Posts Tagged ‘quality problems’

Lean Six Sigma Improvement and Work Design, Part 8

Monday, August 2nd, 2010

This is the eighth post in a series taken from a lesson in Pyzdek Institute Lean Six Sigma Black Belt training. Future posts will continue the topic. You can find all of the articles in the series by searching this site for the title.

What skills do the people need?

The Lean Six Sigma cell layout requires that workers be multiskilled and able to handle any of the tasks in the work cell. This differs from an operations-based layout where, for example, all drill presses are placed together and a person would only need to know how to operate a drill press. In contrast, a work cell might have drill presses, grinding machines, mills, a deburring station, etc. and all workers need to know how to operate all of this equipment competently.

How can we keep track of cross-training?

It’s a good idea to keep track of which operator has which skill in a work cell, as shown in Figure 9.

Figure 9-Cross Training Chart

Cross Training Chart

An additional advantage to the continuous cell layout is that workers don’t waste time standing around waiting for the machine to finish a task. Instead they load one machine, start it, and move to the next operation in the cell while the machine completes its automatic cycle.

How can we arrange the workplace and assign workers so those working in it can easily help one another?

Yet another efficiency enhancement is that when more than one person is working in the cell the workers can help each other if one of them falls behind. Quality also improves as workers are able to check on each other’s work and often catch quality problems right away. Work cell layout should deliberately take this into account, making it easy for a more experienced worker to help a fellow worker. Worker assignment should also consider this. Try to assign workers so new or slower people have more experienced and faster workers on either side, or immediately after them in the flow.

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Quality Guru Chosen to Head CMS

Tuesday, May 11th, 2010


Donald Berwick


Donald Berwick, a Harvard University professor and leading advocate for improving health-care quality and efficiency, has been named by President Obama as his choice to head the Centers for Medicare and Medicaid Services (CMS.) Berwick is well-known in Quality circles for aggressively advocating quality improvement in healthcare. Berwick, who specializes in health-care policy and pediatrics, has never led such a large organization. As head of the Boston-based Institute for Healthcare Improvement, however, he is known for persuading doctors and hospitals to adopt innovative methods for reducing medical errors. Dr. Berwick is author of numerous articles and books, including the classic work demonstrating the application of quality technology to health care issues, Curing Health Care. He is one of the nation’s leading authorities on health care quality and improvement. He is also Clinical Professor of Pediatrics and Health Care Policy at the Harvard Medical School, and Professor in the Department of Health Policy and Management at the Harvard School of Public Health.

If confirmed by the Senate, Berwick will face a number of daunting challenges. One is the sheer size of the CMS, which is about to become even larger. The agency, which is part of the Department of Health and Human Services, must oversee a massive expansion of Medicaid, the federal-state insurance program for the poor, with an estimated 16 million people expected to join its rolls by 2020. At the same time, Medicare, the insurance program for the elderly, will need to reduce payments to health-care providers by about $400 billion over 10 years without impacting the quality of coverage. Lean Six Sigma and Quality technologies provide an approach for doing this while minimizing the impact on value-added health care processes, operations and activities. Berwick’s familiarity with these areas provides reason for optimism or, at least, hope. This blog has frequently posted examples of poor quality in health care. Let’s hope that Dr. Berwick will have a positive impact at CMS.

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Quality, Costs, and Six Sigma

Monday, August 10th, 2009

Six sigma isn’t just about quality for quality’s sake.

Your employer, Peerless Systems, acquired Acme International for its technology. But your leaders want more than just Acme’s technology; they also want Acme to be successful in its own right. But Acme has problems. Acme, it seems, is still operated as a traditional three-sigma company. Peerless has long since moved to six sigma and beyond, and you played an important role in making that happen. Your new challenge is to lead Acme from three sigma to six sigma. It’s what you’ve been waiting for your entire career–welcome to senior leadership!

You bring your staff together to establish a baseline. Bob, the vice-president of marketing, says, “We’re losing customers due to poor quality, and our competitors are killing us on price.”

Ann, your director of quality, is next. “When Bob told us about the quality problems, we increased inspection and testing, ” she says. “Field failures dropped, but (of course) costs increased.”

Figure 1: Cost and Value of Quality

Lorraine, vice-president of finance, shows Figure 1. “My staff and I believe that the customer places a certain value on quality,” she states. “At first, our quality was too low, and the customer wouldn’t buy our products. When we improved our quality, we also increased our costs, but the customer wouldn’t pay the higher prices we had to charge. We’ve found that profitability is maximized when total cost of poor quality is about 25 percent of sales. The problem is that there is very little profit, even at that cost level.”

This all has a familiar ring to you. You know that the typical three-sigma company spends about 25 percent of each sales dollar on the cost of poor quality. Before starting the six sigma journey, Peerless was in similar shape. You’ve prepared the slide shown in Figure 2 to illustrate the difference between three-sigma and six-sigma quality for your staff.

Figure 2: Three Sigma Profits
vs. Six Sigma Profits


“Right now, our business is only capable of operating at a level equivalent to about three-sigma quality,” you explain. “Trying to get better quality out of our existing systems only adds costs. We must develop new systems that deliver better quality and lower costs simultaneously. We need six sigma systems.”

You go on to describe the differences between six sigma systems and three sigma systems, and the importance of six sigma to Acme. You tell them that six sigma is not a destination, but a journey of continuous improvement. Of course, Acme won’t go from three sigma to six sigma in one big jump. Instead, overall performance will move from three sigma to four sigma, then to five sigma and so on as people are trained and systems redesigned and improved. Figure 3 illustrates the expected progress toward six sigma.

Figure 3: The Journey to Six Sigma

You summarize by telling your staff that six sigma is not about quality for the sake of quality; it is about providing better value to customers, investors and employees. Paraphrasing the Chinese philosopher Lao-tzu, you announce, “Six sigma is a journey of a thousand miles. Creating a roadmap that links customer satisfaction, quality and costs is the first step.”

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Activity Based Cost Accounting Hinders Lean Six Sigma

Friday, July 24th, 2009

In a recent post Bill Waddell tackles one of my pet peeves: activity based costing, or ABC. Few things do more harm to lean six sigma than this method of accounting. In fact, it is my opinion that the accounting systems used by American businesses are responsible for a great deal of our country’s declining economic prowess. Hindering improvement activities are just one example, but it’s the example nearest to my heart.

Let me give you one example to illustrate (it would take a book to describe all that’s wrong with ABC.) Let’s say we are trying to convince Mary that lean six sigma is a great idea. “Mary,” we say enthusiastically, “using lean six sigma will help you reduce inventory. Inventory is a bad thing. It takes up valuable space, it hides quality problems, it costs money to build it and it doesn’t generate any revenue…” Mary nods in agreement and tells us to stop badgering her with the obvious. Furthermore, she adopts lean for several important product families and her inventories drop dramatically.

Mary is likely to find herself out of a job if the company is using ABC. With lean six sigma Mary doesn’t make something until it’s needed by a customer. But if ABC is used a unit built for inventory is valued as highly as a unit built for delivery to a customer. ABC’s absorption accounting allocates overhead and other costs to units produced, why the units were produced doesn’t matter to ABC. Mary’s lean approach won’t look good, especially in the begining. Consider that Mary might begin with two months inventory. Depending on takt time, she may not need to produce anything for several weeks. It’s likely that Mary’s boss will pay her a visit with a message something like “Whatever the hell you’re doing, Mary, stop it. You’re killing my numbers!”

There are many other things wrong with ABC, and with the generally accepted accounting principles (GAAP) on which ABC is based. Considering that these accounting methods are taught to MBA students at our elite universities, we can only hope our economy survives our accountants.

Bill offers one alternative to ABC, which is described in a book called Real Numbers. Another is Throughput Accounting, which is based on Goldratt’s Theory of Constraints. Both methods are far more simple than ABC.

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Posted in Leading Six Sigma, lean-six-sigma | 3 Comments »

Why Isn’t Six Sigma Used More in Healthcare?

Thursday, April 9th, 2009

Apparently there are still questions about whether or not a process improvement methodology like lean or Six Sigma can work in healthcare. I find this astonishing and disingenuous. The only real requirement for deploying any process improvement is whether or not there is a process that is done more than once. Healthcare at any respectably sized organization involves thousands of patients, procedures, images, admissions, discharges, transfers, prescriptions, physician orders, medication administration, IV line insertions, laboratory tests. Need I go on?

Every time one of these things take place there are many ways they can go wrong. Patients can be misdiagnosed, emergencies can take too long to attend do, images can be poorly done or misinterpreted, admissions can be too time consuming and expensive, discharges can take place too early or without adequate instruction, transfers can injure patients, prescriptions can be issued in error or filled in error, physician’s orders can be incorrect or incorrectly interpreted or incorrectly followed, medications can be incorrectly administered, IV lines can become infected, lab tests can be done incorrectly or cost too much or take too long to do.

So, we have a very long list of clinical and non-clinical healthcare processes. For every process we have a very long list of things that can go wrong with the process, and an equally long list of ways in which the process can be done better.

Over 20 years ago the National Demonstration Project on Quality Improvement in Healthcare examined the applicability of quality methods to healthcare issues. They concluded

What is truly unique about the field of quality control is not its tools, but its ethos–the set of attitudes that it brings to quality problems.

Here’s a short list of what is included in this ethos

  • Prevention is preferable to detection.
  • Focus on the system, not the individual
  • The customer is central
  • Variation is endemic. Different types of variation require different types of responses
  • Quality should be defined broadly. It is not simply quality of care that matters, but also quality of service, amenities, reliabilitiy–all of the aspects of the healthcare encounter.

The NDP proved that the quality approach (aka Six Sigma and Lean) had value to the healthcare community, but there has never been widespread acceptance. I believe that the root cause of this is a system of perverse economic incentives that makes poor quality pay. A c-section poses higher risk to the mother and the baby. But whether or not a c-section is needed is a judgment call. If one is performed it costs several thousand additional dollars. Those dollars are revenue to the hospital and income to a physician, an anesthesiologist and other professionals and care providers. These are simple facts that can’t help but influence the decision-making process. When Six Sigma or Lean come along and promise to drastically reduce problems and system failures, it is only natural that the people involved consider the impact on their top and bottom lines. Until this situation changes, process excellence will be a tough sell in healthcare.

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