Using Systems Thinking, Lean, Six Sigma and Theory of Constraints (ToC) Business process improvement - Doing the right things, effectively and efficiently - First stage of significant improvement Optimise -GB

Knowledge base Lean: is centred around creating more value with less work by removing waste and increasing efficiencies in business processes. Six Sigma: seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) Optimise -GB

Knowledge base Theory of Constraints (TOC ) ...seeks to identify bottlenecks / constraints and restructure the rest of the organisation around it to eliminate it and improve process flow Systems thinking ...views "problems" as parts of an overall system, rather than reacting to specific part through the context of relationships with each other. Systems thinking focuses on cyclical rather than linear cause and effect. Optimise -GB

Six Sigma Process Improvement methodology Optimise -GB

Define the objectives What do customers want from you? What are their issues? What are the issues you wish to address? What are the Critical To Quality aspects of your business? What are the milestones? What are the key objectives to be achieved? By failing to prepare you are preparing to fail – Benjamin Franklin Process Improvement Optimise -GB D M A I C

Process Improvement Project Team Who are the experts? - who does the day to day activities? Who is going to project manage this work? What are the lines of responsibility and communication? Optimise -GB D M A I C

Process Improvement Stakeholder Identification! What external stakeholders are there? Optimise -GB D M A I C

Process map the activities Process Improvement Measure – Phase 1 Who, which department The what Ensure you record the tools / systems used and products / artefacts utilised / created Optimise -GB D M A I C Customer Operations Finance Give order to sales desk Take goods from shelf Produce / print invoice Box goods / Invoice

Spaghetti Diagram (illustration view of process map) Customer Operations Credit Control Phone in order Deliver goods and invoice Pay invoice Requests an invoice to be raised Process Improvement Measure – Phase 1 Optimise -GB D M A I C

Time focuses on how long a piece of work takes to complete. This also focuses on waiting time for others to complete their task. Cost of work including internal and external labour, purchased goods and overheads that are allocated. Process Improvement Measure – Phase 2 Optimise -GB D M A I C

Quality focus looks at the work itself to identify defects / errors and aims to eliminate them before reaching the end customer or the next person in the chain of events Capacity looks at the resources required to complete the job without bottle necks stopping work, such as waiting time on management approval or waiting on other departments to clear their backlog Process Improvement Measure – Phase 2 Optimise -GB D M A I C

Theory of Constraints (ToC) The Theory of Constraints aims to identify and eliminate constraints so that bottle necks do not appear by following 5 steps: 1 – Identify the constraint 2 – Exploit the constraint to maximise production benefit 3 – Subordinate everything else – eliminate non value added work 4 – Elevate the constraint by increasing resources to handle more work 5 – Start again from point 1 to review all other constraints Process Improvement Measure – Phase 2 Optimise -GB D M A I C

Theory of Constraints (ToC) Each completed unit is passed onto the next person / department in the line Can you see where the bottle necks are? Do you ever wait on others to compete their work so you can start yours? Dept A units Dept B units Dept C units Dept D units Week 1 10 5 6 6 Week 2 8 11 3 9 Week 3 8 14 4 8 Week 4 8 16 5 9 Department B is the bottle neck in the process. They have more work coming in than they have going out. This causes a delay in the entire process. Add resources or improve efficiency in Department B Process Improvement Measure – Phase 2 Optimise -GB D M A I C

Control / Capability Charts Use software to plot the time taken for one process to understand if there is consistency between activities and workers Process Improvement Measure – Phase 2 Optimise -GB D M A I C

Use statistics to verify the data from the control / capability charts Mean (Average) = 14.5 Days Median (Middle number) = 15 Days Standard deviation = 2.26 The standard deviation is still greater than 2 but this at least provides a better sample. Therefore the average (baseline) of 14.5 can be assumed for larger samples. Process Improvement Measure – Phase 2 Optimise -GB D M A I C

Prioritisation of focus: Process time If your focus is on process time, a Pareto chart will help to prioritise your improvement focus. In this case Taking goods from Shelves” and Boxing goods and invoice” seems to take the longest time. Process Improvement Measure – Phase 2 Optimise -GB Process Time Take goods from shelf 30 Package goods and invoice 15 Take order 10 Produce Invoice 10 D M A I C

Prioritisation of focus: Quality If your focus is on quality a Pareto chart will help to prioritise your improvement focus. In this case “Taking goods from shelves” and “Taking orders” has the larges defects. Process Improvement Measure – Phase 2 Optimise -GB Process Defects Take goods from shelf 5% Take order 5% Package goods and invoice 4% Produce Invoice 1% D M A I C

Question each activity Is it needed? Does it add value? Can the activity be removed? Reduce time of each activity wherever possible through systems development Process Improvement Optimise -GB Value Added Non-value Added Value enabled Process Take order Take goods from shelf Produce and print invoice Box goods / invoice D M A I C

Process Improvement Use Cause and Effect Trees to get the root cause of the problem Optimise -GB D M A I C Take goods from shelf Writing on form mis-read Writing of poor quality Person was in a rush Writing was smudged Felt tips are used Too much workload Person is carless Paper is greasy No pens in the office No other supplies Lack of training

Identify Process Waste Process Improvement Optimise -GB Waste category Office examples 1. Overproducing Printing / working on paperwork before it is needed 2. Inventory Filed in boxes, office supplies, batch processing 3. Waiting System downtime, managers approval, information from others 4. Extra processing Re-entering data, extra copies, excessive reports, budget process, scanning 5. Correction Data entry, design, invoice errors 6. Excess motion Walking to and from printers, other offices, filing 7. Transportation Excessive email attachments, multiple hand offs, approvals, postal services, internal post 8. Under utilised people Limited employee authority, excessive management control D M A I C

Identify the solutions Solution 1 Use post it notes and put the solutions on a blank wall Solution 2 Solution 3 Solution 4 Solution 5 Solution 6 Solution 7 Solution 8 Solution 9 Solution 10 Solution 11 Solution 12 Solution 13 Solution 14 Solution 15 Solution 16 Solution 17 Solution 18 Process Improvement Optimise- GB D M A I C

...Group the solutions to identify duplications Group the post it notes in an affinity diagram to identify common themes Six Sigma Theme 3 Solution 12 Solution 18 Theme 2 Theme 1 Optimise- GB Solution 1 Solution 2 Solution 3 Solution 4 Solution 5 Solution 7 Solution 8 Solution 9 Solution 10 Solution 11 Solution 13 Solution 14 Solution 15 Solution 16 Solution 17 D M A I C

Evaluate solution Process Improvement Optimise- GB D M A I C Easy to Implement Big Impact Hard to implement Small Impact Solution 1 Solution 3 Solution 6 Solution 7 Solution 8 Solution 9 Solution 2 Implement Now Possible Kill Implement Later

Formularise the top 3 solutions Solution 1 Who? What? When? Where? How? Why? Process Improvement Optimise- GB D M A I C

Use mistake / error proofing to prevent future problems Process Improvement Optimise -GB Use colour and clear help guides for users Use system interfaces to prevent manual working Use drop down lists instead of free text fields Use colourful pictures to show the expected end result D M A I C

Produce an A2/3 project charter to describe what the project is about and what it is to deliver (ex1) Process Improvement Optimise -GB D M A I C

Six Sigma Control (Business as usual management reviews) Project manage business process improvement activities Ensure control reports, policy documents, training manuals and schedules are in place to ensure control Optimise -GB D M A I C

Use capability / control charts to notify issues immediately Six Sigma Unacceptable time to input invoice – managers to immediately address issue System to send email upon work falling outside tolerance levels Optimise -GB D M A I C

Control – Training manuals: Each process maps should be accompanied by the following documents Six Sigma Process map of who does what Procedure of how to carry out activity clearly numbered with screen shots What is expected, policies behind work, rules and regulations that apply Examples of what the finished output should look like: example being forms Check list for the activities to confirm completion and sign as authorisation Optimise -GB D M A I C Process map How to guide Policy info Specimen Checklist

Control – staff training: Ensure that every user involved in the business process has been given training. Use tests to ensure understanding and ensure employees sign to acknowledge that training has been given Do not allow access to systems or allow person to work in process if they have not been trained Six Sigma Optimise -GB D M A I C