Metrics-Based Process Mapping

Lean Webinar Series: Metrics-Based Process Mapping November 10, 2011 Company LOGO

Welcome! To new friends and old across the U.S. (28 states) To our global friends in:        Australia Brazil Canada Hong Kong Romania The Netherlands Uruguay © 2011 Karen Martin & Associates, LLC 2

Schedule & Materials Schedule   Content – 11:00 a.m.-12:00 p.m. PT Q&A – 12:00-12:30 p.m. PT Link to slides (pdf format)   www.ksmartin.com/files/webinarmaterials/1110-2011_slides.pdf (full slides) www.ksmartin.com/files/webinarmaterials/1110-2011_handout.pdf (2 slides per page) © 2011 Karen Martin & Associates, LLC 3

Announcements  Final webinars of 2011   A3 Problem-Solving – Tuesday, Dec 6 (Part 1 of 2) A3 Problem-Solving – Wednesday, Dec 7 (Part 2 of 2)  Learning needs for Jan-Mar 2012? Email: ksm@ksmartin.com  Resources & tips   Newsletter – www.ksmartin.com/subscribe Social Media      www.facebook.com/karenmartinassoc www.twitter.com/karenmartinopex www.linkedin.com/in/karenmartinassoc www.slideshare.net/karenmartin2 www.vimeo.com/karenmartinassoc - Recorded webinars & 3-part MBPM series  When you leave the webinar, please click “File – Exit” vs. exiting your browser. © 2011 Karen Martin & Associates, LLC 4

Learning Objectives Participants will learn:    Key time and quality metrics for effective improvement in office, service, and knowledge work settings. Step-by-step process for creating current and future state maps. How to use MBPM to document the new standard work and monitor process performance. © 2011 Karen Martin & Associates, LLC 7

The Work We Do: Degrees of Granularity Macro View (Strategic; heavy leadership involvement) Value Stream Process Micro View (Tactical; heavy frontline involvement) Step Step Value Stream Map Process Process Step Metrics-Based Process Map 8

Service Value Stream Current State Dispatch Source Refrigeration & HVAC, Inc. Current State Value Stream Map Serv ice Deliv ery Created February 11, 2009 CONFIDENTIAL Repair Billing Customer Great Plains 1 Verisae (Customer) Special Order Part Excel Spreadsheet (Customer) Supplier Tech Upload time card Close call in Verisae Process Time Cards Tech Account Manager (West) Payroll Admin PT = 0 mins. %C&A = 70% Batch: 1x/day PT = 1 mins. %C&A = 90% Batch: 1x/day Complete Call in GP Pick up Part at Parts Store Review Service Call Data ?% Tech 2 40% Receive customer call Select & Dispatch Tech Call Center Dispatcher & Service Manager 5 m. 120 m. PT = 2 mins. %C&A = 60% 3 0.0833 hours PT = 5 mins. %C&A = 60% Tech PT = 90 mins. %C&A = 90% PT = 0 mins. 640 m. 240 m. PT = 5 mins. %C&A = 80% PT = 120 mins. %C&A = 40% 2 hours 75 minutes Dispatcher Tech 120 m. 1.25 hours 90 minutes Make Repair; Call to raise the NTE Get Part from Truck 75 m. 1.5 hours 5 minutes ?% Tech 90 m. 2 hours 2 minutes Assess Problem PT = 75 mins. %C&A = 95% 5 minutes A/P Admin PT = 15 mins. %C&A = 85% Batch: 1x/day PT = 10 mins. %C&A = 90% Batch: 1x/day Billing Admin 6 days PT = 25 mins. %C&A = 75% 48 hours 10 minutes Posting Admin 240 mins. PT = 3 mins. %C&A = 98% Batch: 1x/day 640 m. Account Manager 3 minutes Enter Invoices into Verisae & Excel; Mail Invoices Billing Admin 120 m. PT = 10 mins. %C&A = 85% Batch: 3-5x per wk 10.7 hours 4 hours 25 minutes Review Invoices; Close in Verisae (Pac) Review & Post Invoices Review Open Ticket Report PT = 10 mins. %C&A = 50% Batch: 2x/day 10.7 hours 4 hours 120 minutes Service Manager Process A/P Receive Cash; Post Payment Collections 60 days PT = 4 mins. %C&A = 95% Batch: 1x/week 480 hours 2 hours 10 minutes 4 minutes Lead Time = 572 hours Process Time = 349 minutes Acronym Key %C&A %Complete and Accurate AR 1 – Information Flow 2 – Material Flow (physical or electronic) 3 – Timeline Activity Ratio FTE Full Time Equivalent LT Lead Time PT Process Time RFPY Rolled First Pass Yield Lead Time to invoice = 86.2 hrs Process Time =5.9 hrs. NOTE: Business hours Activity Ratio = 6.8% RFPY = 1.1% Lead time to cash = ? days

Traditional Mapping Method: Process Flow Chart Look up Customer in Eclipse SALES New Customer? Yes Enter Order SALES Product in Stock? Yes Print Ship Ticket SALES Load Trucks SHIPPING No No Enter Customer Information ADMIN Yes Perform Credit Check FINANCE Okay? Notify Sales COD Only; Notify Admin No to update Customer Profile FINANCE Order Material PURCHASING Receive Material RECEIVING How is this process performing? 10

Traditional Swim Lane Process Maps How do we know what to improve? 11

What is a Metrics-Based Process Map? A visual process analysis tool, which integrates:   Functional orientation of traditional swim lane process maps Key Lean time and quality metrics Highlights the disconnects / wastes / delays in a process.  Keeps the improvement focus properly directed Serves as standard work for workforce training and process monitoring. © 2011 Karen Martin & Associates, LLC 12

Metrics-Based Process Mapping (MBPM)

When is the MBPM Used? For current state analysis and future state design during an office/service-based Kaizen Event.  For complex processes, it consumes 1-2 days As a standalone improvement tool. © 2011 Karen Martin & Associates, LLC 14

Mapping Preparation (if not part of a Kaizen Event)  Select a skilled, objective facilitator.  Scope the process being mapped   Opt for narrow current state focus so you can explore deeply and minimize variation. No decision trees in MBPM (interferes w/ timeline); loopbacks are linearized.  Select a cross-functional team of no more than 10.      Process workers (30-50% of the team) Upstream suppliers Downstream customers Subject matter experts (e.g. I.T., legal, etc.) Outside eyes  Draw 6” wide swim lanes on the 36” paper.    Pre-drawn lines – template available: www.ksmartin.com/files/tools/MBPM_swimlanes.pdf Chalk line Manually draw © 2011 Karen Martin & Associates, LLC 15

Supplies Needed 36” wide white paper Scissors & masking tape 3 x 6” post-its (multiple colors) 2 x 2” post-its (green and yellow) Sharpie markers A red or other brightly colored marker Calculators © 2011 Karen Martin & Associates, LLC 16

Step 1: Label the map Process Name Included/Excluded Conditions Current State MBPM Date Facilitator and/or Team Names

Step 2: List functions involved in process. Function A Function B Process Name Included/Excluded Conditions Current State MBPM Date Facilitator and/or Team Names Function C Function D Function E Function F Include external functions, if appropriate (e.g. customers, suppliers/contractors, etc.)

Step 3: Document all activities (steps) on 3 x 6” post-its; place sequentially. Step Step 1 2 Ticking clock Parallel Steps (concurrent activities)

Document the Current State Step 3 – Document all activities/steps on 3 x 6” post-its.      Use verb/noun format; clear and concise. Include function. Separate tasks that have different quality outputs or timeframes; combine tasks otherwise. Place post-its in appropriate swim lane, sequentially (according to the ticking clock). Be “the thing.” © 2011 Karen Martin & Associates, LLC 20

Step 3: Document task & function Activity (Verb / Noun) Function that performs the task

Step 4: Number the Activities Step # Note: For parallel activities, use alpha modifiers -e.g. 8A, 8B, etc.

Step 5: Add step-specific information Barriers to Flow (if relevant) # Staff (if relevant) • Batching • Shared resources • System downtime • Etc. % Complete & Accurate PT (Process Time) LT (Lead Time)

Key Lean Metrics: Time Process time (PT)    The time it takes to actually perform the work, if one is able to work on it uninterrupted Includes task-specific doing, talking, and thinking aka “touch time,” work time, cycle time Lead time (LT)    The elapsed time from the time work is made available until it’s completed and passed on to the next person or department in the chain aka throughput time, turnaround time, elapsed time Includes Process Time © 2011 Karen Martin & Associates, LLC 24

Key Lean Metrics: Quality %Complete and Accurate (%C&A)  % time downstream customer can perform task without having to “CAC” the incoming work:  Correct information or material that was supplied  Add information that should have been supplied  Clarify information that should or could have been clear   This output metric is measured by the immediate downstream customer and all subsequent downstream customers. If workers further downstream deem the output from a particular step to be less than 100%, multiply their assessment of quality with the previous assessments. © 2011 Karen Martin & Associates, LLC 26

Metrics Reminders Typically obtained via interview; questions must be high quality PT & LT   You can “chunk” these metrics for a series of post-its when necessary When wide variation, do one of three things:  Narrow your scope (pick a specific circumstance)  Use the median  Indicate the variation, but use the median for the timeline %C&A    Determined by immediate downstream customer and all subsequent downstream customers Response is placed on the post-it for the output step 0% at a particular step is not rare © 2011 Karen Martin & Associates, LLC 27

Dealing with high variation metrics Map the rule (80%), not the exceptions (20%).  For metrics with ranges, use the median. Continue to add conditions to your scope if you need to.  To minimize “it depends” answers. © 2011 Karen Martin & Associates, LLC 28

Metrics-Based Process Mapping: Three-Part Series Part 1: Document the current state Part 2: Analyze the current state; design and implement the future state Part 3: Document the improved process © 2011 Karen Martin & Associates, LLC 29

Step 6: Define the “Timeline Critical Path” For parallel activities: Chose the longest LT unless a “dead-end” activity

Complex Process with Many Concurrent Activities (Parallel Steps) 31

Step 7: Create the Timeline

Timeline for Concurrent Work / Parallel Flows Close file PT = 5 min LT = 8 hrs Sign P.O. Sign Contract Email packet to Supplier PT = 1 min LT = 4 hrs PT 1 min LT 4 hrs Bring longest lead time (and its associated PT) to the timeline, unless it’s a “dead end step.” © 2011 Karen Martin & Associates, LLC 33

Step 8 – Calculate Summary Metrics Timeline PT Sum Timeline LT Sum % Activity  (PT Sum/Total LT Sum) x 100 Rolled First Pass Yield (RFPY)   %C&A x %C&A x %C&A… Include ALL post-its, not just critical path Labor requirements (next slide) © 2011 Karen Martin & Associates, LLC 34

Summary Metrics: Labor Requirements Total PT  Sum of all activities, not just timeline Labor Requirements # FTEs* = Total PT (in hrs) X # occurrences/year Available work hrs/year/employee** * FTE = Full-Time Equivalent (2 half-time employees = 1 FTE) **Available work hrs/yr/emp = # full-time hrs – paid holidays, vacation & sick time. Full time is typically 2,080 hrs per year. © 2011 Karen Martin & Associates, LLC 35

Metrics-Based Process Mapping Summary Metrics Metric Current State Timeline PT 110 mins Timeline LT 7 days % Activity 3.3% Rolled First Pass Yield 9.2% Total Process Time 170 mins Labor requirements 106 FTEs Freed capacity Projected Future State Projected % Improvement

Analyzing the Current State Step 9 – Identify the value-adding (VA) and necessary non-value-adding (N) activities    This is the first of two “bridge steps” between current state documentation and future state design. Use small colored post-its labeled with “VA” or “N”. All unlabelled post-its represent waste. © 2011 Karen Martin & Associates, LLC 37

Customer-Defined Value Value-Adding (VA) - any operation or activity your external customers value and are (or would be) willing to pay for. Non-Value-Adding (NVA) - any operation or activity that consumes time and/or resources but does not add value to the product (good or service) the customer receives.   Necessary – support processes, regulatory requirements, etc. Unnecessary – everything else - WASTE © 2011 Karen Martin & Associates, LLC 38

Document the Current State Step 10 – Circle (with a red marker) the step-specific metrics that indicate the greatest opportunity for improvement.   Low step-specific %activity, low %C&A, etc. This is the second “bridge step” between current state documentation and future state design © 2011 Karen Martin & Associates, LLC 41

Step 10: Circle the data that indicates the greatest need for improvement

Typical Current State Findings Islands of value-adding activities All other time is “waste.” Rework First Step Adding Value Last Step Future State Design: How can we progress from one “VA” or “N” step to the next and eliminate all waste? © 2011 Karen Martin & Associates, LLC 43

Future State Design Goals     Reduce overall LT & PT Improve quality (increase RFPY) Increase % activity Improve LT, PT, and %C&A at individual steps May need to perform root cause analysis before determining countermeasures to realize the future state Mapping steps    Clean sheet or modify current state map Same steps as current state Calculate projected metrics © 2011 Karen Martin & Associates, LLC 44

The Right Process Standardize work Mistake proof work Make problems visual Fix problems immediately Create continuous flow Level demand Balance work Create pull systems © 2011 Karen Martin & Associates, LLC 45

Future State Design Considerations  Eliminate steps / handoffs  Combine steps  Create parallel paths  Alter task sequencing and/or timing  Implement pull  Reduce / eliminate batches  Improve quality  Create an organized, visual workplace  Reduce changeover  Eliminate motion & transportation  Standardize work  Eliminate unnecessary approvals / authorizations  Stop performing nonvalue adding (NVA) tasks  Co-locate functions based on flow; create cells (teams of crossfunctional staff)  Balance work to meet takt time requirements 46

Future State Projected Summary Metrics: Labor Requirements Total PT  Sum of all activities, not just timeline Labor Requirements # FTEs = Total PT (in hrs) X # occurrences/year Available work hrs/year/employee Freed = Current State FTEs – Future State FTEs Capacity © 2011 Karen Martin & Associates, LLC 47

Document Projected Future State Results Current State Projected Future State Projected % Improvement CP PT 110 mins 85 mins 23% CP LT 7 days 4 days 43% Activity Ratio 3.3% 4.4% 33% RFPY 9.2% 50.4% 448% Total PT 170 mins 140 mins Labor requirements* 1.7 FTEs 1.4 FTEs Metric Freed capacity 18% 600 hrs = 0.3 FTEs *Demand = 1,200 per year 48

PACE Improvement Prioritization Grid Easy 5 4 13 23 8 22 17 3 10 21 1 16 15 20 19 14 6 7 11 2 18 12 Difficult Ease of Implementation 9 High Anticipated Benefit Low

Create an Action Plan: Who, What, When, Where, and How? Future State Implementation Plan Value Stream Outpatient Imaging Implementation Plan Review Dates Executive Sponsor Allen Ward 11/1/2007 Value Stream Champion Sally McKinsey 11/21/2007 Value Stream Mapping Facilitator Dave Parks 12/13/2007 Date Created 10/18/2007 Block # 2 Goal / Objective Improve quality of referral Improvement Activity Type KE Implement standard work for referral process Owner Sean O'Ryan PROJ 1/10/2008 Implementation Schedule (weeks) 2 3 4 5 6 7 8 9 10 11 12 Dianne Prichard 3, 4 Reduce lead time beween schedulingand Cross-train and colocate work teams preregistration steps 5, 6 Eliminate the need for two patient checkins Collect copays in Imaging KE Michael O'Shea 6 Eliminate bottleneck in waiting area Balance work / level demand KE Dianne Prichard 9 Eliminate lead time associated with transcription step Implement voice recognition technology PROJ Sam Parks 10 Eliminate batched reading Reduce setup required KE Sam Parks 7 Reduce inventory costs, regulatory risk and storage needs 5S CT supplies area; implement kanban KE Michael O'Shea 12 Reduce delay in report delivery Implement additional fax ports PROJ Martha Allen 12 Reduce delay in report delivery Increase percentage of physicians receiving electronic delivery (rather than hard copy) KE 1 Martha Allen Approvals Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator Signature: Signature: Signature: Date: Date: Date: Date Complete

Electronic Documentation? Archive the team’s work Distribute the maps to remote locations Document the new standard work for the process   Training/retraining staff Monitoring process performance Communicate the impact of Kaizen Events and other improvement activities Excel product demo: www.vimeo.com/27016122  Fast forward to 8:00 to begin tool demo. © 2011 Karen Martin & Associates, LLC 51

The Improved State Becomes Standard Work Current State Metrics-Based Process Map 0 PT Units 1 0 Seconds Hours Minutes Days LT Units 15 6 -1 0 Seconds Hours Minutes Days Process Details Specific Conditions Domestic orders through sales force Occurrences per Year 37,500 Hours Worked per Day 8 Date Mapped 25-Jun-08 Step # ► Function / Department 1 Customer Mapping Team Diane O'Shea Sean Michaels Sam Parks Sally Dampier Michael Prichard Process Name Order Fulfillment 1 2 Activity PT LT %C&A Fax PO to Sales Rep 0 0 Ryan Austin Mary Townsend Facilitator Dave Morgan 3 4 45% PT LT %C&A Activity PT LT %C&A Review PO; clarify with customer as needed 20 2 90% Fax PO to warehouse 10 4 Activity PT LT %C&A Activity PT LT %C&A Check inventory levels; notify Sales Rep re: status 2 Sales Rep Activity 5 90% 5 4 95% Fax PO to Sales Rep 5 0.33 90% 5 Finance 6 Warehouse / Shipping Critical Path PT Critical Path LT Rolled %C&A Total PT 0 20 0 0 10 2 45% 20 5 4 90% 10 5 4 90% 0.33 95% 5 90% 5

Color-Coded Summary Metrics Sheet  The Excel mapping tool auto-calculates:     Summary time and quality metrics for before and after maps Projected % improvement (color-coded for visual ease) Staffing requirements User-defined metrics

Creating the Current State MBPM Phase I 1. Label the map in upper right corner.  Process name, date, facilitator and/or team members 2. List the functions involved in left column. 3. Document all activities/steps.  Verb/noun; concise language; include function as well. 4. Number the activities.  One number per column; concurrent activities are labeled A, B, C, etc. 5. Add activity-specific metrics (PT, LT, %C&A), barriers to flow, and number of staff involved (if relevant).  Include units of measure (mins, hrs, days, etc.) © 2011 Karen Martin & Associates, LLC 54

Creating the Current State MBPM Phase II 6. Define the critical path.  Longest LT unless “dead-end” step; use colored marker 7. Create the timeline. 8. Calculate the summary metrics  CP PT Sum, CP LT Sum, AR, RFPY, Total PT, Labor Required 9. Define the value-adding and necessary nonvalue-adding activities  Use small colored post-it labeled with “VA” and “N.” 10. Circle the step-specific metrics that indicate the greatest opportunity for improvement.  Use red marker.  Longest LTs, Low %C&As, High PTs, Low step-specific ARs © 2011 Karen Martin & Associates, LLC 55

For Further Learning Excel tool for electronically archiving Chapter 12 – Manual method www.vimeo.com/karenmartinassoc 3-part MBPM series (including Excel tool demo) Onsite workshops (8-24 participants) & facilitated mapping sessions Public workshops: Portland, Oregon – February 22, 2012 (ASQ) Winnipeg, Manitoba, Canada – June 4, 2012 (CME) Chicago, Illinois – October 15, 2012 (AME)

Learning Objectives Participants will learn:    Key time and quality metrics for effective improvement in office, service, and knowledge work settings. Step-by-step process for creating current and future state maps. How to use MBPM to document the new standard work and monitor process performance. © 2011 Karen Martin & Associates, LLC 57

For Further Questions Karen Martin, Principal 7770 Regents Road #635 San Diego, CA 92122 858.677.6799 ksm@ksmartin.com Connect & learn Monthly newsletter: www.ksmartin.com/subscribe 58