Lean 101

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Lean Webinar Series:

Lean 101 for Office & Service

November 8, 2010

© 2010 Karen Martin & Associates

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

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 non-

manufacturing 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.

3

Karen Martin,

Principal

Karen Martin &

Associates


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

4


Processes: The Basics

5

Customer

Makes Request

Step 1 Step 2 Step 3 Step 4

Final

Output

Input

Upstream Downstream

Supplier Customer

Supplier

Customer

The History of Lean

6

1929

1910 1950’s 1996

1995 2002

2005

Lean

Leadership

& Culture

2009

Service

Sector

© 2010 Karen Martin & Associates 7

Toyota’s Two Key Tenets

Kaizen - Continuous Improvement.

Relentless waste elimination.

Seek perfection.

Respect for people.

Poorly designed processes are

disrespectful.

Reducing waste reduces stress.

Frontlines are authorized to solve

problems.

Plan

Do

Check

Act


Achieving Organizational Excellence

Quality

Morale

Safety Delivery

Cost

8

Lean is a business management approach –

not merely a process design technique

Building a Lean Enterprise


Key Principles

1. Only do what the customer values.

2. Design work so it flows 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.

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.

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

12

Unnecessary Non-valueadding

Necessary non-value-adding

Value-adding

Work Effort as Defined by the

External Customer


Eight Wastes (Muda)

Overproduction

Inventory

Waiting

Over-Processing

Errors

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

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

Any input that’s not “usuable

as is”

Input that has to be

corrected, missing

information added, or

clarified by a downstream

customer

Motion

Walking to shared

equipment

Walking hard copies to

downstream customers

Transportation

Sending hard copies that could

be electronic

Sending docs overnight that

can go two-day

Underutilization of people (Knowledge, Skills, Aptitude,

Creativity)

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)

17

18

Excess Office Supplies

1 year supply

6 mos. supply

… Yet they

received daily

deliveries!

$18,732 of inventory; $6,322 of it is

obsolete cartridges


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

19


Typical Current State Findings

20

Value Add

Necessary

NVA

Request Delivery

Unnecessary

NVA


Diagnostic Tools

Value Stream Mapping (macro)

Metrics-Based Process Mapping (micro)

Root Cause Analysis

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).

Customer

22

Value Stream

Process Process Process

Customer

Request

Customer

Receipt


The Work We Do:

Degrees of Granularity

23

Metrics-

Based

Process

Map

(Tactical)

Value

Stream

Map

(Strategic)

Value Stream

Process

Step Step Step

Process Process

V

a

l

u

e

S

t

r

e

a

m

M

a

p

Current State Value Stream Map

Outpatient Imaging Services

Demand = 15 per day

Customer Demand:

15 patients per Day

(Takt Time 1920 seconds)

8 hours per day

Referring

Physician

% C&A = 65 %

Check-in

Patient

(Admitting)

Cycle Time = 2 mins.

% C&A = 90 %

5

Send

Reports

(Imaging)


% C&A = 90 %

6

Hospital

5 mins.

Schedule

Appointment


Lead Time = 12 mins.

% C&A = 98 %

6

Pre-register

Patient



% C&A = 100 %

5

CT=Cycle Time

LT=Lead Time

%C&A=% Complete & Accurate

Lead Time = 12 mins.Lead Time = 990 mins.

Prep

Patient

(Tech)


% C&A = 100 %

2

Check-in

Patient

(Imaging)


% C&A = 98 %

3

Complete

Exam

(Tech)


% C&A = 90 %

2

Transmit

Images

(Tech)


% C&A = 100 %

2

Read/Dictate

Exam

(Radiologist)


% C&A = 95 %

2

Transcribe

Report

(MDI)


% C&A = 75 %

6

Review

Draft/Sign

(Radiologist)


% C&A = 95 %

2

Print

Reports

(Imaging)


% C&A = 99 %

230 mins. 5 mins. 248 mins. 365 mins. 960 mins. 110 mins. 120 mins.45 mins.

E Pay

Excel

ADS

Symposium

Internet

Waiting Room

Management

System

Fax Order

Solutions

PACS

5 mins.

Lead Time = 24 days

Meditech

123

4

5 6 7 8 9 10 11 12 13 14

Auto Fax 50%

Us Mail 25%

MD Mailbox 25%

Rework Loop

via Fax 25% of

the time

Rolled First Pass

yield = 29%

5 minutes

2 minutes 11520

minutes

1 minutes

45 minutes

10 minutes

30 minutes

15 minutes

5 minutes

3 minutes

248 minutes

15 minutes

365 minutes

5 minutes

960 minutes

1 minutes

110 minutes

1 minutes

120 minutes

3 minutes

L/T = 13464 minutes

VA/T = 11576 minutes

Source Refrigeration & HVAC, Inc.

Current State Value Stream Map

Serv ice Deliv ery

Created February 11, 2009

CONFIDENTIAL

Customer

Receive

customer call

Call Center

PT = 2 mins.

%C&A = 60%

Review &

Post Invoices

Posting Admin

PT = 3 mins.

%C&A = 98%

Batch: 1x/day

0.0833

hours

2 minutes

2 hours

5 minutes

1.5

hours

90 minutes

1.25 hours

75 minutes

2 hours

120 minutes

4 hours

5 minutes

10.7

hours

10 minutes

48

hours

25 minutes

4 hours

3 minutes

10.7

hours

10 minutes

2 hours

4 minutes

480

hours Lead Time = 572 hours

Process Time = 349 minutes

Select &

Dispatch Tech

Dispatcher &

Service

Manager

PT = 5 mins.

%C&A = 60%

Make Repair;

Call to raise

the NTE

Tech

PT = 120 mins.

%C&A = 40%

Complete Call

in GP

Dispatcher

PT = 5 mins.

%C&A = 80%

Review

Service Call

Data

Service

Manager

PT = 10 mins.

%C&A = 50%

Batch: 2x/day

Review Open

Ticket Report

Billing Admin

PT = 25 mins.

%C&A = 75%

Upload time

card

Tech

PT = 0 mins.

%C&A = 70%

Batch: 1x/day

Close call in

Verisae

Account

Manager

(West)

PT = 1 mins.

%C&A = 90%

Batch: 1x/day

Process Time

Cards

Payroll Admin

PT = 10 mins.

%C&A = 90%

Batch: 1x/day

Process A/P

A/P Admin

PT = 15 mins.

%C&A = 85%

Batch: 1x/day

Tech

Assess

Problem

PT = 90 mins.

%C&A = 90%

Tech

Special Order

Part

Tech

Pick up Part

at Parts Store

PT = 75 mins.

%C&A = 95%

Tech

Get Part from

Truck

PT = 0 mins.

120 m.

Great

Plains

Verisae

(Customer)

Review

Invoices;

Close in

Verisae (Pac)

Account

Manager

PT = 10 mins.

%C&A = 85%

Batch: 3-5x per wk

Enter Invoices

into Verisae &

Excel; Mail

Invoices

Billing Admin

PT = 4 mins.

%C&A = 95%

Batch: 1x/week

Excel

Spreadsheet

(Customer)

40%

Receive

Cash; Post

Payment

Collections

75 m. 120 m. 240 m. 640 m. 6 days 240 mins. 640 m. 120 m. 60 days90 m.5 m.

?%

?%

Supplier

%C&A %Complete and Accurate

AR Activity Ratio

FTE Full Time Equivalent

LT Lead Time

PT Process Time

RFPY Rolled First Pass Yield

Acronym Key

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

Equipment Servicing Value Stream

Request to Cash


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.

26


Lead Time vs. Process Time

Individual Steps

27

Lead Time

Work

Received

Work passed

to next step

Process Time


Typical Current State Findings

28

Value Add

Necessary

NVA

Request Delivery

Unnecessary

NVA

Process Time Process Time

Process Time

Total Lead Time


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).

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.

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

31

32

Metric Current

State

Future

State*

%

Improvement

Total Lead Time 32.5 hrs

Total Process Time 56 mins

Activity Ratio (PT/LT) 2.9%

Rolled First Pass Yield

(Multiply %C&A’s) 29%

Other**

Other**

Other**

Outpatient Imaging Value Stream

Current State Findings

* 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.

Future State Value Stream Map

Outpatient Imaging Services

VSM Champion: Paul Scanner

Created: July 18, 2007

Demand = 15 per day

Referring

Physician

% C&A = 85 %

Send

Reports

(Imaging)


% C&A = 90 %

6

Hospital

Schedule appt

Pre-register



% C&A = 98 %

6

CT=Cycle Time

LT=Lead Time

%C&A=% Complete & Accurate

0.0833 hrs.

1 mins.

0.583 hrs.

10 mins.

0.333 hrs.

10 mins.

0.0833 hrs.

2 mins.

2 hrs.

15 mins.

7 hrs.

1 mins.

0.0333 hrs.

1 mins.

0.5 hrs.

3 mins.

LT = 11.3 hrs.

CT = 43 mins.

CT/LT Ratio = 6.32%

Lead Time = 45 mins.Lead Time = 15 days

Prep

Patient

(Tech)


% C&A = 100 %

2

Check-in

Patient

(Imaging)


% C&A = 98 %

3

Complete

Exam

(Tech)


% C&A = 90 %

2

Transmit

Images

(Tech)


% C&A = 100 %

2

Read/Dictate

Exam

(Radiologist)


% C&A = 95 %

2

Review

Draft/Sign

(Radiologist)


% C&A = 95 %

2

Print

Reports

(Imaging)


% C&A = 99 %

220 mins. 5 mins. 120 mins. 420 mins. 2 mins. 30 mins.35 mins.

E Pay

Excel

Symposium

Internet

Waiting Room

Management

System

Fax Order

Solutions

PACS

5 mins.

Set-upReduction

Remove Check in

and ReduceSystem Access

Work Balancing

StandardWork

Pull System(Supplies Kanban)

VisualWorkplace

Voice Recognition

Batch Reductions

5S

Co-locate

StandardWork

Work Balance

ContinuousFlow

Value StreamAlignment

Auto Fax 80%

Us Mail 15%

MD Mailbox 5%

Rolled First Pass

yield = 40%

Rework Loop via Fax 10% of the time

Customer Demand:

15 patients per Day

(Takt Time 1920 seconds)

8 hours per day

12

3

45 6 7 8 9 10 11

Risk Reduction

(Joint Commision)

Meditech

34

Metric Current

State

Future

State

%

Improvement

Total Lead Time 32.5 hrs 11.3 hrs 65%

Total Process Time 56 mins 43 mins 23%

Activity Ratio 2.9% 6.3% 117%

Rolled First Pass Yield 29% 40% 38%

Annual turnover 100% 25% 75%

# handoffs 14 11 21%

Outpatient Imaging

Value Stream Improvement Results

Note: Freed capacity (reduced PT) allowed the facility to collect an add’l

$500,000 in revenue without adding equipment or staff.


Beau Keyte & Drew Locher

35

© 2010 Karen Martin & Associates 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.

Metrics-Based Process Mapping

Metrics-Based Process Mapping

Resources

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Root Cause Analysis

39

Peel back the layers of the onion to

avoid jumping to incorrect conclusions

and applying incorrect solutions.

Root Cause Analysis: 4 Key Tools

CauseCause--andand--Effect DiagramEffect Diagram

Machine Measurement Environment

People Material / Info Method

Budgets

Submitted Late

Lack of experience

Time availability

No sense of import

No stnd spread sheet

Email vs. FedEx

No standard work

Input rec’d late

Forecast in other system

Manual vs. PC

System avail.

No milestones

$ vs. units

Weather delays

Dispersed sales force

Changing schedule

Machine Measurement Environment

People Material / Info Method

Budgets

Submitted Late

Lack of experience

Time availability

No sense of import

No stnd spread sheet

Email vs. FedEx

No standard work

Input rec’d late

Forecast in other system

Manual vs. PC

System avail.

No milestones

$ vs. units

Weather delays

Dispersed sales force

Changing schedule

5 Why’s

Why?

Why?

Why?

Why?

Why?

Check Sheets Quantify Occurrences

|Equipment failure

|||||||||||||Changing customer

requirements w/ no

adjustment to expected

delivery

||||||||||Order entry error

|||Staffing/absenteeism

|||||Quality issue requiring

rework

|||||||Material shortage

Tally Reason

|Equipment failure

|||||||||||||Changing customer

requirements w/ no

adjustment to expected

delivery

||||||||||Order entry error

|||Staffing/absenteeism

|||||Quality issue requiring

rework

|||||||Material shortage

Tally Reason

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 & error-proof work

Eliminate unnecessary approvals / authorizations

Stop performing non-value adding (NVA) tasks

Co-locate functions based on flow; create cells (teams of cross-functional staff)

Balance work to meet takt time requirements

41


Process

Stabilization

Tools


Flow-

Enhancing

Tools

PACE Prioritization Matrix

High Low Anticipated Benefit

Ease o

f Im

ple

men

tati

on

Dif

fic

ult

E

as

y

20

7

5 13

4 23

1

22 8 9

2

10

16

11

6

12

14 19

15

17

3 21

18

Value Stream

1 2 3 4 5 6 7 8 9 10 11 12

2 Improve quality of referral KE Sean O'Ryan

3, 4Reduce lead time beween schedulingand

preregistration stepsPROJ

Dianne

Prichard

5, 6Eliminate the need for two patient check-

insKE

Michael

O'Shea

6 Eliminate bottleneck in waiting area KEDianne

Prichard

9Eliminate lead time associated with

transcription stepPROJ Sam Parks

10 Eliminate batched reading KE Sam Parks

7Reduce inventory costs, regulatory risk

and storage needsKE

Michael

O'Shea

12 Reduce delay in report delivery PROJ Martha Allen

12 Reduce delay in report delivery KE Martha Allen

Implement voice recognition technology

Reduce setup required

Cross-train and colocate work teams

Implement additional fax ports

Collect copays in Imaging

Balance work / level demand

5S CT supplies area; implement kanban

Value Stream Mapping Facilitator

Increase percentage of physicians

receiving electronic delivery (rather than

hard copy)

Approvals

Executive Sponsor Value Stream Champion

Signature:

Date: Date: Date:

Signature: Signature:

Block

#Goal / Objective Improvement Activity

Implement standard work for referral

process

Type OwnerImplementation Schedule (weeks) Date

Complete

Date Created

11/21/2007

Allen Ward

Sally McKinsey

Dave Parks 12/13/2007

10/18/2007 1/10/2008

Future State Implementation Plan

Executive Sponsor

Value Stream Champion

Value Stream Mapping Facilitator

Implementation Plan Review Dates

11/1/2007

Outpatient Imaging

Create an Action Plan: Who, What, When, Where, and How?

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

46

Kaizen Events & Projects

Plan Do

Check Act

Macro

PDCA • Test improvements

• Refine & finalize improvements

• Implement improvements

• Train workforce

• Design & develop improvements

• Document & analyze the current state

• Design future state

• Brainstorm & prioritize solutions

Plan Do

Check Act


The Improvement Process

47

Plan

Do

Check

Act

• Gain a deep

understanding about

the current state

• Create hypothesis

• At least 50% of the

total improvement

cycle

• Brainstorm

solutions

• Create mini-

experiments to

test theories

• Select & finalize

countermeasures

• IMPLEMENT • Measure results

• Design improved

approach if further

improvement is

needed

• Adjust

process as

needed

• Prepare for

next round of

improvement


Where do you begin?

48

Issue Approach

A complex problem linked to annual

business goals is identified.

• A3

• May need do use VSM to understand

the current state.

Better performance is needed across a

value stream.

• Value Stream Mapping to create the

improvement strategy.

• Kaizen Events, projects, and just-do-

its to implement improvements.

• Metrics-based process mapping may

be needed to identify waste and

document new standard work.

Small, localized problems within a

department.

• Just-do-its or mini-projects

• Metrics-Based Process Mapping may

be needed to identify waste and

document new standard work.

Building a C.I. Culture

49

Heavy support from

seasoned improvement

professionals

Light support from

seasoned improvement

professionals

Support needed only for

audits, bandwidth gaps,

continued learning

Years 1 & 2 Small percentage of staff

engaged – project-based

Years 3 & 4 More staff engagement –

reduced need for formal

Kaizen Events

Years 5 & Beyond Company-wide engagement –

everywhere, all the time

“Settling In” Stage

• Demonstrating learned

competencies

• Process owners manage

performance

• Becoming more proactive

“Life is Good” Stage

• Daily kaizen is the norm

• “Action now” dominates

• Most processes are

stabilized with minimal waste

and output variation

“Disruption” Stage

• Sensei-dominated

• Much mentoring & learning

• Heavy use of Kaizen Events

• Many issues to be resolved


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

50


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

51

Capability Development Needs (continued)

52

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