The Three Elements of a Great Leader

The article below was written by Hiroshi Mikitani who is known as a thought leader in today's world.  I felt it went well with my series of leadership articles I have posted over the last year or so.  Once again, a key focus is self assessment and belief, keeping an eye on the detail while having a greater vision.  Too often we get caught up in the day to day operations and lose focus.  The ability to re-focus periodically, take a step back an view the organisation from different perspectives (both internal and external), is another key element in my perspective.

Roland Weber

Hiroshi Mikitani

CEO, Rakuten Inc.

October 18, 2012

What is a leader? In my experience, a successful leader is made up of three critical elements. A leader is a general, a teacher and an optimist. You can be all three if you understand what skills and behaviors make up each of these traits.

A General. Many young people assume a general is simple the leader at the front of the pack shouting orders. But this is not the behavior of a great general. If you all you are doing – as a team leader, a division leader or a CEO – is giving orders, you are not displaying the necessary “general” behavior. A great general is a strategist. Strategists work out problems not just in the near term but also considering the overarching strategy for the full group in the future. Think of it as if you were skiing. You don’t just look right in front of you. You also must look into the distance and prepare for that terrain ahead. The ability to engage in strategic thought is critical to great leadership.

A Teacher. Those who rise to leadership positions often have tremendous confidence in their own actions and judgments. But can they teach others to follow in their footsteps? It’s the difference between being a great athlete and a great coach. You may be a first rate baseball player, but can you teach another to do what comes to you as second nature? It’s not that easy. In order to really teach something properly, you must transform the knowledge of a genius into something average person can understand. You must be able to translate your intuition into ordinary, understandable words. It is a huge challenge, but a critical one. You can’t create and sustain a great company without a strong teaching element running through it. You may hire the most talented people in the world, but it is a reality that some of them will eventually leave your firm. You need the construct to transfer abilities from person to person. That activity begins with you.

An Optimist. To climb the tallest mountain, you must believe you can set an outrageous goal and achieve it. To lead others to this remarkable feat, you must be able to convey your enthusiasm for the challenge to them. The leader who says, “Well, just climb up as far as you can go” will not get the same response as “We can make it to the top! I am confident. Follow me!”

Wherever you are on the leadership hierarchy today – whether you currently lead a team or a division or a company – these three elements are the key ingredients to your success and to the success of those who follow you.

Original post: Mikitani, H (2012), LinkedIn:  http://www.linkedin.com/today/post/article/20121018130617-52782505-the-three-elements-of-a-great-leader

Lean Leadership

The following information is from a presentation out of the lean leadership series by Factory Strategies Group LLC. (2009).  I have previously discussed the differences between management and leadership, as well as traditional and modern variations.  The following further highlights the importance of leadership, and the direct distinction from management.  Changing from wearing one hat to the other, and combing both takes practice, but will allow for a better organisational culture and increased efficiencies.  Although the following doesn't discuss energising and motivating employees, it is an area that will stem from good leadership.

Leadership Influences Change

ENGAGEMENT

“People don’t resist change.  They resist being changed.” - Peter Senge

REALISM

“Culture does not change because we desire to change it.  Culture changes when the organisation is transformed; the culture reflects the realities of people working together every day.” - Frances Hesselbein

DETERMINATION

“Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone getsbusy on the proof.” - John Kenneth Galbraith

Leadership versus Management

Leadership is not management

3 Tenets of management

Planning and budgeting
Involves creating timetables to meet commitments and developing specific action steps.

Organising and staffing
Requires that managers put some structure to the plan which includes staffing requirements, communications and delegation of responsibility.

Controlling and problem-solving
Entails the monitoring of activities, spotting deviations from the plan and organising solutions.

These management processes create and maintain order and predictability within the organisation. - John P. Kotter

Lean Leadership Characteristics

A leader needs to be visible as a role model in order to demonstrate his/her breadth of knowledge and understanding of the business environment and the organisational challenges.

A leader should display an aptitude for logic and a desire to challenge the status quo or “alleged wisdom” in order to facilitate free flowing decision making.

A leader must posses the ability to be a linking agent (facilitator) with a wide array of knowledge and information coupled with an unquestionable trust, professionalism and an open invitation for dissent.

Traditional versus Lean



Lean Leadership:

Good leaders motivate people in a variety of ways, three of which are the basis to the “lean” approach.


1.  Leaders must define the organisation’s vision in a way
     that highlights the values of their group
2.  Leaders must support people’s efforts to achieve the
     shared vision through coaching, feedback, and role modelling
3.  A leader should recognise and reward success


There are five leadership moves, or actions, a leader can perform to provide leadership on the Lean journey.


1.  Leaders Must Be Teachers
2.  Build Tension, Not Stress
3.  Eliminate Fear and Comfort
4.  Lead Through Visible Participation, Not Proclamation
5.  Build Lean Into Personal Practice

Kaizen - A Therapy for Continuous Improvement

I came across this article on Kaizen which I found interesting.  One point I take from it and that has come up through several of my posts is the link of management and leadership support.  I have discussed leadership as both part of my studies with Robert Kennedy College as well as in context to lean culture.  At the end of the day, there are many programs that can be successfully implemented in companies, but everything starts with the leaders, and also has to finish with them to complete the circle.  Both their vision, strategic planning, persistence, openness and inclusiveness as well as change management play a big part in the successful implementation of any project.  For more information on my views please read my previous posts that relate to lean culture and leadership.  If you already have, just enjoy the article below.

Best regards
Roland

http://www.isixsigma.com/methodology/kaizen/kaizen-adhd-therapy-using-continuous-improvement-tools-to-keep-employees-continuously-occupied/?type=newsletter

Kaizen – ADHD Therapy Using Continuous Improvement: Tools to Keep Employees Continuously Occupied

Chris Seider, Robert Tripp and Mike Carnell September 3, 2012

Two common questions for people new to the Lean Six Sigma community are: “What is Kaizen?” and “Why would you run a Kaizen event as part of a Lean Six Sigma project?” This article describes what a Kaizen event is and addresses how to run successful Kaizen events.

Kaizen Basics

Kaizen is a Japanese term that translates to “change for the better” and is sometimes paraphrased as continuous improvement. As an event, a Kaizen represents a focused effort by a team to make quick but meaningful improvements to a defined area of a business process.

Kaizen is not designed exclusively for manufacturing processes but was first embraced on the shop floor. Kaizen can be used to impact one of three measures for a manufacturer – throughput (cycle time), inventory, and product or process cost. While non-manufacturing processes may look to other meaningful metrics to improve, any measurable process improvement should ultimately translate to one of these three primary areas of improvement.

The Relationship Between Kaizen and Lean Six Sigma

Kaizen events are generally distinguished from Lean Six Sigma projects by virtue of the shorter time to implement changes and the more focused application of resources (i.e., team members) to solve problems. The cognitive problem-solving approaches and the philosophies are the same, though some may differentiate the names of the problem solving phases in Kaizen events versus Six Sigma projects. Using the same philosophy in a shorter timeframe can mean that Kaizen events tend to favor trial-and-error tweaking of solutions in the absence of the thorough data analysis that characterizes Six Sigma projects. Solution-tweaking is a consequence that is often readily accepted in order to drive change quickly.

Because of the philosophical similarities between Kaizen and Six Sigma, Kaizen events often become an important component of Six Sigma projects in order to remove operational noise and to help illustrate the systemic issues to be solved in a Six Sigma project. It is also common that Six Sigma projects are a byproduct of efforts to characterize waste in a Kaizen event. In a mature continuous improvement culture, Kaizen and Six Sigma can have a powerful, symbiotic interaction. A planned schedule of future Kaizen events can also become part of a control plan to ensure that an operating system adopts a continuous improvement approach to ongoing management of the process.

Successful Kaizen Events

The best Kaizen events, typically defined by achieving a goal in less than two weeks, feature the following elements.

Process understanding, defined metrics and license to change are prerequisites of a Kaizen event.

The role of team leader is crucial to having a successful Kaizen event. An effective leader will harness the power of multiple voices to explore solutions, refine and correct those solutions as needed, get actions completed quickly, and take responsibility for the success or failure of the event. The team leader should be mostly neutral during the event, but should be ready to contribute when doing so may add value – team leadership is an art form in this sense. The leader is empowered by the site or line leadership to make changes while keeping a focus on what metrics are most important. Change for the sake of change without improving business metrics (and ultimately financial performance) is never the desired outcome.

The team leader must be familiar with the process regardless of whether they formally work in the process. If the selected team leader is unfamiliar with the process, then the team leader must formally observe the process performed prior to launching the team – without trying to improve the process during the observations. In a transactional process the team leader needs to watch several process transactions flow from start to finish before facilitating an event.

Also before launching the Kaizen event, line or site leadership must determine the metrics that will be used to evaluate the work of the team. For example, if a Kaizen is being used to help 5S (sort, straighten, shine, standardize, sustain) an area, an operator’s movements (distance traveled by steps or arms) could be a selected metric – ensuring that the 5S actions were appropriate. As previously stated, continuous improvement-related Kaizen events should primarily focus on three types of measures – throughput, cost and inventory; the event and the selected metrics should be directly linked to at least one of these three process characteristics.

This often requires considerable planning; leaders must be sure that change management approaches are properly considered in anticipation of the desired improvements. For example, if it is clear that standard work combinations need to be reorganized in order to match demand to new manning levels and line layouts, then the site leadership needs to be prepared for document change control and training of operators – as well as supervisors and support personnel. (Note: This assumes that the organization is at an adequate level of maturity to perform a Kaizen and embraces  the importance of a formalized change management process.) Further, having to wait for approvals should be minimized so any changes prioritized by the team can be implemented within 24 hours ideally.

Speed is critical to these events in order to establish a clear cause-and-effect relationship between process changes and process performance. Consequently, the actions of the team must stay focused on improving the metrics desired by the leadership, and not be distracted by political maneuvering to gain support for the changes.

Teams that consist primarily of people who participate in the process.

The team must include three to seven full-time team members who regularly participate in the process that is the focus of the Kaizen event. While it is important to build a cross-functional team, consider using some team members (such as a finance representative) on an ad hoc basis. Powerful Kaizen events have line leadership or supervisors as part of the team composition; teams whose membership derives exclusively from either leadership or operator ranks can suffer from a myopic view of the system and limited buy-in from the process stakeholders. The challenge for any Kaizen leader is to ensure that subordinates are empowered and able to offer ideas without being inhibited by participating line leaders. The input of these team members is critical – they will be actively assisting in executing process changes, they will have to live with the changes as part of their daily routine, and they will be helping their colleagues understand and embrace the process changes moving forward. 

Often, work will need to be accomplished during the 12 to 16 hours the team is not on-site or otherwise unavailable, so the team leader should identify a prearranged point of contact who can coordinate necessary actions. Examples of off-hours work include rearranging furniture in an office, getting new IT connections to support a reconfiguration, getting new tools fabricated to accomplish a task, and acquiring a new piece of equipment that allows for easier operations.

Actions prompted by the team must align with the measures that the leadership wants a Kaizen event to affect. The team members must know that their time is dedicated to the Kaizen until the team disbands. Furthermore, site or line leadership must recognize that team members will not be available as resources to accomplish other tasks – like keeping the line running! 

Using process participants as part of the team helps with the critical change management that is often neglected. If the improvements are understood by all the team members, then acceptance is easier to sell outside of the team. If line leadership can also be part of the team, then the team’s empowerment grows because tacit approval exists for the changes even before confirming with a change management program. The team leader should recognize that unanimous, unwavering endorsement of all changes is not critical; many changes can proceed with general agreement only and an understanding of potential risks. Kaizen leaders need to recognize that there is risk in every decision, but when discipline is applied in understanding the metrics, the people and the process the risks can be better understood. Understanding the risks of making a bad decision – not eliminating such decisions entirely – is the practical path to undertake. To presume that any risk will be completely eliminated undermines the credibility of the Kaizen leader and/or wastes time trying to achieve the impossible.

Kaizen scopes defined not just by the metrics, but also by the physical boundaries of work.

Do not attempt to solve world hunger. No matter how tempting it might be to improve a high-level metric of an operation, the Kaizen leader needs to keep the focus sharp and directly tied to the team’s domain of control. This is especially important if the leader lacks experience running these intense, focused events. The focus should be on reducing a defect or error in one portion of the process, removing a specific element of waste or improving a subprocess of one production/processing area – not on reengineering a complex system. Planning multiple Kaizen events in sequence, each with a narrow focus, is preferable to a single, broadly scoped event on a complex operation. Elimination of one bottleneck will often reveal other bottlenecks that previously had been obscured.

Depending on the scope of the Kaizen, the availability of the line (process) must be coordinated and aligned with thebusiness needs. If significant physical changes are required (or expected) for the process as a result of the Kaizen, then time must be allotted each day to allow these changes to occur. The team leader must remember to use the change management process to ensure changes are aligned with the business needs.

Successful Kaizens can be scheduled for as short as one day or as long as five days. Short Kaizen events need to be narrowly focused with a small physical area to be impacted. While a Kaizen event should target two weeks or less to attain its goals, there are often cases where more difficult physical changes cannot be fully accommodated in that timeframe, so a project plan with milestones and responsible individuals will need to be established and managed.

There is no absolute rule that prescribes how long a Kaizen should keep the team members fully engaged, but it is rare to go beyond a week on a single purpose. Kaizen events are both physically and emotionally intense so more than one week can become difficult to endure. Often, team members will need to address action items outside of the formally convened team for at least one week following the original event. If the team feels the physical or transactional boundary must change during the event, the team leader must immediately coordinate with site or line leadership to formalize the scope change.

Preparing for Success

As with most endeavors, adequate preparation paves the way for success. The guidelines provided here  prepare a company for how to arrange and scope a Kaizen event. Besides solving a focused issue within a process, Kaizen events can be effective in any phase of a Six Sigma project as a means to scope an opportunity, understand waste or quickly identify solutions. Whether used on its own or within a Lean Six Sigma project, a Kaizen event has the potential to bring about lasting, impactful change.

Organisational Behaviour

I have recently completed my first module for my MBA in Leadership and Sustainability through Robert Kennedy College and the University of Cumbria.  It was an interesting start to this journey, enhanced by the multi-cultural and multi-business background of the participants in the course.  The individual views of individuals in the course widely varied depending on their cultural background and geographical location.

The discussions often included individual’s examples and their personal experiences, bringing a different perspective to the subject matter.  The course material was interesting and there was plenty of it.  More material was introduced as the course progressed.  The structure that lead from leadership and general organisational behaviour, through communication and teams, while looking at human capital and the motivation and management styles encountered in organisations did not only make sense, it was practical and allowed an in depth analysis on the way about one’s own present and past businesses.

The consideration of culture and conflict management as part of the organisational structure, as well as the tools discussed like balanced scoreboard, SWOT analysis and McKinsey’s 7s analysis allowed for a detailed analysis of an organisation, leading to clearly defined solutions relevant to our daily business lives.

The Professor was knowledgeable and easily approachable both through the public forums and through private communication.

I would recommend this course to anyone who wants to become a leader, or a more effective leader.  The investment of both time and money is minimal compared to the outcomes gained from the experience.  Below is a summary of this particular course (as taken from the Robert Kennedy College online campus).  Should you have any further questions, please do not hesitate to contact me.

Best regards

Roland

COURSE OBJECTIVES 

-- To focus on increasing the effectiveness of organisations and thus, of their members. 

-- To understand why people and groups in organisations feel and behave as they do. 

-- To identify principles that can improve the behaviour and attitudes of organisational members. 

-- To develop and enhance your skills as an organisational member and a manager. 

COURSE OVERVIEW 

The course involves learning from a variety of sources - audio clips, slide presentations, textbook, lecture notes, case studies, and interaction with peers and faculty in the forums. 

The course aims to be an examination of research and theory on the forces underlying the way that the members of an organisation behave. Topics covered include the behaviour of work groups and supervisors, inter-group relations, employees’ goals and attitudes, problems in communication, the circumstances of change in an organisation, and the goals and design of an organisation. 

READINGS 

Please read the articles provided under the resource tab of this course to get a brief idea about the focus. Students can also avail of our e-library facilities to surf, and research for material. The faculty will also provide some online links for selected reading as and when required. 

ON-LINE PARTICIPATION 

All students are expected to participate regularly in the discussions taking place in the forums. A wide range of discussion is usually desired in these discussion forums. These areas are an interesting and informative way of interacting with peers and faculty. They also allow you to apply concepts learned in isolation to real life or personal experiences. 

Lean Thinking - City Of Melbourne

I came across this page from Melbourne's government web site:

http://www.melbourne.vic.gov.au/ABOUTCOUNCIL/PLANSANDPUBLICATIONS/ANNUALREPORT/2010/ABOUT/COMMLEAN/Pages/LeanThinking.aspx

While I believe it is good that the city has focused some efforts on lean thinking, government traditionally do not spent much time following through.  Even here you can see that the last post goes back two years.  Lean is a continuous improvement path and journey that will never end.

The other issue I see is that they very much focused on the Senior leadership and management, but without including everyone in the business and creating a Lean Culture, the project is doomed to fail.  Both Labour and Liberal governments, both local and federal, their leaders Tony Abbott and Julia Gillard should take some time to take a closer look at how lean can help the government, opposition and most of all Australia as a whole.

I would welcome the opportunity to spend some time with our political leaders to highlight how Lean has helped thousands of businesses in Australia.  Many of our clients in the manufacturing industry are successful and continue to grow throughout these tough times.  Lean principles apply to all industries, but we must create a lean culture where the applications can blossom.  If you would like to challenge these thoughts, please drop me a line at roland.weber@chaseperformance.com or call me on 1300 880 338.  I am always happy to consider other views as part of our continuous Lean and Learning/Improvement journey.

Lean Thinking

Lean Thinking is an improvement system which focuses on improving the quality, timeliness and cost of services we deliver from the perspective of the customer. The system provides a structure, techniques and tools for carrying out improvements. Its ultimate goal is to deliver increased satisfaction for our customers and staff.  The City of Melbourne has been a pioneer in local government in Australia, fully embracing Lean Thinking as the continuous improvement model.

Lean Thinking within the City of Melbourne began in 2009, focussing on 10 organisational processes, incorporating many areas of the business including parking meters, child care, council reports and the recruitment process. One example of these improvements was the processing of construction zone permit applications. Prior to the application of Lean Thinking principles, the City of Melbourne took months to go through all the processes necessary to issue these permits. After applying Lean Thinking, the time has been reduced to around a fortnight. This is not only a major improvement for customers applying for permits, but also for drivers needing parking spaces, as the spaces are reinstated much earlier.  In our childcare centres, the Lean Thinking project identified 60 per cent of payments were overdue at any one time.  A more customer friendly online process has increased timely payments and freed staff from administration work to focus on more time on the children.

In 2009–10, the City of Melbourne Lean Thinking program has been coordinated by a dedicated team who provide guidance and support to managers. Our aim is to increase customer and staff satisfaction with improved services and processes, increase first time quality and timeliness, reduce costs and reduce the environmental impact. All process improvements must be measured against these outcomes.

In 2010–11, the City of Melbourne will continue to apply Lean Thinking across the organisation.  Our aim is to transform our organisational culture such that Lean Thinking is the way things are done every day.  Lean Thinking will be prevalent across the organisation, evidenced by supportive leaders who work with their teams to solve problems through the application of lean techniques. Because Lean Thinking focuses on processes from beginning to end we are also working with our external partners to ensure seamless service delivery for the benefit of our customers.

Increasing Productivity and Client Satisfaction

Melbourne 28th & 29th August 2012

2nd Annual LCI Australia - Increasing productivity and client satisfaction

You will agree that there is a lot of waste in the processes of our sector the newly formed LCI Australia network is bringing the focus back to improving the processes and outcomes delivered by our sector. Lean business practices bring the focus back to increasing value for the client, eliminating non value adding inputs and making sure all work flows reliably. 

Consider joining your industry colleagues at the 2nd Annual LCI Australia conference, the annual gathering for senior managers, industry leaders and Lean practitioners who are focussed on improving the efficiency of business practices and outcomes in our sector. Only 2 weeks to go so book your place today and forward this to your colleagues.

The 2012 conference will bring 60-70 attendees together all ready to actively participate in group discussions, Q & A and networking over the course of the 2 days conference, workshop and Industry Dinner. We invite you to share your experience and views as we delve into this year’s theme: Increasing productivity and client satisfaction

LCI 2012 will provide an overview and insight into the general practice of LEAN. Starting and sustaining an ongoing transformation on projects or in organisations, understanding the resistance to and motivation for change. The conference offers industry speakers full of case studies, experiences sharing the problems they have encountered in implementing lean thinking in their workplaces and solutions. Indications and examples of costs and benefits achieved through Lean implementation and sharing the results, including both traditional measures and longer term benefits are some of the tangible benefits of attending LCI 2012. 

Program is packed with Case studies, tools and research all the details are available on the website; 

·         CASE STUDY - Building lean capability Angela Corriero and Hunter Dean, Chase Performance / Systemix

Resistance to and motivation for change are key factors in determining successful Lean project delivery.

Angela is a Lean culture specialist who spent considerable time with Toyota in Japan and using this global experience will illustrate how problems can be eliminated before they even start – it’s a matter of building Lean capability into not only your project delivery, but within your fundamental business development

structure.

·         CASE STUDY - Lean Construction for Home Builders Brian Levitan, Managing Director, Lean Australia

In March 2011 the NSW Government organised a program aimed at construction companies and their suppliers. 10 companies signed up, in Dubbo and Mudgee consisting of 2 Builders, 4 Construction support service, and 4 mining/mining Support companies. This session describes the program, training challenges for the level of staff, success factors, roadblocks, and results for example Scott Hawkins Homes have reduced the time to build a house by 30% using Lean

construction tools, and can build 30% more houses with the same overhead. Most importantly, although the ‘Project’ finished over a year ago, the companies have internalised the culture change, and are still engaged in ongoing continuous improvement.

·         CASE STUDY - Techniques for improving productivity and client satisfaction Alex Kunz and Mick Jackson, Gehry technologies, Blue Ocean Consulting

Examples where the implementation of new processes and technology has led to project-wide performance improvement of commercial and civil construction projects. Particular focus will be on non-financial improvements and their corollary effect on project financial performance.

Lean practices, tools like ‘Last Planner’ and cultural alignment are explored through interactive sessions in 2 half day workshops on 29th August. I have attached the conference brochure so you can see the full speaker line up and it’s an exciting mix this year. 

Discounts available to LCI members / AAA members / EA Members and AME members. Student discount also available so book your place today.

We look forward to seeing you there.

CLICK HERE TO REGISTER NOW

P.S If you are not an LCI Australia member why not join today and enjoy the benefits of discounted rates to the Annual Conference and the FREE Regional Events Join LCI AU Today.

Chase Performance - Lean Six Sigma - New Web Site

Chase Performance is pleased to announce it's new web site with many lean six sigma case studies and more...  http://www.chaseperformance.com

Lean Mining, Integration of Lean, Six Sigma & TOC Improves Performance

Lean Construction and Mining are on the forefront of our programs.  We are currently working with clients in Western Australia through our Perth branch, Queensland through our Brisbane branch and South Australia through our Adelaide branch, to create improvements in all areas of the construction and mining operations.  The article below, although published over two years ago is a great example on how easy it is to create improvements.  

Most mining companies have their own continuous improvement specialists who we work closely with.  The advantage we offer is access to more resources due to government assisted initiatives, as well as nationally recognised qualifications for the individuals completing the programs.  

We also assist in rolling out lean processes in departments like admin, procurement and planning, that are often located in head offices and not necessarily included in the programs run on site.  Contact us for a chat, to see how we can add value to your lean journey (1300 880 338).  Here's a link to a lean article I published a little while ago...  http://leanimprovement.blogspot.com.au/2012/04/lean-mining.html

Integration of Lean, Six Sigma & TOC (theory of constraints) Improves Performance

Right combination bring results in Brazilian mining and metallurgical plants

Apr. 9, 2010Reza M. Pirasteh, iTLS-ISO Group and Eng. Celso G. Calia, Goldratt Associados

It is clear that for-profit enterprises manufacturing products strive to achieve their targeted revenues from their production reliably utilizing their available capacities and resources. Unreliable and below target production levels lead to low revenues and high inventories, causing high operating expenses. As an outcome, profit and ROI are typically compromised. This situation also creates an enormous amount of stress and frustration on the organization's critical resources potentially jeopardizing the future revenue opportunities.

Continuous Process Improvement (CPI) approaches such as Lean, Six Sigma and TOC have been applied to help organizations to improve their efficiencies and profitability. However, there had not been research to quantify the effects and contributions of each of these approaches which led to a recent scientific research conducted from 2003 to 2005. This research also tested effects of a integrated approach applying the three methodology in a logical sequence and compared its effect with the implementations that were using each one of the CPI methods alone.

The integrated continuous process improvement tested in the research is called iTLS. It applies the Theory Of Constraint, introduced by Eli Goldratt, Lean which is best known as Toyota Production Systems (TPS), and Six Sigma developed by Motorola, in a sequence in order to optimize each approach's core strength.

Taking over two and a half years and involving 21 manufacturing plants with 211 CPI team leaders implementing their preferred CPI approaches,105 projects were completed.

The research also quantified the financial contributions realized through implementation of each one of these CPI approaches. The statistical analysis of the results indicated that Lean and Six Sigma contributed significant financial results for their organizations. Both Lean and Six Sigma contributed similar results (P-Value of 0.622, did not indicate significant difference between the two approaches, considering financial benefits factor.) However, the integrated approach, applying TOC, Lean and Six Sigma in logical sequence, resulted in financial benefits that were over 4 times (4X) higher (P-Value of 0.0000, indication of high degree of significance), if either one of these methodologies were applied alone. (For research click here.)

One company that used the integrated approach is Votorantim, which is the 4th largest private Brazilian group and operates in several countries in various market segments, such as mining, metal industries, cement, paper, steel, and fruit juices. Five facilities have adopted and benefitted from the Integrated TOC, Lean, Six Sigma, iTLS approach for continuous improvement developed by Dr. Reza Pirasteh, introduced publicly in 2006 (Pirasteh & Farah 2006), in a deployable form. Two of the plants in this case study were mining operations and three were metallurgical plants.

In this case study the iTLS approach successfully synchronized production with the available capacity levels while providing process stability. This approach was smoothly implemented through involvement and participation of the organizations' people and their powerful commitment for success.

The Integrated TOC, Lean, Six Sigma Model

iTLS integrates, synchronizes and harmonizes the three powerful ingredients (Lean, Six Sigma and TOC):

• Focus on the few yet critical elements that limit the global performance of the organization by applying Theory of Constraint tools
• Eliminates waste in the form of "hidden factories" with application of Lean tools
• Reduces undesirable variability to ensure process stability with Six Sigma tools

The application of this integrated system to production for continuous process environments ensured that the invested capacities and resources were converted into stable production flow generating profitable revenues.

Results

The case study that follows is a summary of application of iTLS in a number of Brazilian conglomerates includes mining plants, ore concentrating plants, and metallurgical production plants. In all cases studied, when the iTLS was applied, within 3 to 4 months production throughputs significantly increased. Continuing with the implementation with additional 3 to 4 months the processes stabilized while achieving the desired strategic target production levels. This was previously perceived as impossible.

The new performance levels are significantly exceeding previous production thresholds without adding and investing in additional capacity. Consequences were simply generation of more revenues, more profits and higher ROI.

Case Study

Initial Condition

• All plants were unable to meet production targets and had sporadic production performances, leading to lost revenues, due to missing deliveries.
• There was a constant pressure on the plant managers for not being able to achieve the desired strategic production results which trickled down to all levels below in the organization. The other undesired effects observed were:
• Targets were not met
• Huge quantity of actions for problems solving which were becoming more unmanageable as the quantity of the grew
• Growing pressure for acquiring more and more resources
• People were frustrated. Their perception was: "the more we do, the less we achieve"
• "Finger pointing" and "It was not me!", "I am not part of the problem" was a commonplace, creating an environment of non-cooperation and covering the back atmosphere
• The productive utilization of resources were low
• Lack of consistent preventive maintenance
• Employee apathy

Application

The iTLS model was implemented in all plants simultaneously. The model was applied to bring stable and robust process flows to the market place consisting of the following basic elements:

• A Drum that set the production pull tempo, established the delivery TAKT (at the pace that an operation needs to operate in order to meet the customer requirements) for the plant's product flow to the market
• Established buffers (Kanbans) that responded to the process drum and protects the vulnerable processes and the shipments from natural process variability
• A Pull material release disciplines synchronized with the pace of the Drum
• Implementation of Lean tools to identify sources of waste and removing them from the processes, making processes more effective
• Application of Six Sigma tools to make improvements sustainable by bringing process performances under statistical control
• Establish a repeatable and pragmatic problem solving framework for the workers and management to be able to continuously improve their processes autonomously

There is a direct correlation between responses to the operations' drum and process stability and the amount of financial gains achieved. Once the process drum was identified based on the optimal capability of the constraint resource, the operations drum became the pace for the material release and the shipments.

The constraint operations needed to be protected against variability caused by the feeding and interdependent operations, in order to ensure that full capacity was being converted to the product. In operations with continuous process environments, protecting the constraint which sets the operation drum and shipments was accomplished by creating sized protective buffers feeding them to ensure continuous flow of throughput to the market place.

Once adequately sized and implemented, buffers absorbed the process random variability shocks on the constraint resource and the shipments. It was important to note that the impact of the variability was buffer loss of volume or level, which needed to somehow recuperate. This was possible by utilizing the excess capacities at the feeding operations acting as virtual protective capacity. This allowed them to work when needed, at a pace which was higher (~10%) than the constraint or drum and the shipment's pace to replenish used buffers.

Therefore, any operation with capacity below 110% of the capacity of the drum, was tagged as a constraint, because it could potentially have a global adverse effect and jeopardize the throughput. It may seem that the operation becomes temporarilyunbalanced. Then the work teams began working on these operations, in terms of getting more from what they have by reducing waste and stabilizing them by reducing variability by applying lean and Six Sigma tools.

This model used buffer management to optimize decisions making based on interpreting the behaviour of the Buffers over-time. Buffers became the story tellers by letting the operations management know what is going on in the entire flow and allow them to anticipate potential disruptions, identify causes and derive actions for our Continuous Process Improvement (CPI), using Statistical Process Control tools.

The repeatability of results achieved with iTLS implementations was consistent with expectations. The following were some of the results achieved through implementation of this approach in all plants:

• Production improved by 10% to meet 100% customer requirement, without any additional capital investments
• Profits increased by additional 5%
• Pay-back periods were only a few months at each plants and sometimes less as low as 28 days
• Process stability improved exceeding the strategic target level expectations

Eugenio Hermont, General Manager of Votorantim Metais Unidade Tres Marias states that "...we have succeeded in another great achievement... that is why Tres Marias achieving all targets...."

Synergetic application of integrated TOC, Lean and Six Sigma, iTLS, provided a rapid and effective approach to improve capacity and productivity in metallurgical mining plants, which significantly improved the operations profitability and meeting 100% customer commitments. This model applied TOC to focus where to make necessary changes, Lean was applied to remove waste and Six Sigma tools were applied to control process performance and variability.

Reza M. Pirasteh, PhD., MBB, CLM is founder of iTLS-ISO Group. http://itls-iso.com/itlsgroups@itls-iso.com Eng. Celso G. Calia is founder and partner of Goldratt Associadoshttp://www.goldratt.com.br/site

7 ways lean healthcare management reduces cost

July 24, 2012 | Steff Deschenes, New Media Producer

Article by: Steff Deschenes

New Media Producer for Healthcare Finance News

Follow Steff on Twitter@Steff_HFN

With the financial pressures that healthcare organizations are facing, many hospitals are using traditional cost cutting methods to save money by looking at layoffs and staff reductions. Many more hospitals, however, are finding ways to reduce costs through lean management methods that don't require layoffs and can improve quality for patients.

"Lean is actually the best alternative to layoffs. It's all about encouraging everyone to participate in process improvement, as well as finding creative and interesting ways to save money for a healthcare organization to avoid those unwanted traditional cost slashing endeavors like layoffs," explains Mark Graban, a lean expert and author of the book Hospital Kaizen. "Layoffs don't lead to long-term cost reduction. And if you lay off people and don't fix any processes, you're risking patient safety and quality. As a result, more and more healthcare providers are looking at lean to break that cycle."

[See also: Reducing cost through clinical redesign]

Graban has outlined seven different ways that lean management can help reduce system cost.

1. Reduce "never events." A "never event" includes falls, infections, erroneous amputations and other small-to-large-scale disasters. Reducing these events is, of course, best for patients, but there's also financial pressure to reduce never events. In 2009, Medicare stopped paying for care from events they consider preventable, and now private insurers are following suit. Pressure ulcers and bedsores, for example, are viewed as preventable. They shouldn't happen if a good process is followed – like patients being repositioned. Improving quality in general saves hospitals more than layoffs since "never events" occur when an understaffed hospital can't be attentive enough to a patient needs.

2. Supply chain improvements. It's important to consider looking at a more effective material restocking process. For example, more frequent smaller batch deliveries or rotating supplies more quickly reduces  both the amount of space used in internal warehouse and cash tied-up in inventory.

[See also: Cost structure for hospital tracking systems must be 'no-brainer']

3. Delay or cancel construction and expansion. A trend in the last few years has shown that hospitals use lean to increase capacity by using current equipment and available space. Lean makes better use of existing resources as an alternative to increasing capital spending. "I worked with one hospital that through process improvement to patient flow – preventing delays from registration through to discharge – they increased the utilization rates of their MRI machines from 40 percent to 60 percent. And they didn't need buy more equipment," said Graban.

4.  Reduce overtime. Reducing overtime is a great opportunity to help make improvements with lean that doesn't alienate people the way layoffs do. Essentially, people want to get home to have dinner with their families in a predictable/consistent way. If you can improve charting during the process, for example, instead of having nurses do it after, you can improve staff satisfaction while trimming down overtime, which results in both morale and cost savings. It's a win-win opportunity.

5. Reduce length of stay. This certainly isn't about pushing patients home before they're ready, Graban notes. Reducing length of stay is done through preventing errors that would extend a stay or delay a discharge when patients are medically ready to go home. Because of miscommunication, poor planning, or when families or nursing homes aren't yet ready to take on the person being discharged, a four-day stay can suddenly turn into a five- or six-day stay. These process related things aren't medical issues, but they often extend length of stay which can cost millions.

6. Reduce unnecessary testing and diagnostics. A number of hospitals are trying to be responsible stewards of healthcare dollars by reducing inappropriate usage of lab testing and diagnostic imaging. For example, through medical evidence it's been shown that when a patient comes in with back pain more often than not what they need is physical therapy – not a fast pass to a CT scan, says Graban. ACOs help organizations benefit from their own cost reduction efforts and will do so in a way that doesn't shortchange what the patient needs.

7. Reduce delays and errors in billing. There are a tremendous amount of delays in billing, including too many people involved during different parts of the process. If there's a better flow, if people are handing off the work to the next person in the chain immediately, bills go out in a couple of days instead of a couple weeks. It's also incredibly important to make sure billing is being done properly. If mistakes are made and proper preauthorizations aren't followed, but procedures are done anyway, hospitals might be voluntarily giving away revenue.

This article was originally published on: http://www.isixsigma.com/share.php?site=http%3A%2F%2Fwww.healthcarefinancenews.com%2Fnews%2F7-ways-lean-healthcare-management-reduces-cost

To discuss how we can assist you with lean and six sigma in Australia, please contact Chase Performance on 1300 880 338 or visit our web site: www.chaseperformance.com