Benchmarking
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This is a presentation about how to do benchmarking the right way. Don’t just hand managers a stack of reports! Write me at Paul.Fogel@ExecutiveInfoSystems.com with any comments or questions.
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Benchmarking
- 1. BENCHMARKING IN ACTION Paul Fogel, Executive Information Systems, Inc. www.eisorg.com▪fogel@eisorg.com▪503-317-8427 1
- 2. HEALTHCARE IS A LOW MARGIN, HIGHLY REGULATED, RAPIDLY CHANGING BUSINESS. 2
- 3. EXECUTIVES STRUGGLE TO CONTROL COSTS, INCREASE CLINICAL QUALITY, AND IMPROVE SERVICE. ! 3
- 4. WE’VE TRIED ALL KINDS OF WAYS TO IMPROVE PERFORMANCE, BUT WE STILL NEED MORE! 4
- 5. IF APPROACHED THE RIGHT WAY, BENCHMARKING– LEARNING FROM THE BEST–MAY OFFER A PRACTICAL SOLUTION. 5
- 6. 6
- 7. PILES OF VENDOR REPORTS ARE DISTRIBUTED TO MANAGERS, WHO THEN CALL THEIR PEERS… 7
- 8. DESPITE SERIOUS PROBLEMS, BENCHMARKING REMAINS POPULAR BECAUSE EXECUTIVES LIKE THE INTUITIVE APPEAL… 8
- 9. …BUT MANAGERS DON’T ALWAYS SHARE THEIR ENTHUSIASM. 9
- 10. THERE ARE EIGHT STRATEGIES COMMONLY USED IN BENCHMARKING. WHY DON’T THEY JUST SAY WHAT WORKS? 1. The Shotgun Approach 2. Department Manager Method 3. Budgeting Method 4. Layoffs 5. Do Nothing (Wait & See) 6. Bring In The Consultants 7. The Team Approach 8. The Shame Technique 10
- 11. VENDOR CASE STUDIES From Their Websites 11
- 12. Finally, Solucient’s Professional Services consultants implemented an OP- ACTION engagement where they worked side by side with department managers to identify specific opportunities for improvement based on all their benchmarking work. This process lasted five months and resulted in the identification of two departments presenting significant opportunities for improvement in labor and medical supply costs. They identified opportunities to reduce and standardize medical supply kits, negotiate new supply contracts and implement new charge capture processes. 12
- 13. The team’s initial focus was to modify the process used to schedule staff, allowing for more flexibility and greater responsiveness to changes in patient volume and acuity. A review of patient volume and workload by week, day and shift led to a better understanding of the demand fluctuations on the unit. 13
- 14. Premier immediately put expert teams in place for each area of focus. Every team included a Premier consultant, a Board executive, a senior hospital administrator, a management leader… Using Operations Advisor, Premier’s total labor management solution to analyze operations improvement, the team used comparative data and conducted focused departmental reviews to identify operational issues, including staffing. The productivity reporting tool allowed the group to observe and manage its progress on a regular basis. On the revenue cycle side, the Sinaiko Healthcare Consulting team began by examining the hospital’s emergency department (ED) revenue cycle and found several areas requiring attention. 14
- 15. “Ultimately RNs are more efficient,” says Osborne. “nurses can do anything for a patient, and the added cost is typically offset by reducing steps and rework. We’ve really walked away from the old paradigm of using nurse assistants, and as a result we’re experiencing less turnover and higher outcomes in terms of patient care.” One finance department, for example, was able to stop producing nearly 60 reports after an audit uncovered that managers in other areas weren’t really using them, even though they had requested the documentation. 15
- 16. To further support HMC’s data, OCEG hired a radiology consultant to complete a full assessment. The primary driver of lower productivity was the scheduling of appointments. The skill mix of staff needed to be realigned… The total predicted financial impact is $400K reduction in the first year. 16
- 17. MOMENTUM IS EASILY STALLED WITHOUT A PLAN, WHEN MANAGERS RESIST, AND LACKING REAL LEADERSHIP. 17
- 18. UNFORTUNATELY, EXECUTIVES OFTEN NEGLECT TO DO THEIR HOMEWORK BEFORE SIGNING UP FOR REPORTS. 18
- 19. BENCHMARKING 101 The Vendor Approach 19
- 20. PERCENTILES PLACE OUR METRICS IN RELATION TO THE PEER GROUP. Twenty Values (Hours Per Unit) Arrayed From Lowest to Highest Value 1st Quartile 50th 4th Quartile Top 50% Bottom 50% Objective: move hours per unit leftward 20
- 21. COMPARATIVE REPORTS IDENTIFY SAVINGS OPPORTUNITIES, BUT THEY HAVE AN IMPORTANT LIMITATION… 21
- 22. “ACTUAL” LOOKS LIKE A COST CENTER REPORT, WHILE “NORMALIZED” IS ADJUSTED FOR A BETTER COMPARISON. 22
- 23. WHAT DO WE DO WITH STANDARD DEVIATION? 99.7% 95.5% 68.2% 95.5% 99.7% 23
- 24. A NORMAL POPULATION... 24
- 25. 25
- 26. 26
- 27. 27
- 28. 28
- 29. JUST CALL YOUR PEERS AND LEARN WHAT THEY DO… 29
- 30. CREATING VALID PEER GROUPS 30
- 31. PEER GROUPS IDENTIFY PERFORMANCE GAPS. WOULD YOU LIKE YOURS STANDARD OR CUSTOM? 31
- 32. PERFECT COMPARISONS DO NOT EXIST, AND WOULDN’T BE VALUABLE EVEN IF THEY DID. 32
- 33. FOR PEER GROUPS, ONE SIZE DOES NOT FIT ALL. A CUSTOM FIT WORKS BEST. 33
- 34. TO VALIDATE THE DATA, LOOK FOR THESE SIX ITEMS. CHANGE PEER GROUPS UNTIL YOU GET A GOOD FIT. • Smallpeer groups • Workload service intensities • Mapping issues • Workload volumes • Appropriate workload indicators • Nursing 34
- 35. MEET EVERY MANAGER INDIVIDUALLY, AND ASK OPERATIONAL QUESTIONS TO GET A REASONABLE, ACCEPTABLE PEER GROUP. 35
- 36. WE HAVE THE REPORTS. NOW WHAT? 36
- 37. WE HAVE THE REPORTS. NOW WHAT? 36
- 38. THE PLAN: MANAGERS GET THEIR REPORTS, CALL THEIR PEERS, AND THEN CREATE AN ACTION PLAN TO CLOSE THE GAP. 37
- 39. 38
- 40. 39
- 41. ACTION PLAN EXERCISE • We are managers handed a benchmarking report. • On the handout there is a scenario of our operation, and 5 questions we asked of each best performer along with their answers. • Using only the report and peer responses, let’s draft an action plan that closes the performance gap with our peers. 40
- 42. “SURVEY SAYS!” 41
- 43. BENCHMARKING 201 Reforming the Process 42
- 44. “CRITICAL SUCCESS FACTORS” ARE MEASURABLE STRATEGIC REQUIREMENTS FOR SUCCESS. 43
- 45. GLOBAL BUSINESSES STRIVE TO REDUCE COSTS, MINIMIZE CYCLE TIMES, AND IMPROVE QUALITY WITH A WELL-DEFINED PROCESS. 44
- 46. THERE IS NO “ONE BEST WAY.” LEARN FROM OTHERS AND ADAPT THEIR SOLUTIONS TO YOUR SITUATION. 45
- 47. BENCHMARKING REQUIRES COMPLEX ANALYSIS TO ACCOUNT FOR DIFFERENT PATIENTS, MEDICAL PRACTICES, AND UNIQUE TASKS. 46
- 48. 47
- 49. NURSING EFFICIENCY DEPENDS ON THE EFFICIENCY OF OTHER UNIT STAFF AND OTHER DEPARTMENTS. 48
- 50. HALF OF ALL LABOR IS DOCUMENTATION, SCHEDULING, AND TRANSPORTATION. 30% 20% 19% 16% 8% 7% 49
- 51. Source: Restructuring Health Care, by J. Philip Lathrop 50
- 52. A COMPLETE BENCHMARKING PROCESS HAS SIX STEPS, NOT JUST ONE. 1. Determine what to benchmark 2. Form the team 3. Identify outside partners 4. Collect and analyze information 5. Action plan and implementation 6. Monitor progress 51
- 53. STEP 1: DETERMINE WHAT TO BENCHMARK. IDENTIFY CSFs WHERE MAJOR IMPROVEMENT WOULD HAVE A HIGH IMPACT. • High importance to clinicians • High percentage of costs • High value to customers • High volumes 52
- 54. A LIST OF TOP OPPORTUNITIES FROM THE VENDOR CAN HELP TO NARROW THE FIELD OF CHOICES FOR FURTHER STUDY. 53
- 55. HISTORIC PERFORMANCE PROVIDES A VALUABLE OBSERVATION POINT FOR REFERENCE AND CONVERGENCE. 0.9 more hours worked labor cost per patient day in 2008 per patient day Total Labor Per Unit Productivity Change Unit of Service Volume Hours Wages Hours Wages Hours Wages 2006 Patient Days 3,367 40,743 1,247,131 12.05 370.38 NA NA 2007 Patient Days 3,530 42,012 1,281,182 11.90 362.90 701 21,377 2008 Patient Days 3,618 46,310 1,490,383 12.80 411.94 (3,256) (104,793) 2009 Patient Days 3,840 49,882 1,653,472 12.99 430.59 (730) (24,185) Four Year Performance 14,356 178,947 5,672,168 12.47 395.12 (3,280) 107,450 0.9 more hours per patient day in 3,256 hours at 2008 applied to 2008 patient days 2008 salary rates 54
- 56. PROCESS IMPROVEMENT TOOLS 55
- 57. RUN CHARTS SHOW PERFORMANCE OVER TIME, USING THRESHOLDS AND INTERVENTION MARKERS. 56
- 58. FLOWCHARTS SHOW THE SEQUENCE OF PROCESS STEPS TO IDENTIFY DELAYS, NEEDLESS WORK, DUPLICATION, AND WASTE. Billing Process 57
- 59. CAUSE AND EFFECT DIAGRAMS IDENTIFY WHICH AREAS NEED TO IMPROVE. 58
- 60. STEP 2: PUT PEOPLE ON THE TEAM WHO CAN GET THE JOB DONE. • Sponsor (executive) • Facilitator or Project Manager • Process “owner” (dept head, exec, other) • Staff member of process owner • Financial analyst or management engineer • Medical Director 59
- 61. THE SPONSOR LAUNCHES AND PROMOTES PROJECTS, REMOVES BARRIERS, AND APPROVES RECOMMENDATIONS. 60
- 62. THE FACILITATOR IS A MULTI-SKILLED INDIVIDUAL. 61
- 63. THE PROCESS OWNER MANAGES THE FUNCTION, HAS TECHNICAL EXPERTISE, AND KNOWS THE OPERATION AND THE PEOPLE. 62
- 64. THE ANALYST PROVIDES TECHNICAL HELP – FLOWCHARTING, ABC ACCOUNTING, AND COST/BENEFIT ANALYSES. 63
- 65. THE MEDICAL DIRECTOR ASSISTS WITH ANY PRACTICE ISSUES AND GAINS SUPPORT FROM OTHER DOCTORS. 64
- 66. STEP 3: FIND BENCHMARKING PARTNERS WHO REPRESENT EXCELLENCE. 65
- 67. WHERE CAN I FIND INFORMATION? • Healthcare Financial Management Association www.hfma.org • The Advisory Board Company www.advisory.com • American College of Healthcare Executives www.ache.org • American Productivity and Quality Center www.apqc.org • International Society for Performance Improvement www.ispi.org • Association for Benchmarking Health Care www.abhc.org • Institute for Healthcare Improvement www.ihi.org • Lean Enterprise Institute www.lean.org • J. P. Lathrop, Restructuring Health Care, Jossey-Bass, 1994 • Michael Spendolini, The Benchmarking Book, AMACOM, 2003 • Robert Gift, Benchmarking in Health Care, AHA, 1994 66
- 68. STEP 4: DOCUMENT CURRENT PROCESSES AND SEND THE ANALYSIS TO YOUR PARTNERS. A SITE VISIT COULD BE VALUABLE. 67
- 69. Hospital 68
- 70. Hospital 69
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- 75. STEP 5: IMPLEMENT THE PLAN-GAIN SUPPORT, PRESENT THE RECOMMENDATIONS AND PUBLICIZE PROGRESS. 74
- 76. STEP 6: MONITOR PROGRESS BY TRACKING OUTCOMES, CREATING REGULAR REVIEW CYCLES, AND TAKING ANY CORRECTIVE ACTION. 75
- 77. We’ve always done it this way 76
- 78. We’ve always done it this way 76
- 79. 76
- 80. A “PERFECT” PROCESS PRODUCES THE RIGHT OUTPUT AND QUALITY, ELIMINATES WAITING, IS VERY FLEXIBLE, AND “FLOWS.” 77
- 81. ACTION PLANNING: BREAKOUT 1. List several topics with good potential 2. Solve common problems: nursing shortages, budget cycle too long, receivables, patient throughput (ER, length of stay, wait times), etc. 3. Group, then multi-vote on the best one 4. Draft a concise statement of the problem today, and another outlining the desired future state or goal 5. Decide where the current process begins and ends, and create a flowchart of the current process 6. Create of list of issues and a list of solutions as you go 7. Eliminate wasteful, unnecessary steps and create a new, replacement process on a new sheet 8. Quantify the savings or the improvement 78
- 82. CASE STUDIES From Health Care 79
- 83. The Issue Resulting Waste For Example… Excess testing, surplus meds, Overproduction Producing more than needed at the time excessive documentation Excess supplies and instruments Inventory Storing more than needed at the time for surgical cases Moving people, goods without adding Unnecessary patient transport, Transportation value movement of charts Movement of staff to retrieve Movement Staff processes that add no value supplies and information Workaround solutions, performing tasks Searching for charts, shadow Processing a second time charts, omitting documentation Idle time from unavailable people, OR late starts, test results, bed Waiting equipment, information assignments, appointments Defects Work that contains errors Medical and surgical errors “30%-40% OF THE “COST OF PRODUCTION” IS WASTE. THE PROBLEM IS HIDDEN, UNTRACKED AND UNEXAMINED”—IHI 80
- 84. PARK NICOLLET IMPROVES PATIENT CARE, REDUCES WAITING, INCREASES CAPACITY, AND CUTS COSTS. Source: Healthcare Advisory Board, Park Nicollet website 81
- 85. HEALTHPARTNERS CHANGES STAFFING AND ROLES, CUTS CLINIC WAITS, BOOSTS NET REVENUE. 82
- 86. IMPROVEMENT CALLS FOR MANAGERS COACHED IN PROBLEM-SOLVING SKILLS, IDENTIFYING OUTPUTS, ASSIGNING RESPONSIBILITIES, AND SPECIFYING WORK METHODS. 83
- 87. QUESTIONS? 84
Editor's Notes
- More than one-quarter of all hospitals today are actively involved in benchmarking. Typically working with a vendor, managers are handed complicated spreadsheet-style comparative data, and then told to contact their best-performing peers to find out how they can run at the same level. So what have organizations reaped after investing hundreds of thousands of dollars over the course of several years? Not much. Strategically, the typical benchmarking program fails on day one, tasking the wrong people with a difficult, complex project that goes way beyond spreadsheets; employing a faulty method of operational change, and lacking a sound foundation of budget discipline and analytical expertise.
- Where’s the roadmap?
- Costs-labor and materials Quality-error rates, customer satisfaction Cycle time-time to admit, response times, waiting times
- Including benchmarking Budgeting Flex budgeting Cost accounting systems
- Typically working with a vendor, organizations produce a large number of reports and distribute them to managers, who then must call their top-performing industry peers and learn what they do to achieve their numbers. To do this task effectively, managers would need to have the expertise of a first-rate management engineer or financial analyst, possess multi-clinical skills to solve inter-departmental issues, and be strong and articulate advocates of higher efficiency. Managers from other organizations who get these phone calls would need to have the same skills in order to respond effectively! Not only are those conditions unrealistic, we implicitly assume that managers will eagerly cooperate in the absence of any incentives to do so. We burden managers with an almost impossible task, and the overwhelming majority of organizations embarking on this path are destined to fail. The problem is not the data – it’s the method. Presented with thousands of data points like those contained in the report below, managers will usually adopt a defensive posture: first, they challenge the accuracy of their own department’s data. Second, they challenge the appropriateness of the outside comparison. Third, they remain immobile until told exactly what to do — something the organization is ill equipped to deal with. Nothing happens. Yet, despite these problems, benchmarking remains a popular exercise in many healthcare organizations. Senior managers like the intuitive appeal of the approach: learn from the best. Hard data seems to make the case that one’s organization is ripe with opportunities for the plucking. Commercial databases can extract numerous examples of any given department that look much more efficient than one’s own, whether labeled “best,” “better,” or “top” performers. Theoretically, moving most of a typical organization’s departments to the top performing quartile would yield millions of dollars of savings per year, and this holds out a very compelling and tantalizing prospect for the CEO or CFO. The appeal is undeniable, and health care organizations keep coming back for more.
- Medical Center of Central Georgia
- Delnor community hospital
- Obici Hospital, Virginia
- Missing or ineffective plan Manager acceptance issues Missing leadership Negative past history Momentum often positive immediately following implementation, then may start fading. Examples of ineffective/unworkable benchmarking plans Manager Acceptance Issues Data denial Our data is correct, but not theirs Our data is incorrect We’ve changed since data submission Negative Past History Following in the footsteps of unpopular consulting firms Bad experience with prior benchmarking efforts
- The reports do not identify processes
- Dark blue is less than one standard deviation from the mean. this accounts for 68.26% of the set. two standard deviations from the mean (blue and brown) account for 95.46%. three standard deviations (blue, brown and green) account for 99.73%.
- How many in a normal population? What if you’re just looking for the 10 best?
- Perfect comparisons don’t exist! Not hunting for numbers, but better practices Alike in every way? Then like performance too!
- One peer group for each department Small sample size Dissimilar volume Distinct service intensity Unlike characteristics Better acceptance
- Small peer Groups Service Workload Intensity Measures Workload intensity measures – minutes per case, RVUs per procedure, inpatient vs. outpatient service mixes, and percentage composition statistics, as well as characteristic questions, allow us to identify a better peer match to adjust for service mixes that are beyond the manager’s control. The patient composition is usually a “given,” and we can alter the compare group to reflect what the host department deals with on a daily basis. Mapping In a small number of departments, after review with the manager, it may be that a fair compare group for a department does not exist, and the department should not have been mapped. Alternatively, a “secondary” mapping can be made. This clearly indicates that such a benchmarking report is for informational purposes only, but is useful for analytical purposes. Workload Volumes Are the main workload volumes lower than the 25th percentile, or above the 75th percentile? If so, the host department is being compared with much bigger or much smaller departments. This is usually, but not always, an undesirable comparison, based on the objectives sought. Choosing Labor Indicators Action OI selects a default unit of service for productivity calculations, but these do not always best reflect the department in question, and it is difficult to know this by looking at the reports from a distance. It may be that the mapping and data are correct, but the main or default labor indicator is inappropriate in light of the department’s mission or its goals. Which is the “right” labor unit of service to use? Generally, hospitals like to use labor indicators currently in service in their host departments, and ignore the rest. This is a mistake. A difference in the relative ranking by one indicator compared to another within the same department usually reveals a service intensity issue. That is, the workload composition is different in some respects to the compare group. Suppose, for example, that hours worked per surgery case is the key productivity measure, and that the host department compares favorably by the case – but unfavorably by the surgery minute. That should alert us to the strong possibility of their being fewer minutes per case for the host than the compare group. If this is a radical difference, it probably indicates different types of patients (the service mix) more than superior turnaround times. Combinations of Departments In a very few cases, departments might be better combined and then mapped to a single profile for accuracy with the compare group. For example, if Central Sterile Supply and Receiving and Distribution are actually one department, but artificially split for budget purposes and mapped to two separate standard departments, then it might be best for analytical purposes to combine the two and map them together. In some other cases, departments may have been combined and mapped to one profile, when in fact the departments are actually separate operations, and could be evaluated on their own.
- What do we require to be successful? Today? Tomorrow? Five years? Ten years? How do we know we’re successful? What measures should we develop in advance? Who decides what the CSFs will be?
- Outside health care, commercial industry has employed an entirely different model than health care. Across a variety of industries, this approach has yielded considerable success as globally competitive businesses strive to reduce costs, minimize cycle (turnaround) times, and improve quality. Starting from an identification of what their businesses require to be successful now and into the future (aka “critical success factors”), they seek out those who exemplify excellence in a given business process. Only then do they assemble data and compare operations. Furthermore, the benchmarking partners they select are highly likely to come from outside their industry. This is a highly rigorous and structured approach seldom seen in health care benchmarking.
- Benchmarking is an analytically rigorous process of discovery and adaptation; a focused approach that answers specific questions in particular areas of the organization. Benchmarking is aimed at learning what superior-performing organizations do, how they do it, and how this knowledge can be adapted to work elsewhere. Is the organization ready? Alignment with strategic objectives Organizational culture Incentives and consequences Productivity and cost standards Reporting and monitoring systems Budgeting rules
- The spreadsheet approach doesn’t lend itself to process comparison or learning “what they do.”
- Not on the GL spreadsheet
- Are such savings achievable? No one can realistically know in advance. It is often surprising to find out how much discretion managers have. Today, they may devote considerable energy to increasing their labor pool, but with an incentive plan (and a push from productivity standards); they might direct their energy to eliminating valueless tasks, unnecessary reports, and other busywork. For example, J. Philip Lathrop, in Restructuring Health Care, estimated that about 50% of all labor hospital-wide is devoted to documentation: 30% to scheduling, and 20% to transportation. Is there a better way?
- This case study is taken from Restructuring Health Care, by J. Philip Lathrop, 1993. He is the originator of the patient-focused care movement. Note that the actual chest x-ray, a bread-and-butter procedure, takes only 6% of the total time spent. Is there an opportunity to cut, scale back, or consolidate some of these process steps? You can see what the savings would be.
- Since we cannot focus on everything at once, the first phase of a benchmarking project would be to select the best opportunities from internal productivity reports we have available, plus industry benchmark targets. The combination of higher historical productivity and industry norms lends credence that targets are achievable. The culling process should ensure that we focus only on the greatest opportunities of strategic significance to the organization. Put more minor opportunities aside.
- This describes the collaborative approach, in contrast to having managers work on their own. This is how Xerox, AT&T, and others in commercial industry do benchmarking. Collaboration is familiar to hospital managers, provides the missing support they often need to accomplish financial objectives. Go through the skills of each team member, and talk about why these skills are necessary for success If we advise them to form a team, a corollary is that we ask them to focus on the top 2-3 opportunities for the year. It’s not cost-effective to form a team like this for every indicated gap. Start with the single best opportunity, learn how it’s done, and then repeat as they make their way through the organization. Bonus: knocking off the top 2-3 opportunities every year means they can go through the whole top ten list in 3-5 years.
- Flowcharting ABC accounting Reconfiguring operations to be more efficient
- formally on the team, or plays an advisory role
- Internal or external partners? Inside or outside health care? Organizations representing excellence Are they willing? Investigate outsourcing alternatives Why should potential benchmarking partners help us out? What’s in it for them? It takes time and effort for others to cooperate with us. What are we offering in return? Develop a list of other organizations representing excellence in the process or function. Sources include Solucient, Premier, Health Care Advisory Board, National Benchmarking Clearinghouse, JCAHO, American Management Association, and industry contacts. Contact such organizations to gauge their willingness to collaborate. Refine this list to several solid contacts for in-depth discussion and analysis, and be prepared to give something in return. Investigate possible outsourcing alternatives. One of the prime points of comparison might be with vendors able to supply the same (or better) service to the organization. We can place vendors at-risk for both cost and quality goals. Even if we do not outsource, we will learn how to match or beat the vendor’s bid.
- Collecting and analyzing the information is a complex, delicate task. It requires a keen understanding of the business processes under study. The objective is to study, quantify, and qualify a particular function or business process so that it can be re-engineered to produce better results, whether cost, quality, or cycle time. Document current processes or functions. Tools include flowchart modeling, management engineering, computer simulation and financial analysis. A critical step. Send the analysis to benchmark partners. Solicit comments and advice. What questions should we ask? What do we want to learn? If useful, plan site visits. Develop outcome measures. Write up proposed new processes or functions to contrast with current practices. Develop action plans. Such plans should be in a venture capital style format, allowing anyone to see who is responsible for carrying out the plan, how long it will take, how much it will cost, and how to measure the desired objective.  [PF1]“Know thyself.” Spendolini pg.49-50
- How will implementation be carried out? Who will be charged with doing it? How will the plan be communicated for acceptance and approval? Presentation. The report should be presented in a clear, plain-spoken fashion so that everyone understands the action plan. This will also facilitate subsequent events. Implementing the plan. The options include a full rollout or a pilot test.
- How will progress be monitored? Are these measures agreed-upon before implementation? Outcome Measures. Generally, the same outcome measures as used in the analysis should be tracked upon implementation. Regular review. Having a periodic review encourages managers to keep their focus on the outcomes that were desired when the project was in the planning stages. Corrective Action. If the project is off-track, how will it be brought back into alignment with the original goals?
- Process: a set of actions or steps that create value for the primary customer Perfect process: every step is valuable, produces the right output and quality, no waiting, flexible, continuous flow – anything less is waste Processes often cross department boundaries! Conventional reports are by cost center…
- Steps in Brainstorming Brainstorming is an idea-generation tool designed to produce a large number of ideas through the interaction of a group of people. 1. The session leader should clearly state the purpose of the brainstorming session. 2. Participants call out one idea at a time, either going around the round in turn, which structures participation from everyone, or at random, which may favor greater creativity. Another option is to begin the brainstorming session by going in turn and after a few rounds open it up to all to call out ideas as they occur. 3. Refrain from discussing, complimenting, or criticizing ideas as they are presented. Consider every idea to be a good one. The quantity of ideas is what matters; evaluation of the ideas and their relative merit comes later. This tool is designed to get as many ideas generated in a short period of time as possible. Discussing ideas may lead to premature judgment and slow down the process. 4. Record all ideas on a flipchart, or on self-adhesive notes (see Affinity Grouping), so that all group members can see them. 5. Build on and expand the ideas of other group members. Encourage creative thinking. 6. When generating ideas in turn, let participants pass if an idea does not come to mind quickly. 7. Keep going when the ideas slow down in order to create as long a list as possible and reach for less obvious ideas. 8. After all ideas are listed, clarify each one and eliminate exact duplicates. 9. Resist the temptation to “lump” or group ideas. Combining similar ideas can come later (see Affinity Grouping). Steps in Affinity Grouping Affinity Grouping is a brainstorming method in which participants organize their ideas and identify common themes. 1. Write ideas on individual cards or adhesive notes (see directions for Brainstorming). 2. Randomly place cards on a table or place notes on flip chart paper taped to the wall. 3. Without talking, each person looks for two cards or notes that seem to be related and places these together, off to one side. Others can add additional cards or notes to a group as it forms or reform existing groups. Set aside any cards or notes that become contentious. 4. Continue until all items have been grouped (or set aside). There should be fewer than 10 groupings. 5. Now discuss the groupings as a team. Generate short, descriptive sentences that describe each group and use these as title cards or notes. Avoid one- or two-word titles. 6. Items can be moved from one group to another if a consensus emerges during the discussion. 7. Consider additional brainstorming to capture new ideas using the group titles to stimulate thinking. Steps in Multivoting Multivoting is a structured series of votes by a team, in order to narrow down a broad set of options to a few. 1. Generate a list of items (see directions for Brainstorming). 2. Combine similar items into groups that everyone agrees on (see directions for Affinity Grouping). 3. Number each item. 4. Each person silently chooses one-third of the items. 5. Tally votes. 6. Eliminate items with few votes. The table below will help you determine how to eliminate items: Eliminate items with less than one-third of the group’s size 7. Repeat the Multivoting process with remaining items, if necessary.
- Six essential practices in lean thinking: Eliminate waste Create continuous flow Build quality at the source Standardize processes Use visual controls Engage and respect everyone’s contribution Glossary of Lean Terms 5-S: Sort, Simplify, Sweep, Standardize, Self-Discipline: a visually-oriented system for organizing the workplace to minimize the waste of time. Adequate: In value stream mapping, the capacity for any given step in a process is adequate if the process is not delayed at that step. Available: In value stream mapping, a step in a process is available if it produces the desired output, not just the desired quality, every time. Batch-and-queue: The mass-production practice of making large lots of a part then sending the batch to wait in the queue before the next operation in the production process. Contrast with single-piece flow. Capable: In value stream mapping, a step in a process is capable if it produces a good result every time. Cycle time: The time required for completing one step of a process. Flow: The progressive achievement of tasks along the value stream so that a product proceeds from design to launch, order to delivery, and raw materials into the hands of the customer with no stoppages, scrap, or backflows. Just-in-Time: A system for producing and delivering the right items at the right time in the right amounts. Just-in-Time approaches just-on-time when upstream activities occur minutes or seconds before downstream activities, so single-piece flow is possible. The key elements of Justin- Time are flow, pull, standard work (with standard in-process inventories), and takt time. Kaizen: Continuous, incremental improvement of an activity to create more value with less muda. Kanban: A signal, often a card attached to supplies or equipment that regulates pull by signaling upstream production and delivery. Lead time: The total time a customer must wait to receive a product after requesting the product or service. In service sectors, it is the time from the beginning of the process to the end (e.g., from when a patient arrives until he or she leaves the hospital). Muda: Waste. People distance: The distance staff must travel to accomplish their tasks. Product distance: The distance products must travel to meet the customers’ needs. Pull: A system of cascading production and delivery instructions from downstream to upstream activities in which nothing is produced by the upstream supplier until the downstream customer signals a need; the opposite of push. Set-up time: All time spent getting ready to add value (e.g., time preparing a room for an office visit). Single-piece flow: A situation in which products proceed, one complete product at a time, through various operations in design, order-taking, and production, without interruptions, backflows or scrap. Contrast with batch-and-queue. Standard work: A precise description of each work activity specifying cycle time, takt time, the work sequence of specific tasks for each team member, and the minimum inventory of parts on hand needed to conduct the activity. Takt time: The available production time divided by the rate of customer demand. For example, if customers demand 240 widgets per day and the factory operates 480 minutes per day, takt time is two minutes. Takt time sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean system. Throughput time: The time required for a product to proceed from concept to launch, order to delivery, or raw materials into the hands of the customer. This includes both processing and queue time. Trystorm: To generate and quickly try ideas, or models of ideas, rather than simply discuss them, as in brainstorming. Value: A capability provided to the customer at the right time at an appropriate price, as defined in each case by the customer. Value stream: The specific activities required to design, order, and provide a specific product (or service) — from concept launch to order to delivery into the hands of the customer. Value stream mapping: Identification of all the specific activities occurring along a value stream for a product or product family (or service). Valuable: In value stream mapping, a step in a process is valuable if it creates value for the customer. Waste: Anything that does not add value to the final product or service, in the eyes of the customer; an activity the customer wouldn’t want to pay for if they knew it was happening.
- Identify the output (what is to be done) Assign responsibility for each task or step Signals to trigger the work to be done How each step is to be done (method)