How is your year going thus far? If the first quarter is any indication, we may be in for a year of extremes. As I write this, Chicago is experiencing it’s eighth consecutive day of record high spring temperatures. Recently bank interest rates, and home prices have been reported at record lows. Conversely, gas prices are projected to reach record highs by May, the DOW continues it’s upward trend and recent articles tout the record number of terabytes of storage that businesses are burning through as they try to capture and analyze all of our transactions.

What does any of this have to do with Operational Excellence? The more robust your business processes, the better you weather the storm of extreme conditions. It does get confusing with all the methods available - Deming, Juran, Crosby, Six Sigma, Lean, Red X, 8D, TQM, etc. The good news is all these methods have their success stories! It’s just a matter of picking one and applying it to help bullet-proof your business from extreme conditions.

Spring has sprung, it’s time for a refresh – do you have your method in place?

Have an excellent month!

Best,

Jeff Cole

President

JCG Management Consulting

A Healthcare Quality Crisis?

If a 747 crashed, killing all on board you’d be shocked. But what if a 747 crashed every day for a year? Certainly something would be done about it – right? According to a 2009 estimate from the Centers for Disease Control, 1.7 million healthcare-associated infections resulted in 99,000 deaths – over 260 daily or the equivalent of a 747 dropping out of the sky every single day.

While the statistics may be startling, some hospitals are making great strides in quality improvement. For some it means using very simple OpEx tools like checklists, according to author Jay Arthur. In his book Lean Six Sigma for Hospitals, he describes a pilot of eight hospitals who implemented the World Health Organization’s Surgical Safety Checklist. The results?

47% reduction in deaths
36% reduction in major complications
50% reduction in infections

Many healthcare organizations are primed to make large gains quickly through the application of simple tools that can be learned in under an hour!

Customer Needs Keep On Changing

Customers are great – in fact it’s kind of difficult to stay in business without them. The downside is they have multiple requirements and exhibit a tendency to change those requirements over time. We easily calibrate our expectations upwards. What once surprised and delighted us is now a commonplace status quo.

One cruise line for example placed chocolate mints on the pillows of their frequent guest cruisers. It wasn’t expected – just a nice little surprise next to the towel-animal on your bed. Another amenity that made your day just a little better. However, guests quickly became accustomed to the mints. When the mints were discontinued to cut costs, the guests were up in arms. The mints had now become a requirement – expected by the high-roller guests. The presence of the mints no longer delighted the customer, but a lack of mints upset them! Based on the number of complaints, the mints quickly reappeared each night. A lesson learned about attending to the little things in the hospitality industry.

Fortunately for us, in the 1970’s professor Noriaki Kano devised a model allowing us to categorize and prioritize customer requirements. Used in several OpEx methods, it allows you to understand and position customer expectations into three categories: Must-Be, More-Is-Better, and Delighters. Further, it aids in predicting how those requirements may change over time.

To read a short article on what the Kano Model is and how it works, click here.

Goal Setting Tips

A consultant once told our leadership team that any target or goal that ended in a “0” or “5” was artificially set. He may be right. Ours is a culture that loves right angles, straight lines, numbers ending in 0 and 5, and times that are in 15 min. increments. (When is the last time a meeting started at 9:07 or someone said I’ll meet you outside in six minutes?)

Do you have goals in your organization for, say, 95% customer satisfaction? Why not 94.9% or 95.7%? You have to stop and ask - what is special about 95% and how did we arrive at that figure?

When setting goals it would be nice to make an informed decision and have sound logic behind your targets. A couple things to consider when setting goals:

· If your process worked at its best, what results should you be entitled to get?

· Are there any contractual targets or engineering specs?

· What are your current levels and trends?

· How are your peer organizations performing?

· How is your best competitor performing?

· What is the industry standard and best in class for that metric?

· What is considered world class for that measure?

· What level of performance would be considered a breakthrough to the next level?

Armed with that information, you can “triangulate” in on a realistic target for your measure that best reflects your strategy!

Link of the Month

In the 1940’s University of Tokyo professor Kaoru Ishakawa put together the “Seven Basic Tools of Quality”. The theory being you can make many of your process

improvements using this small set of tools. To find out what the seven tools are, see a description of each, and download free Excel templates to help automate them, click here and visit the American Society for Quality.

What Are The Odds?

Almost every Operational Excellence methodology advocates the use of process maps or flowcharts. By visualizing your process you can quickly uncover non-value added work, inefficiencies, bottlenecks, and waste. From there you are in a good position to make sound decisions on improvements.

There is one advanced technique that allows you to take the picture off the whiteboard and bring it to life by performing desktop simulations to see how your process would perform under different conditions. It’s name? Monte-Carlo simulation.

Monte-Carlo is a technique developed in the 1940’s as part of the Manhattan Project that involves the use of random number generators to help study how a process is likely to perform in varying conditions. With today’s software, you can map a process, enter projected performance data on each step into Excel and with the click of a mouse, simulate running that process 10,000 times. It produces a distribution of output so you can study the odds that you will meet your goals (such as speed and quality). It also offers a sensitivity analysis to find bottlenecks and do non-invasive “what-if?” analysis for process changes. It is quick to learn and an invaluable aid in optimizing a process.

Several Excel add-in software packages exist. My favorite is DiscoverSim (in Beta testing at this writing) by SigmaXL, Inc. According to its author, John Noguera, “The areas of application for Monte-Carlo simulation are very wide, including Design for Six Sigma (DFSS), Tolerance Design, Project Management and Risk Management with common use in Engineering, Finance, Telecommunications and other industries.” The benefit, notes Noguera, is in being able to deal with uncertainty by using “brute force” computational power.

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