MBOE recap: What’s your sigma level?

For most of us, the sigma level – or defects per million opportunities – for New Year’s resolutions would be abysmal. We have 365 opportunities in a year to implement what we resolve to stick to and in reality, how many do we take advantage of? Whether it is skipping that dessert or going out for a run or practicing that hobby, rarely do we stick to our plan – but we keep complaining and hoping that we will achieve that goal. New Year’s resolutions are hard to keep.

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MBOE faculty member Peg Pennington works with MBOE students on the SigmaBrew simulation

Thankfully, our Master of Business Operational Excellence students had an easier task at hand during the Six Sigma Week of the year-long degree program. In the four days they worked on improving the sigma level for a coffee company called Sigma Brew, a simulation created by MoreSteam.com. Sigma Brew is fraught with many issues: Long lead time and wrong orders, to name a couple. Until now the students have been reading and learning the online MoreSteam modules on the Six Sigma body of knowledge. This week they had the opportunity to apply the theory to a simulated real business problem with the usual constraints of cost and resources.

Students first were challenged to define the problem correctly. Tons of data were provided but their job was to pull only those data that made sense to the business and helped them make meaningful decisions. This is not very different from what happens in companies. The true problem is hidden well below myriad symptoms. Data are available but they may not be relevant. It is only after defining a problem one can start to think about what data would make sense.

Data provide the baseline for the current performance of the company. Measuring the correct metrics guides you to not only make right decisions but also show you the impact of the solutions/countermeasures that you implement.

If the problem is not analyzed correctly, the countermeasures will only address the symptoms and the problem will continue. A cause map helps you drill down the root causes of the problem. Statistical tools such as hypothesis testing, regression analysis, ANOVA and others help you understand the degree of impact different root causes can have on the outcome you are measuring.

Improvement occurs when you implement the countermeasures in a systematic manner. It is important to track the metrics to confirm improvement. If there is not impact or the metrics are going in the opposite direction, it becomes important to start from the very beginning to identify the root causes and experiment until you are able to improve.

Improvements last only so long, especially if there are no controls in place to check the progress of the project. Control charts and standard work for leaders can take organizations a long way. There must be a system in place that helps visualize not only the progress but also any roadblocks that come up in way of progress. It is the job of all involved to solve and/or to escalate matter at the right levels to resolve the issues.

Students went through the DMAIC phase to address the issues that Sigma Brew was facing. Each group positively impacted process and the sigma levels went from a one to six up to eight!

‘You are a virus!’

When our Master of Business Operational Excellence health-care students spent some with Kathryn Correia, chief of Minnesota’s HealthEast Care System, she brought up a great point about the things that slow us down. Most of the interruptions that impede the flow of care, she said, aren’t surprises. If a machine breaks down, we know that somewhere we missed out on the preventive maintenance. If patients, providers or staffs are waiting for too long, we know that we have not really designed our processes to meet the demand. Defects occur because we have long been fixing symptoms but not the root causes.

This was one interesting insight in a busy week for the students, who heard from a number of instructors.

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Lean expert Art Byrne, speaking to our MBOE cohort.

Bill Boyd, director plan development at Wisconsin’s ThedaCare, spent some time with students explaining how the company has adopted the value stream approach to enhance the patient experience and quality and efficiency of care. He emphasized how important it is to stop working in silos and come together as a team to address the care needs of patients.

Post-lunch, the health-care and industry cohorts spent three hours with Gary Butler and yours truly in an emergency department simulation. They applied their learnings in understanding the wastes in the process and improving the efficiency and quality of care the patients received. The simulation is designed to help understand how lean principles apply to a non-manufacturing process.

The day came to an end with a visit from Art Byrne, an expert in lean strategy, and Tom Mooney, manager of Lean Transformations at Goodyear. Byrne has been implementing lean from the position of a President, CEO or Chairman of the organizations he worked with since the last 20 years. He shared his perspective on the role the leaders have to play to successfully implement lean and sustain the gains. He left the students with a thought his sensei Chihiro Nakao once said to him: “Byrne San, if you don’t try something, no knowledge will visit you.” Lean is all about trying out ideas. If you don’t try, how will you know about the process you are improving?

Mooney gave a different twist to the challenges of a lean practitioner. He said to the students, “You are a virus!” He emphasized that the change agents always get resistance from almost everyone. The resistors are like the antibodies who are trying to dissuade and destroy the change agents. He urged the students to keep going, coach others and multiply the lean knowledge rapidly to bring change in the organization.

MBOE recap: Lean in the back office

Last week, we hosted our industry and health-care MBOE cohorts on campus, bringing together dozens of professionals in a range of different fields. The principles and leadership skills we teach in each program carry many similarities, but there remain some key differences between health care and the rest of the pack. Shingo prize-winning author Jean Cunningham highlighted one of those when she visited our health-care cohort last week.

jean cunningham consulting lean accounting
Jean Cunningham (courtesy jeancunninghamconsulting.com)

Health care might be the only industry, Cunningham said, where you put a charge on a bill but only end up collecting a partial amount. That amount is based on the contracts and agreements organizations make with public and private insurance companies. Cunningham, author of the book Real Numbers, said traditional cost accounting systems are designed for all the resources to be used fully all the time. You create capability to create demand, and gather all resources such as people, materials and equipment and then produce what the customer needs. Taiichi Ohno, father of the Toyota Production System, once said that costs don’t exist to be calculated – they exist to be reduced. Lean accounting, Cunningham’s area of expertise, helps do exactly that by identifying and eliminating non-value add waste in the accounting process and helping managers understand the numbers to make meaningful decisions.

When organizations bring in lean, the first place they apply it is the “shop floor,” where patient care is actually provided. As the changes are being implemented, Cunningham said, it’s important to indicate them on financial statements. How do you do that? Well, the most important thing to do is to get the financial folks to plunge into operations and lean activities. Make them a part of the improvement teams so they can understand the changes that are being implemented and how they impact the financials. Lean accounting is about applying lean tools to streamline accounting and finance processes and also accounting for lean transformations.

Explaining lean accounting isn’t possible in the space of a single blog, but the key takeaway here is knowing that people outside of accounting need fewer, and easier-to-understand transactions. When they make transformations the key is to provide information that takes the right calculations into accounting and reflect gains and losses.

Interested to hear more about lean accounting from Cunningham? Click here

Getting it Right: The Crucial Role of Standard Work

We all have our own way of doing work.

This is something we learned in school, found it worked for us in the past, or we just developed a habit to do our work in a certain way. Let’s take a simple example: Managing e-mails. Some people print each and every e-mail to keep a trail of the conversation. Others create folders and dump their e-mails in them. There are still others who create chunks of time in a day, respond to them, and delete them after that, leaving an empty inbox most of the time. The process of managing e-mails, in the end, is personal and doesn’t impact the overall business. Every individual can have the freedom to manage the e-mails the way they want as long as they respond appropriately within a reasonable period of time.

When it comes to building cars at a pace of a minute per car, workers cannot have their own way doing work. Every second counts in a process like this. It is important to develop a process with the least amount of waste that results in a defect-free product that also meets customer specifications. This is nothing but standardized work.

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MBOE students used paper plates and other ordinary items to create a new set of standard work during an exercise.

The Lean Enterprise Institute’s Mark Reich, director of strategy and operations, and faculty member Scott Borg recently spent a day with our Master of Business Operational Excellence students discussing standardized work and the nuts and bolts of developing it. Students watched two videos depicting the process of manufacturing parts of a washing machine and refrigerator doors. Reich and Borg had the students break out into teams and focus on the movements that the operators went through and time them. Then, using paper plates, a string, duct tape and A3 paper, our students developed standardized work to improve the process as seen in the picture to the right.

The goal with the exercise, aside from allowing the students to exercise their inner MacGuyver, was to understand the purpose of standard work, which is to do what the customer requires with safety and quality built into the process. This is accomplished with these elements:

–          Takt time: Pace needed to meet the customer demand

–          Working sequence: The most efficient order of operation in single process that yields the highest quality product

–          Standard in-process stock: Minimizing the number of products necessary for operator to keep work repeatable and without stopping.

FMEA: Finding the fix before things go wrong

Here’s a provocative question: Are workplace accidents ever really accidents? For an equally provocative answer, watch this 30-second video from the Workplace Safety and Insurance Board of Ontario – though the squeamish should be warned.

cautionUnanticipated events at work occur because of a combination of multiple factors. It is a result of interaction between human beings and loosely built processes and systems. However, when errors occur, the common response from managers is to remind the employee to do better, rewrite job responsibilities or simply fire him or her. There are better ways to address errors other than blaming and shaming the people who made that error.

To understand why mistakes could occur, I introduced our Master of Business Operational Excellence students to a method called Failure Mode and Effects Analysis (FMEA). FMEA helps create robust processes and systems by proactively anticipating the vulnerabilities in them, prioritizing the risk they may cause and developing an action plan to address them.

One of the outcomes of an FMEA can be standardized work that addresses the variability in the processes. Standardized work defines the best-known method to perform a particular process that provides the maximum value to the customer. When you develop the standardized work you also need to train your people to perform the work optimally. Gary Butler, an executive in residence with Fisher’s Department of Management Sciences, spoke to our students about Training Within Industry, which focuses on breaking down the work into various job elements, explaining how it is done, and why it is done until the employee internalizes it. This also involves having help available if the employee has any questions or issues when they start doing the work.

The philosophy of lean is to have clear expectations of work, reduce complexities in the processes, and build systems that are mistake-proof or make it easier to detect mistakes. This prevents catastrophic events occurring.

So go ahead and shield your organization before things go wrong!

Sponsors: The secret weapon of a successful MBOE student

In Fisher’s Master of Business Operational Excellence program, we just completed the “Gate One” review of our students, the first of four evaluations they undergo. Gates are the points where students are assessed based on the progress they have made on their capstone project. Coaches and faculty follow a rubric that assesses students for their growth as lean thinkers and how they are applying the principles they learned in the classroom and from the gemba to their own organization.

At Fisher, we have created a rubric that helps the faculty and coaches make a fair assessment of the student’s progress irrespective of their experience with operational excellence methods. We assess students based on:

  • The consistency of the problem statement they have chosen to work on for their capstone project;
  • How well they use value stream mapping along with their team to understand the problem; and
  • The application of A3 thinking for their problem solving process.
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A snapshot of our grading rubric for Gate 1

Jumping to solutions addresses only the symptoms. We like to see an in-depth analysis of the root cause of the problem in the form of a cause map and how well the countermeasures are connected with the root causes. In addition, we also assess how students communicate with the coach, sponsor and relevant stakeholders from areas outside the realm of their control. Creativity is yet another dimension we consider to assess the students especially for the countermeasures they implement to successfully solve the problem.

The student’s individual efforts and the coach’s guidance can lead to major progress only if the sponsor plays his or her part well. The more involved the sponsor is, the more likely the student is to succeed. So how can a sponsor get involved?

  •  First of all, we interview the student and the sponsor together before the student can get in the program. The sponsor weighs in on the capstone project that the student chooses to work on. We encourage them to select a project that is expected to have an impact on the strategic goal.
  • We expect our students to keep the sponsor informed on what they learned in class and their plan of action for bringing out improvement.
  • We invite our sponsors to attend any lectures during the MBOE session that might interest them. This way they learn about what the student is learning in class and are in a position to support the students in implementing the tools, methods and strategies they are learning in class. To facilitate this we will start sending out to our sponsors announcements that the students receive that provide the details of each MBOE week session.
  • We also engage the sponsor in evaluating the student and also share the outcomes of the evaluation having reviewed with faculty and other coaches.
  • Last but not least, we also invite them to read this blog to see what was covered in the lectures and also read about some of the concepts and methods used to achieve operational excellence.

The wheel of success turns only when the three cogs – student, coach and sponsor – move synchronously.

MBOE recap: Lessons from the pharmacy

Value stream mapping has been widely used in the manufacturing industry to understand flow. Our MBOE students learned how value stream mapping can be effectively used in a pharmacy setting using a case based on Giant Eagle’s pharmacy, authored by Gary Butler, pictured.

One of the many things that the case addresses is the question that commonly comes up when mapping a value stream in a service industry: Variation in how customers come in. There are peak periods and then there are low periods.

How do you then calculate the demand and takt time? When you draw the current state value stream map, it’s not surprising to see multiple takt times: Shorter during busy times of the day and longer during the slower periods.

In health-care settings it’s very common to have multiple people with varying skills performing various tasks in the process. A value stream can give you the metrics to calculate their utilization, which can help you understand how to allocate resources so that every resource can spend their time on only those activities based on their expertise that add value to their customers.

MBOE recap: Learning from observing

With the theory of value stream mapping internalized, our MBOE program’s health-care cohort traveled to Ohio State’s Wexner Medical Center while the industry cohort headed to Center for Operational Excellence member Tosoh USA Inc.  A key step before launching a value stream mapping exercise is to go to the gemba. You can’t really map a value stream unless you’ve seen the process and have the relevant data, and you can’t do it accurately without the people who are a part of the process.

MBOE students value-stream mapping following a visit to Wexner Medical Center

Legend has it that Taiichi Ohno, the father of the Toyota Production System, had his engineers stand inside a circle for eight hours to observe the process. There is a lot of learning that results from just observing. Once you understand how the process flows you go speak with the people who do the work. Share your findings with them. Ask them to validate the findings. Ask them why they do what you observed. Note the issues they point out and ask them what would make the process better and why.

On the hospital gemba, students went to three different areas: Outpatient endoscopy, inpatient endoscopy and Invasive Prep and Recovery (IPR). Ryan Haley, Peg Pennington, Jill Treece, Jason Swartz and Tim Nelson were key in assisting.

The biggest hurdle in getting started with the value stream map is selecting the correct group of product or services to represent on a single flow map. For example, in IPR, the manager was interested in understanding the flow of EP (Electrophysiology) patients. Within this group there were multiple procedures, such as ablation (that took the longest to perform and recover) and cardioversion (the shortest procedure to perform and recover). There are many more within that range. What procedure should one focus on? The answer: Select the family of procedures that if improved upon will have the most benefit to the patients and organization.

The students spent three hours on the gemba and mapping the process and later presented their findings to hospital leaders. As our students benefit from gemba partnerships, so do these organizations. In fact, many departments have implemented the recommendations made by the students and achieved positive results.

MBOE recap: The cold, harsh reality of the value stream map

Google “value stream map” and you’ll get about 5 million hits. You can read as much as you want on it, but the only way to truly learn is by doing one – and in my experience, you learn more with each new map. Learning to See, co-authored by lean guru John Shook, gave our MBOE students this past week a prime on the value stream map, and in class, they learned much more about the five components to one: Customer, Supplier, Process Steps, Process Metrics and Information Flow.

So why should one care about mapping a value stream? For starters, it helps you answer a ton of questions about what you do day in and day out. Just a sample:

  • Are you producing to takt (customer demand), creating more than is needed or you are so slow?
  • How are you balancing supply with demand?
  • Do you have too many, too few or just the right amount of people doing the work?
  • Are there wastes in the process?
  • Are people undergoing unnecessary movements to get materials or information to do the work?
  • How do all the steps communicate with each other?

A value stream map gives you a snapshot of your process in a given time period. It tells you how much of the process you are studying is actually value adding. It might be shocking for someone mapping the first time to find out that more than 90% of the work they do is non-value added.

Here’s an example of that: Executive in Residence Gary Butler this past week told of his first encounter with MBOE Sensei Paul Kerry, a coach in our program. Kerry asked Butler and his executive team to tell him about their expenses, and Butler explained it by making the drawing above.

Kerry turned around and drew what he said was the reality of the business, which you’ll see below. A value stream map gives you a new lens through which you can look at your business. And what you see isn’t always pretty.

MBOE recap: Opening the toolbox

The MBOE program trains our students to be leading problem-solvers in their organization by providing the tools they need and, more importantly, teaching the behavior that creates lasting change. This week, we started handing out the tools.

Peg Pennington, a senior lecturer and Executive Director of the Center for Operational Excellence, kicked off MBOE’s second day of week one by walking students through the DMAIC methodology. This gets them ready for their journey toward green and black belts in the program, which uses the online Moresteam University modules. DMAIC (check out the breakdown in the image) helps students define, measure, analyze, improve and control the change they are working on in implementing at their organization. The modules will also help them prepare for the Six Sigma exam.

Another important tool is the A3 problem-solving method, which Executive-in-Residence Gary Butler introduced. Most of us are used to seeing a 100-slide PowerPoint describing a problem and all the steps that were taken to address it. With the A3 method, it’s all on an 11×17 sheet, and not just by writing in fine print but by being very specific about the problem.  It’s not only a good problem-solving tool but a great communication tool. An attention span, after all, does much better with one slide than 100!

We also wasted no time getting students to their first gemba. The assignment: Visit various areas in Wexner Medical Center at Ohio State and Riverside Methodist Hospital, speak with people there and develop a problem statement. The goal was to help students understand that what you hear from people the first time are mostly symptoms. Observing the process and getting data to support the problem really help in the end. On a short visit with no data, a situation you might find yourself in at some point like our students, it’s important to keep these things in mind:

  • Keep an open mind. What you think is a problem may not be the problem.
  • Don’t walk in with a solution. When you have a solution in mind, you tend to listen less and lose out on the information you could potentially receive from people/frontline staff.
  • Listen. Make a note of issues/symptoms. They might not be directly related to the problem, but you might find good ideas to help people understand what’s in it for them when you come back to implement countermeasures and gain their buy-in.