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Lean Webinar Series:
Lean 101 for Office & Service
November 8, 2010

Company

LOGO
Webinar Content
Key Lean principles
Eight office/service wastes
Key metrics for identifying & eliminating
waste
Elements for a typical improvement cycle
Basic Lean tools needed to stabilize
processes
Stages of a Lean transformation
© 2010 Karen Martin & Associates

2
Your Instructor
 Early career as a scientist; migrated to
quality & operations design and
management 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

3
Processes: The Basics
Process – The steps you take to accomplish
anything.
Four types of non-manufacturing processes:





Service (to a live being or equipment)
Transactional
Analytical
Creative

© 2010 Karen Martin & Associates

4
Processes: The Basics
Input

Customer
Makes Request

Final
Output

Step 1

Step 2

Step 3

Supplier

Customer
Supplier

Customer

Upstream

© 2010 Karen Martin & Associates

Step 4

Downstream

5
The History of Lean

1950’s

1910

1929

1996

1995

2005

2002

Lean
Leadership
& Culture

2009

Service
Sector

6
Toyota’s Two Key Tenets
 Kaizen - Continuous Improvement.



Relentless waste elimination.
Seek perfection.

Plan

Act

Do

Check

 Respect for people.


Poorly designed processes are
disrespectful.




Reducing waste reduces stress.

Frontlines are authorized to solve
problems.

© 2010 Karen Martin & Associates

7
Achieving Organizational Excellence

Quality

Cost

Delivery

Morale

Safety

Lean is a business management approach –
not merely a process design technique
© 2010 Karen Martin & Associates

8
Building a Lean Enterprise
Key Principles
1.
2.
3.
4.

Only do what the customer values.
Design work so it flows through the system.
Make problems visible.
Solve problems using disciplined
methodology.
5. The people doing the work know best.
6. Seek perfection; continuously improve.

© 2010 Karen Martin & Associates

10
Key Principles
1. Only do what the customer values.
2. Eliminate all obstacles that prevent work
from flowing through the system.
3. Make problems visible.
4. Solve problems using disciplined
methodology.
5. The people doing the work know best.
6. Seek perfection; continuously improve.
© 2010 Karen Martin & Associates

11
Customer-Defined Value
Value-Adding (VA) - any operation or
activity your external customers value
and are (or would be) willing to pay for.
Non-Value-Adding (NVA) - any operation
or activity that consumes time and/or
resources but does not add value to the
product (good or service) the customer
receives.




Necessary – support processes, regulatory
requirements, etc.
Unnecessary – everything else - WASTE

© 2010 Karen Martin & Associates

12
Work Effort as Defined by the
External Customer

Unnecessary Non-value
adding
Necessary non-valueadding
Value-adding
Eight Wastes (Muda)

Overproduction
Inventory
Waiting
Over-Processing
Errors

© 2010 Karen Martin & Associates

Motion (people)
Transportation
(material/data)

Underutilized
people

14
Examples of Office/Service Waste
Overproduction








PO’s for waiting to be
ordered
Contracts waiting to be
signed
Radiology reports
waiting to be transcribed
The symptom - WIP

Inventory



Office supplies
Unnecessary hard
copies being stored

© 2010 Karen Martin & Associates

Waiting






For meetings to begin
For approvals
For shared equipment
to become available
For the system to
respond

Over-processing





Excessive reporting
Excessive reviews &
approvals
Redundant data entry
15
Examples of Office/Service Waste
(continued)

 Errors




 Sending hard copies that could
Any input that’s not “usuable
be electronic
as is”
 Sending docs overnight that
Input that has to be
can go two-day
corrected, missing
information added, or
 Underutilization of people
clarified by a downstream
(Knowledge, Skills, Aptitude,
customer
Creativity)

 Motion




 Transportation

Walking to shared
equipment
Walking hard copies to
downstream customers

© 2010 Karen Martin & Associates





Narrow scopes of responsibility
Not properly trained
Not used for designing
improvements

16
Looking for Stuff: Time is Money
Organization with 1,500 employees



Earn average of $22 per hour
Work 250 days per year

Each employee spends an average of 10 minutes
per day looking or waiting for equipment or material


Individual impact
 = 41.7 hours wasted time per year
 = Over a week of frustrating, unfulfilling, nonproductive time



Organizational impact
 = 62,550 hours of nonproductive time
 30 FTEs worth of valuable resources doing non-value-adding
work
 = $1.4 unnecessary direct expense per year (unloaded)

© 2010 Karen Martin & Associates

17
Excess Office Supplies
6 mos. supply

1 year supply

… Yet they
received daily
deliveries!
$18,732 of inventory; $6,322 of it is
obsolete cartridges
18
Shared Equipment Causes
Excess Motion
Distance traveled to printer



Dept A = 92 ft. per trip
Dept B = 696 ft. per trip

120 occurrences / day = 4656 miles/year
Walk pace = 1 mile per hour = 582 days/year of
unproductive, non-value-adding time = 2.2 FTEs

© 2010 Karen Martin & Associates

19
Typical Current State Findings

Unnecessary
NVA

Request

Necessary
NVA

Delivery

Value Add

© 2010 Karen Martin & Associates

20
Diagnostic Tools
Value Stream Mapping (macro)
Metrics-Based Process Mapping (micro)
Root Cause Analysis

© 2010 Karen Martin & Associates

21
Value Stream Defined
Value Stream: All of the activities, required to
fulfill a customer request from order to delivery
(and beyond to cash received).
Value Stream
Process

Process

Process

Custom er

Customer
Request

© 2010 Karen Martin & Associates

Customer
Receipt

22
M
a
p

The Work We Do:
Degrees of Granularity

Value
Stream
Map
(Strategic)

MetricsBased
Process
Map
(Tactical)
© 2010 Karen Martin & Associates

23
Current State Value Stream Map
Outpatient Imaging Services

Pre-register
Patient

Customer Demand:
15 patients per Day
(Takt Time 1920 seconds)
8 hours per day

Schedule
Appointment

Referring
Physician

Hospital

4

3

5

Lead Time = 24 days

2

6

Lead Time = 990 mins.

Cycle Time = 30 mins.
Lead Time = 990 mins.
% C&A = 100 %

Demand = 15 per day

1

Lead Time = 12 mins.

Cycle Time = 11 mins.
Lead Time = 12 mins.
% C&A = 98 %

% C&A = 65 %

CT=Cycle Time
LT=Lead Time
%C&A=% Complete & Accurate

Symposium

E Pay

Excel

ADS

Internet

Meditech

Fax Order
Solutions

Waiting Room
Management
System

PACS

Auto Fax 50%
Us Mail 25%
MD Mailbox 25%
Rework Loop
via Fax 25% of
the time

Check-in
Patient
(Admitting)

Prep
Patient
(Tech)

Check-in
Patient
(Imaging)

Complete
Exam
(Tech)

Transmit
Images
(Tech)

Read/Dictate
Exam
(Radiologist)

Transcribe
Report
(MDI)

Review
Draft/Sign
(Radiologist)

Print
Reports
(Imaging)

Send
Reports
(Imaging)

5 mins.
5

5

5 mins.

Cycle Time = 2 mins.
% C&A = 90 %

3

6

45 mins.

Cycle Time = 1 mins.
% C&A = 98 %

5 minutes

2

7

45 minutes
2 minutes

11520
 minutes

1 minutes

30 mins.

Cycle Time = 10 mins.
% C&A = 100 %

2

8

30 minutes
10 minutes

5 mins.

Cycle Time = 15 mins.
% C&A = 90 %

2

5 minutes
15 minutes

9

248 mins.

Cycle Time = 3 mins.
% C&A = 100 %

2

10

248 minutes
3 minutes

365 mins.

Cycle Time = 15 mins.
% C&A = 95 %

6

11

365 minutes
15 minutes

960 mins.

Cycle Time = 5 mins.
% C&A = 75 %

2

12

960 minutes
5 minutes

110 mins.

Cycle Time = 1 mins.
% C&A = 95 %

2

13

110 minutes
1 minutes

120 mins.

Cycle Time = 1 mins.
% C&A = 99 %

6

14

Cycle Time = 3 mins.
% C&A = 90 %

120 minutes
1 minutes

L/T = 13464 minutes
3 minutes

VA/T = 11576 minutes

Rolled First Pass
yield = 29%
Equipment Servicing Value Stream
Request 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
Key Metrics: Time
Process time (PT)






The time it takes to actually perform the work, if one is
able to work on it uninterrupted
Includes task-specific doing, talking, and thinking
aka “touch time,” work time, cycle time

Lead time (LT)





The elapsed time from the time work is made available
until it’s completed and passed on to the next person or
department in the chain
aka throughput time, turnaround time, elapsed time
Includes Process Time, not merely waiting time.

© 2010 Karen Martin & Associates

26
Lead Time vs. Process Time
Individual Steps

Lead Time

Process Time
Work
Received

© 2010 Karen Martin & Associates

Work passed
to next step

27
Typical Current State Findings
Process Time

Process Time

Unnecessary
NVA

Necessary
NVA

Request

Delivery

Value Add

Process Time

Total Lead Time
© 2010 Karen Martin & Associates

28
Summary Metrics: Time
Percent Activity (aka Activity Ratio)








The percentage of time anything is being done
to the work passing through the system (whether
value-adding or non-value-adding)
% Activity = (∑PT ÷ ∑LT) × 100
100 – %Act = % Time Work is Idle
Common current state finding = 1-10%
Could also calculate %VA to determine how
much activity is value-adding (typically lower
than % Activity).

© 2010 Karen Martin & Associates

29
Key Metrics: Quality
%Complete and Accurate (%C&A)




The percentage of incoming work (input) that’s deemed
“usable as is” by the recipient (downstream customer).
% of incoming work where the recipient can perform
task without having to “CAC”:
 Correct information or material that was supplied
 Add information that should have been supplied
 Clarify information that should have or could have been clearer



Measured by the immediate downstream customer and
all subsequent downstream customers.

© 2010 Karen Martin & Associates

30
Summary Metrics: Quality
Rolled First Pass Yield (RFPY)







The percent of value stream output that passes
through the process “clean,” with no “hiccups,”
no rework required.
RFPY = %C&A x %C&A x %C&A…
Common finding = 0-15%
Multiply ALL %C&A’s, even if parallel processes

© 2010 Karen Martin & Associates

31
Outpatient Imaging Value Stream
Current State Findings
Metric
Total Lead Time
Total Process Time
Activity Ratio (PT/LT)
Rolled First Pass Yield
(Multiply %C&A’s)
Other**

Current
State

Future
State*

%
Improvement

32.5 hrs
56 mins
2.9%
29%

Other**
Other**
* Projected until validated
** Other = Metrics for individual blocks, financials, survey or audit results, turnover,
market share, system downtime, inventory turns, hold times, work volume, etc.
32
Future State Value Stream Map
Outpatient Imaging Services
Standard
Work

Work
Balance

Customer Demand:
15 patients perDay
(Takt Time1920 seconds)
8 hours per day

Co-locate
Schedule appt
Pre-register

Referring
Physician

Hospital

3
Lead Time = 15 days

2

6

Demand = 15 per day

1

Lead Time = 45 mins.

Cycle Time = 11 mins.
Lead Time = 45 mins.
% C&A = 98 %

% C&A = 85 %

Risk
Reduction
(Joint
Commision)

Symposium

E Pay

Excel

Internet

Waiting Room
Management
System

Work
Balancing

Standard
Work

3

35 mins.

4

Cycle Time = 1 mins.
% C&A = 98 %
0.0833 hrs.

2

Complete
Exam
(Tech)

5

20 mins.

Cycle Time = 10 mins.
% C&A = 100 %

0.583 hrs.
1 mins.

2

Transmit
Images
(Tech)

6

5 mins.

Cycle Time = 10 mins.
% C&A = 90 %

0.333 hrs.
10 mins.

Visual
Workplace

Set-up
Reduction

Prep
Patient
(Tech)

Check-in
Patient
(Imaging)

Fax Order
Solutions

PACS

Auto Fax 80%
Us Mail 15%
MD Mailbox 5%
5S

Value Stream
Alignment

Pull System
(Supplies
Kanban)

Remove
Check in
and Reduce
System Access

5 mins.

Meditech

CT=Cycle Time
LT=Lead Time
%C&A=% Complete & Accurate

2

7

120 mins.

2

Review
Draft/Sign
(Radiologist)
420 mins.

Cycle Time = 15 mins.
% C&A = 95 %

2 hrs.
2 mins.

8

Batch
Reductions

Voice
Recognition

Read/Dictate
Exam
(Radiologist)

Cycle Time = 2 mins.
% C&A = 100 %

0.0833 hrs.
10 mins.

Continuous
Flow

2

Print
Reports
(Imaging)

9

2 mins.

Cycle Time = 1 mins.
% C&A = 95 %

7 hrs.
15 mins.

Rework Loop
via Fax 10% of
the time

2

30 mins.

Cycle Time = 1 mins.
% C&A = 99 %

0.0333 hrs.
1 mins.

10

Send
Reports
(Imaging)

6

0.5 hrs.
1 mins.

11

Cycle Time = 3 mins.
% C&A = 90 %

LT = 11.3 hrs.
3 mins.

CT = 43 mins.
CT/LT Ratio = 6.32%
Rolled First Pass

VSM Champion: Paul Scanneryield = 40%
Created: July 18, 2007
Outpatient Imaging
Value Stream Improvement Results
Current
State

Future
State

%
Improvement

32.5 hrs
56 mins

11.3 hrs
43 mins

65%
23%

Activity Ratio
Rolled First Pass Yield

2.9%
29%

6.3%
40%

117%
38%

Annual turnover

100%

25%

75%

14

11

21%

Metric
Total Lead Time
Total Process Time

# handoffs

Note: Freed capacity (reduced PT) allowed the facility to collect an add’l
$500,000 in revenue without adding equipment or staff.
34
Beau Keyte & Drew Locher

© 2010 Karen Martin & Associates

35
What is a Metrics-Based Process Map?
A visual process analysis tool, which integrates:




Functional orientation of traditional swim lane
process maps
Key Lean time and quality metrics

Tool which highlights the disconnects / wastes /
delays in a process.


Keeps the improvement focus properly directed

Documents standardized work for more effective
workforce training and process monitoring.

© 2010 Karen Martin & Associates

36
Metrics-Based Process Mapping
Metrics-Based Process Mapping
Resources
Chapter 12

Click here to order from Amazon

Click here to order from Amazon
Root Cause Analysis

Peel back the layers of the onion to
avoid jumping to incorrect conclusions
and applying incorrect solutions.
© 2010 Karen Martin & Associates

39
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
Future State Design Considerations
 Improve quality
 Eliminate steps / handoffs
 Combine steps
 Create parallel paths
 Alter task sequencing
and/or timing
 Implement pull
 Reduce / eliminate batches
 Create an organized, visual
workplace
 Reduce interruptions, setup
and changeover
 Eliminate motion &
transportation

 Standardize & errorproof work
 Eliminate unnecessary
approvals /
authorizations
 Stop performing nonvalue adding (NVA)
tasks
 Co-locate functions
based on flow; create
cells (teams of crossfunctional staff)
 Balance work to meet
takt time requirements
41
Building a Lean Enterprise

Process
Stabilization
Tools
Building a Lean Enterprise

FlowEnhancing
Tools
PACE Prioritization Matrix
Easy

4

5

13

23

8

22

17
3

10

21

1

16
15
20
19

14

6
7

11
2

18
12

Difficult

Ease of Implementation

9

High

Anticipated Benefit

Low
Create an Action Plan: Who, What, When, Where, and How?
Future State Implementation Plan
Value Stream Outpatient Imaging

Implementation Plan Review Dates

Executive Sponsor Allen Ward

11/1/2007

Value Stream Champion Sally McKinsey

11/21/2007

Value Stream Mapping Facilitator Dave Parks

12/13/2007

Date Created 10/18/2007
Block
#
2

Goal / Objective
Improve quality of referral

Improvement Activity

Type
KE

Implement standard work for referral
process

Owner
Sean O'Ryan

PROJ

1/10/2008
Implementation Schedule (weeks)
2 3 4 5 6 7 8 9 10 11 12

Dianne
Prichard

3, 4

Reduce lead time beween schedulingand
Cross-train and colocate work teams
preregistration steps

5, 6

Eliminate the need for two patient checkins

Collect copays in Imaging

KE

Michael
O'Shea

6

Eliminate bottleneck in waiting area

Balance work / level demand

KE

Dianne
Prichard

9

Eliminate lead time associated with
transcription step

Implement voice recognition technology

PROJ

Sam Parks

10

Eliminate batched reading

Reduce setup required

KE

Sam Parks

7

Reduce inventory costs, regulatory risk
and storage needs

5S CT supplies area; implement kanban

KE

Michael
O'Shea

12

Reduce delay in report delivery

Implement additional fax ports

PROJ

Martha Allen

12

Reduce delay in report delivery

Increase percentage of physicians
receiving electronic delivery (rather than
hard copy)

KE

1

Martha Allen

Approvals
Executive Sponsor

Value Stream Champion

Value Stream Mapping Facilitator

Signature:

Signature:

Signature:

Date:

Date:

Date:

Type: KE = Kaizen Event; PROJ = Project; JDI = Just do it

Date
Complete
Kaizen Events & Projects
• Document & analyze the
current state
• Design future state
• Brainstorm &
prioritize solutions

• Design & develop
improvements

Plan

Act
• Refine & finalize
improvements
• Implement
improvements
• Train workforce

Macro
PDCA

Plan

Check
• Test improvements

Do

Act

Do

Check

46
The Improvement Process

Plan
• Adjust
process as
needed
• Prepare for
next round of
improvement

Act

• Measure results
• Design improved
approach if further
improvement is
needed
© 2010 Karen Martin & Associates

• Gain a deep
understanding about
the current state
• Create hypothesis
• At least 50% of the
total improvement
cycle

Do

• Brainstorm
solutions
• Create miniexperiments to
test theories
• Select & finalize
countermeasures
• IMPLEMENT

Check
47
Where do you begin?
Issue
A complex problem linked to annual
business goals is identified.

Approach
• A3
• May need do use VSM to understand
the current state.

Better performance is needed across a • Value Stream Mapping to create the
value stream.
improvement strategy.
• Kaizen Events, projects, and just-doits to implement improvements.
• Metrics-based process mapping may
be needed to identify waste and
document new standard work.
Small, localized problems within a
department.

© 2010 Karen Martin & Associates

• Just-do-its or mini-projects
• Metrics-Based Process Mapping may
be needed to identify waste and
document new standard work.
48
Building a C.I. Culture
“Life is Good” Stage

Years 5 & Beyond
Company-wide engagement –
everywhere, all the time

Support needed only for
audits, bandwidth gaps,
continued learning

• Daily kaizen is the norm
• “Action now” dominates
• Most processes are
stabilized with minimal waste
and output variation

“Settling In” Stage

Years 3 & 4
More staff engagement –
reduced need for formal
Kaizen Events

Light support from
seasoned improvement
professionals

• Demonstrating learned
competencies
• Process owners manage
performance
• Becoming more proactive

“Disruption” Stage

Years 1 & 2
Small percentage of staff
engaged – project-based

Heavy support from
seasoned improvement
professionals

• Sensei-dominated
• Much mentoring & learning
• Heavy use of Kaizen Events
• Many issues to be resolved
49
Capability Development Needs
Frontlines



Problem-solving skills - PDCA & root cause analysis (RCA)
Basic lean principles & tools

Middle management




Problem-solving skills & tools (PDCA, RCA & A3)
More advanced lean philosophy, principles & tools
Process monitoring and sustainability

© 2010 Karen Martin & Associates

50
Capability Development Needs
(continued)
 Senior leadership









Problem-solving skills (PDCA, RCA, A3 & Hoshin Kanri)
Highly advanced lean philosophy, principles & tools
Setting organization-wide clear improvement strategies
Delegating tactical details to the people who do the work
Establishing an improvement culture
Lean accounting, lean product development, etc.
The psychology of change
The effort involved in making improvement

 Improvement professionals





Full complement of improvement skills & Lean tools
The psychology of change
Converting results into financial terms
Selling results; building improvement momentum

© 2010 Karen Martin & Associates

51
For Further Questions

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858.677.6799
ksm@ksmartin.com
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Lean 101

  • 1. Lean Webinar Series: Lean 101 for Office & Service November 8, 2010 Company LOGO
  • 2. Webinar Content Key Lean principles Eight office/service wastes Key metrics for identifying & eliminating waste Elements for a typical improvement cycle Basic Lean tools needed to stabilize processes Stages of a Lean transformation © 2010 Karen Martin & Associates 2
  • 3. Your Instructor  Early career as a scientist; migrated to quality & operations design and management 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 3
  • 4. Processes: The Basics Process – The steps you take to accomplish anything. Four types of non-manufacturing processes:     Service (to a live being or equipment) Transactional Analytical Creative © 2010 Karen Martin & Associates 4
  • 5. Processes: The Basics Input Customer Makes Request Final Output Step 1 Step 2 Step 3 Supplier Customer Supplier Customer Upstream © 2010 Karen Martin & Associates Step 4 Downstream 5
  • 6. The History of Lean 1950’s 1910 1929 1996 1995 2005 2002 Lean Leadership & Culture 2009 Service Sector 6
  • 7. Toyota’s Two Key Tenets  Kaizen - Continuous Improvement.   Relentless waste elimination. Seek perfection. Plan Act Do Check  Respect for people.  Poorly designed processes are disrespectful.   Reducing waste reduces stress. Frontlines are authorized to solve problems. © 2010 Karen Martin & Associates 7
  • 8. Achieving Organizational Excellence Quality Cost Delivery Morale Safety Lean is a business management approach – not merely a process design technique © 2010 Karen Martin & Associates 8
  • 9. Building a Lean Enterprise
  • 10. Key Principles 1. 2. 3. 4. Only do what the customer values. Design work so it flows through the system. Make problems visible. Solve problems using disciplined methodology. 5. The people doing the work know best. 6. Seek perfection; continuously improve. © 2010 Karen Martin & Associates 10
  • 11. Key Principles 1. Only do what the customer values. 2. Eliminate all obstacles that prevent work from flowing through the system. 3. Make problems visible. 4. Solve problems using disciplined methodology. 5. The people doing the work know best. 6. Seek perfection; continuously improve. © 2010 Karen Martin & Associates 11
  • 12. Customer-Defined Value Value-Adding (VA) - any operation or activity your external customers value and are (or would be) willing to pay for. Non-Value-Adding (NVA) - any operation or activity that consumes time and/or resources but does not add value to the product (good or service) the customer receives.   Necessary – support processes, regulatory requirements, etc. Unnecessary – everything else - WASTE © 2010 Karen Martin & Associates 12
  • 13. Work Effort as Defined by the External Customer Unnecessary Non-value adding Necessary non-valueadding Value-adding
  • 14. Eight Wastes (Muda) Overproduction Inventory Waiting Over-Processing Errors © 2010 Karen Martin & Associates Motion (people) Transportation (material/data) Underutilized people 14
  • 15. Examples of Office/Service Waste Overproduction     PO’s for waiting to be ordered Contracts waiting to be signed Radiology reports waiting to be transcribed The symptom - WIP Inventory   Office supplies Unnecessary hard copies being stored © 2010 Karen Martin & Associates Waiting     For meetings to begin For approvals For shared equipment to become available For the system to respond Over-processing    Excessive reporting Excessive reviews & approvals Redundant data entry 15
  • 16. Examples of Office/Service Waste (continued)  Errors    Sending hard copies that could Any input that’s not “usuable be electronic as is”  Sending docs overnight that Input that has to be can go two-day corrected, missing information added, or  Underutilization of people clarified by a downstream (Knowledge, Skills, Aptitude, customer Creativity)  Motion    Transportation Walking to shared equipment Walking hard copies to downstream customers © 2010 Karen Martin & Associates    Narrow scopes of responsibility Not properly trained Not used for designing improvements 16
  • 17. Looking for Stuff: Time is Money Organization with 1,500 employees   Earn average of $22 per hour Work 250 days per year Each employee spends an average of 10 minutes per day looking or waiting for equipment or material  Individual impact  = 41.7 hours wasted time per year  = Over a week of frustrating, unfulfilling, nonproductive time  Organizational impact  = 62,550 hours of nonproductive time  30 FTEs worth of valuable resources doing non-value-adding work  = $1.4 unnecessary direct expense per year (unloaded) © 2010 Karen Martin & Associates 17
  • 18. Excess Office Supplies 6 mos. supply 1 year supply … Yet they received daily deliveries! $18,732 of inventory; $6,322 of it is obsolete cartridges 18
  • 19. Shared Equipment Causes Excess Motion Distance traveled to printer   Dept A = 92 ft. per trip Dept B = 696 ft. per trip 120 occurrences / day = 4656 miles/year Walk pace = 1 mile per hour = 582 days/year of unproductive, non-value-adding time = 2.2 FTEs © 2010 Karen Martin & Associates 19
  • 20. Typical Current State Findings Unnecessary NVA Request Necessary NVA Delivery Value Add © 2010 Karen Martin & Associates 20
  • 21. Diagnostic Tools Value Stream Mapping (macro) Metrics-Based Process Mapping (micro) Root Cause Analysis © 2010 Karen Martin & Associates 21
  • 22. Value Stream Defined Value Stream: All of the activities, required to fulfill a customer request from order to delivery (and beyond to cash received). Value Stream Process Process Process Custom er Customer Request © 2010 Karen Martin & Associates Customer Receipt 22
  • 23. M a p The Work We Do: Degrees of Granularity Value Stream Map (Strategic) MetricsBased Process Map (Tactical) © 2010 Karen Martin & Associates 23
  • 24. Current State Value Stream Map Outpatient Imaging Services Pre-register Patient Customer Demand: 15 patients per Day (Takt Time 1920 seconds) 8 hours per day Schedule Appointment Referring Physician Hospital 4 3 5 Lead Time = 24 days 2 6 Lead Time = 990 mins. Cycle Time = 30 mins. Lead Time = 990 mins. % C&A = 100 % Demand = 15 per day 1 Lead Time = 12 mins. Cycle Time = 11 mins. Lead Time = 12 mins. % C&A = 98 % % C&A = 65 % CT=Cycle Time LT=Lead Time %C&A=% Complete & Accurate Symposium E Pay Excel ADS Internet Meditech Fax Order Solutions Waiting Room Management System PACS Auto Fax 50% Us Mail 25% MD Mailbox 25% Rework Loop via Fax 25% of the time Check-in Patient (Admitting) Prep Patient (Tech) Check-in Patient (Imaging) Complete Exam (Tech) Transmit Images (Tech) Read/Dictate Exam (Radiologist) Transcribe Report (MDI) Review Draft/Sign (Radiologist) Print Reports (Imaging) Send Reports (Imaging) 5 mins. 5 5 5 mins. Cycle Time = 2 mins. % C&A = 90 % 3 6 45 mins. Cycle Time = 1 mins. % C&A = 98 % 5 minutes 2 7 45 minutes 2 minutes 11520  minutes 1 minutes 30 mins. Cycle Time = 10 mins. % C&A = 100 % 2 8 30 minutes 10 minutes 5 mins. Cycle Time = 15 mins. % C&A = 90 % 2 5 minutes 15 minutes 9 248 mins. Cycle Time = 3 mins. % C&A = 100 % 2 10 248 minutes 3 minutes 365 mins. Cycle Time = 15 mins. % C&A = 95 % 6 11 365 minutes 15 minutes 960 mins. Cycle Time = 5 mins. % C&A = 75 % 2 12 960 minutes 5 minutes 110 mins. Cycle Time = 1 mins. % C&A = 95 % 2 13 110 minutes 1 minutes 120 mins. Cycle Time = 1 mins. % C&A = 99 % 6 14 Cycle Time = 3 mins. % C&A = 90 % 120 minutes 1 minutes L/T = 13464 minutes 3 minutes VA/T = 11576 minutes Rolled First Pass yield = 29%
  • 25. Equipment Servicing Value Stream Request 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
  • 26. Key Metrics: Time Process time (PT)    The time it takes to actually perform the work, if one is able to work on it uninterrupted Includes task-specific doing, talking, and thinking aka “touch time,” work time, cycle time Lead time (LT)    The elapsed time from the time work is made available until it’s completed and passed on to the next person or department in the chain aka throughput time, turnaround time, elapsed time Includes Process Time, not merely waiting time. © 2010 Karen Martin & Associates 26
  • 27. Lead Time vs. Process Time Individual Steps Lead Time Process Time Work Received © 2010 Karen Martin & Associates Work passed to next step 27
  • 28. Typical Current State Findings Process Time Process Time Unnecessary NVA Necessary NVA Request Delivery Value Add Process Time Total Lead Time © 2010 Karen Martin & Associates 28
  • 29. Summary Metrics: Time Percent Activity (aka Activity Ratio)      The percentage of time anything is being done to the work passing through the system (whether value-adding or non-value-adding) % Activity = (∑PT ÷ ∑LT) × 100 100 – %Act = % Time Work is Idle Common current state finding = 1-10% Could also calculate %VA to determine how much activity is value-adding (typically lower than % Activity). © 2010 Karen Martin & Associates 29
  • 30. Key Metrics: Quality %Complete and Accurate (%C&A)   The percentage of incoming work (input) that’s deemed “usable as is” by the recipient (downstream customer). % of incoming work where the recipient can perform task without having to “CAC”:  Correct information or material that was supplied  Add information that should have been supplied  Clarify information that should have or could have been clearer  Measured by the immediate downstream customer and all subsequent downstream customers. © 2010 Karen Martin & Associates 30
  • 31. Summary Metrics: Quality Rolled First Pass Yield (RFPY)     The percent of value stream output that passes through the process “clean,” with no “hiccups,” no rework required. RFPY = %C&A x %C&A x %C&A… Common finding = 0-15% Multiply ALL %C&A’s, even if parallel processes © 2010 Karen Martin & Associates 31
  • 32. Outpatient Imaging Value Stream Current State Findings Metric Total Lead Time Total Process Time Activity Ratio (PT/LT) Rolled First Pass Yield (Multiply %C&A’s) Other** Current State Future State* % Improvement 32.5 hrs 56 mins 2.9% 29% Other** Other** * Projected until validated ** Other = Metrics for individual blocks, financials, survey or audit results, turnover, market share, system downtime, inventory turns, hold times, work volume, etc. 32
  • 33. Future State Value Stream Map Outpatient Imaging Services Standard Work Work Balance Customer Demand: 15 patients perDay (Takt Time1920 seconds) 8 hours per day Co-locate Schedule appt Pre-register Referring Physician Hospital 3 Lead Time = 15 days 2 6 Demand = 15 per day 1 Lead Time = 45 mins. Cycle Time = 11 mins. Lead Time = 45 mins. % C&A = 98 % % C&A = 85 % Risk Reduction (Joint Commision) Symposium E Pay Excel Internet Waiting Room Management System Work Balancing Standard Work 3 35 mins. 4 Cycle Time = 1 mins. % C&A = 98 % 0.0833 hrs. 2 Complete Exam (Tech) 5 20 mins. Cycle Time = 10 mins. % C&A = 100 % 0.583 hrs. 1 mins. 2 Transmit Images (Tech) 6 5 mins. Cycle Time = 10 mins. % C&A = 90 % 0.333 hrs. 10 mins. Visual Workplace Set-up Reduction Prep Patient (Tech) Check-in Patient (Imaging) Fax Order Solutions PACS Auto Fax 80% Us Mail 15% MD Mailbox 5% 5S Value Stream Alignment Pull System (Supplies Kanban) Remove Check in and Reduce System Access 5 mins. Meditech CT=Cycle Time LT=Lead Time %C&A=% Complete & Accurate 2 7 120 mins. 2 Review Draft/Sign (Radiologist) 420 mins. Cycle Time = 15 mins. % C&A = 95 % 2 hrs. 2 mins. 8 Batch Reductions Voice Recognition Read/Dictate Exam (Radiologist) Cycle Time = 2 mins. % C&A = 100 % 0.0833 hrs. 10 mins. Continuous Flow 2 Print Reports (Imaging) 9 2 mins. Cycle Time = 1 mins. % C&A = 95 % 7 hrs. 15 mins. Rework Loop via Fax 10% of the time 2 30 mins. Cycle Time = 1 mins. % C&A = 99 % 0.0333 hrs. 1 mins. 10 Send Reports (Imaging) 6 0.5 hrs. 1 mins. 11 Cycle Time = 3 mins. % C&A = 90 % LT = 11.3 hrs. 3 mins. CT = 43 mins. CT/LT Ratio = 6.32% Rolled First Pass VSM Champion: Paul Scanneryield = 40% Created: July 18, 2007
  • 34. Outpatient Imaging Value Stream Improvement Results Current State Future State % Improvement 32.5 hrs 56 mins 11.3 hrs 43 mins 65% 23% Activity Ratio Rolled First Pass Yield 2.9% 29% 6.3% 40% 117% 38% Annual turnover 100% 25% 75% 14 11 21% Metric Total Lead Time Total Process Time # handoffs Note: Freed capacity (reduced PT) allowed the facility to collect an add’l $500,000 in revenue without adding equipment or staff. 34
  • 35. Beau Keyte & Drew Locher © 2010 Karen Martin & Associates 35
  • 36. What is a Metrics-Based Process Map? A visual process analysis tool, which integrates:   Functional orientation of traditional swim lane process maps Key Lean time and quality metrics Tool which highlights the disconnects / wastes / delays in a process.  Keeps the improvement focus properly directed Documents standardized work for more effective workforce training and process monitoring. © 2010 Karen Martin & Associates 36
  • 38. Metrics-Based Process Mapping Resources Chapter 12 Click here to order from Amazon Click here to order from Amazon
  • 39. Root Cause Analysis Peel back the layers of the onion to avoid jumping to incorrect conclusions and applying incorrect solutions. © 2010 Karen Martin & Associates 39
  • 40. 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
  • 41. Future State Design Considerations  Improve quality  Eliminate steps / handoffs  Combine steps  Create parallel paths  Alter task sequencing and/or timing  Implement pull  Reduce / eliminate batches  Create an organized, visual workplace  Reduce interruptions, setup and changeover  Eliminate motion & transportation  Standardize & errorproof work  Eliminate unnecessary approvals / authorizations  Stop performing nonvalue adding (NVA) tasks  Co-locate functions based on flow; create cells (teams of crossfunctional staff)  Balance work to meet takt time requirements 41
  • 42. Building a Lean Enterprise Process Stabilization Tools
  • 43. Building a Lean Enterprise FlowEnhancing Tools
  • 45. Create an Action Plan: Who, What, When, Where, and How? Future State Implementation Plan Value Stream Outpatient Imaging Implementation Plan Review Dates Executive Sponsor Allen Ward 11/1/2007 Value Stream Champion Sally McKinsey 11/21/2007 Value Stream Mapping Facilitator Dave Parks 12/13/2007 Date Created 10/18/2007 Block # 2 Goal / Objective Improve quality of referral Improvement Activity Type KE Implement standard work for referral process Owner Sean O'Ryan PROJ 1/10/2008 Implementation Schedule (weeks) 2 3 4 5 6 7 8 9 10 11 12 Dianne Prichard 3, 4 Reduce lead time beween schedulingand Cross-train and colocate work teams preregistration steps 5, 6 Eliminate the need for two patient checkins Collect copays in Imaging KE Michael O'Shea 6 Eliminate bottleneck in waiting area Balance work / level demand KE Dianne Prichard 9 Eliminate lead time associated with transcription step Implement voice recognition technology PROJ Sam Parks 10 Eliminate batched reading Reduce setup required KE Sam Parks 7 Reduce inventory costs, regulatory risk and storage needs 5S CT supplies area; implement kanban KE Michael O'Shea 12 Reduce delay in report delivery Implement additional fax ports PROJ Martha Allen 12 Reduce delay in report delivery Increase percentage of physicians receiving electronic delivery (rather than hard copy) KE 1 Martha Allen Approvals Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator Signature: Signature: Signature: Date: Date: Date: Type: KE = Kaizen Event; PROJ = Project; JDI = Just do it Date Complete
  • 46. Kaizen Events & Projects • Document & analyze the current state • Design future state • Brainstorm & prioritize solutions • Design & develop improvements Plan Act • Refine & finalize improvements • Implement improvements • Train workforce Macro PDCA Plan Check • Test improvements Do Act Do Check 46
  • 47. The Improvement Process Plan • Adjust process as needed • Prepare for next round of improvement Act • Measure results • Design improved approach if further improvement is needed © 2010 Karen Martin & Associates • Gain a deep understanding about the current state • Create hypothesis • At least 50% of the total improvement cycle Do • Brainstorm solutions • Create miniexperiments to test theories • Select & finalize countermeasures • IMPLEMENT Check 47
  • 48. Where do you begin? Issue A complex problem linked to annual business goals is identified. Approach • A3 • May need do use VSM to understand the current state. Better performance is needed across a • Value Stream Mapping to create the value stream. improvement strategy. • Kaizen Events, projects, and just-doits to implement improvements. • Metrics-based process mapping may be needed to identify waste and document new standard work. Small, localized problems within a department. © 2010 Karen Martin & Associates • Just-do-its or mini-projects • Metrics-Based Process Mapping may be needed to identify waste and document new standard work. 48
  • 49. Building a C.I. Culture “Life is Good” Stage Years 5 & Beyond Company-wide engagement – everywhere, all the time Support needed only for audits, bandwidth gaps, continued learning • Daily kaizen is the norm • “Action now” dominates • Most processes are stabilized with minimal waste and output variation “Settling In” Stage Years 3 & 4 More staff engagement – reduced need for formal Kaizen Events Light support from seasoned improvement professionals • Demonstrating learned competencies • Process owners manage performance • Becoming more proactive “Disruption” Stage Years 1 & 2 Small percentage of staff engaged – project-based Heavy support from seasoned improvement professionals • Sensei-dominated • Much mentoring & learning • Heavy use of Kaizen Events • Many issues to be resolved 49
  • 50. Capability Development Needs Frontlines   Problem-solving skills - PDCA & root cause analysis (RCA) Basic lean principles & tools Middle management    Problem-solving skills & tools (PDCA, RCA & A3) More advanced lean philosophy, principles & tools Process monitoring and sustainability © 2010 Karen Martin & Associates 50
  • 51. Capability Development Needs (continued)  Senior leadership         Problem-solving skills (PDCA, RCA, A3 & Hoshin Kanri) Highly advanced lean philosophy, principles & tools Setting organization-wide clear improvement strategies Delegating tactical details to the people who do the work Establishing an improvement culture Lean accounting, lean product development, etc. The psychology of change The effort involved in making improvement  Improvement professionals     Full complement of improvement skills & Lean tools The psychology of change Converting results into financial terms Selling results; building improvement momentum © 2010 Karen Martin & Associates 51
  • 52. For Further Questions 7770 Regents Road #635 San Diego, CA 92122 858.677.6799 ksm@ksmartin.com Free webinars and monthly newsletter: www.ksmartin.com/subscribe Connect with us: 52