Recorded webinar: http://bit.ly/1cqhKfu Subscribe: http://www.ksmartin.com/subscribe Karen’s Books: http://ksmartin.com/books

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

37. Metrics-Based Process Mapping

38. Metrics-Based Process Mapping
Resources
Chapter 12
Click here to order from Amazon
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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

44. 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

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
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Problem-solving skills & tools (PDCA, RCA & A3)
More advanced lean philosophy, principles & tools
Process monitoring and sustainability
© 2010 Karen Martin & Associates
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51. Capability Development Needs
(continued)
 Senior leadership
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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
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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
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52. For Further Questions
7770 Regents Road #635
San Diego, CA 92122
858.677.6799
ksm@ksmartin.com
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