Osha Safety and Health Program Managment Guidelines

17th Annual
Society for Health Systems

Management Engineering Forum
February 12-13, 2005
Dallas, Texas
Value Innovation Partners, Ltd.

Patrick Lucansky
41966 N US Hwy. 45
Antioch, IL 60002
LeanSigma in the Office
001-847-395-7076
plucansky@vipgroup.us
www.vipgroup.us
All materials contained herein are the sole property of Value Innovation Partners, Ltd. and unauthorized
use is strictly prohibited without the expressed written consent of Value Innovation Partners, Ltd.
The Agenda
• What is LeanSigma
• Lean
• Six Sigma
• Lean Sigma
• Designing LeanSigma for the Office
• Strategy
• Methodology
• Deployment
• Case Studies
• Issues
• Methods
• Results
• Questions and Answers
© Copyright 2004 All rights reserved VIPGroup

Evolution of Lean and Six Sigma
TQC
TQM
Employee Involvement World
Class
Waste Elimination Mfg
JIT
JIT
Supplier Development Lean
Enter- Lean
prise
Sigma
Business Process Reengineering

BPM
BPM
Cost Management (ABC)
Lean
Lean
Six Sigma 66 σ
σ
1970’s 1980’s 1990’s 2000’s
Mid 1800’s: Interchangeable parts
Late 1800’s: Pork disassembly lines – Chicago
1913: Moving assembly line at Ford
Pre-WW2: Toyoda invents “Jidoka” on looms
Post-WW2: Toyota Develops a Production System For High-Variety, Low Volume.
1980’s: MIT Study of Toyota
1996: James Womack Documents General Applications of TPS and For Any Organization and Calls It “Lean Thinking”.

What is Lean Enterprise
A Group of individuals, functions, and sometimes legally
separate but operationally synchronized organizations. The
value stream defines the Lean Enterprise. The objectives of
the Lean Enterprise are to:
• correctly identify and specify “value to the ultimate
customer / consumer” in all its products and services
• analyze and focus the value stream so that it does
everything form product development and production to
sales and service in a way that activities that do not
create value are removed and actions that do create value
proceed in a continuous flow as pulled by the customer.
Lean
Lean is
is focused
focused on
on reducing
reducing waste
waste through
through increasing
increasing speed,
speed,
reducing
reducing process
process inventory
inventory and
and decreasing
decreasing process
process cycle
cycle times
times

Six Sigma - The Short Story
• Pioneered by Motorola in 1980s
• Discovered that products with high first-pass yield (the amount
of product that made it through defect-free) seldom failed in use
• Won Baldrige Award in 1988
• Some key players in Six Sigma history
• Mikel Harry - one of the original Motorola architects
who later founded Six Sigma Academy
• Jack Welch, CEO General Electric
• Larry Bossidy, CEO Allied Signal
What is Six Sigma (6σ)?
• Philosophy: Promote excellence in all business processes -- improve
productivity, profits, and customer satisfaction
• Methodology: A 5-phase process for continuous improving quality by
reducing inherent variability
• Statistic: Numerically describes amount of variation in a process
• Benchmark: Normalized measure to compare performance of many
processes and process types
• Goal: 6 Sigma performance -- a process which produces less than 3.4
defects per million opportunities (DPMO).
• A tool reduce or eliminate variation
What is Six Sigma…the Theory
A 3σ process because 3
standard deviations fit
between target and spec
Before
Target Customer
3σ Specification
1σ
6.6% Defects
2σ
3σ
Reduced
Reduced Variation
Variation
Target
Customer
Specification
After 1σ
2σ No Defects!
6σ 3σ
4σ
5σ
6σ

What is Lean Sigma
Process Process Process Process
Step 1 Step 2 Step 3 Step 4
Lean =
Balanced Flows
Through Waste
Elimination
6s =
Reduced
Variation

Lean Sigma “DMAIC” Approach
Lean Sigma Balance / Time / $Inventory
Typical Process
Capability / Variability / $COPQ
& Process
Capability
Time
Improvement
Lean/ Supply Chain Six Sigma
Phases Deliverables
Voice Of the Customer Select projects
Value Stream Mapping within the
D efine Product Family Matrix
process
Muda Matrix
Cycle Time Measurement Quality Basics Understand
5S, Quick Hits, OTD, LT Minitab, Basic Graphical Analysis current state
M easure Sequence Of Events
Spaghetti Diagram
Z Calc, Capability metrics
Measurement Systems Analysis and potential
factors
Takt Time Determination Cause& Effect, FMEA
Mixed Model Line Balance Confirm Vital
A nalyze Vendor Managed Inventory
Statistical Hypothesis Testing
Few factors
I mprove Heijunka, Kanban, Pull
OMS, Visual Management
Design Of Experiments, Tolerance
Poka- Yoke
Optimize,
C ontrol Flexing, Daily Rate Planning SPC, Control Plan Implement
Sustain
Improving Balance… Improving Capabilities…

Enhances Process Capabilities Enhances Process Balance
Improved Process
Time
Balanced Steps Reduced Variation

Customer Focused Quality

What is difference between the two methods?
Lean Six Sigma

• Attacks waste through • Attacks variation through
smoothing flow and reducing statistical tools
cycle time and NVA” • Requires a higher level of
• Anyone in the organization education, thus may exclude
some
can participate
• Uses the DMAIC
• Does not require a format to methodology to make
make change happen change happen
• Investment in Lean is low to • Investment in Six Sigma is
moderate moderate to high
• Many resources and books • Books are limited in scope
available and tend to be technical
• Leadership can come from • Leadership is through a rigid
structure of green and black
anywhere within the belts with Masters and a
organization Sensei
Note:
Note: none
none of
of these
these differences
differences are
are obstacles
obstacles toto success,
success, just
just areas
areas
to
to be
be addressed
addressed prior
prior to
to implementation
implementation to
to ensure
ensure aa smooth
smooth flow.
flow.
9

Lean Sigma Exceptions?
Lean Sigma Does NOT apply to functions on the Exception List
Exception List -- Lean
Lean Sigma Applies È Sigma Does Not Apply
in these Functions È
Sales
Manufacturing
Engineering
Technical Support
Finance
Administration
Emergency Rooms
Research
Human Resources
Food Services, …

Is it Lean, Six Sigma or Lean Sigma?
QUESTIONS Six Sigma -- 6σ:
Six Sigma, a vehicle for
• Which should we do first? strategic change…an
organizational approach
• What are the prerequisites of each? to performance
excellence. Six Sigma
creates transformational
• Can I do them concurrently? change throughout the
organization, processes,
• Which will deliver the biggest bang for culture and customers.
Six Sigma creates
the buck? transactional change by
applying tools and
What tool(s) should we focus our efforts on? methodologies targeted
at reducing variation
Tools:
Tools and drastically
6 Sigma 6σ Design for Manufacturability improving processes.
tactics Design for Six Sigma, 6ơ Tolerancing
Product Scorecard Six Sigma (6σ):
5σ Tools:
Tools: 99.99966%
Process characterization (mapping, MSA, etc…) accuracy – 3.4
4σ Process optimization (DOE, etc…) defects per million
Tools:
Lean Seven basic tools (paretos, fishbones, etc…)
3σ
tactics Tools:
Common sense
1-2σ Tribal knowledge
Where is your organization? What kind of tools should you be using?

Potential Benefits
Lean Sigma Potential Results
• Productivity +20% per year

• Lead Time Reduced to a Few Days (75%)
• Manufacturing Space Cut in Half
• Reduce Overhead and Quality Cost 20% /yr
• Inventory Turns +25% Per Year
• Little or No Capital Investment
• Cycle times at 3 to 4 times “one piece touch time”

Where are Businesses Today?
Most business processes are around 3σ
)
•• 99%
99% results
results in:
rs
in:
ie
l
ai
rr
lls
M
•• 20,000
20,000 lost
lost articles
articles of
ca
t C IRS
ca
of
ss
ll
la
of
(a
1s m
mail
mail per
per hour
hour
)
of o
%
rs
r
al
21
ie
iv
er ce
rr
•• 5,000
5,000 incorrect
incorrect
rr
s
ca
i
er
liv v
ta
d
y
sw
ll
de a
DPMO surgical
surgical operations
gh
operations
(a
l
an
ht a
er gg g
fli
e
ig eg
tr led ce lls
sf ba sin
ag
per
per week
S
week
l
o i
1000000
im
IR
ire nd r b
s
rn t
ve ec
ll nt
nt
O orr
is ro ra
•• 200,000
200,000 wrong
O
wrong
M y u
p
s
C
100000
Pa ta
prescription
prescription drugs
es
an drugs
R
h a
10000 each
each year
year
W
•• Even
Even atat 99.9%
99.9% quality
quality
te
1000
ra
(=
(= 4.6
4.6 sigma)
sigma)
y
lit
ta
100
•• 20,000
20,000 wrong
wrong drug
fa
drug
ne
10 ) irli prescriptions
prescriptions per per
pm ic a
year
year
3p t
.4 es
1
(0 om
•• Two
Two short
short or
or long
long
D
0 landings
landings at at O’Hare
O’Hare
0 1 2 3 4 5 6 7
airport
airport each
each day
day
Process Sigma

Healthcare Facts
• The IOM report noted at least 99,000 deaths
are caused by errors each year. In reality the
figure is probably higher.
• 2002 estimated cost of care $1.76 trillion.
• Shortage in the available, trained staff.
• Regulations and compliance is becoming
more stringent.
• Administrative costs account for as much as
40% of the Total cost of Healthcare.
• $483 Billion was spent by the Federal
Government in 2004 on Medicare and
Medicaid.
The Agenda
• Lean
• Six Sigma
• Lean Sigma
• Strategy
• Methodology
• Deployment
• Case Studies
• Issues
• Methods
• Results

Principles of a LeanSigma Office
• Positive, clear communications.
• Ensure “no-blame” culture.
• Work through cross functional teams.
• Staff involvement at every stage.
• Process maps on display for comments.
• Remove non-value added steps, hand-off`s, rework loops.
• Agree design principles with All.
• Fix the root cause not the symptom.
• Ensure solution supports departmental interfaces.
• Incorporate Continuous Improvement

LeanSigma is Achieved Through:
Simplifying……………………...Processes
Integrating…………....…Across Organizations
Automating………. Utilizing IT functionality and

connectivity

WASTE or “MUDA”
. . . Any resource-consuming activity
that delivers NO value to the customer

Lean Sigma Means…
Identifying and Eliminating the 7 Wastes
PEOPLE
Motion
Processing Waiting
TYPES
OF
Defects
QU
WASTE Inventory
A
LIT
Making Too Moving

Y
Much Things
T ITY
UA N
Q
TAIICHI OHNO, ARCHITECT OF THE TOYOTA PRODUCTION SYSTEM

Waste In The Office
THE PROCESS
Handle SORT
COUNT Record
Multiple forms INSPECT
INPUT OUTPUT
Track
HIDE . . .
. . . FIND
Retrieve
Excess Paperwork File
Movement Damage
.. .. .. NONE
NONE OF
OF THESE
THESE ADD
ADD VALUE
VALUE !!
The analysis and redesign
requires a clear understanding of:
Value Added, Non Value Added, and Sustaining Activities
VA The value related attribute of an activity
can only be assessed in the context of
the process, never in isolation
NVA
–Considering other activities upstream and downstream Non Value Added activities are those that are not
necessary to deliver the customer’s requirements
Value Added activities are those absolutely and can be eliminated in the re-design
necessary to deliver the customer’s requirements –These are colored red on the flowcharts
–These are colored green on the flowcharts
–They are later re-designed into the new process
VA SNVA NVA
Sustaining activities are those that are not

necessary to deliver the customer’s
requirements but are either:
Sustaining Activities
–absolutely necessary to sustain the business or:
–cannot be eliminated due to known Sustaining activities are targeted for gradual
severe constraints (often external)
elimination during the Continuous
–These are colored blue on the flowcharts
Improvement process
–They are later re-designed into the new process

How to Determine VA / NVA / SNVA?
Activity
Activity
Yes Necessary No
to Produce
Output?
Adds Value
to Customer?
No
Yes Contributes
Yes to Business
Effectiveness?
No
VA SNVA NVA
Customer Non-Value
Value Added Sustaining
Added
Payroll Review & Approval
Agree Specifications Testing
Development Activity Rework
Manufacturing Filing
Back-up Data Base Copying
Changeovers Reconciliation
Regulatory

Value Added Assessment of a RN’s Time
Non Value Added Time Patient Value Added Time
• Rework • Providing Care
• Correcting • Listening
• Assisting
• Clarifying
• Searching
33%
• Waiting
• Queuing
43% Adapted from John W. Kenagy, 2002
• Enforcing Rules
• Duplication of Effort
24%
• VA) = Value Added Activities Administrative Time
• (NVA) = Non-Value Added Activities
• Compliance & Quality requirements
• (SNVA) Sustaining Non-Value Added Activities
The
Theopportunity
opportunityisisto
toeliminate
eliminatethe
theNVA,
NVA,reduce
reducethe
theeffect
effectof
ofthe
theSNVA,
SNVA,optimize
optimizethetheVAVA
time
timeproviding
providingpatients
patientswith
withmore
morequality
qualitytime
timefor
forcare.
care.Healthcare
Healthcarefacilities
facilitiesfurther
further
benefit
benefitfrom
fromthe
theincrease
increaseininpatient
patientsafety,
safety,patients/nursing,
patients/nursing,and
andcost
costreduction.
reduction.

Approaches to Process Excellence
TRADITIONAL APPROACH
Process Excellence Approach
Focus on Value Added
Focus on the 89% Resources through . . .
Non-Value Added
Resources Through . . . 11% • Time Study
• Work Study
• Total Quality Control
72% • Outsourcing
• Total Waste Elimination 17% • Utilization
• Automation
• Total Staff Involvement
• Staff Reductions
• Enforced Problem Solving
Accept Imposed
• Process Focus (Value Stream) Quality Requirements
• Information Technology as an enabler Challenge is to Reduce the Need
Source VIPGroup database, 2004
for Imposed Quality Requirements
Most
Mostorganizations
organizationsstruggle
strugglewith
withcomplex
complexdysfunctional
dysfunctionalsystems,
systems,which
whichhave
haveaatop-
top-
down focus and often demonstrate a perceived value for profits over the patient care.
down focus and often demonstrate a perceived value for profits over the patient care.

Lead Time Analysis ... Office Processes
NON-VALUE ADD
- Recording
- Sorting VALUE ADD

- Counting
25% - Purpose
- Filing
- Retrieving
- Corrections
- Reconciliation
75%
- Copying
- Tracking
- Etc
- Stocking/restocking
$
TYPICALLY . . . 75% PLUS OF LEAD TIMES ARE BIN
NON-VALUE ADDED

Non-Value Added Activities in Healthcare
A side by side comparison to Manufacturing
Healthcare Manufacturing
• Waiting • Queuing
• Patient traveling around • Moving Materials around
• Terrible outcomes • Product defects
• Unnecessary procedures • Over Production
• Too many patients waiting • Too much inventory
• Empty beds • Excess Capacity
• Hunting for supplies, staff • Too much motion
• Process inefficiencies • Process inefficiencies
According
AccordingtotoTaiichi
TaiichiOhno
Ohno(Architect
(Architectof
ofthe
theTPS)
TPS)there
thereare
are77wastes
wasteswhich
whichmanifests
manifestsin in
three
threeformats,
formats,people,
people,quality
qualityand
andquantity.
quantity.Clearly,
Clearly,people
peoplearearenot
notwasteful,
wasteful,ititisiswhat
whatwewe
asked th
askedthem
themto
todo
dothat
thatisisnon-value
non-valueadded.
added.ItItisissaid
saidthere
thereisisan
an88thwaste
waste……lost
lostcreativity
creativity
Basically, we’ve taken a simple process . . .
Management
Employees
SEND to
Inbound RECEIVE PROCESS Next Process Customer
Data Step

. . . & Complicated it!
Inbound
data
Sales & Design & Customer

Customer Finance
Marketing Develop Purchasing Operations Quality Delivery
Service & Admin
FUNCTIONAL MEASURES
• Finance Related DEPARTMENTAL BARRIERS

• Efficiencies
• Bureaucracy
• Utilization SYSTEMS BARRIERS
• Delays
• Variances
• Island of Autonomy
• Aligned to Functions

Important Concepts About Processes….
Lean Sigma uses the VSM (Value Stream Map)
format of process flowcharts.
Supplier
Customer Customer
xS1
A B C D
xS2 xA1 xB1 xC1 xD1
xA2 xB2 xC2 xD2
X1 X2 + X3… Y
SS == Suppliers
Suppliers •• What
What is
is your
your Y? Y?
II == Inputs
Inputs
SIPOC = P
O
P == Processes
Processes
O == Outputs
Outputs
••
••
What
What are
How
are the
How does
the possible
possible x’s?
does itit flow?
flow?
x’s?
CC == Customers
Customers

VSM the Process “E2E”
…Depicting the process as it is done today
Planning &
Scheduling
Orders
Customer
Material
Scrap Scrap
10% 4%
Return Rework= 25%

To
Vendor Rework=13%
Retest= 8% Rework No
Rework
Retest
No No No
Receive Yes Manufacturing Yes Yes Pack
Inspect Accept Raw Accept Test Accept FG
Material Produce & Ship
Inventory Inventory
C/T= 45 min DOS C/T= 45 sec C/T= 30 sec DOS

1 Shift C/T= 10 min
R= 77 C/O= 2 Hrs C/O= 30 min FG= 55
5 Inspectors 1 Shift
3 Shifts 3 Shifts
95 receipts/day 5 Operators
150 Operators 15 Operators
15% Reject 95 orders/day
3% Reject 8% Reject
WIP= 45 DOS WIP=10 DOS
4 Days 8 Days 45 Days 5 Days 3 Days 1 Day
4 Days 12 Days 57Days 62 Days 65 Days 66 Days
8 Handoffs
1 Value Add 7 Steps Critical Path
6 Non-Value Add 17 Steps if all Loops Executed
4 Rework/Retest Loops
1 Sustaining Non-Value Add 66 Days Critical Path

QALITY IS OUR x\
x\
BUSYNESS

Everyone must have…
…ownership of quality
Towards Lean ‘Inspection’ Type of ‘inspection’
End
Successive
Self
Source

The Quality Dilemma
You are now inspectors of the office process of creating invoices.
Count the number of basketball passes the team in the white shirts
make. Each pass is a poor quality invoice.
How
Howmany
many
bad
badinvoices
invoices
were
werecaught?
caught?
Video
Did
Didyou
you
see
seethe
the
Defect?
Defect? copyright (© 2003, Daniel J. Simons, President, VisCog Productions, Inc.)

The Agenda
• Lean
• Six Sigma
• Lean Sigma
• Strategy
• Methodology
• Deployment
• Case Studies
• Issues
• Methods
• Results

Strategy Deployment requires a disciplined
approach and a robust management system
• Structured Management
• Communications Program
• Voice of the Customer (VOC)
• Lean System for Managing
• Deployment Strategy
Office waste is
• Culture Change harder to recognize!
• Reward and Recognition

• Metrics

The Agenda
• Lean
• Six Sigma
• Lean Sigma
• Strategy
• Methodology
• Deployment
• Case Studies
• Issues
• Methods
• Results

Use a disciplined methodology to
achieve consistency and sustainability
A clear, structured, step by step process
Obtain
You Regulatory
Approval
Are if required
Here
Define top Define Evaluate

Detailed Identify Design Develop Obtain
level Lean Benefits/
process wasteful New Implement Management Implement
process Sigma Gap
map(s) activities Process approach approval
road map Principles Analysis
Quantitative • External/regulatory requirements

& Voice of the
• Internal requirements - global
Qualitative Customer
analysis • Internal requirements - local
• Future requirements

Communication Programs are a key
ingredient to any change process
• Distribute communication through a variety of
media and communications channels Communicate !
• Publications Communicate !
• Newsletters, magazines
Communicate !
• Memos, bulletins, handbooks, manuals Communicate !
• Formal presentations
• Meetings, conferences
• Training
• Video, film, audio, computer
• In-person informal socializing
• Email
• Voice Mail
• One-on-one meetings
• Town Hall meetings

Voice of Customer is a necessary first step
in DMAIC along with Value Stream Mapping
Quality Function Deployment
• What do they
Define need?
• When do they
need it?
Measure • How do you
know if they
received it?
• What will they
Analyze want?
• What do they
want it to do?
Improve
Control
Value Stream Map

The Agenda
• Lean
• Six Sigma
• Lean Sigma
• Strategy
• Methodology
• Deployment
• Case Studies
• Issues
• Methods
• Results

Possible Approaches to Deployment
Autonomy Process Focus Mandate

Business independence Value stream process Corporate edict,
and self-deployment map, data driven deployment focus
Pros: Local owners, some methodology selection Pros: Quick to the bottom
zealots, low stress Pros: Customer focused, line, full participation
Cons: No focus, minimal consistent across the Cons: No real ownership or
bottom line impact. No business, can be applied sustainability. Many
common language or anywhere, has bottom line “weak” projects and
talent pool. Wasted impact, relies upon lean implementations. Used for
efforts, re-inventing of and proper six sigma a ”ticket punch” not for its
the wheel. Incorrect Con: A bit more bureaucratic power.
applications. for lean and upfront
homework before projects
Deployment Strategy must be easy to
follow, consistent and repeatable
Sustainable Benefits
•Pick Pilot & Implement Structured approach to Lean performance . .
minimizing the time to Realize Sustainable Benefits
•Stabilize Process
Performance 4
•Rollout to Other Areas Continuous
3 Improvement
•Measure Results Stabilization
•Adjust Process As 2
Benefit
1 Implementation
Needed / Determined By
Mobilization
Time
Metrics DRAMATIC
SHORT TERM
GAINS
CONTINUOUS
LONG TERM
GAINS
AAstructured
structuredprocess
processprovides
providesyour
yourteam(s)
team(s)with
withformal
formaltraining
trainingalong
alongwith
with
responsibility
responsibilityand
andownership,
ownership,thereby
therebyensuring
ensuringprogram
programsuccess
successandandcontinuation.
continuation.

Critical Success Factors
• Voice of Customer
• Compliance
• Measures
• Senior Management Commitment
• Middle Management
• Skill Matrix
• Culture Change

LeanSigma Performance Measurements
. . . Apply to all the Supply Chain & Business Processes
PERFORMANCE MEASUREMENTS
Quality
(No. of Defects) Cost Lead Time Quality
100%
0%
INPUT OUTPUT
100%
100%
VA
NVA
Customer
Service Flexibility Effectiveness Customer
(On-time Service
Delivery)
••What
Whatisisthe
theright thingto
rightthing tomeasure?
measure?
••Set
Set the Target Goals to strivefor
the Target Goals to strive for
••Make measures visible.
Make measures visible.

Senior Management and Team Structure
• Give Strategic Direction
• Senior Management efforts across •
•
Agree Recommendations
Resolve Issues
• Remove obstacles
the Company including: • Support & coach
Steering Team
• Communication Strategy
• Reward and Recognition systems • Cross-functional ‘users’
• Full Time Team
• Make Recommendations
• Goal Alignment
• Project over-site management
• Prioritization • GiveQA/QC/Mfg Expertise
Tactical Direction
• Agree Recommendations
• Process Alignment •
•
Resolve Issues
Support & coach Pilot Project Team
• Implement Recommendations
• Collaborative environment • Cross-functional ‘experts’
• Scorecard/Dashboard • Milestone Delivery
• Roles & Responsibilities
Ad hoc
Keep all informed through a “LeanSigma Project” Folder on a shared drive Project Groups

Experts Role in Facilitating LeanSigma
Training & Facilitation Driving Force
Lean & Supply Chain Tools Sustainability
Expe
LeanSigma Expertise Internal Experts
Project Management Implementation Ownership
rts
Ownership
any
Culture
mp
Co
Transfer
Need Auditing
Point
Desire Monitoring
Guidance
Time

The Agenda
• Lean
• Six Sigma
• Lean Sigma
• Strategy
• Methodology
• Deployment
• Case Studies
• Issues
• Methods
• Results

Lean Healthcare in Action
$20 Million Emergency Room Management Group
Pareto Analysis of Injuries Treated Key
KeyBenefits
Benefits
100% •Laborand
•Labor andOver-time
Over-time
reduced 5%
reduced 5%
80%
80% of all injuries
Injury Type
•Maintainedcompliance
•Maintained compliance
60% were knee, elbow, and quality
and quality
40% head and foot •$250kannual
•$250k annualoperating
operating
expense reduction
expense reduction
20%
0%
Knee Elbow Head Foot Back Pelvic Internal Face
Series1 28% 49% 68% 84% 91% 95% 98% 100%
Percent
The demand analysis allow the treatment centers to reset stocking levels of
treatment carts in line with the demand. Local activities (skate boarding contests)
accounted for the increase number of knee, elbow and head trauma treated. Drs and
Nurses spent less time hunting for the right materials and implements.

Lean Healthcare through…
…“Value Stream Mapping”
$350 Million Hospital Group
• The issue : could only get 2 knee operations per day accomplished.
• Perceived constraints: Drs blamed the nursing staff, Nursing staff blamed Administration and
Administration blamed the Drs. and Nurses.
• Actual constraint found through VSM: Sterilizer could only process 2 cycles per day.
Current State Map Key

KeyBenefits
Benefits
•89%of
•89% ofprocess
processsteps
stepswere
wereNVA
NVAandandremoved
removedreducing
reducing
Remittance
Advice
Claims Employer
Flow of Claims
the process time by 65%.

Document
Information Payme
nt
& Fee Of
Summary
Policy
the process time by 65%.

Holder
Type of
Payment Flow of Money Claims
& Fee
Paymen
PPO Insurance t
•Newprocess
processfreed
freedupupthe
thesterilizer
sterilizerthereby
therebyallowing
allowingfor
Carrier
Hospital
Care Billing Patient

Preferred
Provider
Organization
“A”
Patient
Payment
•New for
...
an additional 2-4 surgeries per day to be done.

Billing
Provider Process at
Info Explanation
“A” Hospital Of
an additional 2-4 surgeries per day to be done.

Benefits
...
Indicates
Several Inside
3rd Party Insurance Policy
Co-pay
Providers Deductible Billing Carrier Owner
Balance Due
Care Or Direct Bill
Service “Z”
•Currentsterilizer
sterilizerwas
wasnotnotcapable
capableof ofmore
morethan
than33cycles
Provider
“Z”
Patient
Patient
Payment
•Current cycles
per
per day. However, a new unit would allow for up to10
day. However, a new unit would allow for up to
Billing
Info.
Outside Care
10
Provider
Remittance
“A” Advice
...
cycles/day. The Hospital purchased a new unit and was

Indicates
several outside
Claims
providers
Payment
cycles/day. The Hospital purchased a new unit and was

Co-pay
Deductible
Outside Care Balance Due
Or Direct Bill
Provider
able
ableto
toperform
perform4-8 4-8more
moresurgeries
surgeriesperperday.
day.The
Thenew
newunit
“Z”
unit
was paid for within 3 months.
was paid for within 3 months.
Sterilization Process
•Costper
•Cost perprocedure
procedurewas wasreduced
reduced8%. 8%.

Lean Procurement Utilizing LeanSigma
$1.2 B Medical Device Operation
(a division of J & J)
91 Supplier performance improved to better than
98% while reducing their inventory hold by 50%
31
SNVA Defect:
Process and tolerance variability
50
DMAIC Project:
Lean out the Supply Network, reduce
60 27 Supplier parts variability and install a
NVA SNVA pull replenishment model
$34M
17
NVA
5 SNVA 21 $31M
11
SNVA 6 VA 6 VA 10
2
RMS PFGS Handoffs Raw Material Rework
Steps Steps Inventory Loops
Procurement lead-time was reduced from 4-5 weeks down to 1 day

Lean Procurement Model for Success
Rate Based
Supplier Scheduled
• focus on small batch 1000 5000 10000 • High flexibility to
and short LT Item a match demand
Item b
• plan using Kanban Item c
board FG
PKB PKB Stores
Customer
Scheduling Wheels PKB
Raw Raw Mfg PKB

Supplier 2 Supplier 1 Plants Distribution
MKB
MKB Planned Raw MKB MKB
Stock Store Finished
Goods
KANBAN CONTROL BOARD
KANBAN CONTROL BOARD
LESS URGENT URGENT
$$$
Item A
MTO
Supplier Visible BUILD A STRONG,
Item B Buyer Planner measures SUSTAINABLE
Planner • co-located STRUCTURE
Item C • replenishes • manages customer (Mfr) LeanSigma Principles

demand
to stock • sequence plan to simple
DOE DFMA SIPOC DMAIC SPC
Item D
Green Yellow Red capacity

model
$$$ • plans custom orders
• RBS, KB, MRP

LeanSigma Distribution Example
Japan Distribution Center for a $40B Medical Device Company
Defect: Process and compliance variability
DMAIC Project: Lean out the Distribution Center
Before After (4Q ‘ 04)
6F
Unpacking (Outer carton)
6F In
Out
4F 　　　　Return operation
Domestic
Decision for release Rework　
procured
4F 　　　　Return operation MJ
Obsolete Hold
Demo. Library
Decision for release Rework　 Storage
MJ MJ
Packing material
Storage Storage
MJ VJ Packing material
Operation NT
Storage Storage Storage
3F ＭＪ Stock MJ Stock Receiving Unpacking FG
3F ＭＪ Storage Staging Pick Label Pack and Ship
ＶＪ
ＭＪ Stock MJ Stock
Hart Valve operation
ＶＪ Packing INC
Hart Valve operation ＭＪ Storage
INC Packing material
Telemetry check 2F
2F Receiving Material & label Appearance check Decision for release Office Space for Kawasaki
Check Labeling Assembly Repair
storage QA check
Experiment Office
Repair Receiving registration
Experiment Office Hard product
Customer Service
Office
1F
1F MJ
MJ NT・VJ
Shipping
Shipping
Return product receive Import product receive Return product receive Import product receive
13 days lead time, 5 floors 2 days lead time, 3 floors, 18 FTEs

38 FTEs $1M savings, + office space

Example 2- Pharmacovigilance…
As-is Map
Client Location
Client
Logo
Error Loops, Process

Process QC Reg S&DS Total F/U's & Total Report structur
Steps Steps Steps Steps Steps Cosuspect Steps Type e
US-CT 47 11 29 0 87 17 104 15 day IND Parallel
Non US-CT 35 11 22 0 68 9 77 15 day IND Parallel
Non US-Spont 32 13 21 19 85 45 130 15 day NDA Parallel
US-Spont 79 12 21 19 131 35 166 Spont Sequentia
477

Example 2a – Pharmacovigilance…
As-is Flow Diagram
The
The current
current layout
layout leads
leads to
to aa case
case travelling
travelling about
about 1/2
1/2 mile
mile
from
from case
case receipt
receipt to
to submission
submission
Corp Regulatory
MD • 4560 cases times
MD Garden Level
.5 miles/case =
2780 miles
MD traveled/year.
Admin Temp
• The distances
MD MD result in
Data Mgt increases in:
Admin Temp • lead times
1st Floor • batching
Temp • process
Files Admin delays
MD FDA
2nd Floor

Example 2b – Pharmacovigilance…
Redesigned Process Map
Actual redesigned process

Client
Error Loops,
Process QC Reg S&DS Total F/U's & Total
Steps Steps Steps Steps Steps Cosuspect Steps NVA VA SNVA
All 17 0 0 0 17 0 17 0 8 9

Example 2c – Pharmacovigilance…
Redesigned Flow Diagram
Distance traveled reduced by 96% Serious Case Path Sequence
1. Receive case by fax and sent
to hub-bin
DSS 2. Initial Triage of case and
3 place in appropriate hub-bin
3. Assessment and data entry
4. Submission and printing of
required documents
5. File Pending awaiting further
action
6. File Archive awaiting further
4 action
DSC 5 7. Offsite storage
Faxes FU’s
2 Off-site
1Hub-Bin Approx. 100 ft/case 7 storage
6
Archive Files Archive Files

Lean Office in Action
$4.8 B Pharmaceutical/Biotech/Chemical Operation
Source:
Client Process Maps
includes rework loops • Case travel distance was
Number of process steps and hand-offs reduced by 96% from 1/2
mile to 100ft.
180 Before VA • All NVA steps were
160
3% removed (400+)
SNVA
NVA • Global compliance
140 19% improved from 30% to
120
78% better than 97% pa
104
100 • Case processing time was
After VA reduced from 21 days to 11
80
76% 45% • Internally generated
60 documents were reduced
SNVA
40 from 32 to 1
25 55%
20
15
• Improved productivity by
10
105% with existing staff
0
• Reduced process steps
Old Process Redesigned from 477 to 17
Steps
Process
Handoffs

Equipment Validation As-Is process of a $6B Pharma
Actual touch time for the work is approx. 30 days
… support processes constrain production with many rework

loops, long leadtimes, excessive waste and handoffs. SNVA
NVA 33.6%
66.4%
140 Total Lead-time for Equipment Validation is approx. 116 days
120 5
5
Average Lead-time (days)
4 2 2
100 10
6 2 2
20
80
60 5 3 AS-IS Process Analysis

50
Equipment Commissioning NVA SNVA VA
40 Number of Steps 12 3 0
Equipment Validation NVA SNVA VA
20
Number of Steps 14 6 0
0
Deviation
Deviation
QA Approval
QA Approval
Write Final
Execute IQ
Execute OQ
Approval Loop
Fix Error(s)
Fix Error(s)
Peer Review
Peer Review
Write IQ/OQ
Report
Loop
Loop
Validation
Loop
Loop
Loop
Loop

Equipment Validation process of a $6B Pharmaceutical
Lead-time redesigned to approx. 33 days
NVA
12.1%
Minimize the number of steps to be performed to
reduce levels of waste, handoffs, leadtime and cost
SNVA
140 Current lead-time 116 days 87.9%
130
120
110 Interim Process Analysis
Average Lead-time (days
100 Integrated Process NVA SNVA VA

Number of Steps 4 5 0
90
Blue Sky Process NVA SNVA VA
80 Number of Steps 0 3 0
70
60
Lead-time with Process Redesign 33 days
50
40 2
5 2
30 10
Critical Steps
20 10 2 2
10 NVA to meet conformance
0
Execute CPP
QA Approval
Write Final
QA Approval
Fix Error(s)
Fix Error(s)
Write CPP
Report
Loop
Loop
Loop
Loop

The Agenda
• Lean
• Six Sigma
• Lean Sigma
• Strategy
• Methodology
• Deployment
• Case Studies
• Issues
• Methods
• Results

QUESTIONS?


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17th Annual

Society for Health Systems

Value Innovation Partners, Ltd.

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Business Process Reengineering

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Improving Balance… Improving Capabilities…

Balanced Steps Reduced Variation

Customer Focused Quality

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Lean Six Sigma

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Where is your organization? What kind of tools should you be using?

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Lean Sigma Potential Results

• Productivity +20% per year

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Automating………. Utilizing IT functionality and

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Making Too Moving

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Sustaining activities are those that are not

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- Sorting VALUE ADD

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Sales & Design & Customer

• Finance Related DEPARTMENTAL BARRIERS

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Return Rework= 25%

C/T= 45 min DOS C/T= 45 sec C/T= 30 sec DOS

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• Reward and Recognition

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Define top Define Evaluate

Quantitative • External/regulatory requirements

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Value Stream Map

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Autonomy Process Focus Mandate

•Measure Results Stabilization

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• Scorecard/Dashboard • Milestone Delivery

• Roles & Responsibilities