Lean: History and Background. Steven Johnson, MBA, SSBB

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1 Lean: History and Background Steven Johnson, MBA, SSBB 1

2 Handouts Seven Wastes Lessons from Lean and Six Sigma Suggested Reading 2

3 Henry Ford Rodolfo E. Aristimuño Labor from farms and Europe. Millions of acres of cheap land Low taxes ONE+ (0% on MILLION corporations) No OSHA, EPA, child labor laws, etc. a crisis of opportunity 15 M I L L I O N ¼ MILLION by 1927

4 Standard Work and Flow Standard Work: A principle and practice that forces a process to be done the same way each time regardless of operator. Flow: The production moves through the process together, as a steady stream 4

5 Results: Not merely stunning. Miraculous. A finished car rolled off the line every 3 minutes Competitors need 5X the labor needed to keep up Assembly reduced from 12 hours to 93 minutes Flipped the cash cycle on its head In 1914, Ford institutes a minimum wage of 0.62/ hr ($14.06) and the 8 hour work day From 1914 to 1916, profits doubled 5

6 Flash Forward Ford s efficiency advantage doesn t last. Competitors start to catch on Great Depression WWII America deploys to rebuild Europe and Japan 1950 s, 60 s, 70 s: America enjoys world s highest standard of living Cars get huge Japanese cars don t sell well in the US Tiny cars for a tiny country Then the OPEC oil embargo hit us. 6

7 1980 s : American auto industry faced a slow motion crisis 199_, the Honda Accord becomes the best selling car in America (made in Ohio) 2009, US taxpayers bailout GM and Chrysler Top selling passenger cars in US (YTD, August 2012): 1. Toyota Camry 2. Honda Accord 3. Honda Civic 4. Nissan Altima 5. Toyota Corolla 7

8 LEAN: The Toyota Production System Decoded for American Industry Eliminate Waste Improve Quality Create Flow 8

9 9

10 Lean Principles Map your Value Streams Identify Value vs. Waste Value = Quality Cost 10

11 Value Stream All the activities required to deliver your product or service, from the very first step to the very last. DIRT $$ FIRST CONTACT $$ 11

12 Value Stream: a Siloed Perspective Process A Process B Process C Process D Process E Process F Process G Process H 12

13 Value Stream: From the Patient s Perspective Patient s Value Stream Process A Process B Process C Process D Process E Process F Process G Process H 13

14 Identify Value & Eliminate Waste Patients come to us for two reasons: 1. Information 2. Care Provision Manufacturing Healthcare Value-Added: An activity which that builds changes on a the patient's form, fit, information function or of is directly the product. involved in Everything care provision. else Everything is non-value else added is (NVA). non-value added (NVA). Okay, but where is all this waste? I don t see it. 14

15 Non Value Added: The 7 Wastes Eliminating waste is easy. Seeing waste is hard. -Taiichi Ohno A taxonomy for seeing NVA 1. Defects / Mistakes 2. Over-processing 3. Waiting 4. Over-production 5. Transportation 6. Inventory 7. Motion NVA UNNECESSARY 15

16 How much waste is in our system? 16

17 Lean Principles Map your Value Streams Identify Value vs. Waste Create Standard Work Design Error-Proof Systems Design Out the Complexity you can Use Visual Controls to manage the remaining complexity and sustain your improvements. Track process performance 17

18 6σ Define Measure Analyze Improve Control 18

19 Deming Ishikawa Juran Shewhart Taguchi 19

20 Lessons from Six Sigma Variation is the Enemy The answers are in your data Listen to the Voice of the Process For consistent output, control your inputs Listen to the Voice of the Customer Your problems are in your processes, NOT your people 20

21 PDSA ACT PLAN STUDY DO scientific method applied to process design Hypothesize à Experiment à Evaluate 21

22 PDSA Clinical Research A S P D Shotgun Approach 22

23 PDSA Rapid pilot, multiple iteration A S P D A S P D A S P D A S P D 23

24 Performance Excellence Methodology Lean 6σ PDSA A General Methodology Framework 1. Project Definition 2. Baseline Analysis 3. Investigation 4. Improvement Design 5. Improvement Implementation 6. Monitoring 24

25 Aircraft Maintenance Repair & Overhaul (MRO) Hospitals for aircraft João Eduardo Sequeira 25

26 Military Aircraft Maintenance Repair & Overhaul (MRO) Induction Disassemble Needs Assessment: Visual Needs Assessment: Diagnostic Create Repair Bill Repair & Reassemble Operational Test Ship Send the Bill to Someone 26

27 Healthcare Admit Patient Physician Assessment Needs Assessment: Diagnostic Diagnosis and Plan Medical / Surgical Intervention Post- Intervention Observation Discharge Send the Bill to Someone 27

28 Performance Excellence in MRO Winnipeg, MB, 1980 s San Antonio, TX, 1990 s 28

29 Quality of Cost? Which do we address first? Both: In American healthcare, as quality increases, cost decreases Quality Cost 29

30 Transformative Endeavors Aren t New to Us UUHC #1 in quality 2010, #7 in 2011 nationwide, up from 43 in UUHC went from 51 st percentile in patient satisfaction (Press Ganey) in 2009 to consistently ranking in the high 80 s - low 90 s. Successfully managed our finances during a turbulent economy. 30

31 We can do this. 31

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