Lean Vs 6 Sigma Vs Vm

Audit Commission Presentation

Lean thinking - what is it?

Too much jargon!

Audit Commission Presentation

Lean thinking - what is it? • Lean thinking provides a way to do more with less, while coming closer to providing customers or users with exactly what they want. • It focuses on creating value and capacity rather than eliminating jobs in the name of efficiency. The methodology eliminates waste while improving performance and quality as flow and capacity increase.

Audit Commission Presentation

Value

Audit Commission Presentation

Lean thinking - what is it?

Don’t get mislead by the jargon and hype stick to the basics -

Purpose Value – for the user Analyse demand End to end measures Variation Flow Waste

Comparison of approaches

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Deming Cycle PLAN Problem analysis Current process & performance variation Devise workable solution Action plan DO Implement solution STUDY - Review & evaluate ACT Assess results & change as required Standardise process Continuous improvement

Six Sigma (DMAIC) DEFINE customers & requirements project boundaries boundaries of the process the process to be improved MEASURE Performance of core process Compare ANALYSE Root causes of problems & Improvement opportunities Identify sources of variation IMPROVE Design and implement solution CONTROL Prevent reverting back to the "old way" an ongoing monitoring plan Institutionalize the improvements

Value Analysis PLANNING INFORMATION GATHERING • Key information on the product/service to be examined ANALYSIS • Analysing the problem • functions, processes and costs of the service INNOVATION • Generating new ideas & solutions EVALUATION Evaluating potential solutions REPORTING • Management approval& staff consultation IMPLEMENTATION: • Putting new methods into practice FOLLOW-UP: • Project implementation is reviewed regularly

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Lean Thinking • Viewing the organisation or the service as a system • And from a customer perspective: – – – – – – –

Define purpose and value Understand demand Measure performance of the system Understand and act on variation Manage the system – not the people Improve the system by designing against demand Introduce single piece flow – move away from batching and queueing – Identify and work on system constraints, where possible

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Results • Reducing average benefit claim times from 140 days to 12 days without any major investment in ICT. • Magistrates’ court: 30% increased case throughput resulting in increased revenue, lower costs and improved service. • Reducing prescription errors by 40 per cent • Reducing the time to produce an assessment of special education needs from 17 weeks to 4 weeks.

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Results - Housing

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Repairs • • • •

End-to-end time was reduced on average from 46 days to 5.9 days. Customer satisfaction following a repair shows that 61% of tenants score the service 10/10 with a total of 90% scoring 8/10 or above. This compares to the latest STATUS survey, where 77% of tenants had rated the service above average. Potential six-figure efficiency gains.

Rent collection • • • •

For new tenants, first payment on the account was reduced from an average of 34 days to 20 days. Only 18% of new tenants falling into arrears compared to 43% previously.

Re-housing • •

64 steps in the process reduced to 32 steps. Reduced void relet time of 50 days to an average of 25 days. The potential reduced void loss as a consequence estimated in excess of £90,000.

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Other successes

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Senior managers had not been aware of the degree of waste in the system prior to the systems thinking review. In all three pilots, the work has been generally well received and supported by senior managers.

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In each pilot, an in-house team (Systems Team) was seconded to learn and apply the ‘lean systems’ method. The self-development of Systems Team members was apparent and continued as the new process was implemented.

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All members of the Systems Teams gained an understanding of the whole system in which they work. They worked with colleagues, senior management, councillors and board members. Their confidence and skills around training, assertiveness andworking with people at all levels have noticeably improved.

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Other employees involved in the process were enthusiastic as their input directly led to changes in the way they worked.

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Costs • Costs fall as waste is taken out: – Only the value work is done – non-value adding work is minimised or eliminated – Failure demand is reduced or eliminated (40%) – The improvement-led approach leads to greater savings than cost-centred approach – hard for the FD to get their heads around!

• At the moment there is a lack of comprehensive cost data for comparison purposes

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Capacity and quality • Capacity is increased due to: – Improved flow – Elimination of waste and failure

• Quality improves: – Better performance – Less variation, i.e. improved consistency

• User satisfaction – Tends to go through the roof

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Magistrates’ Courts example Success is defined as: “the delivery of local justice fairly and consistently, in a manner that commands the confidence of the community in the criminal justice system and offers value for money”

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Criminal justice system value chain Customer need identified

Solicitors

Police

organisational boundary Crown Prosecution Service

Probation Service

Magistrates Court

Crown Court

suppliers

Customer need satisfied

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Identifying and managing the barriers to a successful project: the people issues • • • •

Lack of understanding of how the process works Complexity of customers with conflicting needs Allocating time: people already have busy “day jobs” Conflicting organisational goals and targets: blame culture • Lack of “quality maturity” • Fear of measurement and statistics

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Process Team Structure Criminal Justice Excellence Forum

Presentation

Dyason/Kaye 2004

Crown Court

Magistrates’ Court

CPS

Case Management

Police

Solicitors

Witness Service

Probation Service

Key Process Team:

Process improvement facilitator

CJE Forum “Champion”

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Advantages of the process team strategy • • • • • • • • •

The team operates across organisational boundaries whilst accountability is clear Those who know the work best contribute to improvement ideas Action-learning approaches could be applied to learning and development when and as appropriate, including “servqual” methodology and “balanced scorecard” Best practice is identified and shared There is greater understanding of roles and responsibilities Process mapping helps to identify opportunities to add value Non value-added activities are scrapped (e.g. duplication) Resources are most effectively deployed and planned for Internal and external benchmarking can be carried out

Audit Commission Presentation

Measuring lost value in financial terms

The budget allocation for the magistrates’ courts is based upon weighted caseload, that is the number of cases actually completed in a year. No allocation is made for cases not completed. The key process is the throughput of a case from start to completion. If a process failure is identified at the court hearing, the court hearing is adjourned and the process starts again.

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In the example case study approximately 20,000 cases are completed in a year. The opportunity exists however to complete 30,000 cases in this period. One third of the cases are adjourned two to three times on average before they are completed. The purpose of the application of the six sigma methodology is to optimise the process so that maximum value is achieved and thereby maximum funding attracted.

Audit Commission

Results achieved

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Customer perspective Witness satisfaction – satisfaction with waiting time increased by 22% Witness treatment, facilities and information increased to 90% Community confidence – increased by 14%

Learning and growth External recognition – Quality awards: Finalist in International Award (International Quality and Productivity Centre) IIP and Charter Mark: first criminal justice-wide area

Financial perspective Cost efficiency: savings of £360,000 achieved (18%) Productivity increased by 30% Expenditure reduced 5% year on year

Internal Business process Timeliness: Reduced from 35 to 33 days (all cases) Optimisation of resources: increased by 10% In top three areas for timely provision of sentence reports

Audit Commission Presentation

Next steps • • • •

Do your own research Get top management buy-in Identify support and facilitation Tell your auditor or inspector what you are doing