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Error-Proofing Transactional, Service,
Creative, and Analytical Processes

August 12, 2010

Company

LOGO
Your Instructor
 Early career as a scientist; migrated to
quality & operations design in the mid-80’s.
 Launched Karen Martin & Associates in
1993.
 Specialize in Lean transformations in nonmanufacturing environments.
 Co-author of The Kaizen Event Planner;
co-developer of Metrics-Based Process
Mapping: An Excel-Based Solution.
 Instructor in University of California, San
Diego’s Lean Enterprise program.

© 2010 Karen Martin & Associates

Karen Martin,
Principal
Karen Martin &
Associates

2
You will learn…
Common causes for errors.
The key metric (%C&A) for measuring
quality in office/service settings (review).
Error-proofing prioritization.
Root cause analysis tools.
Countermeasures for improving quality.
How to translate quality improvement into
productivity gains.
© 2010 Karen Martin & Associates

3
Building a Lean Enterprise

Jidoka
Eight Wastes (Muda)

Overproduction
Motion (people)
Inventory
Transportation
(material/data)
Waiting
Underutilized
Over-Processing
people
Errors ( Defects Rework)

© 2010 Karen Martin & Associates

5
Building a Lean Enterprise

Process
Stabilization
Tools
Building a Lean Enterprise

Poka Yoke;
Error-Proofing
Potential Impact of Poor Quality
Customer




Death or injury
Slow delivery
Lost market share

Financial





Excessive expenses
Missed performance
bonuses
Cash flow

Legal / Regulatory



Staff







© 2010 Karen Martin & Associates

Non-compliance
Litigation
Interpersonal &
interdepartmental
tension
Stress & frustration
Turnover / absenteeism
Poor morale
Inability to attract talent
8
Cost of Poor Quality (COPQ)
Labor (Process Time)




To fix
To inspect/audit/monitor/approve
Turnover due to frustration & stress

Extended lead times


Cash flow

Material costs (sometimes)



Scrap
Rework

Quantify
COPQ to
establish your
current state
baseline from
which to
measure
improvement

Storage costs (sometimes)
Litigation / regulatory fines
© 2010 Karen Martin & Associates

9
1-10-100 Quality Rule
The 1-10-100 rule states that as work moves
through a process, the cost of correcting an
error increases by a factor of 10.
Order entry example
Activity
Prevention Order entered correctly
Inspection Error detected by billing dept
Failure
Error detected by customer
Big Failure Cost of customers telling others
© 2010 Karen Martin & Associates

Cost
$1
$ 10
$ 100
???
10
Error-Proofing
Recognizes that every human will make errors.
Methodology that is used to strive toward zero
defects by either preventing or automatically
detecting defects.
Help people do the right thing; prevent them from
doing the wrong thing.
 Key Toyota principle – Respect for people.

Errors become defects that require rework.

© 2010 Karen Martin & Associates

11
Levels of Error-Proofing
1. Prevention



Make it impossible to make the error.
Make it difficult to make the error.

2. Detection


Make it obvious the error has occurred.

3. No Impact


Make it a “no impact” error.

© 2010 Karen Martin & Associates

12
Error-Proofing Tenets
Common tendency (non-Lean mindset) is to blame
people



“If they’d just be more careful…”
“They’re being lazy…”

Errors are not the result of careless or inattentive
employees.
Warning or “be careful” signs are not robust
solutions (and may be insulting)
Errors are evidence of a process design or
environmental problem, not a people problem.


Lean mindset: “We (the organization) have failed you.”

© 2010 Karen Martin & Associates

13
Quality:
People
aren’t the
problem.
The problem is
generally rooted in:
• Process design
• Technology capabilities
• Environmental conditions
14
Poor Input Quality Causes
Unnecessary Tension
Poorly designed processes are typically
behind interpersonal and interdepartmental
tension – not personalities.

© 2010 Karen Martin & Associates
You can’t
inspect in
quality.

© 2010 Karen Martin & Associates

16
Inspection in Non-Manufacturing

Reviews
Approvals
Audits
Signatures

Improvement goal: Eliminate the NEED
for inspection.
© 2010 Karen Martin & Associates

17
State of Quality in Office &
Service Environments
Office & service quality rarely measured.
If measured, typically “end state” quality.
“In process” quality is a far more revealing
analytical tool, in terms of:






Determining how robust your process is
Identifying waste
Rebuilding interpersonal and interdepartmental
relationships
Capturing productivity gains

© 2010 Karen Martin & Associates

18
The Improvement Process

Plan

Act

Gain a deep
understanding
about the
current state

Do

Check
© 2010 Karen Martin & Associates

19
Measuring Process Quality

Customer

Step 1

© 2010 Karen Martin & Associates

Step 2

Step 3

Step 4

20
Key Lean Metric: Quality
%Complete and Accurate (%C&A)


% time downstream customer can perform task without
having to “CAC” the incoming work:
 Correct information or material that was supplied
 Add information that should have been supplied
 Clarify information that should or could have been clear





This output metric is measured by the immediate
downstream customer and all subsequent downstream
customers.
If workers further downstream deem the output from a
particular step to be less than 100%, multiply their
assessment of quality with the previous assessments.

© 2010 Karen Martin & Associates

21
Measuring Step-Specific Quality

Customer
%C&A = 50%

Step 1

Step 2

Step 3

Step 4

%C&A =
70%

%C&A =
85%

%C&A =
25%

%C&A =
80%

© 2010 Karen Martin & Associates

22
Measuring Step-Specific Quality

Customer
%C&A = 50%

Step 1

Step 2

Step 3

Step 4

%C&A =
70%

%C&A =
85%

%C&A =
25%

%C&A =
80%

Rolled First Pass Yield = 6%
(.50 x .70 x .85 x .25 x .80) x 100
© 2010 Karen Martin & Associates

23
Two Ways to Measure
Value Stream Mapping



Holistic, macro view of process
Strategic planning tool

Metrics-Based Process Mapping



Micro view of process
Tactical design tool

© 2010 Karen Martin & Associates

24
Mapping Post-it Conventions
Step #
Activity
(Verb / Noun)
Function that
performs the
task
# Staff
(if relevant)
Barriers to flow
(if relevant)

PT (process time)
% Complete &
Accurate

LT (Lead time)
Current State Value Stream Map
Service Delivery – Call to Cash
Source Refrigeration & HVAC, Inc.
Current State Value Stream Map
Serv ice Deliv ery
Created February 11, 2009
CONFIDENTIAL

Customer

Great
Plains

Verisae
(Customer)
Special Order
Part

Excel
Spreadsheet
(Customer)

Supplier

Tech

Upload time
card

Close call in
Verisae

Process Time
Cards

Tech

Account
Manager
(West)

Payroll Admin

PT = 0 mins.
%C&A = 70%
Batch: 1x/day

PT = 1 mins.
%C&A = 90%
Batch: 1x/day

Complete Call
in GP

Pick up Part
at Parts Store

Review
Service Call
Data

?%
Tech

40%

Receive
customer call

Select &
Dispatch Tech

Call Center

Dispatcher &
Service
Manager

5 m.

120 m.
PT = 2 mins.
%C&A = 60%

0.0833
 hours

PT = 5 mins.
%C&A = 60%

Tech

PT = 90 mins.
%C&A = 90%

PT = 0 mins.

640 m.

240 m.
PT = 5 mins.
%C&A = 80%

PT = 120 mins.
%C&A = 40%

2 hours
75 minutes

Dispatcher

Tech
120 m.

1.25 hours
90 minutes

Make Repair;
Call to raise
the NTE

Get Part from
Truck

75 m.

1.5
 hours
5 minutes

?%

Tech
90 m.

2 hours
2 minutes

Assess
Problem

PT = 75 mins.
%C&A = 95%

5 minutes

PT = 15 mins.
%C&A = 85%
Batch: 1x/day

Billing Admin
6 days
PT = 25 mins.
%C&A = 75%

Posting Admin
240 mins.
PT = 3 mins.
%C&A = 98%
Batch: 1x/day

640 m.

Account
Manager

3 minutes

Enter Invoices
into Verisae &
Excel; Mail
Invoices
Billing Admin

120 m.

PT = 10 mins.
%C&A = 85%
Batch: 3-5x per wk
10.7
 hours

4 hours
25 minutes

Review
Invoices;
Close in
Verisae (Pac)

Review &
Post Invoices

Review Open
Ticket Report

48
 hours
10 minutes

A/P Admin

PT = 10 mins.
%C&A = 90%
Batch: 1x/day

PT = 10 mins.
%C&A = 50%
Batch: 2x/day

10.7
 hours

4 hours
120 minutes

Service
Manager

Process A/P

Receive
Cash; Post
Payment
Collections
60 days

PT = 4 mins.
%C&A = 95%
Batch: 1x/week
480
 hours

2 hours
10 minutes

4 minutes

Lead Time = 572 hours
Process Time = 349 minutes

Acronym Key
%C&A %Complete and Accurate
AR

Activity Ratio

FTE

Full Time Equivalent

LT

Lead Time

PT

Process Time

RFPY Rolled First Pass Yield

Lead Time to invoice = 86.2 hrs
Process Time =5.9 hrs.
NOTE: Business hours
Activity Ratio = 6.8%
RFPY = 1.1%
Lead time to cash = ? days

RFPY = 1.1%
Summary Quality Metric
Rolled First Pass Yield (RFPY)







The percentage of occurrences where work
passes through the process “clean,” with no
“hiccups,” no rework (CAC) required.
RFPY = %C&A x %C&A x %C&A…
Common finding = 0-15%
Multiply ALL %C&A’s, even if parallel processes
(concurrent activities).

© 2010 Karen Martin & Associates

27
Service Delivery Value Stream
Call to Cash

Metric
Lead Time (LT)
Process Time (PT)

Current State

86.2 hours
5.9 hours

% Activity

6.8%

Rolled First Pass
Yield (RFPY)

1.1%

# Handoffs

© 2010 Karen Martin & Associates

10

Projected
Future State

Projected %
Improvement
Future State Value Stream Map
Service Delivery – Call to Cash
Future State Value Stream Map
Source Refrigeration & HVAC, Inc.
Service Delivery

T&M Target example, refrigeration component repair, non-peak season (35 w ork orders per day)
Created February 13, 2009
CONFIDENTIAL

Create Source
preferred T & C's

Explore flat rate
pricing

Customer
%C&A = 99%

Establish
parameters for time
& parts by
service type

EDI Interf ace
Create EDI
Interface w/
Customers

Create Tech
performance
report

Create EDI
Interface w/
Verisae

Supplier

Great
Plains

No EDI

Special Order
Part
Improve Tech
Training; Create
Sub-levels

Improve Tech
Onboarding

Tech
Create Tech
Support Center

Implement
GPS

Contact Tech
Support As
Needed

Install kanban
on trucks

?

Centralize
Dispatch

10%
Assess
Problem

Dispatcher
120 mins.
PT = 7 mins.
%C&A = 85%

2 hrs.

Make Repair;
Complete call
on handheld

Tech

PT = 75 mins.
%C&A = 90%

PT = 0 mins.

`

24 hrs.
PT = 120 mins.
%C&A = 75%

2 hrs.
1.25 hrs.

Create stnd work
for invoicing

PT = 5 mins.
%C&A = 99%
1x daily

Billing Admin

Compare
invoice
register to
invoices and
mail invoices
4 hrs.

PT = 25 mins.
%C&A = 95%

24 hrs.
2 hrs.

Create
Customer Billing
Teams

Review W.O.,
payroll, AP &
invoice; post
immediately

Tech
2 hrs.

1.25 hrs.
1.25 hrs.

Create invoice
exception report

Get Part from
Truck

75 mins.

1.25 hrs.
0.117 hrs.

?

Enter data
into Verisae
and Excel
from Daily
Report
Billing Admin

Standardize
Truck Inventory

PT = 75 mins.
%C&A = 95%

Tech
75 mins.

Separate labor
& payroll

Pick up Part
at Parts Store
Tech

Tech

Create W.O.
Dispatch Tech

Excel
Spreadsheet
(Customer)

Verisae
(Customer)

Billing Admin

Receive
Cash; Post
Payment
Collections
60 days

PT = 5 mins.
%C&A = 99%
1x daily
4 hrs.

0.417 hrs.

480 hrs.
0.0833 hrs.

Lead Time = 520 hrs.
Process Time = 5.12 hrs.

Acronym Key
%C&A %Complete and Accurate
AR

Activity Ratio

FTE

Full Time Equivalent

LT

Lead Time

PT

Process Time

RFPY

Rolled First Pass Yield

Lead Time to invoice = 34.5 hrs
NOTE: Business hours
Process Time = 5.1 hrs.
Activity Ratio = 14.8%
RFPY = 45.4%
Lead time to cash = 67 days
Service Delivery Value Stream
Call to Invoice Segment
Projected Improvement

Current State

Projected
Future State
(10 months)

Projected %
Improvement

86.2 hours

34.5 hours

60.0%

5.9 hours

5.1 hours

13.6%

% Activity

6.8%

14.8%

45.9%

Rolled First Pass
Yield (RFPY)

1.1%

45.4%

3,990%

10

5

50%

Metric
Lead Time (LT)
Process Time (PT)

# Handoffs

Freed
Capacity =

© 2010 Karen Martin & Associates

0.8 hrs/service call x 75,000 calls/yr
1,875 hrs/year

= 32 FTEs
What do you do with freed capacity?
 Absorb additional work without increasing staff
 Reduce paid overtime
 Better work/life balance
 Slow down & think
 Innovate – create new revenue streams
 Conduct ongoing continuous improvement activities
 Do a better job with fewer errors and higher safety
 Get to know your customers; build stronger supplier
relationships
 Mentor staff to create career growth opportunities
 Provide additional workforce development; cross-training
 Do the things you haven’t been able to get to; get caught up
 Collaborate with other areas
 Reduce payroll through natural attrition
© 2010 Karen Martin & Associates

31
Reasons for Errors
 Lack of effective training
 Non-standardized work
 Excessive complexity
 Time delays between input
and output (holding info in
one’s head too long)
 Multi-tasking
 Rushing
 Poor knowledge re: internal
customer requirements

© 2010 Karen Martin & Associates

 Hardware / software issues
 Similarities
 Environmental




Interruptions/ distractions
Noise, odor, lighting

 Ambiguous information




Unclear instruction
Poor handwriting
Blurry images (technologyrelated

32
Root Cause Analysis

© 2010 Karen Martin & Associates

33
Root Cause Analysis (RCA)
RCA is necessary to:






Avoid jumping to conclusions.
Avoid creating “band-aid” fixes
(addressing only the symptoms).
Select proper countermeasures.
Design and implement lasting
solutions that truly eliminate the
problem.

© 2010 Karen Martin & Associates

34
Root Cause Analysis: 4 Key Tools
Cause-and-Effect Diagram

5 Why’s

People

Material / Info

Lack of experience

Budgets
Submitted Late
Forecast in other system
Manual vs. PC
System avail.

Quality issue requiring
rework
Staffing/absenteeism
Order entry error
Changing customer
requirements w/ no
adjustment to expected
delivery
Equipment failure

Tally
||||| ||
|||||
|||
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No standard work
Email vs. FedEx

Check Sheets Quantify Occurrences
Material shortage

Changing schedule
Input rec’d late

No sense of import

Machine

Reason

No stnd spread sheet

Time availability

Why?
Why?
Why?
Why?
Why?

Method

No milestones
$ vs. units

Measurement

Weather delays
Dispersed sales force

Environment
Root Cause Analysis Tools
Simple problems



Five Why’s
Problem Analysis Tree

More complex problems





Brainstorm causes (fishbone)
Tally frequency of most likely causes
(check sheet)
Identify relevant few (Pareto analysis)
for countermeasure development

© 2010 Karen Martin & Associates

If
necessary

36
Five Why’s Example
Problem: Report is taking too much of an employee’s time;
team questions whether the report is needed

1. Why is the error report being prepared?
 My supervisor told me to.
2. Supervisor – Why are you asking for this report?
 One of the standard reports to be prepared per my
predecessor – I have yet to determine its usage.
3. Predecessor – Why did you initiate this report?
 Report was required in the past because personnel in
order entry were making data input errors.
4. Data entry – Why were orders being input with errors?
 Orders received via fax were blurry and hard to read.
5. Data entry - Why were the fax orders hard to read?
 Fax machine was old and of low quality. It was replaced
10 months ago and errors no longer are occurring.
Problem Analysis Tree
Problem: Documents are not being translated well and on time
In physical transit
Lost docs*

No tracking

In cyberspace

Large batches

In in-basket
Confusing
formats

In out-basket
Poor
original

Late or poorly
translated
documents

Translator doesn’t
understand original
Translation
problems**

Translator
understands
original, but still
poor translation

Faxed / poor
resolution

Random
vocabulary

Translator
skills

Selection
Lack of training

Wrong
technical
vocabulary

Training
No standard
Poor editing

Poorly
expressed
* Lost and found = 40%; lost & never found = 5%; stuck in system = 55%
** Rework on over 50% of documents

Unclear
expectations
Uneven
workload
Cause-and-Effect Diagram
(aka Fishbone, Ishikawa)
Brainstorming tool used to identify all possible
causes for an undesirable effect in 6 categories:







People (“Man”)
Material/Information - Inputs used in the process
Method - Procedures, work instructions, processes
Machine - Equipment, computers, tools, supplies
Measurement - Techniques used for assessing the
quality/quantity of work, including inspection



Environment (“Mother Nature”) - External & internal

Use other categories if appropriate

© 2010 Karen Martin & Associates

39
Cause-and-Effect Diagram (continued)
Decreases the likelihood that something is being
overlooked
Shows us the possible causes, but not how
much each contributes, if at all, to the problem
Does not provide solutions / countermeasures

© 2010 Karen Martin & Associates

40
Call back cause-and-effect diagram.igx

Cause and Effect Diagram – Call Backs
Method

Material

People

Tech ambition
Wrong tech sent

Bad part
Tech training

No criteria for calling for help

Wrong part

Not reaching out for help
No help available

Rushing

Substitute part

Call Backs

Inherent problem in case

Repeat failure

Machine

Poor data

Lack of defined metrics

Measurement

Unplanned conditions

Equipment variety

Environment

Circled items indicate likely highest volume root causes
Cause-and-Effect Diagram
Medication Administration Errors
Check Sheets
 Help collect and record process data in an organized way
(how often are certain events occurring?)
 Provides factual data to help analyze process (transition
from subjective to objective)
 Detects patterns
 Includes “likely candidates” from Cause-and-Effect
Diagram (the relevant few)
 Basis for Pareto Analysis
 NOTE: Make it easy & collect data for limited period of
time only

© 2010 Karen Martin & Associates

43
Root Cause Analysis: Late Shipments
Check Sheets Quantify Occurrences

Reason
Material shortage
Quality issue requiring
rework
Staffing/absenteeism
Order entry error
Changing customer
requirements w/ no
adjustment to expected
delivery
Equipment failure
© 2010 Karen Martin & Associates

Tally
||||| ||
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44
Pareto Analysis
Named after Wilfredo Pareto (18th century Italian
economist/statistician) who discovered the 80-20
principle.


20% of the people held 80% of the wealth

Focuses our attention on the VITAL FEW issues
that have the greatest impact to avoid spending
energy on the TRIVIAL MANY.
A type of bar graph that displays
information/data in order of significance.
A visual aid for defining & prioritizing problems.

© 2010 Karen Martin & Associates

45
Pareto Chart
Credit Application Delays
3500

100%
97%

100%

94%

3000

86%

77%

80%

2493

2500

Occurrences

90%

2909

70%
60%

2000

50%
1500

41%

40%
30%

1000
627

20%

561

500
242

180

0

10%
0%

No Signature Insufficient BankNo prior address
Info

Current
Customer

Reason for Delay

No Credit History

Other
Error-Proofing Process Design
Priorities
Goals:





First, avoid making the error. (Lean priority)
Second, avoid passing errors to downstream
internal customer.
Third, avoid passing errors to external customer.
(Traditional priority)

Typical non-Lean solution – Inspection!

© 2010 Karen Martin & Associates

47
Priorities for Designing ErrorProofing into the Process

1. Make it impossible to make the error.
2. Make it harder to make the error.
3. Make it obvious the error has
occurred.
4. Make the system robust so it
tolerates the error.

© 2010 Karen Martin & Associates

48
Error Proofing Priorities

Goals:
Make it impossible to make the error.
 Make it harder to make the error.
 Make it obvious the error has occurred.
 Make the system robust so it tolerates
the error.


© 2010 Karen Martin & Associates

49
Impossible to make the error –
mechanical/physical solutions
typically needed.
Error-Proofing (Poka Yoke) Data Entry
Error Proofing Priorities

Goals:
Make it impossible to make the error.
 Make it harder to make the error.
 Make it obvious the error has occurred.
 Make the system robust so it tolerates
the error.


52
Make It Harder to Make Errors

© 2009 Karen Martin & Associates

53
Error Proofing Priorities

Goals:
Make it impossible to make the error.
 Make it harder to make the error.
 Make it obvious the error has occurred.


 Sight – spell check, grammar check
 Sound – beeps at the checkout stand
 Smell – additive to natural gas
 Touch – ?


Make the system robust so it tolerates the
error.

© 2010 Karen Martin & Associates

54
Make It Obvious That
an Error Has Occurred

55
Error Proofing Priorities

Goals:
Make it impossible to make the error.
 Make it harder to make the error.
 Make it obvious the error has occurred.
 Make the system robust so it tolerates
the error.


© 2010 Karen Martin & Associates

56
“No Impact” Error

© 2010 Karen Martin & Associates

57
Mistake Proofing
Goals:





First, avoid making errors.
Second, avoid passing errors to downstream internal
customer.
Third, avoid passing errors to external customer.

Design robust processes with:



No errors
No “impact errors” if errors occur at all

We have a tendency to be less diligent when
we know a downstream inspection will occur.

58
Establishing a Quality Culture
Remove all obstacles to an employee’s success






Adequate time for quality work
Pressure-free
Effective training
Robust processes
Automation

Make problems visible
Stop “the line” / fix problems immediately
Honesty is honored; Blame-free
Improvement-oriented
Inspection is a last resort, not the first solution.
© 2010 Karen Martin & Associates

59
Types of Inspection
Self-inspection (point of
origin inspection) – most
desirable
Downstream inspection –
less desirable (we’re less
diligent)
3rd party inspection before it
reaches an external
customer – adds excess cost
3rd party inspection after the
fact – NO!
© 2010 Karen Martin & Associates

60
Ways to Error-Proof Data Entry
Environment










Information
enhancement
Audible or visual
warnings
Physical workspace
Reduce noise, smells,
interruptions
Adequate breaks
Rethink production
standards

Technology


Process


Simplify! (Why multiple
fixes for the same
problem?)

People





© 2010 Karen Martin & Associates

Correct data to begin with

Effective training!
Grouping data / cadence
Reading aloud
Time for self-inspection
61
Ways to Error-Proof Data Entry
(continued)

Process-related


Standardized work
 Proper sequencing
(logical order of work)
 Job aids & visual
reminders
 Checklists
 Verbalize information
 Repeat orders



Measurement &
feedback

© 2010 Karen Martin & Associates

System-related


Software
 Drop-down menus instead of
free text field
 Required fields
 Pop-up warnings
 Programming / macros



Hardware
 Dual monitors
 Ergonomic considerations

62
Error-Proofing
 Help people do the right thing; prevent them from doing the
wrong thing (e.g. automation, physical restrictions,
warnings)
 Create easy standard work tools (e.g. checklists)
 Provide adequate training & retraining



Visual work instructions
See one, do one, teach one

 Send work back upstream for completion and/or correction
and follow-up with add’l training
 Have customer requirements discussions with upstream
suppliers

63
Quality-at-the-Source
Make problems visual
The work stops immediately when an error
is detected!
Cross-trained workers are better at
detecting errors
DO NOT RELY ON INSPECTION!!!

64
Reasons for Errors
Lack of training
Lack of standardization
Overly complicated processes
Time delays between input and output
Multi-tasking
Interruptions
Rushing
Ambiguous information




Unclear instruction
Poor handwriting
Blurry images (technology-related)

65
Ambiguous Information

66
Standardized Work

A tool for maintaining quality, safety,
productivity, and employee morale
at the highest possible levels.

© 2010 Karen Martin & Associates

67
Review: Elements of Quality-atthe-Source
Standardize work.
Make problems visual.
The work stops immediately when an error
is detected!
Cross-trained workers are better at
detecting errors.
Eliminate or minimize reliance on
inspection.
© 2010 Karen Martin & Associates

68
© 2010 Karen Martin & Associates

69
You will learn…
Common causes for errors.
The key metric (%C&A) for measuring
quality in office/service settings (review).
Error-proofing prioritization.
Root cause analysis tools.
Countermeasures for improving quality.
How to translate quality improvement into
productivity gains.
© 2010 Karen Martin & Associates

70
Resources

Chapter 11

Chapter 8

71
For Further Questions

Karen Martin, Principal
7770 Regents Road #635
San Diego, CA 92122
858.677.6799
ksm@ksmartin.com
Subscribe to monthly newsletter:
www.ksmartin.com/subscribe

© 2010 Karen Martin & Associates

72

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Error-Proofing in Office & Service Environments

  • 1. Error-Proofing Transactional, Service, Creative, and Analytical Processes August 12, 2010 Company LOGO
  • 2. Your Instructor  Early career as a scientist; migrated to quality & operations design in the mid-80’s.  Launched Karen Martin & Associates in 1993.  Specialize in Lean transformations in nonmanufacturing environments.  Co-author of The Kaizen Event Planner; co-developer of Metrics-Based Process Mapping: An Excel-Based Solution.  Instructor in University of California, San Diego’s Lean Enterprise program. © 2010 Karen Martin & Associates Karen Martin, Principal Karen Martin & Associates 2
  • 3. You will learn… Common causes for errors. The key metric (%C&A) for measuring quality in office/service settings (review). Error-proofing prioritization. Root cause analysis tools. Countermeasures for improving quality. How to translate quality improvement into productivity gains. © 2010 Karen Martin & Associates 3
  • 4. Building a Lean Enterprise Jidoka
  • 5. Eight Wastes (Muda) Overproduction Motion (people) Inventory Transportation (material/data) Waiting Underutilized Over-Processing people Errors ( Defects Rework) © 2010 Karen Martin & Associates 5
  • 6. Building a Lean Enterprise Process Stabilization Tools
  • 7. Building a Lean Enterprise Poka Yoke; Error-Proofing
  • 8. Potential Impact of Poor Quality Customer    Death or injury Slow delivery Lost market share Financial    Excessive expenses Missed performance bonuses Cash flow Legal / Regulatory   Staff      © 2010 Karen Martin & Associates Non-compliance Litigation Interpersonal & interdepartmental tension Stress & frustration Turnover / absenteeism Poor morale Inability to attract talent 8
  • 9. Cost of Poor Quality (COPQ) Labor (Process Time)    To fix To inspect/audit/monitor/approve Turnover due to frustration & stress Extended lead times  Cash flow Material costs (sometimes)   Scrap Rework Quantify COPQ to establish your current state baseline from which to measure improvement Storage costs (sometimes) Litigation / regulatory fines © 2010 Karen Martin & Associates 9
  • 10. 1-10-100 Quality Rule The 1-10-100 rule states that as work moves through a process, the cost of correcting an error increases by a factor of 10. Order entry example Activity Prevention Order entered correctly Inspection Error detected by billing dept Failure Error detected by customer Big Failure Cost of customers telling others © 2010 Karen Martin & Associates Cost $1 $ 10 $ 100 ??? 10
  • 11. Error-Proofing Recognizes that every human will make errors. Methodology that is used to strive toward zero defects by either preventing or automatically detecting defects. Help people do the right thing; prevent them from doing the wrong thing.  Key Toyota principle – Respect for people. Errors become defects that require rework. © 2010 Karen Martin & Associates 11
  • 12. Levels of Error-Proofing 1. Prevention   Make it impossible to make the error. Make it difficult to make the error. 2. Detection  Make it obvious the error has occurred. 3. No Impact  Make it a “no impact” error. © 2010 Karen Martin & Associates 12
  • 13. Error-Proofing Tenets Common tendency (non-Lean mindset) is to blame people   “If they’d just be more careful…” “They’re being lazy…” Errors are not the result of careless or inattentive employees. Warning or “be careful” signs are not robust solutions (and may be insulting) Errors are evidence of a process design or environmental problem, not a people problem.  Lean mindset: “We (the organization) have failed you.” © 2010 Karen Martin & Associates 13
  • 14. Quality: People aren’t the problem. The problem is generally rooted in: • Process design • Technology capabilities • Environmental conditions 14
  • 15. Poor Input Quality Causes Unnecessary Tension Poorly designed processes are typically behind interpersonal and interdepartmental tension – not personalities. © 2010 Karen Martin & Associates
  • 16. You can’t inspect in quality. © 2010 Karen Martin & Associates 16
  • 17. Inspection in Non-Manufacturing Reviews Approvals Audits Signatures Improvement goal: Eliminate the NEED for inspection. © 2010 Karen Martin & Associates 17
  • 18. State of Quality in Office & Service Environments Office & service quality rarely measured. If measured, typically “end state” quality. “In process” quality is a far more revealing analytical tool, in terms of:     Determining how robust your process is Identifying waste Rebuilding interpersonal and interdepartmental relationships Capturing productivity gains © 2010 Karen Martin & Associates 18
  • 19. The Improvement Process Plan Act Gain a deep understanding about the current state Do Check © 2010 Karen Martin & Associates 19
  • 20. Measuring Process Quality Customer Step 1 © 2010 Karen Martin & Associates Step 2 Step 3 Step 4 20
  • 21. Key Lean Metric: Quality %Complete and Accurate (%C&A)  % time downstream customer can perform task without having to “CAC” the incoming work:  Correct information or material that was supplied  Add information that should have been supplied  Clarify information that should or could have been clear   This output metric is measured by the immediate downstream customer and all subsequent downstream customers. If workers further downstream deem the output from a particular step to be less than 100%, multiply their assessment of quality with the previous assessments. © 2010 Karen Martin & Associates 21
  • 22. Measuring Step-Specific Quality Customer %C&A = 50% Step 1 Step 2 Step 3 Step 4 %C&A = 70% %C&A = 85% %C&A = 25% %C&A = 80% © 2010 Karen Martin & Associates 22
  • 23. Measuring Step-Specific Quality Customer %C&A = 50% Step 1 Step 2 Step 3 Step 4 %C&A = 70% %C&A = 85% %C&A = 25% %C&A = 80% Rolled First Pass Yield = 6% (.50 x .70 x .85 x .25 x .80) x 100 © 2010 Karen Martin & Associates 23
  • 24. Two Ways to Measure Value Stream Mapping   Holistic, macro view of process Strategic planning tool Metrics-Based Process Mapping   Micro view of process Tactical design tool © 2010 Karen Martin & Associates 24
  • 25. Mapping Post-it Conventions Step # Activity (Verb / Noun) Function that performs the task # Staff (if relevant) Barriers to flow (if relevant) PT (process time) % Complete & Accurate LT (Lead time)
  • 26. Current State Value Stream Map Service Delivery – Call to Cash Source Refrigeration & HVAC, Inc. Current State Value Stream Map Serv ice Deliv ery Created February 11, 2009 CONFIDENTIAL Customer Great Plains Verisae (Customer) Special Order Part Excel Spreadsheet (Customer) Supplier Tech Upload time card Close call in Verisae Process Time Cards Tech Account Manager (West) Payroll Admin PT = 0 mins. %C&A = 70% Batch: 1x/day PT = 1 mins. %C&A = 90% Batch: 1x/day Complete Call in GP Pick up Part at Parts Store Review Service Call Data ?% Tech 40% Receive customer call Select & Dispatch Tech Call Center Dispatcher & Service Manager 5 m. 120 m. PT = 2 mins. %C&A = 60% 0.0833  hours PT = 5 mins. %C&A = 60% Tech PT = 90 mins. %C&A = 90% PT = 0 mins. 640 m. 240 m. PT = 5 mins. %C&A = 80% PT = 120 mins. %C&A = 40% 2 hours 75 minutes Dispatcher Tech 120 m. 1.25 hours 90 minutes Make Repair; Call to raise the NTE Get Part from Truck 75 m. 1.5  hours 5 minutes ?% Tech 90 m. 2 hours 2 minutes Assess Problem PT = 75 mins. %C&A = 95% 5 minutes PT = 15 mins. %C&A = 85% Batch: 1x/day Billing Admin 6 days PT = 25 mins. %C&A = 75% Posting Admin 240 mins. PT = 3 mins. %C&A = 98% Batch: 1x/day 640 m. Account Manager 3 minutes Enter Invoices into Verisae & Excel; Mail Invoices Billing Admin 120 m. PT = 10 mins. %C&A = 85% Batch: 3-5x per wk 10.7  hours 4 hours 25 minutes Review Invoices; Close in Verisae (Pac) Review & Post Invoices Review Open Ticket Report 48  hours 10 minutes A/P Admin PT = 10 mins. %C&A = 90% Batch: 1x/day PT = 10 mins. %C&A = 50% Batch: 2x/day 10.7  hours 4 hours 120 minutes Service Manager Process A/P Receive Cash; Post Payment Collections 60 days PT = 4 mins. %C&A = 95% Batch: 1x/week 480  hours 2 hours 10 minutes 4 minutes Lead Time = 572 hours Process Time = 349 minutes Acronym Key %C&A %Complete and Accurate AR Activity Ratio FTE Full Time Equivalent LT Lead Time PT Process Time RFPY Rolled First Pass Yield Lead Time to invoice = 86.2 hrs Process Time =5.9 hrs. NOTE: Business hours Activity Ratio = 6.8% RFPY = 1.1% Lead time to cash = ? days RFPY = 1.1%
  • 27. Summary Quality Metric Rolled First Pass Yield (RFPY)     The percentage of occurrences where work passes through the process “clean,” with no “hiccups,” no rework (CAC) required. RFPY = %C&A x %C&A x %C&A… Common finding = 0-15% Multiply ALL %C&A’s, even if parallel processes (concurrent activities). © 2010 Karen Martin & Associates 27
  • 28. Service Delivery Value Stream Call to Cash Metric Lead Time (LT) Process Time (PT) Current State 86.2 hours 5.9 hours % Activity 6.8% Rolled First Pass Yield (RFPY) 1.1% # Handoffs © 2010 Karen Martin & Associates 10 Projected Future State Projected % Improvement
  • 29. Future State Value Stream Map Service Delivery – Call to Cash Future State Value Stream Map Source Refrigeration & HVAC, Inc. Service Delivery T&M Target example, refrigeration component repair, non-peak season (35 w ork orders per day) Created February 13, 2009 CONFIDENTIAL Create Source preferred T & C's Explore flat rate pricing Customer %C&A = 99% Establish parameters for time & parts by service type EDI Interf ace Create EDI Interface w/ Customers Create Tech performance report Create EDI Interface w/ Verisae Supplier Great Plains No EDI Special Order Part Improve Tech Training; Create Sub-levels Improve Tech Onboarding Tech Create Tech Support Center Implement GPS Contact Tech Support As Needed Install kanban on trucks ? Centralize Dispatch 10% Assess Problem Dispatcher 120 mins. PT = 7 mins. %C&A = 85% 2 hrs. Make Repair; Complete call on handheld Tech PT = 75 mins. %C&A = 90% PT = 0 mins. ` 24 hrs. PT = 120 mins. %C&A = 75% 2 hrs. 1.25 hrs. Create stnd work for invoicing PT = 5 mins. %C&A = 99% 1x daily Billing Admin Compare invoice register to invoices and mail invoices 4 hrs. PT = 25 mins. %C&A = 95% 24 hrs. 2 hrs. Create Customer Billing Teams Review W.O., payroll, AP & invoice; post immediately Tech 2 hrs. 1.25 hrs. 1.25 hrs. Create invoice exception report Get Part from Truck 75 mins. 1.25 hrs. 0.117 hrs. ? Enter data into Verisae and Excel from Daily Report Billing Admin Standardize Truck Inventory PT = 75 mins. %C&A = 95% Tech 75 mins. Separate labor & payroll Pick up Part at Parts Store Tech Tech Create W.O. Dispatch Tech Excel Spreadsheet (Customer) Verisae (Customer) Billing Admin Receive Cash; Post Payment Collections 60 days PT = 5 mins. %C&A = 99% 1x daily 4 hrs. 0.417 hrs. 480 hrs. 0.0833 hrs. Lead Time = 520 hrs. Process Time = 5.12 hrs. Acronym Key %C&A %Complete and Accurate AR Activity Ratio FTE Full Time Equivalent LT Lead Time PT Process Time RFPY Rolled First Pass Yield Lead Time to invoice = 34.5 hrs NOTE: Business hours Process Time = 5.1 hrs. Activity Ratio = 14.8% RFPY = 45.4% Lead time to cash = 67 days
  • 30. Service Delivery Value Stream Call to Invoice Segment Projected Improvement Current State Projected Future State (10 months) Projected % Improvement 86.2 hours 34.5 hours 60.0% 5.9 hours 5.1 hours 13.6% % Activity 6.8% 14.8% 45.9% Rolled First Pass Yield (RFPY) 1.1% 45.4% 3,990% 10 5 50% Metric Lead Time (LT) Process Time (PT) # Handoffs Freed Capacity = © 2010 Karen Martin & Associates 0.8 hrs/service call x 75,000 calls/yr 1,875 hrs/year = 32 FTEs
  • 31. What do you do with freed capacity?  Absorb additional work without increasing staff  Reduce paid overtime  Better work/life balance  Slow down & think  Innovate – create new revenue streams  Conduct ongoing continuous improvement activities  Do a better job with fewer errors and higher safety  Get to know your customers; build stronger supplier relationships  Mentor staff to create career growth opportunities  Provide additional workforce development; cross-training  Do the things you haven’t been able to get to; get caught up  Collaborate with other areas  Reduce payroll through natural attrition © 2010 Karen Martin & Associates 31
  • 32. Reasons for Errors  Lack of effective training  Non-standardized work  Excessive complexity  Time delays between input and output (holding info in one’s head too long)  Multi-tasking  Rushing  Poor knowledge re: internal customer requirements © 2010 Karen Martin & Associates  Hardware / software issues  Similarities  Environmental   Interruptions/ distractions Noise, odor, lighting  Ambiguous information    Unclear instruction Poor handwriting Blurry images (technologyrelated 32
  • 33. Root Cause Analysis © 2010 Karen Martin & Associates 33
  • 34. Root Cause Analysis (RCA) RCA is necessary to:     Avoid jumping to conclusions. Avoid creating “band-aid” fixes (addressing only the symptoms). Select proper countermeasures. Design and implement lasting solutions that truly eliminate the problem. © 2010 Karen Martin & Associates 34
  • 35. Root Cause Analysis: 4 Key Tools Cause-and-Effect Diagram 5 Why’s People Material / Info Lack of experience Budgets Submitted Late Forecast in other system Manual vs. PC System avail. Quality issue requiring rework Staffing/absenteeism Order entry error Changing customer requirements w/ no adjustment to expected delivery Equipment failure Tally ||||| || ||||| ||| ||||| ||||| ||||| ||||| ||| | No standard work Email vs. FedEx Check Sheets Quantify Occurrences Material shortage Changing schedule Input rec’d late No sense of import Machine Reason No stnd spread sheet Time availability Why? Why? Why? Why? Why? Method No milestones $ vs. units Measurement Weather delays Dispersed sales force Environment
  • 36. Root Cause Analysis Tools Simple problems   Five Why’s Problem Analysis Tree More complex problems    Brainstorm causes (fishbone) Tally frequency of most likely causes (check sheet) Identify relevant few (Pareto analysis) for countermeasure development © 2010 Karen Martin & Associates If necessary 36
  • 37. Five Why’s Example Problem: Report is taking too much of an employee’s time; team questions whether the report is needed 1. Why is the error report being prepared?  My supervisor told me to. 2. Supervisor – Why are you asking for this report?  One of the standard reports to be prepared per my predecessor – I have yet to determine its usage. 3. Predecessor – Why did you initiate this report?  Report was required in the past because personnel in order entry were making data input errors. 4. Data entry – Why were orders being input with errors?  Orders received via fax were blurry and hard to read. 5. Data entry - Why were the fax orders hard to read?  Fax machine was old and of low quality. It was replaced 10 months ago and errors no longer are occurring.
  • 38. Problem Analysis Tree Problem: Documents are not being translated well and on time In physical transit Lost docs* No tracking In cyberspace Large batches In in-basket Confusing formats In out-basket Poor original Late or poorly translated documents Translator doesn’t understand original Translation problems** Translator understands original, but still poor translation Faxed / poor resolution Random vocabulary Translator skills Selection Lack of training Wrong technical vocabulary Training No standard Poor editing Poorly expressed * Lost and found = 40%; lost & never found = 5%; stuck in system = 55% ** Rework on over 50% of documents Unclear expectations Uneven workload
  • 39. Cause-and-Effect Diagram (aka Fishbone, Ishikawa) Brainstorming tool used to identify all possible causes for an undesirable effect in 6 categories:      People (“Man”) Material/Information - Inputs used in the process Method - Procedures, work instructions, processes Machine - Equipment, computers, tools, supplies Measurement - Techniques used for assessing the quality/quantity of work, including inspection  Environment (“Mother Nature”) - External & internal Use other categories if appropriate © 2010 Karen Martin & Associates 39
  • 40. Cause-and-Effect Diagram (continued) Decreases the likelihood that something is being overlooked Shows us the possible causes, but not how much each contributes, if at all, to the problem Does not provide solutions / countermeasures © 2010 Karen Martin & Associates 40
  • 41. Call back cause-and-effect diagram.igx Cause and Effect Diagram – Call Backs Method Material People Tech ambition Wrong tech sent Bad part Tech training No criteria for calling for help Wrong part Not reaching out for help No help available Rushing Substitute part Call Backs Inherent problem in case Repeat failure Machine Poor data Lack of defined metrics Measurement Unplanned conditions Equipment variety Environment Circled items indicate likely highest volume root causes
  • 43. Check Sheets  Help collect and record process data in an organized way (how often are certain events occurring?)  Provides factual data to help analyze process (transition from subjective to objective)  Detects patterns  Includes “likely candidates” from Cause-and-Effect Diagram (the relevant few)  Basis for Pareto Analysis  NOTE: Make it easy & collect data for limited period of time only © 2010 Karen Martin & Associates 43
  • 44. Root Cause Analysis: Late Shipments Check Sheets Quantify Occurrences Reason Material shortage Quality issue requiring rework Staffing/absenteeism Order entry error Changing customer requirements w/ no adjustment to expected delivery Equipment failure © 2010 Karen Martin & Associates Tally ||||| || ||||| ||| ||||| ||||| ||||| ||||| ||| | 44
  • 45. Pareto Analysis Named after Wilfredo Pareto (18th century Italian economist/statistician) who discovered the 80-20 principle.  20% of the people held 80% of the wealth Focuses our attention on the VITAL FEW issues that have the greatest impact to avoid spending energy on the TRIVIAL MANY. A type of bar graph that displays information/data in order of significance. A visual aid for defining & prioritizing problems. © 2010 Karen Martin & Associates 45
  • 46. Pareto Chart Credit Application Delays 3500 100% 97% 100% 94% 3000 86% 77% 80% 2493 2500 Occurrences 90% 2909 70% 60% 2000 50% 1500 41% 40% 30% 1000 627 20% 561 500 242 180 0 10% 0% No Signature Insufficient BankNo prior address Info Current Customer Reason for Delay No Credit History Other
  • 47. Error-Proofing Process Design Priorities Goals:    First, avoid making the error. (Lean priority) Second, avoid passing errors to downstream internal customer. Third, avoid passing errors to external customer. (Traditional priority) Typical non-Lean solution – Inspection! © 2010 Karen Martin & Associates 47
  • 48. Priorities for Designing ErrorProofing into the Process 1. Make it impossible to make the error. 2. Make it harder to make the error. 3. Make it obvious the error has occurred. 4. Make the system robust so it tolerates the error. © 2010 Karen Martin & Associates 48
  • 49. Error Proofing Priorities Goals: Make it impossible to make the error.  Make it harder to make the error.  Make it obvious the error has occurred.  Make the system robust so it tolerates the error.  © 2010 Karen Martin & Associates 49
  • 50. Impossible to make the error – mechanical/physical solutions typically needed.
  • 52. Error Proofing Priorities Goals: Make it impossible to make the error.  Make it harder to make the error.  Make it obvious the error has occurred.  Make the system robust so it tolerates the error.  52
  • 53. Make It Harder to Make Errors © 2009 Karen Martin & Associates 53
  • 54. Error Proofing Priorities Goals: Make it impossible to make the error.  Make it harder to make the error.  Make it obvious the error has occurred.   Sight – spell check, grammar check  Sound – beeps at the checkout stand  Smell – additive to natural gas  Touch – ?  Make the system robust so it tolerates the error. © 2010 Karen Martin & Associates 54
  • 55. Make It Obvious That an Error Has Occurred 55
  • 56. Error Proofing Priorities Goals: Make it impossible to make the error.  Make it harder to make the error.  Make it obvious the error has occurred.  Make the system robust so it tolerates the error.  © 2010 Karen Martin & Associates 56
  • 57. “No Impact” Error © 2010 Karen Martin & Associates 57
  • 58. Mistake Proofing Goals:    First, avoid making errors. Second, avoid passing errors to downstream internal customer. Third, avoid passing errors to external customer. Design robust processes with:   No errors No “impact errors” if errors occur at all We have a tendency to be less diligent when we know a downstream inspection will occur. 58
  • 59. Establishing a Quality Culture Remove all obstacles to an employee’s success      Adequate time for quality work Pressure-free Effective training Robust processes Automation Make problems visible Stop “the line” / fix problems immediately Honesty is honored; Blame-free Improvement-oriented Inspection is a last resort, not the first solution. © 2010 Karen Martin & Associates 59
  • 60. Types of Inspection Self-inspection (point of origin inspection) – most desirable Downstream inspection – less desirable (we’re less diligent) 3rd party inspection before it reaches an external customer – adds excess cost 3rd party inspection after the fact – NO! © 2010 Karen Martin & Associates 60
  • 61. Ways to Error-Proof Data Entry Environment       Information enhancement Audible or visual warnings Physical workspace Reduce noise, smells, interruptions Adequate breaks Rethink production standards Technology  Process  Simplify! (Why multiple fixes for the same problem?) People     © 2010 Karen Martin & Associates Correct data to begin with Effective training! Grouping data / cadence Reading aloud Time for self-inspection 61
  • 62. Ways to Error-Proof Data Entry (continued) Process-related  Standardized work  Proper sequencing (logical order of work)  Job aids & visual reminders  Checklists  Verbalize information  Repeat orders  Measurement & feedback © 2010 Karen Martin & Associates System-related  Software  Drop-down menus instead of free text field  Required fields  Pop-up warnings  Programming / macros  Hardware  Dual monitors  Ergonomic considerations 62
  • 63. Error-Proofing  Help people do the right thing; prevent them from doing the wrong thing (e.g. automation, physical restrictions, warnings)  Create easy standard work tools (e.g. checklists)  Provide adequate training & retraining   Visual work instructions See one, do one, teach one  Send work back upstream for completion and/or correction and follow-up with add’l training  Have customer requirements discussions with upstream suppliers 63
  • 64. Quality-at-the-Source Make problems visual The work stops immediately when an error is detected! Cross-trained workers are better at detecting errors DO NOT RELY ON INSPECTION!!! 64
  • 65. Reasons for Errors Lack of training Lack of standardization Overly complicated processes Time delays between input and output Multi-tasking Interruptions Rushing Ambiguous information    Unclear instruction Poor handwriting Blurry images (technology-related) 65
  • 67. Standardized Work A tool for maintaining quality, safety, productivity, and employee morale at the highest possible levels. © 2010 Karen Martin & Associates 67
  • 68. Review: Elements of Quality-atthe-Source Standardize work. Make problems visual. The work stops immediately when an error is detected! Cross-trained workers are better at detecting errors. Eliminate or minimize reliance on inspection. © 2010 Karen Martin & Associates 68
  • 69. © 2010 Karen Martin & Associates 69
  • 70. You will learn… Common causes for errors. The key metric (%C&A) for measuring quality in office/service settings (review). Error-proofing prioritization. Root cause analysis tools. Countermeasures for improving quality. How to translate quality improvement into productivity gains. © 2010 Karen Martin & Associates 70
  • 72. For Further Questions Karen Martin, Principal 7770 Regents Road #635 San Diego, CA 92122 858.677.6799 ksm@ksmartin.com Subscribe to monthly newsletter: www.ksmartin.com/subscribe © 2010 Karen Martin & Associates 72