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© Vanguard Consulting Ltd© Vanguard Consulting Ltd
An Introduction toLean Systems Thinking
… a better way to make the work work
© Vanguard Consulting Ltd© Vanguard Consulting Ltd
Two main design and management thinking approaches …
© Vanguard Consulting Ltd
Hundreds Of
Suppliers
Stamping
Foundry
Body & Frame
Painting
Rework
Power Train
W A R E H O U S E
Final Assembly
(& Rework) Dealers
Customers
Orders
Planning
Production Programme &
Forecast
Material flow Information flow
MA
NA
GE
ME
NT
FA
CT
OR
Y
© Vanguard Consulting Ltd
Arise Command & Control!
Perspective
Design
Decision making
Measurement
Management ethos
Top down, hierarchy
Functional
Separated from work
Output, targets, standards related to
budget & plan
Manage people, hit budget and plan
NOT DESIGNED
AGAINST DEMANDBUILDS IN WASTE
AND INHIBITS FLOW
© Vanguard Consulting Ltd
Company
Worker Worker Worker Worker
Customer
Material flow Information flow
Variety in the context of continuous flow
MANAGEMENT FACTORY
An alternative solution…
© Vanguard Consulting Ltd
Summary of TPS Features
• Pull
• Flow
• Waste
• Measures
• Decision making
• Management role
© Vanguard Consulting Ltd
The Toyota Production System
“The number of man hours it takes to build a Lexus is less than the man hours used in re-
working a top-of-the-line German luxury car at the end of the production line, after it has been
made."
The Machine that Changed the WorldWomack, Roos & Jones 1990
© Vanguard Consulting Ltd
Vanguard - translation for Service
Service differs from manufacturing!
The customer is involved in ‘production’,
• Their Demand triggers our work…
• Variety of customers and demand is huge!
i
© Vanguard Consulting Ltd
Systems Thinking Principles
Perspective
Design
Decision making
Measurement
Management ethic
Outside - in
Demand, value, flow
Integrated into the work
Related to purpose, and show
capability
Act on the system
© Vanguard Consulting Ltd
Thinking
System
PerformanceimproveService
EfficiencyRevenueMorale
Change this
Tools here
© Vanguard Consulting Ltd
The rise of Tools
• Six sigma– Centred on a powerful problem solving and
process optimisation methodology, 6 Sigma is credited with saving billions of dollars for companies over the past ten years.
• Define • Measures • Analyse • Improve • Control
© Vanguard Consulting Ltd
… and plenty more!• 5 s• 4 actuals• 7 wastes• Tact time• Value Stream Mapping • Brainstorming• Cause and Effect• Control Charts• Decision analysis• Failure Modes Effects Analysis (FMEA) • Force field Analysis• Pokeyoke (Failure Proofing) • SIPOC (Suppliers, Inputs, Process, Outputs and Customers)
• Spaghetti Chart • Treatability Matrix
© Vanguard Consulting Ltd
Thinking
System
PerformanceimproveService
EfficiencyRevenueMorale
Do they change
this?
© Vanguard Consulting Ltd
CUSTOMERS DEMANDS PROCESSES OUTCOMES
These Vary!
Unhelpful? Costly?
“WHAT MATTERS?”
Focus outside in, design to absorb variety
i
© Vanguard Consulting Ltd
Costs of departure from the nominal value
BusinessmanFishermanMum & Kids
Customer sets nominal value and thus the response of the service.
Quick & HotKids 1st
then me
Coffee I/V
Laptop
DnD
i
© Vanguard Consulting Ltd
What is the purpose (in customer terms)?1
Demand : T&F, V&FWhat matters?
2
Capability of response3
Understanding your organisation as a System The Vanguard model for ‘check’
© Vanguard Consulting Ltd
Understanding capability data
• Much of what we currently report on are percentages or averages in relation to targets (static data points)
• Few of these targets relate to the real experience of the customer
• Because of the way it is reported it is hard to see the effects of changes and decisions that we may be taking
© Vanguard Consulting Ltd
Understanding capability data
• Statistical process control charts (SPC) or Capability Charts are a powerful way of looking at our data and understanding the performance of our system
• They capture statistically the capability or predictability of our system in delivering service for customer over time
• Normally used to understand frequency of an occurrence or elapsed time (end-to-end)
© Vanguard Consulting Ltd
No. of Days
UCL
mean
LCL
x xx
x
x
x
x
x
x
x
x
x
x
xx
x
Cases
How they work
Every system has inherent
variation
We tend to only pay attention to the average
100
50
Statistically we can measure the variation or predictability – what it
feels like for our customersWhat’s important is knowing the extent of this variation
and why – the causes
© Vanguard Consulting Ltd
Understanding your organisation as a System
What is the purpose (in customer terms)?1
Flow : Value work + Waste4
Demand : T&F, V&FWhat matters?
2
Thinking6
System Conditions5
Capability of response3
The Vanguard model for ‘check’
© Vanguard Consulting Ltd
Change based on knowledge…
Thinking
System analysisaction
change
…act on the
Performanceimprove
© Vanguard Consulting Ltd
What you learn from Check
What do customers want?
“Can I make a claim?”“My circumstances have changed”
© Vanguard Consulting Ltd
What matters to customers?
• “I get an answer quickly so that I know whether or not I’m going to get help”
• “Deliver payments quickly so that I don’t get hassle from my landlord or the CTax department”
• “Make sure my benefits keeps track with changes in my situation…”
• “You help me through the process”• “I can understand the letters & forms”• “I don’t mind waiting a bit if I know it is going to be
sorted”
© Vanguard Consulting Ltd© Vanguard Consulting Ltd
Purpose
Pay the right money to the right people as quickly as possible
© Vanguard Consulting Ltd
Capability(how well are we meeting the purpose in customer terms?)
• We don’t know!– Because we don’t measure it!
• But … we do measure:– BVPIs & position relative to ‘similar’ authorities– Waiting time in reception– AvHT, wrap, etc. in the Call Centre– Number of cases per day in the back office
© Vanguard Consulting Ltd
Learning to see HB as a System
Inspect
SortScanIndex
Decide
Allocate
Notify
Hand out formsTake in documents
Pay
22%V 78%F
44%V 56%F
34%V 66%F
99% claims ‘dirty’No case
ownershipCTax
fragmentation
1-10 cycles to clean (ave.4) 95% cases over-specified 20% docs. duplicated
60% errorsRework
Multiple Sorts & ChecksCases fragmentedScanning/Indexing errors
64% passed backManage queues
Letters unclear87%
0-152 days to pay3% visit once
Handoff
HO
HO
HOHOHO
“I want to claim”
Workers’ activity ‘managed’
© Vanguard Consulting Ltd
Thinking
System
Performance
What is the
… to result in
That has caused the
i
© Vanguard Consulting Ltd
Learning to see HB as a System
Inspect
SortScanIndex
Decide
Allocate
Notify
Hand out formsTake in documents
Pay
22%V 78%F
44%V 56%F
34%V 66%F
99% claims ‘dirty’No case
ownershipCTax
fragmentation
1-10 cycles to clean (ave.4) 95% cases over-specified 20% docs. duplicated
60% errorsRework
Multiple Sorts & ChecksCases fragmentedScanning/Indexing errors
64% passed backManage queues
Letters unclear
0-152 days to pay3% visit once
Handoff
HO
HO
HOHOHO
“I want to claim”
Workers’ activity ‘managed’
© Vanguard Consulting Ltd
What’s itsPURPOSE?
If there is an issue, sort it:
One-stopor manage my expectations
FIX
CLOSE
LOG QSM@
16% 33%
A Story of IT Support
TO TEAM A or S CUST
FIX
CLOSE
DDWW1:11:1
DDWW1:11:1
CUST
FIX
CLOSE 51%
MORE WORK
WAIT
Work done
R & R
Diagnosis
Fixing
Ordering …
Reasons for wait:
Reallocation
suppliers
engineers
user1.5 min
1 Hr58 Hrs 83 Hrs
Calls not being fully fixed first time
Ongoing problem
Not set up properly
Calls closed
Bounced between people / teams
Predictably up to 5 people3 teams
Vanguard
www.lean-service.com
What underpins this design & performance?
FIX
CLOSE
LOG QSM@
TO TEAM A or S CUST
FIX
CLOSE
DDWW1:11:1
DDWW1:11:1
CUST
FIX
CLOSE
MORE WORK
WAIT
Functional Design
HelpDesk
Core Techs.
Remote Techs.Operations
Development
HandoffBatchCheck
Rework
= DELAY
83 Hrs
Vanguard
www.lean-service.com
What underpins this design & performance?
FIX
CLOSE
LOG QSM@
TO TEAM A or S CUST
FIX
CLOSE
DDWW1:11:1
DDWW1:11:1
CUST
FIX
CLOSE
MORE WORK
WAIT
Functional Design KPI’s
Raise Job Stop Clock Close JobReopen
Focus on Close NOT Fix
= MORE WORKPrioritise jobs
= DELAY
Logging data
83 Hrs
Vanguard
www.lean-service.com
What underpins this design & performance?
FIX
CLOSE
LOG QSM@
TO TEAM A or S CUST
FIX
CLOSE
DDWW1:11:1
DDWW1:11:1
CUST
FIX
CLOSE
MORE WORK
WAIT
Functional Design KPI’s Procedures & Authorisation
Control over IT people and costs
= DELAY= STAFF FRUSTRATION
We say “No!”
= USER FRUSTRATION
Vanguard
www.lean-service.com
What underpins this design & performance?
FIX
CLOSE
LOG QSM@
TO TEAM A or S CUST
FIX
CLOSE
DDWW1:11:1
DDWW1:11:1
CUST
FIX
CLOSE
MORE WORK
WAIT
Functional Design KPI’s Procedures & Authorisation
BUDGET CONTRACT
Focus on the numbers“Lower Cost” staff for “Simple” jobsJuggle resources between support
and developmentSay “It’s chargeable!”
Authorisation to “control” spend
Stick to the letter Ensure we hit the numbers (and don’t
get fined)Juggle resources between support
and development
Vanguard
www.lean-service.com
© Vanguard Consulting Ltd
Performance
• Hard to get through• Poor first time resolution• Long E2E time• High failure demand• Rising complaints• Poor retention• Rising costs• High staff turnover
• Demands equal units of work• Functionalised design• Managers make decisions• Focus on productivity, output and prizes• Workers follow procedures• Hand-off, batch & Q, checking, reworking
• Focus on revenue• Meet the budget• Stick to the contract• Manage the people• Improve through Projects
System
Thinking
© Vanguard Consulting Ltd
Principles for ‘Plan’ (Re-design)
Clarity of purpose1
Clarity of the permanent measures2
What are the ‘core’ roles?Design against demand
4
C
U
S
T
O
M
E
R
S
What are the value steps?3
What are the management roles?
Add value
5
Where do we need to act? Remove System Conditions
6
© Vanguard Consulting Ltd
Learning to see HB as a System
Inspect
SortScanIndex
Decide
Allocate
Notify
Hand out formsTake in documents
Pay
22%V 78%F
44%V 56%F
34%V 66%F
99% claims ‘dirty’No case
ownershipCTax
fragmentation
1-10 cycles to clean (ave.4) 95% cases over-specified 20% docs. duplicated
60% errorsRework
Multiple Sorts & ChecksCases fragmentedScanning/Indexing errors
64% passed backManage queues
Letters unclear
0-152 days to pay3% visit once
Handoff
HO
HO
HOHOHO
“I want to claim”
Workers’ activity ‘managed’
© Vanguard Consulting Ltd
Change thinking, improve performance
Pay the right people the right money fastPurpose
Measures
Method
mean = 142
Experiment: find & act on causes of variation
© Vanguard Consulting Ltd
Purpose
Measures
Method
Pay the right people the right money fast
mean = 142
mean = 12
Change thinking, improve performance
© Vanguard Consulting Ltd
The Systems Solution: design against demand
Expertise
Value Work
Demand “I want to claim”
•Obtain clean information•Make a decision•Notify the claimant•Pay if entitled
•Put the claims expertise at the front end•Enable assessors to pull support on
demand•Build Ctax expertise into the flow•And measure against purpose
© Vanguard Consulting Ltd
Repairs as a System
CallCentre
Worksorder Supervisor
Tradesman
Materials
Access
Repair
“Something’s broken…”
Service Level, AvHTDiagnosis & SoR
Target Times, Budget
Diagnosis,Bonus, Fix
Cancel WO’s
favouritism
Delay
No. JobsType of job
40% fail
95% WO’s Reworked
Parts/materialPriority
Activity, Time, CostProp. o/heads
Re-allocateArgue
“What’s going on!”“It’s not fixed!” 65%
Bonus
Distrust
© Vanguard Consulting Ltd
What would you do?
• Think about…– “What Matters?” to the tenants– What is the VALUE work?– How could we just do the value work?– What would we need to do to help those to do
their jobs?– What are the implications on roles?– What should we measure?
© Vanguard Consulting Ltd
Setting a target that exceeds capability
UCL
LCL
x xx
x
x
x
x
x
x
x
x
x
x
xx
x
Target
© Vanguard Consulting Ltd
What’s important?
UCL
LCL
x xx
x
x
x
x
x
x
x
x
x
x
xx
x
What’s important is knowing the extent of this variation
and why – the causes
© Vanguard Consulting Ltd
Capability vs TargetsTargets Capability Measures
Arbitrary – “plucked out of the air” Derived from the work
Increase disorder in systems Lead people to work in ways that increase order and control
Focus people on the wrong things – survival not improvement
Focus ingenuity on how the work works
No value in understanding and improving performance
Understanding causes of variation provides a focus for improvement
De-motivating – no understanding of capability
Motivate – put control and understanding in the right place
© Vanguard Consulting Ltd
What makes a good measure?
• Measures must be derived from the work – relate to purpose
• Measures must help us understand and improve performance
• Measures must demonstrate capability and variation over time
• Measures must be in the hands of the people doing the work, to control and improve the work
• Measures must be used by staff and managers to take action on the systemi
© Vanguard Consulting Ltd
Summary – the key issues
1. Not paying attention to demand
2. Damaging the ability to absorb variety
3. Managing people not the process
4. Using the wrong measures
© Vanguard Consulting Ltd
Reading ListVanguard Stuff : www.lean-service.com • Freedom from Command & Control, John Seddon• I Want you to Cheat, John SeddonRecommended• The New Economics, W. Edwards Deming• The Toyota Production System, Taiichi Ohno• The Machine that Changed the World, Womack Jones & Roos• Lean Thinking, Womack & Jones• Understanding Variation, Donald Wheeler• Punished by Rewards, Alfie KohnInteresting but Dangerous - you work out why…• The Principles of Scientific Management, Frederick Winslow Taylor