Campus Corner

Sort, Set in Order, Shine, Standardize, Sustain

Health care in the U.S. faces many ongoing challenges. Health care costs continue to climb, even faster than the inflation rate. In the current recession, many laid-off workers have lost access to employer-sponsored health insurance. Among those with coverage, many face higher co-pays and/or diminished protection by insurance plans that are trying to contain the costs of care. Underlying expenses contributing to the spiral include:

· research and development costs incurred to introduce new or improve existing medical technology and prescription drugs
· higher litigation risks that lead to steep malpractice insurance premiums for health care providers
· inadequate numbers of primary care physicians and geriatricians capable of caring for an increasingly older, sicker population
· the need to pay competitive wages to attract qualified doctors, nurses, technicians and other health care personnel
· inefficient or inadequate billing, information technology, lab test, scheduling and other support services that are necessary to deliver quality care
· overhead costs required to modernize hospital facilities that are often 20-30 years old
· facility costs incurred to build new or replacement structures that can serve the aging cohort of baby boomers
· higher financial burdens borne by public and mental health institutions and by hospital emergency rooms due to increased numbers of uninsured patients and due to decreased government funding at the federal, state, and local levels and
· sudden suspension or even reversal of private endowments resulting from the repercussions of the Bernard Madoff Ponzi scheme and other financial scandals.

Some of these expenses are beyond the purview of operations management but operations can contribute to cost reduction by forming a rapid improvement team to reduce waste and improve quality. A 5S program (sort, set in order, shine, standardize, sustain) is a useful initial activity for a rapid improvement team to engage in. The organization and cleaning of workspaces, the goal of a 5S program, result in clearly visible, quick improvements that can lead to additional efficiency gains. The 5S program consists of:

· Sort - red-tagging and removing any products or equipment that are no longer used. Red-tagged items can be sold, given to another part of an organization, or discarded.
· Set in Order - labeling remaining items (perhaps with pictures, terms, or even color-coding) so that they are easy to locate and store; arranging these items so that they are easy to use and require minimal transport time. The use of open shelving, a shadow board with outlines of designated implements showing where they should be stored, as well as floor outlines to mark clearly the correct locations for stored equipment will make instruments, tools, and machinery readily visible and less likely to be forgotten than items stored in closed cabinets. Floor outlines can also readily reveal shortages or excess inventories.
· Shine - cleaning floors, shelves, counters, and equipment and maintaining machinery often so that it is available when needed. The most critical equipment should be fixed and serviced first. Facility cleaning should become a daily activity.
· Standardize - the method used to continue sorting, setting in order, and shining on a regular basis. By documenting the standard way these three activities are carried out, the efficiencies gained from the initial sort, set in order, and shine can be easily transferred to later improvements by reducing the time needed for learning or relearning.
· Sustain - adopting the habit of regularly maintaining the standardized methods.

By following the 5S steps, an organization can reduce or eliminate excess inventory costs, effort expended to repeatedly rearrange excess inventory, inventory obsolescence, defects or damage to aging inventory, unneeded transport of items, and equipment failures due to hindering dirt and debris. Reducing or getting rid of these wastes sets the foundation for additional process improvements and cost cutting. An organized, tidy, and clean facility will be more productive, lead to fewer defects and mistakes, enable better adherence to schedules and deadlines, and provide a safer environment for customers and employees. These outcomes will reduce expenditures and improve quality, and at least slow down the spiral of escalating health care costs.

by Laura B. Forker, Ph.D., C.P.M.
Professor, Operations Management
University of Massachusetts Dartmouth

 

When continuous improvement and product/service innovation are paramount for competitive survival, what should a company measure? Financial measures such as return on investment and earnings per share? Or operational measures such as cycle time and defect rates? No individual performance measure can capture all critical areas of a business. Both financial and operational measures are needed to provide a comprehensive picture of an organization. Read the complete December article here.

 

Fail Safe Your Products and Processes

What do the seat belt light, temperature gauge, check engine light, low oil pressure light, and gas cap tether have in common? They are all applications of poka-yoke – a mistake-proofing or fail-safing mechanism designed to prevent a mistake from being made or to make a mistake that’s been made to be evident to the operator. First devised by Shigeo Shingo, an industrial engineer at Toyota in Japan, poka-yoke has been applied to many goods and services in both the industrial and consumer sectors of the economy. Shingo observed: “Defects arise because errors are made; the two have a cause-and-effect relationship…Yet errors will not turn into defects if feedback and action take place at the error stage” (Shingo, 1986, p. 82). Instead of separating defective and acceptable products (“inspecting in quality”) or using data gathered from inspection to control a process (traditional statistical process control), Shingo advocated successive inspections where the closest downstream operation checks the work of the previous operation. Every operator examines both value-adding tasks and quality so that the time and cost of review are minimized. When inspection is nearly costless, every item can be checked. If work-in-process inventories are low, process improvement can proceed quickly since quality is continuously reviewed and corrected. Read the complete November article here

 

Turning Around a Service Failure: The Art of Service Recovery

A recent article in The Archives of Internal Medicine reminded me of the importance of service recovery and how little attention many service providers pay to it. The article reports the results of a survey of 2,600 doctors in the U.S. and Canada that asked how they would handle serious medical errors in four hypothetical cases. Only 42% of responding physicians would actually admit to making an “error”; another 56% would inform their patient of the detrimental incident but not admit to their mistake. Even fewer physicians would directly apologize to patients for their blunder (only 33%). These results indicate that few doctors engage in service recovery.

Read the complete  October article here.

 

Lean Manufacturing: Is it Applicable to Services?

Toyota has steadily gained market share in the U.S. having eclipsed Chrysler in 2005, pioneer automaker Ford in 2007, and is closing in on General Motors as American consumers turn away from the products of the once dominant auto manufacturers and turn to foreign competitors, especially Toyota. The quality (especially reliability) of Toyota's automobiles, trucks, and SUVs, which surpassed that of their American rivals from the 1980s and beyond, has been a major reason. What is the secret of their success?  Read the complete September article here.