Triggers of Process Improvement PDF

Triggers of Process Improvement 4 1 Chapter 4: Triggers of Process Improvement THE BEST KEEPS GETTING BETTER THE BEST KEEPS GETTING However, it’s possible to struc...

Triggers of Process Improvement 4 1 Chapter 4: Triggers of Process Improvement THE BEST KEEPS GETTING BETTER THE BEST KEEPS GETTING However, it’s possible to structure a general process in a way that works for virtually all improvement projects. BETTER Depending on your situation, your time, and your familiarity with the processes, it may be necessary or at We all want to improve something in our lives—and it least advisable to manage all or much of the process seems we’re surrounded by suggestions and improvement effort as a project. recommendations, techniques and tools, theories and methodologies for improving anything and everything from A to Z. That’s certainly true for business processes. It’s easy to feel confused, overwhelmed, and frustrated. How do you improve production processes? That depends in part on the following: − The processes—simple (one stage) or complex (multiple stages) − The scope—within a single work area or involving two or more areas − The type of change you want—incremental or radical − The resources available Dr. Katia Saliba - Faculty of Medical Sciences - LU 2 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES PROCESS FOR IMPROVING 1. Document the Current Process PROCESSES The documentation should consist of a flowchart of the Improving a process generally involves the following steps: process (“as is”), and a process flow description, which describes the process flow in detail and records the 1. Document the current process. process performance measurements, which will provide the 2. Identify the problem areas. criteria for evaluating the effects of changes to the process. 3. Quantify the effects of each problem area. 4. Prioritize the problem areas. 2. Identify the Problem Areas 5. Determine the causes of the problems. Several ways exist to identify process problem areas. 6. Generate possible solutions for the problems. Start with the people who know the systems and 7. Prioritize the possible solutions. component processes. 8. Decide on the improvement project. Survey the employees and suppliers. 9. Set baselines. Review any problems that they currently have with the 10. Set targets. systems or processes as well as any concerns or 11. Develop the new/revised process. suggestions. 12. Plan for making the changes. Not only is this a good way to generate a list of problems, 13. Make the changes as planned. but it also shows that the operations manager cares about 14. Evaluate the effects of the changes. people’s perspectives and insight as well as processes. Dr. Katia Saliba - Faculty of Medical Sciences - LU 3 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES If the processes directly affect your customers, you may want to talk with your marketers, customer service reps, Key performance indicator (KPI) and any other employees in contact with your customers. A metric used to help measure progress toward an objective. A KPI is a measurable They are the best situated to know what customers performance objective. perceive as problems in the processes that affect them directly. Analyzing process flowcharts and metrics should reveal For example, if you decide to use capacity as a KPI, you weaknesses and problem areas. might define it as, for example, “the number of units of acceptable quality produced in an eight-hour shift.” Look for gaps between actual performance of a system and expected performance according to key performance If you decide to use productivity as a KPI, you might define it indicators (KPIs). as “the quotient of the dollar value of output divided by the number of direct labor hours on the process.” You can also find problem areas in a system or a process by A KPI is a metric that is used as a criterion by which identifying the disconnects. system performance is assessed. A disconnect makes a process less effective or less efficient. You may already have KPIs. If not, you probably have certain expectations for the system, thoughts about what it It may be an input, a step, or an output that is missing, should be doing or not doing. unnecessary, or substandard. The most important performance metrics for the system or It may be an activity that occurs at the wrong time, or as component processes should be your KPIs. performed by the wrong person or work unit, or it may be an activity done wrong, or an activity done manually when it Each KPI must be clearly defined. could be automated. Dr. Katia Saliba - Faculty of Medical Sciences - LU 4 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES Flowcharts make it easier to identify redundancies, extraneous actions, processes that can be eliminated, 3. Quantify the Effects of Each Problem bottlenecks, delays that are unnecessary or at least Area unnecessarily long, and steps that add no value to the How serious are the problems? product for the customer. How much are the problems that employees have noted Process flow loops or movement back and forth between affecting the systems or processes? two operations or workers may indicate unnecessary transfers. How big are the gaps between performance and expectations? HOW MANY KPIS? Quantifying the effects of problem areas depends on the HOW FEW? systems and processes and on the performance metrics you use. How many KPIs should you have? That depends on the You should question people in any work unit affected by particular system and situation. the problem areas. However, experts have For each problem, you can ask questions like the following: suggested that it’s difficult to focus on more than seven KPIs. ❑ Where is the impact? On production capacity? On How few KPIs can you have? It scheduling? On quality? On sales? On profitability? On deliveries? On customer service? On other areas of the can be risky to have only one or organization? On relationships with suppliers? On even two or three. It is smart to relationships with customers? have at least four KPIs. Dr. Katia Saliba - Faculty of Medical Sciences - LU 5 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES ❑ How much time is being lost because of this problem? 4. Prioritize the Problem Areas ❑ Who is involved in dealing with the effects of this At least three ways exist to prioritize problem areas. problem? How much is their time worth? What is the value of the work they should be doing? The first approach uses the sole criterion of dollars (or euro or yen). ❑ How is this problem costing the organization? In production downtime? In scrap—cost of materials and The second approach also considers the relationship labor, cost of disposal? In time spent on products that between the problem area and operations strategies. don’t meet specifications—cost of reworking or The third approach allows for soft factors, such as the scrapping? In delays—effect on subsequent systems effects of the problem areas on people in ways that cannot and processes, effect on delivery to customers? In be quantified. unscheduled overtime? In lost customers? Whichever approach you decide to use, the next step is to ❑ What do you think this problem is costing the assess the relative effects of the problem areas. organization? How has this problem affected employee morale? A tool that is commonly used for this purpose is a Pareto chart (or Pareto diagram). The impact of problems is not always easy to quantify in terms of dollars— but that’s the best way to compare the Most people understand the 80-20 rule, which is also effects of problems, and it’s the only metric that works in known as the Pareto principle—20 percent of the activities cost-benefit analyses or in convincing marketing of the true yield 80 percent of the results. cost-to-serve. Dr. Katia Saliba - Faculty of Medical Sciences - LU 6 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES Pareto Chart. A Pareto chart consists of a simple bar graph used to plot values in descending order, with a line graph that shows the cumulative totals across the bars from left to right; it is a typical graphic representation of the effects of problem areas. On the left vertical axis you can mark cost increments, and on the horizontal axis you can name the problem areas, starting with the most costly and going across in order to the least costly. Then you create a bar for each problem area, to show its cost. After you’ve drawn the bars, you can total the costs of all the problem areas charted, add a right vertical axis to show the total and percentage increments of that total, and plot a line of the cumulative values to show how much each problem area contributes to the Exhibit 4-1. Pareto chart of process problem areas total cost. (Exhibit 4-1 shows an example.) Dr. Katia Saliba - Faculty of Medical Sciences - LU 7 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES Pareto chart A type of bar graph used to illustrate SIGNIFICANT FEW VS. TRIVIAL MANY problems or causes by displaying each of The principle behind the Pareto diagram derives from them according to its importance relative to the work of Vilfredo Pareto, an Italian economist and the effects of all of them, to distinguish the sociologist who studied wealth and poverty in the early most important factors, and identify the biggest opportunities for improvement. 1900s and found that 80% of the land in Italy was owned by 20% of the people. Management consultant Joseph M. Juran turned those percentages into the Pareto principle, also Pareto principle known as the 80-20 rule. He asserted that the A generalization that states that, for many “significant few” things will generally account for 80% events, roughly 80% of the effects come of the whole, while the “trivial many” will account for from 20% of the causes. Also known as about 20%. the 80-20 rule. This generalization has become a rule of thumb used in many business situations. Dr. Katia Saliba - Faculty of Medical Sciences - LU 8 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES 5. Determine the Causes of the Problems WHY DID IT FAIL? To determine the causes for your problem areas, begin A piece of equipment has failed. with your process Why did the equipment fail? Because a circuit board flowcharts. Work upstream from the problem areas to try to burned out. identify possible factors. A simple yet often effective Why did the circuit board burn out? Because it approach is the Five Whys. overheated. Why did the circuit board overheat? Because the Five Whys. ventilation system wasn’t working properly. The Five Whys is a technique for exploring the cause- Why was the ventilation system not working properly? effect relationships for a problem area by probing with a Because the filters had not been changed recently. single question—”Why?” Why were the filters not changed recently? Because There’s nothing magic about the number five; the point is that was not on the preventive maintenance schedule. to dig beneath superficial answers to the question to arrive at the root cause of a problem. The operations manager could also ask “Why?” again, to The sidebar shows an example of the Five Whys. get to the reason why changing the filter was not on the At this point, the operations manager could apply the schedule. obvious solution—add changing the filter to the preventive It may be wise to revise the procedures for developing maintenance schedule—and maybe review the schedule to preventive maintenance schedules. ensure that no other maintenance tasks were missing. Dr. Katia Saliba - Faculty of Medical Sciences - LU 9 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES The technique of the Five Whys has been criticized for its simplicity and because the “Why?” is often answered only through deduction and speculation. This technique works only to start an investigation into FIVE WHYS causes. This technique is a straightforward It’s important to remember that there could be more than approach to push investigation of a one answer to each “Why?” question; a simple test for problem area beyond the immediate and each answer is to ask, “If I get rid of this cause, will the most obvious cause. It’s important to problem disappear?” make sure the “Why?” answers are in This technique works best if each answer can be verified the form of “what” and never “who,” in before asking the next “Why?” order to avoid the blame game and fix the process or system. Another tool often used in determining the causes of problems is the fishbone diagram or Ishikawa diagram You should rephrase the answer in your (named after Dr. Kaoru Ishikawa, the Japanese quality follow-up “Why?” question in order to control statistician credited with inventing it), or cause and- keep the focus on “what” and away from effect diagram. “who.” Dr. Katia Saliba - Faculty of Medical Sciences - LU 10 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES A good, basic set of categories is unfortunately less easily Fishbone Diagram. remembered: Begin by drawing a horizontal line; this is the “spine of the ❑ Equipment fish.” Next, at one end of the line, write the problem; this is ❑ Process the “head of the fish.” ❑ People Next, draw diagonal lines running up or down from the ❑ Materials horizontal line, slanting away from the “head,” and label ❑ Environment each with a category; these are the “bones of the fish.” ❑ Management The following categories are typically used, if only because it’s easy to remember them: You can add categories if possible causes arise that don’t fit the categories you’ve charted. ❑ Methods, Machines, Materials, Maintenance, Manpower, Measurement, Mother Nature Use idea-generating techniques to identify factors within each (Environment)—the 7 M’s category that may be contributing to the problem. ❑ Place, Procedure, People, Policies—the 4 P’s Write each of these on a short horizontal line from the diagonal for the appropriate category. (See Exhibit 4-2.) ❑ Surroundings, Suppliers, Systems, Skills—the 4 S’s Repeat this procedure for each factor in each category to Use whatever categories help you organize the diagram. generate factors within each factor. Dr. Katia Saliba - Faculty of Medical Sciences - LU 11 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES Probe until the team members feel that you’ve exhausted the possibilities of factors and factors within factors and factors within factors within factors.... You want to achieve a point at which the final factors are variables that are specific, measurable, and controllable. Analyze the results. Are there any factors that appear in more than one category? If so, these are the most probable root causes of the problem. Prioritize these factors in terms of probability. Then state each root cause clearly and specifically. These root cause statements are your problem statements. Exhibit 4-2. Fishbone diagram Fishbone diagram A tool that provides a systematic and graphic way of identifying possible causes for a problem, using categories to focus and structure the thinking, in order to work toward determining root causes. Also known as the Ishikawa diagram (after Dr. Kaoru Ishikawa, the Japanese quality control statistician credited with inventing it) and cause-and-effect diagram. Dr. Katia Saliba - Faculty of Medical Sciences - LU 12 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES no delays when the first process is going slower than the 6. Generate Possible Solutions for the second and no downtime if the first process is going faster Problems than the second. Sometimes a solution is obvious, a matter of applying Sometimes the solution to a problem may seem obvious, but common sense and/or experience. you lack the specifics for taking action. For example, if your analysis of the flowcharts reveals For example, if the problem is that a process is producing activities that are not adding value to the product or too much waste or productivity is inconsistent, you may service, such as redundancies and unnecessary steps, try believe that the solution is in reducing variations, but not to eliminate them. know how. There may be activities that are not actually part of In that case, the best step might be to consider using processing—decisions, transport of work-in-process, statistical methods, such as the methodology and tools of inspections and review cycles, and documentation and Six Sigma. other paperwork. You may be able to reduce the time spent on these activities if you are unable to eliminate them. If delays occur, determine whether they are necessary; if not, eliminate or at least reduce them. If a delay is necessary because two connected processes work at the same average speeds but the speeds vary, consider inserting a buffer between them so that there are Dr. Katia Saliba - Faculty of Medical Sciences - LU 13 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES Benchmarking Benchmarking. The process in which an organization In many situations, it may be possible to find solutions by identifies other organizations (within its industry examining similar processes within your organization or in or not) with better products, services, or other organizations. processes and then adapts that information to change or improve its own products, services, Through process benchmarking, you identify and examine or processes. how others are doing what you want to do. This term is often used to at least imply that the This is also known as best practices benchmarking, comparison is with the best in the field or with although it may be more realistic to aim at finding better best practices. practices. Specifically, if you are searching for possible solutions, this ON BENCHMARKING is problem-based benchmarking. “Paul Allaire [then chair of Xerox] says the It is essential to distinguish between benchmarks and primary objective of benchmarking is benchmarking; benchmarks are the “whats” but more understanding exemplary business practices. importantly, benchmarks uncover the “hows” and “whys.” Four things count in benchmarking: For example, Michael Phelps’s world record of 4:03.84 in the process on which you focus, the the 400-meter individual medley set in Beijing established organizations you visit, the best practices you a true benchmark, but it is his total dedication to the sport, find and the changes you institute. Target- the thousands of hours he spent in the pool, Bob setting is secondary.” Bowman’s coaching, and his family’s unwavering support —Robert C. Camp, “A Bible for Benchmarking, by that is most relevant to those pursuing his benchmark. Xerox,” Financial Executive, July 1, 1993 That’s what benchmarking uncovers. Dr. Katia Saliba - Faculty of Medical Sciences - LU 14 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES 4. Write each idea as it is offered, in large letters on a Brainstorming. board or flip chart. It may be necessary to use idea-generating (ideation) 5. Keep going around the group, allowing members to techniques such as brainstorming. pass if they have no ideas to offer, until all members We all know about brainstorming. have passed. It’s a technique commonly used to enable a group of 6. Review the list of ideas to make sure that all members people to creatively and efficiently generate a lot of ideas understand them. on any topic in an environment that is free of judgment. 7. Combine similar ideas and discard any duplicates. However, the word “brainstorming” is often used for Perhaps the most important point to keep in mind when unstructured brainstorming, which is usually a group trying to generate possible solutions for a problem is not to session without any rules in which the participants offer focus so much on the problem that you become fixated. ideas at any time and someone tries to record all the ideas. Focus instead on what you’re trying to do that you cannot It may be more efficient and more effective to use do well because of the problem. This means asking three structured brainstorming. basic questions: The process is relatively simple: ❑ What are we trying to do? 1. State the problem and write it on a board or flip chart to ❑ What other ways can we find to do that? keep it on display. ❑ Which other ways would work here? 2. Announce, and then enforce, this basic rule—“No idea is judged by anybody in any way.” 3. Have each member of the group, in turn, give an idea. Dr. Katia Saliba - Faculty of Medical Sciences - LU 15 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES THINK “PROCESSES” When you think of a production system as a series of processes, you can learn more from other organizations, even if they are not in your PAPER IS SAFER industry or selling products or services like If the members of the group might not feel yours. comfortable with the freedom of the activity, Suppose you want to create a system for you can ease into it slowly and safely. Give producing a schnurxo and you want to find the each member a small pad of paper and ask best way to construct the system. You won’t them all to jot down their ideas and find it out there, since no organization is suggestions, one to a slip. Allow them a few producing anything like a schnurxo. minutes. Then collect the slips. Read them aloud and have someone record each on the But if you break down production of the board or flip chart. This approach gets schnurxo into processes (P1,P2, P3,... ), you contributions out anonymously and makes it may find several organizations using P1 easier for group members to risk sharing their processes, and a few organizations using P2 thoughts in the traditional brainstorming processes, and so forth. Learn about those method. processes and apply that knowledge to create better processes and structure them into a system to produce schnurxos. Dr. Katia Saliba - Faculty of Medical Sciences - LU 16 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES Simplification and Standardization. ❑ Automate processes. This saves time and labor and reduces the need for thinking and, of course, the Sometimes the best way to solve a problem is to apply the possibility of making mistakes. simplification and standardization that can be applied to Some basic principles apply to processes of all types and providing services as well as to manufacturing and reduce problems. assembling. ❑ Simplify the design and reduce the number of parts. Each part represents an opportunity for defects and assembly errors or, in providing services, for mistakes and wasting time. (Also, the more parts or steps, the more it costs to produce the goods or provide the services.) ❑ Standardize similar designs and processes as much as possible. This makes activities easier to understand and mistakes less likely. ❑ Use common parts and materials. This reduces the amounts and types of inventory necessary and reduces time spent finding and transporting parts and materials. ❑ Mistake-proof processes however possible. To err may be human, but you can reduce the chances of error without making anyone less human. Dr. Katia Saliba - Faculty of Medical Sciences - LU 17 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES The chart is then divided into four quadrants of equal size 7. Prioritize the Possible Solutions and marked: the upper left is “1,” the lower left is “2,” the You probably won’t be able to try to solve all of the upper right is “3,” and the lower right is “4.” problems at one time. Options in quadrant 1 (higher impact, lower effort) are best, To decide which problems to solve and how to prioritize particularly the closer they are to the upper left corner. them, you can use a simple tool, the impact-effort matrix Options in quadrants 2 (lower impact, lower effort) and 3 (also known as effort-impact matrix). (higher impact, higher effort) are next best, depending on the resources available. Impact-Effort Matrix. Again, the closer the options are to the upper left corners of The members of the group rate each solution option their quadrants, the better. according to impact (what the option would achieve) and The options in quadrant 4 (lower impact, higher effort) would effort (what the option would require), using a scale from be the lowest priority. one to five (for example). (The use of quadrants is unnecessary if there are sufficient Then, a vertical axis and a horizontal axis are drawn and options clustered in the upper left of the chart. If not, the marked with increments from zero to five. quadrants make it easier to compare lower-impact, lower- The vertical is marked “Impact” and the horizontal is effort options and higher-impact, higher-effort options.) marked “Effort.” The options are then plotted on the chart according to their rating values. Dr. Katia Saliba - Faculty of Medical Sciences - LU 18 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES Impact-effort matrix A tool used for choosing among options, using a scale to rate the options according to potential impact and effort required and plotting the values on a chart. Also known as an effort-impact matrix or grid. Exhibit 4-3. Impact-effort matrix Dr. Katia Saliba - Faculty of Medical Sciences - LU 19 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES Step 3. Specify what each criterion means. Make sure that each is Criteria Matrix. stated in a way that allows all to be rated on the same scale (e.g.,1 = most cost, most time, most disruption). A criteria matrix is a systematic approach to choosing ❑ Cost: Total cost of time, materials, and equipment among options, by weighting each criterion and then ❑ Time to Implement: Time until changeover is completed rating each option for each criterion. ❑ Disruption of Activities: Negative effect on operations during It is particularly useful when there are more than 10 implementation options for a solution and when there are more than a Step 4. Assign a weight (e.g., 1-5 or 1-10) to each criterion based half-dozen criteria. on importance. This technique allows for quantifying qualitative criteria. ❑ Cost 7 ❑ Time to Implement 8 Step 1. Create an objective statement; this problem ❑ Disruption of Activities 6 statement will be the basis for choosing and weighting the criteria to be used. Step 5. Create a table, listing each option as a column head and each criterion to the left of a row. (See Exhibit 4-4.) (Depending on Sample problem statement: To increase productivity of the number of options, the number of criteria, and the dimensions widget assembly line. of the paper or board, it may work better to put the criteria across Step 2. Develop a list of criteria for judging the options. the top and the options on the left.) What factors are essential considerations for a solution Step 6: Rate each option 1-10 according to each criterion. Mark the to this problem? rating in the left half of the appropriate cell. Criteria: Step 7. Multiply each rating by the weight assigned to that criterion. ❑ Cost Mark the score in the right half of the appropriate cell. ❑ Time to Implement ❑ Disruption of Activities Step 8. Total the scores for each solution option. (See Exhibit 4-5.) Dr. Katia Saliba - Faculty of Medical Sciences - LU 20 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES Exhibit 4-4. Criterion matrix, showing options and criteria Exhibit 4-5. Criterion matrix, showing ratings, scores, and totals Dr. Katia Saliba - Faculty of Medical Sciences - LU 21 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES Rating A B C D Exhibit 4-6. Criterion matrix, showing ratings, scores, and totals Dr. Katia Saliba - Faculty of Medical Sciences - LU 22 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES The illustration figure can be of any form. Another Cost-Benefit Analysis. form with similar criteria can be as in Exhibit 4-6 A traditional technique used in deciding among potential template. Use the same steps as before but the solutions is to do a cost-benefit analysis for each of them. template could be as such. This technique is relatively simple for anyone with experience doing budgets and estimates. AGREE ON DECISION CRITERIA You calculate the benefits expected from applying a Whenever a group is making decisions solution and subtract the costs you expect to incur. about improvement ideas, it’s smart to The costs may be one-time or ongoing; many solutions are identify in advance the criteria to be used. likely to involve both. If group members decide on decision criteria The benefits are most often going to come over time. early in the process, they can use the same standards and minimize misunderstandings You should calculate a payback period, the time it takes for and conflicts. the benefits of a change to outweigh the costs. (The payback period is often known as the time to the break- even point) You can calculate the costs and benefits at time intervals, such as six months, a year, 18 months, two years, and so on. The costs side could include extra time, training, equipment, the value of productivity lost during the implementation, lost sales, and so on. Dr. Katia Saliba - Faculty of Medical Sciences - LU 23 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES The benefits side could include the value of the resulting increase in productivity, time saved, and so forth. You’ll want to work with someone from finance when you do your cost-benefit analysis. IT’S MONEY THAT MATTERS, BUT It’s generally better to account only for financial costs and TIMING IS EVERYTHING financial benefits. The payback period or breakeven point may However, you should consider as well the intangible costs be a crucial consideration. This is especially and benefits—e.g., the boost in morale, the increased stress true if the improvement project involves big on the process manager and workers, and the positive capital expenditures or borrowing, or if the effects on the organization’s image. investment in improvement entails a It’s tricky to estimate the value of intangibles, but it seems significant cost of lost opportunity. Time to naive to ignore those costs and benefits. break-even may be the decisive factor in choosing the problem for your improvement You should at least note the intangibles you expect to result, effort. both bad and good. Dr. Katia Saliba - Faculty of Medical Sciences - LU 24 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES 8. Decide on the Improvement Project Setting targets helps you focus better on what you want to improve. By now you should have enough information to decide on You should set targets for the overall process, not simply the problem and solution. the problem area. If not, you may need to continue discussing the options, Make sure you have a baseline measurement for every maybe include other people in the decision making, and metric for which you set a target. revisit the criteria matrix and/or the cost-benefit analyses. This is especially important for your KPIs. 9. Set Baselines How much do you expect to be able to improve on your baseline measurements? What performance levels will you Set your baseline, the measurements for the process consider acceptable? performance metrics that you’ll be using as the basis of comparison for evaluating the effects of the changes you’ll be making. The baseline should include measurements of Baseline the process outputs. You should pay particular attention to A set of measurements used to establish the your KPIs, the key performance indicators. current level of performance for a system or a process, usually before starting 10. Set Targets improvement activities. You should have qualitative goals—what you expect to do—and quantitative improvement targets—how well you expect to do it. Dr. Katia Saliba - Faculty of Medical Sciences - LU 25 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES 11. Develop the New/Revised Process Then, try to open up the discussion to design a new process, from zero. This may or may not work, depending Start by challenging basic assumptions and beliefs about on the process and the people in the group. the current process. Often people can’t remember or never If the discussion stalls here, ask questions about the knew why the current process was structured as it is or if it activities in the process. For example: simply evolved. ❑ What if we changed the sequence of the activities? Using the Five Whys may be useful here, to dig into ❑ What if we dropped activity A, activity B, activity C...? assumptions and beliefs. Ask questions like the following— ❑ What if we split activity A, activity B...? and probe the answers with “Why?” ❑ What could we do to reduce or eliminate errors in ❑ Why does this process exist? What is its purpose? activity B? ❑ Why are the activities sequenced as they are? ❑ What could we do to speed up activity C? ❑ Why is activity A part of the process? Why is it At some point, you should be able to start designing a new necessary? process from zero, with questions like the following: Once you’ve questioned assumptions and beliefs and ❑ What should we do first to transform the input into the dissociated the group members from the familiarity of the output? What needs to happen? current process, you can start working toward something ❑ What should we do next? new. ❑ Can we get from input to output any faster, any more First, establish the purpose of the process. What output(s) efficiently, any more simply? are necessary? What input(s) does the process need to ❑ Follow up answers with “Why?” This helps keep the produce the output(s)? discussion logical and the design simple. When the group has agreed on each step in the new process design, mark it on the board or flip chart. Dr. Katia Saliba - Faculty of Medical Sciences - LU 26 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES Keep going until your new process can produce the Also, note any potential problems that you anticipate and necessary output(s). the means by which you should be able to detect them as soon as they develop. Then review the process step by step. Is each step necessary? Is the sequence of activities logical? Can the process be simplified in any way? Create a flowchart for the process as it should be, following 13. Make the Changes as Planned the same guidelines as used to create the flowchart for the Check to make sure each person involved in the change current process. knows what he or she is responsible for doing, is able to do it, and does it according to the schedule, as planned. 12. Plan for Making the Changes Monitor the changes—and the effects. Check for problems. Document everything. The best way to plan for implementing an improvement project is by using the methods and tools of project management. Be sure to specify the basics: ❑ What is to be done? ❑ Who is responsible for doing it? ❑ How is it to be done? ❑ By when is it to be done? Dr. Katia Saliba - Faculty of Medical Sciences - LU 27 Chapter 4: Triggers of Process Improvement PROCESS FOR IMPROVING PROCESSES 14. Evaluate the Effects of the Changes PLAN THE WORK AND WORK THE PLAN Get measurements for the process We cannot always plan our work as well as performance metrics that you used for your necessary. But we should always try to work our baseline and compare the “before” and “after.” plan as well as possible. Pay particular attention to the KPIs—the “vital “A poor strategy executed well is always better signs” of the process. than a great strategy executed poorly.” Check for any problems that may have resulted —Michael Porter, Institute for Strategy and from the solution. Competitiveness, Harvard Business School If you are removing or reducing a bottleneck, for On the other hand... example, you should expect another to develop. “Taking the few extra minutes to outline your Whenever there are multiple activities operating strategy often means the difference between at different speeds, you may need to add a achieving your objectives and losing everything. buffer. Remember, a great strategy poorly executed will always achieve better returns than a poor strategy executed well.” —David Goldsmith, MetaMatrix Consulting Group, LLC Dr. Katia Saliba - Faculty of Medical Sciences - LU 28 Chapter 4: Triggers of Process Improvement THEORY OF CONSTRAINTS THEORY OF CONSTRAINTS (TOC) The core principle in TOC is that every system is limited by a constraint—something that keeps the system from achieving its goal more A discussion of improving production processes would efficiently or more completely. not be complete without the Theory of Constraints There may be a few constraints, but not many. (TOC). Constraints can be within the system or outside This is an approach to management and improvement it. developed by Eliyahu M. Goldratt and introduced in his book The Goal (North River Press, 1984). To improve a system to any significant degree, we must identify the constraint and manage the TOC pursues the goal (global objective) of a system system accordingly. through an understanding of the underlying cause-and- effect dependencies and variations in the system. In other words, a chain is only as strong as its weakest link, and we need to understand the entire chain, not TOC applies cause-and-effect thinking processes to only focus on individual links. understand and improve systems, including organizations. Whether an organization is producing goods or providing services or both, the performance of any system is The TOC thinking processes have been used to create determined by its constraint. solutions in various business functions, including production, distribution, and supplier relations. There are two main types of constraints: TOC has been labeled “a process for creating processes − physical (resources, e.g., people, facilities, machines, of improvement” (John Tripp, TOC Executive Challenge: equipment, materials, time) and A Goal Game, North River Press, 2007). − policy (almost everything else that is intangible). Dr. Katia Saliba - Faculty of Medical Sciences - LU 29 Chapter 4: Triggers of Process Improvement THEORY OF CONSTRAINTS Theory of Constraints These three measures should be used to guide and improve decision making. An approach to management and improvement that emphasizes an These measures are based on the premise that all operations are basically “money-making machines.” understanding of the underlying cause-and effect dependencies and variations in 1. Throughput (T) is the rate at which the system systems and an application of cause-and produces money. It is calculated by subtracting direct effect thinking processes to understand and costs (usually costs of materials) from the sales price. improve systems in business functions. 2. Inventory (I) is all the money invested in things the TOC was developed by Eliyahu M. Goldratt. organization intends to sell (not just materials). It has been labeled “a process for creating 3. Operating Expense (OE) is all the money poured in processes of improvement.” continuously to convert inventory into throughput. For the system or any operations within the system, the following formulas are used: TOC uses three fundamental operational measures— Profit = Throughput `- Operating Expense throughput, inventory, and operating expense—rather than Return on Investment = (Throughput - Operating traditional cost accounting measures. Expense)/Inventory Cash Flow = (Throughput - Operating Expense) + Inventory Dr. Katia Saliba - Faculty of Medical Sciences - LU 30 Chapter 4: Triggers of Process Improvement THEORY OF CONSTRAINTS TOC is a process of ongoing improvement. In TOC, the improvement process is structured around three questions: There are five “focusing steps” for maximizing the ❑ What to change? What is the problem? performance of a system by ensuring that improvement ❑ What to change to? What is the solution? efforts focus on constraints: ❑ How to cause the change? How can we implement the 1. Identify the system constraint—the part that prevents the solution? system from achieving its goal more fully. The three questions provide the framework for the TOC 2. Decide how to exploit the system constraint, how to use Thinking Processes. its capacity to the fullest. To solve the problem of a constraint, we must: 3. Subordinate and synchronize all other processes to ❑ Understand the process interdependencies that support the above decision, what you do with the contribute to delivering a product or a service. constraint. ❑ Understand the effects of those interdependencies and 4. Elevate the system constraint until it is “broken” or variations in the processes on the performance of the solved. Increase the capacity of the constraint system. permanently, if possible. ❑ Buffer to allow for those interdependencies and 5. Don’t let inertia become the system constraint! If you variations so that performance can be consistently high. solve the constraint problem, another part of the system then becomes the new constraint. And if you stop working on constraints, then inertia becomes the constraint. Dr. Katia Saliba - Faculty of Medical Sciences - LU 31 Chapter 4: Triggers of Process Improvement THEORY OF CONSTRAINTS Synchronized production DON’T MAINTAIN POLICY CONSTRAINTS A management philosophy in which every Your most limiting constraints may be policies, activity is evaluated in terms of the global according to Goldratt: goal of the system. “Our systems today are limited mainly by policy constraints. We very rarely find a company with a real market constraint, but rather, with devastating marketing policy constraints. We very rarely find a true bottleneck on the shop floor, we usually find production policy constraints. We almost never find a vendor constraint, but we do find purchasing policy constraints. And in all cases the policies were very logical at the time they were instituted. Their original reasons have since long gone, but the old policies still remain with us.” —Eliyahu M. Goldratt, What Is This Thing Called Theory of Constraints and How Should It Be Implemented? (North River Press, 1990) Dr. Katia Saliba - Faculty of Medical Sciences - LU 32  Lebanese University Faculty of Medical Sciences Masters of Science – Health Administration (MHA) Operations Management Operations Management END OF COURSE Instructor: Dr. Katia Saliba