Part II:Process Improvement - Saving $500K utilizing iGrafx and Design of Experiments

In Part I of this article we showed how utilizing iGrafx we could quickly map the business process flow, and begin to simualte the differences between the current system and the proposed new system.

In this week's article Part II we will look at the Factors, and create a design of experiments to analyze the process alternatives with regard to cost, cycle time, and Rolled Throughput Yield.

To recap:

• There is an opportunity to install a vault dispenser for medications on each floor, and remove the satellite pharmacies. The medications would be stored on each floor of the hospital in the specialized dispenser.


• The pharmacy would be contacted for a prescription, but rather than dispensing a medication (med for short), they would provide the nurse an authorization code to access the proper bin in the vault and extract the med.


• The pharmacy would keep status of each dispenser real-time and update each dispenser (4) times daily

Should the hospital invest time and money in improving the current process (e.g., by improving the chance the satellite pharmacy has the needed med), or by implementing the proposed Vault System.

Model Design

The model has two distinct processes. This is done to allow for direct comparison in the experiments. The left path is the current satellite prescription (Rx), or "As-Is", process. The right hand path is the proposed process utilizing the vault system.

The new process only utilizes components of the current process when the medication is not available in the vault dispenser. In that case, the main Rx is used to fill the order.

Responses

The responses of interest are:

• Time: How can we get the med to the patient most quickly; i.e., what is the shortest cycle time? Which process, current or proposed, has the shortest cycle time?


• Cost: Which process, current or proposed, is the lowest cost?


• Defects: What is the Rolled Throughput Yield (RTY) of each process? Each defect endangers patients, potentially in a life-threatening way; so it is critical to minimize defects.

Factors

The factors of interest are:

• Which process? Does the Satellite Rx, or the Vault, process provide the best responses?


• Immediate Med Availability?What's the impact of immediate med availability on the current and proposed process? The Satellite Rx method currently has an 85% chance of having the med. What effect would increasing the availability of the med in the Satellite Rx to 95% have? How does that compare to an 85% or 95% chance that the Vault has the med available?

Utilizing iGrafx we design the process follows as can be seen by clicking here.

Now we need to simulate the process for the Design of Experiments. Initially we used interview estimates of how long do certain processes take. For example it was estimated that activity #8 took beetween 1 and 4 minutes. But how can we more closely approxiamte this?

Doing a quick motion study we record 30 occurences of both the To-From Satellite process times and the Satellite pickup times. We then utilize iGrafx in conjunction with Minitab to determine the best approximate distribution.

As can be seen in the photo below we approixmate the distribution for the To-From Satellite times from the data.



The A-D Measure is the Anderson - Darling measure. The lower the A-D the better fit of the distribution to the data. From the tool we see that the best approximation for the observed data is the normal curve with the following parameters: Mean of 2.578 and Standard Deviation of 0.7940462.

Likeise doing the same for the satellite pickup time gives us the following.



Which shows that the best approximation is the Weibull distribution with the following parameters Shape of 8.988834 and Scale of 2.652587.

We now take those values and replace the previous interview estimates of task durations witht these distribution curves.

Utilizing this data we want to create a design of experiments that provides us answers to the following questions:

1. Which process do we utilize the current process or the new vault; and


2. What availability level should we have the medicine 85% or 95%.

We use a 2-Level full factorial design. This means that we take four measurements of the cost, average cycle time, and rolled throughput yield (RTY) of each setup of the factors at different levels: Vault at 85%, Vault at 95%, Satellite at 85%, Satellite at 95%.

Typically this would be very expensive and time consuming to do in real life, but since we are utilizing iGrafx to simulate the process and Minitab to track the outputs it does not have a cost nor time impact.

After running the simulations the results look as follows ordered by least cost:



As you can see from the results the best least cost solution is running the Vault Dispenser at 95% for a cost of $570K with an RTY of 99.975% and an average cycle time of 303 as opposed to running the Sateille at 95% at $1,087,504 with an RTY of 99.498% and an average cycle time of 495.

As you can see by creating a design of experiments we can quickly simulate the annual impact and identify the proper settings for the factors of the business process.

This translated into $500K less costs per operating year and a reduction of processing time by 40%.

Hawaii Business Consulting is the Value Added Reseller of in Hawaii. If you need to be able to quickly analyze your business processes and identify new solutions, iGrafx is the software package you need. It will enable you to quickly model, simulate, and analyze your data similar to what we have shown in the article. The software starts at $500 and that includes an initial training session with Hawaii Business Consulting.

Give us a call at (808) 224-0470 and we will create a free high-level model of your business process and identify ways in which your business could be saving money through process improvement.

Part I:Process Improvement - Saving $500K utilizing iGrafx and Design of Experiments

Have you ever been faced with having to make a large capital expenditure without knowing the impact to your business? Wouldn't it be helpful for you to be able to analyze the process improvement before making the decision without having to spend a lot of money or drastically changing your operating procedure?

Lets take a look at how process improvement helped this hospital save $500K and improve quality.

Current challenge is that a hospital has a problem with getting urgently needed medication to patients in a timely, reliable, and low-cost fashion.

The current process structure has a main pharmacy with satellite pharmacies each serving several floors in the hospital. The staff would like to reduce the time required to obtain the urgently needed medication, and have a better chance of the medication being available in the satellite pharmacy. In addition, the current process occasionally delivers the wrong medication to the floor. The staff would like to eliminate this opportunity for error.

The current process is modeled on the left side of the process diagram. A potential (new) process using a medication "Vault" system is modeled on the right side of the diagram.

This new process examines the following:

• There is an opportunity to install a vault dispenser for medications on each floor, and remove the satellite pharmacies. The medications would be stored on each floor of the hospital in the specialized dispenser.


• The pharmacy would be contacted for a prescription, but rather than dispensing a medication (med for short), they would provide the nurse an authorization code to access the proper bin in the vault and extract the med.


• The pharmacy would keep status of each dispenser real-time and update each dispenser (4) times daily

Should the hospital invest time and money in improving the current process (e.g., by improving the chance the satellite pharmacy has the needed med), or by implementing the proposed Vault System.

Model Design

The model has two distinct processes. This is done to allow for direct comparison in the experiments. The left path is the current satellite prescription (Rx), or "As-Is", process. The right hand path is the proposed process utilizing the vault system.

The new process only utilizes components of the current process when the medication is not available in the vault dispenser. In that case, the main Rx is used to fill the order.

In Part I of this article we will look at the Responses and model those utilizing iGrafx. Next week in Part II we will take a look at the Factors, and create a design of experiments to analyze the process alternatives with regard to cost, cycle time, and Rolled Throughput Yield.

Responses

The responses of interest are:

• Time: How can we get the med to the patient most quickly; i.e., what is the shortest cycle time? Which process, current or proposed, has the shortest cycle time?


• Cost: Which process, current or proposed, is the lowest cost?


• Defects: What is the Rolled Throughput Yield (RTY) of each process? Each defect endangers patients, potentially in a life-threatening way; so it is critical to minimize defects.

Factors

The factors of interest are:

• Which process? Does the Satellite Rx, or the Vault, process provide the best responses?


• Immediate Med Availability?What's the impact of immediate med availability on the current and proposed process? The Satellite Rx method currently has an 85% chance of having the med. What effect would increasing the availability of the med in the Satellite Rx to 95% have? How does that compare to an 85% or 95% chance that the Vault has the med available?

Utilizing iGrafx we design the process follows as can be seen by clicking here.

Running the process simulation returns us with the following:

• Satellite Rx Process: 659 Defects out of 131,037 opportunities. RTY is 99.4984% at a total cost of $1,116,775.07.


• Vault Dispenser Process: 98 Defects out of 131,036 opportunities. RTY is 99.9252% at a total cost of $646,575.81.

Looking at just the simulation data we can quickly see that the Vault dispenser will not only decrease the number of defects, but also cut the operating expenses almost by half!

In Part II we will explore the optimum settings for the Vault Dispenser through a design of experiments that will give us process alternatives with regard to cost, cycle time, and RTY.

Hawaii Business Consulting is the Value Added Reseller of in Hawaii. If you need to be able to quickly analyze your business processes and identify new solutions, iGrafx is the software package you need. It will enable you to quickly model, simulate, and analyze your data similar to what we have shown in the article. The software starts at $500 and that includes an initial training session with Hawaii Business Consulting.

Give us a call at (808) 224-0470 and we will create a free high-level model of your business process and identify ways in which your business could be saving money through process improvement.

LinkedIn - An efficient way to stay connected with your professional network

You may have heard that everyone on Earth is separated from anyone else by no more than six degrees of separation, or six friends of friends of friends.

But how do you leverage this? How do you locate the types of people that you want, and how do you allow yourself to be available to those that you would want to contact you, without being annoyed with a bunch of spam mail or phone calls every day?

It looks like LinkedIn.com, may have the solution you are looking for.



LinkedIn is a networking tool that helps you discover inside connections to recommended job candidates, industry experts and business partners. Through LinkedIn, you can accelerate your business effectiveness and career success by leveraging the network you already have. LinkedIn makes it easy to receive and seek out opportunities through your extended network while protecting your privacy, your inbox and your existing professional relationships.

Professionals also get access to LinkedIn Jobs, a relationship-powered job network that allows professionals to search job listings and discover inside connections to hiring managers, HR professionals and recruiters. Employers and recruiters can post positions on LinkedIn Jobs and get great candidates recommended by their trusted contacts.

LinkedIn is currently used by over 3.3 million professionals across the globe. This makes LinkedIn’s base of registered users four times larger than those of all other online business networks combined. LinkedIn has over 1,000,000 users in Europe and over 300,000 in Asia.

When I first heard about this system I though to myself "I am way too busy to be entering in contact information in yet another system." But the beauty behind this system is that it is very easy to add people to your network. All you have to do is add in their first name, last name, and their email list and it sends a generic invite to the people you want. Additionally you can upload a list of contacts from your current contact management system and it will generate the invitations automatically.

In addition, it can automatically create your own email signature to help get more people onto your network with your own personalized touch. For an example click here to see my email signature.

Another fear I had was if I joined someone's network would I then have to face a multitude of intros from people I did not know, or perhaps did not care to know?

But as you can see from their website:

"On LinkedIn, everyone’s Rolodex is protected since only people they trust can see who they know.

LinkedIn’s referral-only approach has attracted an elite group of business people not matched by any other network. And LinkedIn works: users accept 84% of all referrals because the only way users can be approached is if one of their trusted contacts forwards a contact request to them because they believe it is an opportunity their contact will appreciate.

This gated access approach has made the LinkedIn network a web of trust where users strengthen existing professional ties and enhance their reputation by helping their business contacts with introductions.

Professionals in over 130 industries are actively searching the extended networks of their trusted business contacts on LinkedIn to discover inside connections to potential business partners, to get in touch with industry experts for advice, or to find recommended professionals to fill open job positions. On average, users search LinkedIn once per second for people and opportunities, and LinkedIn has already facilitated over 1 million business introductions. Over 850 alumni and professional organizations have selected LinkedIn for Groups to set up member-only groups on LinkedIn that facilitate networking among their members.

LinkedIn is certified to meet the strict privacy guidelines of the European Union. All relationships on LinkedIn are mutually confirmed, and nobody is represented to be in the LinkedIn network without their knowledge and explicit consent."

LinkedIn has a wealth of features that you can choose to use or not use. Like most things it is what you make out of it. Try it out and see how well your network expands with LinkedIn.

Blink - The Power of Thinking Without Thinking

When presented with a new concept, challenge, organization, or even person do you ever come to a conclusion in the "blink" of an eye. Your "gut" has already given you the answer, yet you cannot explain why?



In Malcolm Gladwell's book "blink" he covers what happens within your mind to enable you to process a large amount of information and quickly come to a conclusion of which you cannot immediately substantiate why.

We have been trained not to listen to our gut, but rather follow things through with diligent research, to only find that our gut instinct is correct in the end. Do you ever wonder how you came to that conclusion?

For a personal example, I remember when I was getting my MBA we were covering Organizational Change. The professor that taught the course was previously the Executive Director of the Governor's Economic Advisory Council of the Commonwealth of Puerto Rico, and afterwards left to become a professor.

One of the students asked the professor, "How do you know whether you are effecting organizational change, how long does it take before you know?" And unfortunately the professor took the ivory tower approach to say "It depends.", and refused to elaborate beyond that. Hardly a conclusive answer nor a solid approach to a critical topic.

For whatever reason I felt in my gut that I knew the answer to the question. I raised my hand and said, "No the correct answer is 90 days." Bear in mind that I had not previously analyzed this issue, but there was an overwhelming instinct inside me that said that was the correct answer.

The professor feeling challenged, said, "How can you be so sure that is the correct answer. There are multitudes of organizations and multitudes of challenges how can you arbitrarily assign 90 days?"

Inside of me, I wondered how did I know? And as I started to think about it, it became to clear me, and I said, "Most public organizations are run on quarterly results. In general when you have a new CEO, new product, etc the first 30 days are the honeymoon period. You can't do any wrong since everyone is willing to see if you have made an impact. After that 30 days people start to ask themselves do they see any change; it does not have to be substantial change, but at least momentum in a positive direction. If they do, then your 90 day clock just got reset, if they don't you have another 30 days of where they observe you. At 60 days in with no change, most people will begin to assume that this is either a bait-and-switch or more of the same and if you don't effect change by the 90th day you will have lost your ability to effect change."

Not liking my answer, the professor stated that it was too general of approach and could not be applied to the real world.

To which my instinct prodded me to ask the question, "Ok Professor, when you were working at the Governor's Economic Advisory Council at what point after a major change in the process did you sit down at dinner with your wife and first tell her 'You know honey, I don't think this is going anywhere?'"

And the look on his face answered my question... it had been 90 days!

"blink" is a fun read, and provides insightful answers to how our brain can process multitudes of information and give us the correct answer in a blink of the eye. If you find it to be interest to analyze your own "blink" judgements just follow the link to Amazon.