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Incorporating Lean 6 Sigma into Your Overall Business Strategy

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Black Belts: 6 Sigma projects. Improving key business processes ... must optimize current capacity and develop new capacity to meet current demand and grow ... – PowerPoint PPT presentation

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Title: Incorporating Lean 6 Sigma into Your Overall Business Strategy


1
Incorporating Lean 6 Sigma into Your Overall
Business Strategy
  • Creating a Direct Line-of-sight from
  • Strategy to Action

Jody Thompson, RN, MBA WCBFs 8th Annual Lean, 6
Sigma, PI in Healthcare Summit March 18, 2009
2
Objectives
  • Learn how to integrate Lean 6 Sigma into your
    overarching strategic plan
  • What is 6 Sigma?
  • How can I leverage the Power of 6 Sigma in the
    Strategic Plan?
  • Understand how to develop strategies and
    objectives for deployment
  • The 6 Sigma value proposition
  • The success recipe

3
Objectives
  • Examine how to make Process Improvement a vital
    part of your long term strategic plan
  • Measure what matters
  • Process management competency
  • Effective accountability management systems

4
OSF Saint Francis Medical Center Peoria, Illinois
1877
2007
  • Flagship of OSF Healthcare System
  • 570 Beds
  • 4,500 employees
  • 27,000 Discharges
  • 520 Independent Attending Staff
  • Independent Academic Medical Center with 50
    residents per year

5
What is the Strategic Management Cycle?
  • Control your own destiny or someone else will.
    .
  • Jack Welch

6
Planning Process
  • PLAN
  • How will we get there?
  • Objectives
  • Measures
  • Tactics
  • Accountability
  • EXECUTION
  • Prioritize
  • Resource
  • Schedule
  • Manage
  • Performance
  • Scorecard

Value Proposition
7
Mission
Vision
Values
Value Proposition
OUTCOMES
The Plan
Process evaluation
Strategic Priorities Performance Gaps CSFs
SAIs
The Scorecard
Project Metrics Performance Measures Financial
Benefits
Strategy Management Cycle
The Budget
6 Sigma Value Prop How much financial benefit
will 6 Sigma deliver this year?
Service Lines
People Processes Projects
Project Portfolio
Implementation Managed Change Project Management
The System
Just Do IT 6 Sigma Projects Lean Projects Other
Projects
Accountability
Developed by Ridgeview Medical Center Dr. Rob
Welch, VP clinical Affairs, VHA
Project Mgmt
8
SFMC Strategic PI Model
  • Mission
  • Vision
  • Values
  • Strategic Plan

Reporting Analysis
  • Management plans
  • Critical Success Factors
  • Strategic Areas of Improvement
  • Executive Initiatives
  • IT Projects
  • Lead Green Belt Projects
  • 6 Sigma Teams
  • Lean Events
  • 90 Day Plans Gap Closure Meetings
  • Variable Compensation
  • Team Awards

9
What is the 6 Sigma Management System?
  • However beautiful the strategy, you should
    occasionally look at the results.
  • Winston Churchill

10
Learning from Manufacturing
11
What is the 6 Sigma Management System?
A vehicle for strategic performance improvement
...an organizational approach to achieving
reliability and performance excellence where it
matters most.
  • A set of management beliefs, processes and tools
    that enable transformational change in the
    organizations culture
  • Integration of fundamental changes to the way we
    think about work and do work
  • Enhanced problem solving competency at all levels
  • Development of people and processes to enhance
    organizational effectiveness and achieve
    strategic improvement

12
6 Sigma the SFMC Way
  • Direct line-of-sight from strategy to action
  • Focused on those we serve
  • Data-driven, fact-based decision making
  • Dedicating your best people to your highest
    priorities
  • SMART/PMA Measurement Analysis
  • Black Belts 6 Sigma projects
  • Improving key business processes
  • Measuring performance improvement
  • Quantifying bottom-line impact
  • Transforming the way we work and the culture

13
Unifying Framework for Performance Improvement

14
The Power of Lean 6 Sigma
  • 6 Sigma now centers on Value creation, not just
    cost elimination, or defect elimination.
  • Mikel Harry

15
Value Proposition Fundamentals
  • 6 Sigma DMAIC and Lean are key tools for
    achieving strategic process improvement
  • 6 Sigma project portfolio must demonstrate REAL
    strategic value
  • , Safety, Quality, Throughput, Access,
    Utilization
  • CFO establishes annual 6 Sigma Value
    Proposition
  • FY 04 6 million
  • FY 05 5 million
  • Average bottom line return per project 150k

16
Strategy Alignment
17
Strategy to Action
  • Set clear goals and measurements for the business
  • Identify and align strategic areas of the company
    that require improvement to achieve goals
  • Prioritize and select projects that have the most
    impact on these key strategic areas

18
The 6 Sigma Project Selection process should
quantify the strength of relationships between
CSFs, SAIs, and projects to produce a direct line
of sight from strategy to action
19
Critical Success Factors -- CSFs
  • Clearly defined and measurable strategic goals
  • Measures key outcomes (lagging indicators/Ys)
    and relate to or come from your
  • Burning Platform
  • Strategic Management Plan
  • Examples
  • Mortality/morbidity rates
  • Annual Diversions
  • Total Margin
  • Market Share

20
Strategic Areas of Improvement
  • Drivers of CSF performance which you can clearly
    define and measure
  • Often reflect performance of Core and Enabling
    Processes
  • Almost always impact performance of gt1 CSF
  • Examples
  • Utilization rate for Operating Room (Growth,
    Value, Service)
  • Daily Average Pt Turnover
  • Cost per Case
  • BSI per 1000 days
  • Adverse events

21
How is 6 Sigma Different?
Y f (x)
  • Reads Y is a function of x
  • Translation Outcomes are a function of the
    inputs and processes that produce them
  • 6 Sigma focuses on Strategic Processes and the
    Root Causes of Variation and Value Creation

22
Strategic PillarsPre-6 Sigma Critical Success
Factors
  • Best People
  • Best Quality
  • Bester Service
  • Best Value
  • Targeted Growth

23
Strategic Priorities6 Sigma Critical Success
Factors
  • Best People
  • We must have adequate numbers of highly competent
    staff to reliably provide evidence-based care
    safely
  • Metric RN Vacancy Rate
  • Best Quality
  • Our clinical systems must safely and reliably
    produce high quality patient care outcomes
  • Metric 1) Composite index of Joint Commission
    Core outcome indicators and national patient
    safety indicators 2) Risk-adjusted Mortality rate

24
Strategic Pillars 6 Sigma Critical Success
Factors
  • Best Service
  • Our care delivery system must produce a very high
    level of patient loyalty
  • Metric 1) Press-Ganey raw mean satisfaction
    scores, 2) ED scores for likeliness to recommend
  • Best Value
  • We must improve the bottom line to achieve our
    mission, grow, and fund strategic investments
  • Metric Medicare Index Operating Cash Flow,
    Days of Cash On Hand
  • Targeted Growth
  • We must optimize current capacity and develop new
    capacity to meet current demand and grow
  • Metric 1) Annual Diversions 2) Targeted SL
    volume 3) Physician RR

25
6 Sigma Strategic Areas of Improvement
  • Example SAIs for CSF metric RN Vacancy
  • Recruitment
  • Total advertising dollars/ RN hire
  • Time from vacancy notice to RN start date
  • Selection
  • Time from application received to first interview
  • Retention rate 0 24 months
  • Probationary period termination rate

26
6 Sigma Potential Projects
  • Follow the data
  • Quantify the performance gap
  • Quantify the financial opportunity
  • Real Deal ?Recruitment
  • Time from vacancy notice to RN start date
  • Reduced cycle time by 64 from 135 days to 48
    days
  • 1 Year Financial benefit 1.3 million

27
Implementation Sustaining the Gains
Realize Phase
DMAIC
Process Mgmt
Project Team
Process Owner
Y f (x)
Process Errors
Time
Y f (x)
Good
Financial Benefit ()
Lean 6 Sigma Team
Process Owner
28
Realize Phase
Y f (x)
29
Successful Deployment
  • Lead with Clarity, consistency, Commitment.
    Embrace the 7 critical success factors
  • Glen Barton
  • Former CEO Caterpillar, Inc.

30
7 Critical Success Factors
  • Lean 6 Sigma is
  • Led by CEO
  • Priority 1
  • Reinforced, monitored, and measured

Committed leadership is at the center of
6 Sigma success
31
Top-Tier Metrics
  • Accretive first year
  • Value Prop Achieved thereafter
  • Black Belts / Workforce
  • Green Belts / Black Belts
  • Chartered Projects in Queue
  • Black Belt productivity
  • Financial benefit / project
  • Total Margin Improvement

32
Non-Negotiable
  • Absolutely a top-down effort
  • Strategic management mindset
  • Develops over time, but critical for todays
    reality your entire workforce is overwhelmed
  • Know what dot will move
  • Strategic Management Framework
  • Define how the system works
  • Build the infrastructure for Process Management
  • Process Owners PMAs
  • High Quality measurement systems
  • New competencies
  • New roles

33
Measure What Matters Understand Performance
  • Not all processes are Strategic
  • Airlines Example
  • 7.2 Sigma performance on Core Process of Flight
    Safety with 1 Death per 1 million flyers
  • 3.4 Sigma performance on Baggage Handling with
    29,000 lost bags per 1 million bags handled

34
Measurement Function
  • Identify Indicators
  • Prioritize Indicators
  • Define Indicators
  • Develop Data Collection Systems
  • Communicate Priorities
  • Process Owner Strategic Planning

35
SFMC Measurement Function Organization
36
Pulling it all together to Achieve Strategic
Effectiveness
  • The 6 Sigma management system gives us a direct
    line of sight from strategy to action and makes
    us much more effective. But the learning is in
    the doing and you must be able to tolerate
    progress over perfection.
  • Keith Steffen, CEO
  • OSF Saint Francis Medical Center

37
Mission
Vision
Values
Value Proposition
OUTCOMES
The Plan
Process evaluation
Strategic Priorities Performance Gaps CSFs
SAIs
The Scorecard
Project Metrics Performance Measures Financial
Benefits
Strategy Management Cycle
The Budget
6 Sigma Value Prop How much financial benefit
will 6 Sigma deliver this year?
Service Lines
People Processes Projects
Project Portfolio
Implementation Managed Change Project Management
The System
Just Do IT 6 Sigma Projects Lean Projects Other
Projects
Accountability
Developed by Ridgeview Medical Center Dr. Rob
Welch, VP clinical Affairs, VHA
Project Mgmt
38
SFMC Strategic PI Model
  • Mission
  • Vision
  • Values
  • Strategic Plan

Reporting Analysis
  • Management plans
  • Critical Success Factors
  • Strategic Areas of Improvement
  • Executive Initiatives
  • IT Projects
  • Lead Green Belt Projects
  • 6 Sigma Teams
  • Lean Events
  • 90 Day Plans Gap Closure Meetings
  • Variable Compensation
  • Team Awards

39
6 Sigma Cultural Transformation
Train First Black Belts
We are HERE
40
Achieving Excellence
Excellence is an art won by training and
habituation. We do not act rightly because we
have virtue or excellence, but rather we have
those because we have acted rightly. We are what
we repeatedly do. Excellence, then, is not an act
but a habit.
Aristotle
41
Appendix
42
Integrating 6 Sigma with Strategic Management
Cycle
Burning
Platform
Does your organization need to integrate the 6
Sigma management system into the strategic
management cycle? There must be a compelling
reason to change! What keeps your CEO awake at
night?
43
Is Your Platform Burning?
  • The first step to integrating the 6 Sigma
    management system into your overall business
    strategy is believing there is a compelling
    reason for change
  • The Burning Platform articulates a compelling
    case for change
  • Why Lean 6 Sigma and Why Now
  • Uses words and measures that are meaningful to
    people at all levels of the organization
  • Directly asks if not this, then what? If not
    now, then when?

We need to start getting very uncomfortable with
feeling comfortable
44
Customer Expectations
  • How well are you satisfying your
    customers?(Consider product design, quality and
    reliability, on-time delivery, price, speed/cycle
    time, etc.)
  • Do customers see the same quality and service in
    every encounter ? (Remember, customers see the
    variation not the mean).
  • What are the 3 greatest issues as seen from the
    eyes of your customers? How do you know? What
    are you doing about them?
  • How well do you know / relate to your customers
    and can anticipate their wants?

45
Competition Changing Markets
  • How well are you serving customers compared to
    the competition? (speed to market, lead time on
    current product delivery, quality, cost, etc.)
  • Is your market share increasing? Steady?
    Decreasing?
  • How flexible is your company to adapting to
    changes in external factors such as the
    economy/market conditions, environmental/legal
    requirements, technology, etc.?
  • Are your existing improvement systems and methods
    capable of achieving the degree of change needed
    to keep you a successful, competitive
    organization?

46
Employee Satisfaction Loyalty
  • Do employees have a clear line of sight between
    their work and the overall strategy/goals of the
    organization?
  • Do employees highly recommend your company as a
    great place to work? Why or why not? (Consider
    your company culture, employee absenteeism,
    turnover, safety lost work incidents, etc.)
  • How well are you developing and utilizing the
    intellectual capacity of employees? How much
    time is spent on non-value added work?

47
Bottom Line, Cash Flow, ROI
  • What are some key measures you use to run your
    business (growth rate profit ROA, ROS, market
    share, inventory turns, asset utilization, etc.)?
  • Is your current and recent performance on track
    to achieve the targets youve set? If not, what
    actions are you taking?
  • How confident are you of your continued financial
    performance? What is the greatest hit you could
    afford to take in any of these key measures?
  • Why would investors invest in your company versus
    another? Does your companys performance/outlook
    reflect an attractive return on their investment?
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