsand outbound) •Employee cost to hire and retain •Claims•High inventory investment and lowturns •Health costs per employee •Rework Call Center•Excess and obsolete inventory •Lost time accidents •Scrap •Long average handling time•Order shortages •Disability costs •Warranty •Unnecessary call transfers•Premium freight costs •HS&E issues •Cost per call•Retuned product •Abandoned calls•Unnecessary product transferbetween facilities•Poor on-time delivery James W. Martin, Lean Six Sigma for Supply 10 Chain Management- The 10 Step Improvement Process, McGraw-Hill Professional; 1 edition (October 12, 2006). Copyright 2010 Six Sigma Integration, Inc.
    11. 11. Behavior influences supply chain complexity• Cognition and group behavior influence how products and services are designed and used…• This picture is not moving! Akiyoshi KITAOKA, Professor, Department of Psychology, Ritsumeikan University, Kyoto, Japan studying visual perception, visual illusion, optical illusion, trompe loeil AIC2009 ICP 2016 http://www.ritsumei.ac.jp/~akitaoka/index-e.html (Not incorporated into the book) Attitudes and behaviors increase supply chain complexity 11 Copyright 2010 Six Sigma Integration, Inc.
    12. 12. There are universal principles for good design of supply chain operations Alignment Issue • Influence • Learning • Usability • Appeal • Decision making Alignment Issues http://australianpolitics.com/news/2000/00-11-12.shtml (Not incorporated into the book) Effective designs accentuate the positive and neutralize the negative influences of cognition and group behavior…there are perhaps more than 100 non-technical factors to consider… 12Copyright 2010 Six Sigma Integration, Inc.
    13. 13. Cognition influences process complexity, how people work and misuse products and services Interpret ambiguous images Same color! Perception Issues as simple and completeLaw of Pragnanz (Interpret ambiguous images as simple and complete)http://www.marsartgallery.com/pragnanzlaw.html (Not incorporated into the book) http://www.lottolab.org/articles/illusionsoflight.asp http://picocool.com/culture/color--the-brain-beau-lottos-optical- illusions/ (Not incorporated into the book) 13Copyright 2010 Six Sigma Integration, Inc.
    14. 14. Cognitive errors cause mistakes • Forgetfulness ( not concentrating) • Misunderstanding ( jumping to conclusions) • Identification ( sensory error) • Inadvertent errors ( distraction & fatigue) • Delay in task execution ( information processing) • Inability to compensate for new situations • Intentional errors ( sabotage) 14Copyright 2010 Six Sigma Integration, Inc.
    15. 15. Things fail because error conditions align Failure Model Failure condition A Failure condition B Failure condition C Failure condition D James William Martin (2011), Unexpected Consequences,- Why The Things We Trust Fail, Copyright 2011 by Praeger Failure Publications . Publishing date July 2011. Not to be reproduced or modified without written permission from Praeger Publications. Catastrophic failures occur when contributing factors align … We must detect weak signals 15 and “near misses” … and apply failure analysis to products, services and logistical systemsCopyright 2010 Six Sigma Integration, Inc.
    16. 16. Organizational structure and culture can help or hinder complexity reduction Transportation … Inventory … Motion … Waiting … Overproduction … Over processing … Defects … Safety Formal and Efficiency of Structure Culture informal groups Individuals design • Bureaucratic, functio • Organizational • Team organization • Personal •Performance, schedule, co nal, divisional, matri culture, norms, v and dynamics attitudes, concept of st, customer, suppliers and x, collaborative, virtu alues self, values, norms other project risks and al issues Arbitrary goals … Conflicts of interest… Tolerating a violation of organizational policies, procedures or laws and regulations... Tolerating incompetence … Violations of law or regulations … Lying and falsifying information … Making threats to others … Engaging in disruptive or demoralizing conduct with peers, employees, customers or suppliers … Leaking or misusing confidential information … Stealing property … Misrepresenting intellectual capital and other rights … Making untrue claims regarding product or service features James William Martin (2011), Unexpected Consequences,- Why 16 The Things We Trust Fail, Copyright 2011 by Praeger Publications . Publishing date July 2011. Not to be reproduced or modified without written permission from Praeger Publications.Copyright 2010 Six Sigma Integration, Inc.
    17. 17. 4 hour executive workshop agenda: 3 steps forreducing supply chain complexity:The workshop goal: become familiar with the concepts, identify areas ofapplications and integrate with current programs e.g. OMS and CI Essentials.Step 1:Complexity • Become aware of risk (recurrence risks) • Design low risk processes (supply chain focus)Step 2 Human factors • Social psychological effects on supply chain safety (error conditions, culture and ethics) • Estimating and reducing risk (reduce variation and errors)Step 3 Next steps • Where to focus? / Prioritization?Next step: 2 day supply chain workshop to identify and reduce supply chain complexityand improve safety 17 Copyright 2010 Six Sigma Integration, Inc.
    18. 18. Questions? 18Copyright 2010 Six Sigma Integration, Inc.
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