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Lean, decision making, metrics,

and YOUColorado MGMA

September 12, 2014

Owen J. Dahl, MBA, FACHE, LSSMBB

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Objectives

To define Lean and Six Sigma

To discuss management and decision making

To drill into key tools to make LSS work

To challenge you to transition your practice in areas of efficiency, quality, and cost effectiveness

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Management

• Management is the creative and systematic pursuit of practical results, (including the result of more knowledge), by identifying and using available human and knowledge resources in a concerted and reinforcing way.

http://www.pacrimcross.com/kmguidelines/defman.html

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Leadership

• The organization • Expects the leader to define and express both in writing

and, especially, through behavior the beliefs and values• Needs from a leader a clear statement of its vision and its

strategy• Needs a leader accountable for the design of the business• Needs a leader that sets priorities that are steadfastly

communicated and adhered to in practice• Needs a leader that ensures that the planning at all levels

receives the necessary support• Needs a leader that is accountable for continuous renewal• Needs a leader that never embarrasses followers

— Source: Leadership Jazz by Max DePree

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Leadership vs. Management

• Leadership – doing the right thing• Effective

• Management – doing things right• Efficient

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Decision making - defined

• “describes a process by which a course of action is selected as the way to deal with a specific problem”

Source: Management by Stoner and Wankel

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As a decision leader

• What are the decisions I need to make?

• What data do I need to make those decisions?

• How are my decisions connected to other people’s decisions?

• What new models are required to make better decisions?

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Process of decision making

Define Problem

Identify Alternatives

Evaluate Alternatives

Uncertainty

RiskCertainty

Select

Implement

Feedback and control

#1

#2

#3

#4

#5

#6

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Types of decisions

Decision Problem Procedures ExamplesProgrammed Repetitive,

routineRules, standard operating procedure (SOP), policies

Processing payroll, preparing patient for surgery

Non-programmed Complex, novel Create problem solving

Introducing a new product or service, reacting to a regional disease epidemic

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Elements of a business decision

• Data known about “customer” and situation

• Decision to be made

• Behavioral reaction

• Impact of those behaviors

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For example

Patient

• Test results which point to diagnosis

• The treatment plan

• Patient compliance

• If compliant = “well”

• If non-compliant = readmit, “dinged” for their response

Employee

• Late for work X# times

• Write up

• Arrival times over next days/weeks

• If on time, remove “threat”

• If not, take the next step

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Weighted Decision Making

Should I replace my old car with a new one?Pros Score Cons ScoreBetter comfort 3 Cost outlay 5Lower fuel costs 3 Higher insurance 3Lower service costs 4 Time and hassle to choose &

buy2

Better family use 3 Disposal of old car 2Better reliability 5 Big decisions like this scare

me4

It’ll be a load off my mind 2

Total 6 pros 20 Total 5 cons 16

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Culture defined . . .

• Culture in its broadest sense is cultivated behavior; that is the totality of a person's learned, accumulated experience which is socially transmitted, or more briefly, behavior through social learning.

• A culture is a way of life of a group of people--the behaviors, beliefs, values, and symbols that they accept, generally without thinking about them, and that are passed along by communication and imitation from one generation to the next.

Source: https://www.tamu.edu/faculty/choudhury/culture.html

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Culture – 6 components

• Built on the vision – mission of the practice

• Built on the values

• Built on the “practices”

• Built on the people

• Built on the language used

• Built on the placeSource: http://blogs.hbr.org/2013/05/six-components-of-culture/

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Changing culture occurs first

AT THE TOP

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Change vs. transition

• Change - situational• Move to new location• Reorganization of the roles• Revision of benefit

• Transition – psychological• Phases one goes through in coming to terms

with the details of a new situation that the change brings about

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Basics of Lean

• Definition

“…Practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful and thus a target for elimination. In a more basic term, more value with less work.”Source: Wikipedia, 2010

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What is Six Sigma

• An improvement model designed to reduce the variability that exists within any given process• Eliminate errors and mistakes

• Six Sigma is a metric measured in unacceptable events per million

• 6 σ = 3.4 per million• 5 σ = 233 per million• 4 σ = 6,210 per million• 3 σ = 66,810 per million

• Sigma measures variation rather than averages

• Six Sigma is counter-intuitive in that the process is within control up to a variation of six standard deviations

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Principles of Lean

• Value – • as defined by the customer & delivered by the producer

• Value Stream – • identify set of actions required to bring the product or service

to the customer

• Flow – • smooth movement

• Pull – • the downstream customer triggers the need

• Perfection – • no defects

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DOWNTIME ExamplesWaste Observation

Defects Medication error. Wrong patient. Wrong procedure. Missing information. Redraws. Poor clinical outcomes

Overproduction Drawing too many samples. Extra tests.

Waiting Waiting for doctor, procedure, room, test results, lab results

Not using employees abilities

No empowerment. “Check your brains at the door” mentality. Unenlightened management. Poor hiring practices. Low or no investment in training. High turnover

Transportation Moving samples, specimens, patients for testing, patients for treatment or equipment

Inventory Pharmacy stock. Lab supplies. Samples. Specimens waiting analysis. Paperwork in process.

Motion Searching for patients, medications, or charts. Gathering tools. Gathering supplies. Handling paperwork.

Excess processing

Multiple testing. Multiple bed moves. Excessive paperwork. Unnecessary procedures.Source: “A pathway for patients”, Mark L. Dean

QP, February 2014

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Anecdote vs. antidote

• “Fortunately there is a powerful antidote to muda: Lean Thinking

• “Lean thinking is lean because it provides a way to do more and more and more with less and less – less human effort, less equipment, less time, and less space – while coming closer and closer to providing customers with exactly what they want”

Lean Thinking: Banish waste and create wealth in your corporation – Womack and Jones

“An Anecdote is a funny little story; an antidote counteracts poison”http://www.vocabulary.com/articles/chooseyourwords/anecdote-antidote/

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Deployment Platforms

Define – Measure – Analyze – Improve – Control

Plan – Do – Study – Act

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DMAIC

DMAIC

Document, communicate and check for replication and

sustainability

Long-term implementatio

n

Verify results

Develop action plans, implement

improvements

Develop solutions

Determine cause

Define condition

Identify problems Define

Analyze

Measure

Improve

Control

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Define the Process

Determine to whom the process is focused

• Patients• Payers• Staff

Who are the customers?

• Quality• Speed• Value

List the customers’ requirements

• Map the first and last steps first

Define the process boundaries

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Measure - Collect the Data

Know ahead of time what data you need vs. what data you can collect

• This is particularly prevalent with cycle time studies

For primary research, create a design for the experiment

• IT support• PMS support

Look for existing studies

• Includes the ‘what’ and ‘where’ and ‘who’

Identify specialists within (and outside of) your organization that may be necessary to assist you

Have a written data collection plan

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Analyze the Data

Separate useful from fun-to-know data

• Someone within the organization should be able to explain, in understandable language, the reason for every significant variation.

Use analytical tools and statistical methods to conduct the analysis

Look for variability and conduct root-cause analyses to understand the underlying conditions

The key is accountability

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Approaches to decision making

• Authoritative• Manager makes the decision• Time: to make 5 minutes; explain 30; gain acceptance

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• Group• Share ideas, agrees on the decision to implement• Time: to make 30 minutes; explain 0; gain acceptance

0

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Improve the Process

Use the information from the VSM and analysis phase to recommend process improvements

Develop future state maps with the improvements embedded and compare to current state maps

Include contingencies associated to risk analysis

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Control the Process

Determine when to review

Identify what should be reviewed

Consider doing it again

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PDS(C)A – a “lean” deployment platform

• Plan

• Do

• Study (Check)

• Act

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Plan

• Purpose of the test?

• What change idea are you trying?

• Indicators of success?

• How will data be collected?

• How many subjects tested?

• What is the time frame?

• What do we hypothesize will happen?

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Do

• Conduct the test

• Document any problems with unintended consequences

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Study (Check)

• Analyze the data

• Study the results

• Compare the data to your predictions

• Summarize and reflect on what was learned

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Act

• Refine the change, based on lessons learned from the test

• Prepare a Plan for the next PDSA cycle

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The ideal output

• Is it defect free

• Can be delivered one request at a time

• Can be supplied on demand in the version requested

• Can be delivered immediately

• Can be produced without wasting any materials, labor, energy, or resources

• Can be produced in a work environment that is safe physically, emotionally and professionally for every employee

From: Decoding the DNA of the Toyota Production System, Steven Speer and H. Kent Bowen, HBR September 1999

Is this your daily outcome?

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What is a project? (Beginning & End)

Any temporary, organized effort that creates a unique product, service, process or plan

Projects bring together people from a wide range of jobs and provides them with the opportunity to collaborate in a unique way

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Project Management

• Application of specific knowledge, skills, tools, and techniques to project activities

• A discipline that balances• Time, cost, and quality• Expectations• Identified needs• Unidentified needs

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Project Life Cycle

• Sequential project phases identified to assist in accomplishment of the desired objectives• Phase – logically related activities

• Sequential or overlapping

• Tracked through Project log or Gantt chart

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Voice of the Customer

• Process used to obtain feedback/requirements from the customer to provide them with the best service quality possible

• Proactive

• Captured through• Interviews• Surveys• Focus groups• Observations• Complaint logs

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Meet customer expectations

• Service MUST meet customer expectation requirements

• Must understand the customer expectation

V = R - EV = Value (quality)R = ResultsE - Expectations

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Business Case

• Market demand

• Organizational need

• Customer request

• Technology advance

• Legal requirements

• Ecological need

• Social need

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Define

• The problem or what are we improving• Scope• Business case• The customer• The sponsor• Current state

• Customer value• What matters• What priorities

• The vision • Future state• Strategy

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Project selectionStrategic

Plan3 – 5 years

CurrentI year

objectives

VoicesRegulations

Market

Voice of Business

Voice of Customer

Voice of Process

Performing financialanalysis identifies gapsin performance

Identifying gaps in meeting customer needs(critical expectations)

Process analysis linksthe business byprocess v. function and gives perspective

LIST

OF

PROJECTS

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VA vs. BVA vs. NVA

• Value Add• Any step or activity that transforms the form,

fit, or function of the product or service for which the “customer” is willing to pay

• Business value add• Necessary to support but not directly related

to the customer

• Non-value Add• Waste in the process

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Define - deliverables

• Completed project charter

• Document – customers affected by the project either current or future

• High level process map

• Completed project plan

• Consensus of team related to the outcomes expected from the project (hypotheses)

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JUMPING TO CONCLUSIONS

DUCK TAPEBAND-AID FIXES

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Measure

• Develop a thorough understanding of the current state and collect reliable data on the process itself – time, quality and cost that identify the problem current state

• Need benchmark – baseline (current state)

• Need hypothesis (targeted future state)

Measure – key steps

• Create or validate the current state of the VALUE stream from the initial process map

• Identify outputs, inputs, and process variables relevant to the project

• Create a data collection plan

• Create a data analysis plan

• Use measurement system analysis

• Collect data – establish baseline

• Update value stream map with the data

• Perform process capability evaluation

• Make readily identifiable improvements

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Data Collection

• Continuous• Variable measured on a continuum

• Discrete• Count• Binary – has only two values, e.g., yes/no• Attribute – Nominal – simple names or labels, no

reason to arrange in any order• Attribute – Ordinal – names or labels have some

inherent value, e.g., excellent, very good, good, fair, poor

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X and Y

• X = process or input measures • Quality, speed, cost of information coming into

the process

• Y =output measures• How well customer needs were met

• GOAL – find the Xs that are leading indicators of the critical output the Ys

Metrics

• Informational• Average number of patients seen per month

• Actionable• Average number of patients seen per month per provider

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Sampling

• Data from one or more subsets to make decisions about the entire group

• Population – fixed group with definable boundaries, e.g., customers

• Process – sampling from a changing flow of items moving through the business, time factor

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Data Plan - steps

1. Decide what data to collect• How will data be used?• How will data be displayed?

2. Determine needed sample size

3. Identify source/location of data

4. Develop data collection forms

5. Decide who will collect data

6. Train data collectors

7. Do ground work for analysis

8. Execute the collection plan

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Process map with sub process identified

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PatientArrives

Pull Chart

Find Chart

Collect Payment

See Provider

Patient Calls

Chart Pulled

Collect Payment

See Provider

Check In

Check In

YesNO

With Provider

Lab or other area

to be filed

Nurses Station

Verify Insurance

TriageTriage Ancillary

Check OutCheck Out

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Process Mapping Symbols

Standardized symbols enable the map to clearly, visually display what happens in a given process. The most common symbols include:

However…Keep the overall number of different symbols in a map as limited as possible to prevent confusion

Avoid being hampered by nomenclature. Choose what works best for your institution.

= Processing step or task

= Decision point or checkpoint

= Queue or wait point

= Form or documentation

= Information sent to MIS

= Start or stop point

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Don’t need high tech approach

Process map tips

• Walk through forward and then backward

• Visit the Gemba – the place where the process occurs

• Use sticky notes, remember step one is draft

• Date the notes

• Clarify who has option to update the map

• Concentrate on the process, not the tools, metrics 57

What is Value Stream Mapping?

Value stream mapping starts as a paper and pencil tool that helps you to see and understand the flow of objects, patients, materials, supplies and information as a product or service makes its way through the value stream.

It differs from the process mapping in four ways:It gathers and displays a far broader range of information

than a typical process mapIt tends to be more specific than process mapsIt tends to be used at a broader level, i.e. from inventory

to accounting to clinicalIt tends to be used to identify where to focus future

projects, subprojects, and/or kaizen events58

VSM - examples

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Check out

Post

Provider

Triage

Payment – Denial

Check In

Clearinghouse

Scrubber

Coder Reviews

Provider Generates

EncounterForm

WAIT4 hours Instantly

5 minutes

30 days

Not

14 days

4 minutes

6 minutes

14minutes

13minutes

7minutes

44minutes

4minutes

3 Minutes

8Minutes

32minutes

47minutes

91Minutes

16 hours

4 hours

What is value added?

What is business value added?

What is non-value added?

Identify wastes by type:

• • • • •

Process Cycle Efficiency

• Value Add to total time

Patient in office 60 minutes, sees MA 5 minutes, sees provider 5 minutes

PCE = 10/60 = 16.7%

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Measure - deliverables

• Fully developed current state value stream map

• Reliable data on inputs (X) and outputs (Y) for analysis of defects, variation, process flow, and speed

• Baseline measures of process capability

• Refined definition of improvement goals

• Capable measurement system

• Revised project charter, if change warranted61

Analyze“Seek to understand”

• Pinpoint and verify causes affecting the key input (X) and output (Y) variables – finding the key (X)

• Understand – common picture• Cause & effect relationships• Optional solutions

• Prioritize – • Issues and opportunities• Plan improvements

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Analyze – key steps

• Conduct the value analysis – identify the value add and non-value add steps

• Calculate process cycle efficiency – compare to benchmarks, how much improvement needed

• Analyze process flow

• Analyze data collected

• Generate theories to identify and explain causes

• Refine the focus to root causes and cause and effect relationships

• Collect additional data

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Variation

• Common cause• Random changes in process yet stable and

predictable• “in control” (statistically)

• Special cause• Variations that are not always present in the process• Special causes that are not random, not predictable

as to when they appear or the overall impact of the variation

• “out of control”• Requires a look to determine what’s different

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Visit Times82 60 68 3761 73 61 5450 57 157 6752 67 82 5556 60 54 7035 32 125 7857 54 92 7728 37 80 6875 54 98 6885 127 82 52

20

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Which Measure to Choose?

• Average = 67• Average minus top and bottom 3 = 64.51

• Median = 61

• Mode = 54

• Range = 20 – 157

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Column Chart

1 2 3 4 5 6 7 8 9 10111213141516171819202122232425262728293031323334353637383940410

20

40

60

80

100

120

140

160

180

Visits

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Run/Control Chart

A - ne

w C E G I K M O Q S U

W -

new Y A C E G I K M

0

20

40

60

80

100

120

140

160

180

82

61

505256

35

57

75

28

85

6057

73

6067

32

54

37

68

127

61

157

82

54

92

125

80

98

82

54

37

67

55

707877

6868

52

20

Actual timeMedianUCLLCLTarget

Monitor and Set Control Limits3 Sigma above and below mean

10 above12 below45% in range

Takt Time

• Time available

• Services performed

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Eight hour day 48025 patients to be seen Minutes per patient 19.2 30 minute break -30Time Available 450No break 18.0 Six hour day 360Minutes per patient 14.4

Includes:Prep

In RoomDocumentation

Analyze – key steps

• Conduct the value analysis – identify the value add and non-value add steps

• Calculate process cycle efficiency – compare to benchmarks, how much improvement needed

• Analyze process flow

• Analyze data collected

• Generate theories to identify and explain causes

• Refine the focus to root causes and cause and effect relationships

• Collect additional data

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Where to get benchmarks

• Externally• Sources available• Ask• Research

• Internally• What is important today?• What was important yesterday?• What are your trends?

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What are your goals in any benchmarking project?

• Increase• Patient satisfaction• Efficiency• Revenue• Productivity

• Decrease• Cost of doing business• Overhead• Overall cost of care for each patient

• Optimize• As opposed to maximize = seeking quality outcomes

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Two key principles

1. If you don’t measure it, you can’t change it

• Description• Comparison• Context

2. If you don’t value it, you won’t change it

• Benefit

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Cause and Effect

• Purpose• For teams – to push beyond symptoms to

uncover potential root causes• To provide structure to cause identification efforts• To obtain a balanced list of ideas and to insure

major possible causes are not missed

• Use• Cause identification• Cause prevention – surfaces during brainstorming

and may help address future problems

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Long Wait Time

for New Patient

s

Practice Process

Payers Patients

Patient late (early!)

Elderly

Patients

Unnecessary formsABN

Duplicate

HIPAASchedulingPhone

Triage

Insurance verification

Time of Visit

Pre-authorization

Example – Long Wait Time for New Patients

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CE Categories

• Manpower (personnel)

• Machines

• Materials

• Methods

• Measurements

• Mother nature (environment)

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Analyze - deliverables

• Documentation of potential causes considered

• Data charts and other analyses showing link between X and Y

• Identification of value-add and non-value add work

• Calculation of process cycle efficiency

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Improve – key steps

• Develop potential solutions

• Evaluate, select, and optimize best solutions

• Develop future state value stream map

• Develop and implement pilot solution

• Confirm attainment of project goals

• Develop and execute full-scale implementation plan

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Pilot Testing

• To identify practical problems and failures in a chosen solution so those can be addressed before full scale implementation

• Keys• Small scale• Evaluate the solution and the implementation• Step to make full scale implementation more

effective

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How to pilot

• Plan• What needs to be piloted• Where, who, when, how long

• Review design• Elements complete• All pieces and parts fit together• Identify possible failure points and vulnerability• Review plans

• Finalize design and implement• Do it

• Evaluate the test and verify• Statistical tools for evaluation• Celebrate success• Improve the design

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Pull system

• Set cap or maximum number of WIP, means predictable

• Then apply tools to improve

• Current PLT (process cycle time)

• Current PCE

• Target PCE

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Improve - deliverables

• For Quality Improvement (QI) project – tested, robust solutions that affect the causes of X that impact the critical Y

• For lean project – document the proven best practice or solution applied

• An improved process – stable, predictable AND meets customer expectations!

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Control

• Complete project work and train, support to the operational team the procedures identified to maintain the gain

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Control – key steps

• Develop supporting steps of documentation

• Launch company wide implementation

• Secure performance gains

• Monitor implementation

• Develop the process control plans and pass on to those operationally responsible

• Audit the results

• Finalize the project

• Review the process, memorialize for others and the next improvement project

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Control - deliverables

• Documented plans to transition to the process owner for implementation

• All data metrics

• Operationalize, train, communicate, and provide documents from process to support improvements

• A system of monitoring and metrics necessary to insure successful implementation

• Completed project documentation – lessons learned and recommendations to others

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Your Process Improvement Organization Chart

Typical Structure

The Process

Improvement Way

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SummaryAs Managers/Leaders

• Structure• Decision making• Project and process management

• Metrics• Cycle times• Cost• Care plan compliance

• Transition to a successful future

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Contact Information

Owen J. Dahlodahl@owendahlconsulting.com832-260-4455

Check out my new blog:http://blog.owendahlconsulting.com