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PROCESS IMPROVEMENT (OPTIMIZING TIME, COST, QUALITY (UNDERSTANDING LEAD…

- - - - FAILURE COST
        
        MOST ORGS RARELY AWARE OF
        
        WASTE DISPOSAL
        
        REWORK
        
        COMPLAINT RESOLUTION
        
        LOST CONTRACTS
        
        LITIGATION
        
        COSTS MORE AS QUALITY DECREASES
        
        "INVISIBLE FAILURE COSTS"
        
        PREVENTION COST
        
        COST OF MAKING SURE THINGS DONE WELL
        
        TRAINING
        
        QUALITY CONTROL
        
        GOOD MANAGEMENT
        
        GREAT EQUIPMENT, MATERIALS, PEOPLE
        
        COSTS MORE AS QUALITY INCREASES
        
        MOST ORGS VERY AWARE OF THIS
        
        ALWAYS PRESSURE TO REDUCE THESE
        
        TRACKED BY BUDGETS
      - MIDDLE
        
        CHEAPEST PLACE TO BE
        
        BUT DON'T REALLY WANT TO BE THERE
        
        NOT THE POINT OF MAXIMUM PROFIT
    - - CHOOSING LOW QUALITY ON ANYTHING IS A FALSE ECONOMY.
      - THE POINT OF MINIMUM COSTS IS NOT THE BEST PLACE TO BE.
      - THE POINT OF MAXIMUM PROFIT IS AT ABOUT 7.
      - TRYING TO ACHIEVE A QUALITY OF 10 WILL COST YOU MORE THAN YOU MAKE FROM IT.
    - - WHAT ARE YOUR FAILURE COSTS
      - ESTIMATE, HOW MUCH YOU THINK THEY ARE COSTING YOU ROUGHLY
  - - - PEOPLE
        
        TIME
      - MATERIALS
        
        THROWN AWAY
      - EQUIPMENT
        
        UTILIZATION
        
        SPACE
    - - DEFECTS
      - OVERPRODUCTION
      - WAITING (THAT PRODUCT SPENDS WAITING)
        
        ON SETUP
        
        ON MACHINES BEING FIXED
        
        ON NEXT PART BEING READY
      - NONUSED PEOPLE TALENT
        
        WASTED POTENTIAL
        
        COULD BE BIGGEST WASTE IN MOST ORGANIZATIONS
      - TRANSPORTATION
      - INVENTORY
        
        RAW MATERIALS
        
        WORK IN PROGRESS
        
        FINISHED MATERIALS
        
        THIS IS MONEY TIED UP
      - MOTION (WEAR AND TEAR)
      - EXCESSIVE PROCESSING
        
        MAKING THINGS TOO GOOD
        
        ADDING EXTRA FEATURES THAT ARE UNNECESSARY
    - - MEANS FOOLPROOF DESIGN (JAPANESE)
        
        PRODUCTS
        
        SYSTEMS
      - E.G.
        
        DIESEL NOZZLE IS TOO BIG TO FIT GAS CAR
  - - - KEEP STOCK
        
        BUT ALMOST ALWAYS BAD IDEA
        
        STORAGE SPACE
        
        OUT OF DATE
        
        DAMAGE OR LOSS
        
        MANAGING
        
        CAPITAL TIED UP
        
        REQUIRES ACCURATE FORECASTING OF DEMAND
        
        INSTEAD COULD WE MAKE THIS TO ORDER IF REALLY WANTED TO?
    - - TRANSFERRING BETWEEN PROCESSES
      - WAITING IN QUEUE (TO BE OPERATED ON)
        
        PILES OF PAPER
        
        EMAIL INBOXES
        
        WAITING LISTS
      - WAITING FOR REST OF BATCH (TO BE FINISHED OPERATING ON)
      - BEING OPERATED ON
        
        IS ONLY VALUE ADDING ACTIVITY
    - - BETTER LAYOUT, SO CAN MOVE THINGS MORE QUICKLY BETWEEN PROCESSES
      - REDUCING QUEUES AT EACH OPERATION
        
        CAPACITY
        
        SCHEDULING
        
        SIMPLIFY THE TASK / PROBLEM
      - REDUCING THE BATCH WAITING TIME BY MAKING SMALLER BATCHES
  - - - CAN WE REDUCE NUMBER OF STEPS
        
        "PRODUCTION CELLS"
        
        SMALL GROUP OF PEOPLE PROCESS A JOB FROM START TO FINISH
      - BUSINESS PROCESS REENGINEERING
        
        QUESTIONS
        
        CAN ANY STEPS BE AUTOMATED BY A COMPUTER?
        
        CAN ANY STEPS BE COMBINED INTO ONE, AND BE DONE BY ONE PERSON INSTEAD OF TWO?
        
        CAN ANY STEPS BE DONE IN PARALLEL RATHER THAN ONE AFTER THE OTHER?
        
        CAN ANY STEPS BE DELETED?
        
        DRAW OUT PROCESS
  - - - DICTATE FLOW THROUGH THE PROCESS
      - WORKING ON THIS IS VERY VALUABLE
        
        FREES UP WHOLE SYSTEM
        
        A LITTLE TIME/MONEY SPENT ON CAN HAVE BIG RETURNS
        
        COST IS WORTH IT
        
        IF OVERALL GETS YOU MORE OUTPUT
        
        SPENDING TIME ON NON-BOTTLENECK AREAS IS COMPLETE WASTE OF TIME
    - - FORCES SLOWEST POINT TO HURRY UP
    - - E.G. OFFICE DEPARTMENTS
      - GOOD IF DON'T NEED SOMETHING FROM EVERY ISLAND
      - CAN LEAD TO UNCONTROLLED QUEUES AND DELAYS
    - - YOU CAN EASILY WORK OUT HOW MUCH THE SYSTEM CAN DELIVER BY LOOKING AT THE BOTTLENECK
      - BOTTLENECK LIMITS THE THROUGHPUT, SO EITHER YOU PLAN EVERYTHING TO GO AT THE SPEED OF THE BOTTLENECK OR YOU SPEED UP THE BOTTLENECK.
      - TIME SPENT IN THE SYSTEM IS JUST AS IMPORTANT AS THE QUALITY COMING THROUGH
- - - - BETTER, IS CONTROLLING THE PROCESSES
        
        E.G. OVEN TEMPERATURE (BEFORE/DURING) VS TURKEY IS BURNED (AFTER)
        
        WHAT ARE THE KEY INGREDIENTS OF THE PROCESS?
        
        HOW DO YOU GET THOSE RIGHT EVERY TIME?
      - MEASURING AFTER IS TOO LATE
    - - TWO REASONS FOR FAILURE
        
        DRIFT - DRIFTING OF THE AVERAGE
        
        VARIATION - TOO MUCH VARIATION
  - - - COST
      - WASTE
      - HOURS TAKEN
      - OVERALL DELIVERY
      - LEAD TIME
      - PERCENTAGE DELIVERED ON TIME
      - QUALITY
      - ACCURACY
      - CUSTOMER SATISFACTION
  - - - BUT IF NOT SIGNIFICANT AND DRIFT IS SLIGHTLY ABOVE/BELOW AVERAGE
        
        GENERAL RULE
        
        1-7 = CHANCE / 50/50 / LUCK
        
        8 IN A ROW = PROBLEM
        
        SO CAN BE 99% SURE THAT SOMETHING REALLY HAS CHANGED VS IS PURELY CHANCE
        
        8 BAD COIN TOSSES IN ROW THEN PROBABILITY IS HAPPENING BY CHANCE IS 1/265 = 0.0039
      - IF VERY SIGNIFICANT THEN CHECK RIGHT AWAY
        
        DEATHS
        
        ACCIDENTS
        
        HUGE AMOUNTS OF MONEY
    - - ACTION POINT
        
        MEAN +/- (3.14 X MMR)
        
        STEPS
        
        CALCULATE THE MMR
        
        CALCULATE THE MEDIAN OF THAT
        
        FIND OUT CHANGE BETWEEN EACH SAMPLE
        
        CALCULATE THE MEAN
        
        MEDIAN MOVING RANGE
        
        THE TYPICAL AMOUNT THE NUMBER CHANGES FROM TIME PERIOD TO TIME PERIOD
        
        I.E. HOW SPIKEY THE DATA IS
        
        IF SMALL
        
        THEN ANY REASONABLE CHANGE WILL BE REASON FOR CONCERN
        
        IF LARGE
        
        WILL TAKE A HUGE CHANGE BEFORE NEED TO BE CONCERNED
    - - MEAN +/- (3.14 X MMR)
      - UNLESS HAPPENS 8 TIMES IN A ROW
- - - - U = USAGE RATE
      - A = ANNUAL STORAGE COST PER UNIT
      - FORMULA
        
        ECONOMIC BATCH QUANTITY (EBQ)
        
        LOTS PEOPLE SAY THIS IS AS NOT RELEVANT ANYMORE
        
        RATHER
        
        ASK
        
        HOW COULD WE MAKE IT LESS?
        
        WHY IS SETUP TIME SO LONG?
        
        SMED (TOYOTA)
        
        SINGLE MINUTE EXCHANGE OF DIE
        
        IF YOU CAN SAVE TIME CHANGING OVER BETWEEN BATCHES, YOU GAIN THE ABILITY TO MAKE SMALLE BATCHES EFFICIENTLY
        
        SAVES SPACE AND LEAD TIME THROUGHOUT WHOLE PROCESS
        
        ECONOMIC ORDER QUANTITY
        
        RATHER
        
        WHY CAN'T WE GET SYSTEM WHERE CAN ORDER IN SMNALLER QUANTITIES
      - S = SETUP TIME
- - - - KANBAN CARD
      - SEND MESSAGE
        
        MESSAGE
        
        DELIVER MORE
        
        MAKE MORE
        
        SEND
        
        WHEN RUN OUT
        
        BEFORE RUN OUT
    - - CAN ONLY REPLENISH BUFFER WHEN BUFFER HAS SPACE
      - OTHERWISE NEED TO GO HELP PERSON TWO CLEAR BUFFER
      - ADDRESSES PROBLEM OF
        
        LOTS OF WORK IN PROGRESS
        
        TAKES SPACE
        
        INCREASES LEAD TIME
        
        HIDDEN PROBLEMS
        
        VARYING QUALITY
        
        VARYING DELIVERY TIME
- - - - BEST WAY
        
        GET A RATIO
        
        INFECTIONS PER OPERATION
        
        DAYS ABSENT PER PUPIL
        
        ACCIDENTS PER PASSENGER MILE
        
        ERRORS PER REPORT
        
        THEN COMPARE TO
        
        OTHER SIMILAR GROUPS
        
        YOURSELF
      - E.G. WHY DOES THAT DOCTOR HAVE A LOWER SCORE
      - E.G. WHY DOES THAT SCHOOL GET BETTER GRADES
    - - 5 TESTS
        
        IS IT LIKELY TO BE BIASED?
        
        IS IT A NUMBER OR A RATIO?
        
        IS IT SIGNIFICANT? COULD IT HAVE HAPPENED BY CHANCE?
        
        WHAT AREN'T THEY MEASURING?
        
        CAN WE BE SURE THAT ONE THING REALLY DID CAUSE THE OTHER?
        
        CAUSALITY IS TRICKY
        
        MUST TO CONTROLLED EXPERIMENTS
- - - - YOU CAN'T MAKE MORE THAN THE BOTTLENECK CAN HANDLE
        
        MAKE SURE BOTTLENECK NEVER
        
        BREAKS DOWN
        
        RUNS OUT OF SUPPLIES
        
        IS SUPPLIED WITH DEFECTIVE PARTS OR MATERIALS
        
        NO POINT IN PUSHING IN MORE THAN THE BOTTLENECK CAN HANDLE; OTHERWISE, WORK WILL PILE UP
      - TIME LOST AT NON-BOTTLENECKS IS NOT REALLY TIME LOST.
      - AVOID HAVING ANY OPERATIONS THAT ARE RESOURCE SIGNIFICANTLY HIGHER THAN THE BOTTLENECK
        
        WHAT THEY MAKE WILL NEVER GET THROUGH BOTTLENECK
    - - CALCULATE HOUR REQUIRED AT EACH STAGE TO COPE WITH TOTAL THROUGHPUT
        
        DO YOU HAVE ENOUGH CAPACITY AT EACH STAGE
      - LOOK WHERE QUEUES ARE
      - WHAT TENDS TO BE LATE
        
        WHERE ARE THEY BEING HELD UP
    - - PUT YOUR BEST PEOPLE ON IT
      - MEASURE AND REDUCE DOWNTIME
      - KEEP A BUFFER OF WORK IN FRONT OF IT
      - INVEST IN MORE RESOURCES
  - - - WORKING OUT NUMBER NEEDED PER HOUR NOT ENOUGH
      - ALSO HOW MUCH SPARE CAPACITY DO WE NEED TO COPE WITH FLUCTUATIONS IN ARRIVAL AND SERVICE RATES?
        
        MUST ADD BETWEEN 20% TO 100% STAFF DEPENDING ON SPEED OF SERVICE WANT TO GIVE YOUR CUSTOMERS
        
        AND CHARGE THEM ACCORDINGLY FOR THAT
    - - QUEUE LENGTH = UTILIZATION / (1 - UTILIZATION)
        
        APPLIES TO EVERYTHING WHERE WORK IS ARRIVING AT RANDOM RATE AND NEED TO RESPOND TIMELY
        
        INSTANT SERVICE REQUIRES DOUBLE THE RESOURCES YOU EXPECT
        
        DILEMMA
        
        MANAGERS WANT HIGHER UTILIZATION (WHICH RESULTS IN LONGER QUEUES)
        
        CHOOSE BETWEEN WASTING STAFF IN ORDER TO GIVE GREAT SERVICE
        
        LIVE WITH UNHAPPY CUSTOMERS WHILE KEEP COSTS DOWN
        
        CUSTOMER WANTS SHORTER QUEUES (WHICH REQUIRES MORE STAFF)
        
        EITHER CUSTOMER PAYS MORE FOR LUXURY OF MORE STAFF
        
        OR LIVES WITH LONGER QUEUES RESULTING FROM FEWER STAFF
- - - - THEY KNOW WHAT'S REALLY GOING ON