Operational Excellence Through Enterprise Risk Reduction (ERR) Before We Get Started About The Presenter • • UC COE for Healthcare Injury Prevention Previously worked with: UCLA Fender Guitars Boeing E! Network About the presentation: • • • Presentation will be sent to all attendees – email list is in back. Will cover many concepts very fast, if you have questions I will be available afterwards. “Key Concepts” will be pointed out – take not of these. Overview • • • • • • • Define ERR ERR Background ERR Concepts High Reliability Organization The “Enterprise” in ERR Opportunity to Apply Concepts Review and Summary What is Enterprise Risk Reduction? Enterprise Risk Reduction (ERR) is: • • • Combination of age old concepts on productivity, quality, and safety. A revised approach with ERM in mind. A systemized process to improve operations as a whole. 4 What are the Goals of ERR? ERR Goals • • • • As a team of SME’s, address ALL risks together – Not just individually for your subject areas. Improve the Output of the process/job/operation. Eliminate all failure points. Create a “High Reliability Organization”. ERR Background Operational Excellence through ERR Operations encompass all business processes. All operations are based off of one key similarity: OUTPUT (creating a product or service) ….which is reliant on EFFICIENCY BUT WE'RE RISK!!! Why look at efficiency? First we must answer: What is efficiency? Efficiency is how fast you can get something done….. Right? EFFICIENCY ...is the COST PER UNIT Unit = “Value” Measurement So, what is efficiency made of? Any ideas? RISK! Efficiency Risks In ERR, everything is a risk! ERR Risks are broken down into Risk Variables • Operational Risk (task time, productivity, reliability, user interaction, etc) • Loss/Hazard Risk (assets, materials, safety, injuries, etc) • • • Regulatory/Compliance Risk Quality Risk (Right First Time, liability risk, product/service failure , etc) Financial Risk (pricing, currency, liquidity , etc) • Reputational Risk (brand, customer satisfaction , etc) • Strategic Risk (competition, capital availability , etc) • and many more…. All risks tie in together. Key Concepts Operations Dependent On Output Dependent On Efficiency Based On Risks Everything is a Risk Identifying & Controlling Risks ERR Strategies to Identify Risks ERR Strategies: • • • • • • LEAN Hazard Analysis Six Sigma Ergonomics Organizational Behavior Management Failure Mode & Effects Analysis These strategies address: • • • • • Productivity Loss Quality Predictability Reliability LEAN in ERR (Productivity) Background - Started by Henry Ford in early 1900’s - Improved by Toyota in 1930’s – Continually improving ever since… LEAN focuses on: • • • “Value Add” and “Non-Value Add” task steps Operational “wastes” Optimizing processes Typical types of “waste”: • • • • • • Non “Value Add” processes or steps Non “Value Add” movement, or travel Material waste Overprocessing (rely on inspections rather than having an efficient process) – We often do this in Risk disciplines “Wait time” – caused by an uneven process Supply chain management ERR Goals: 1. 2. 3. Break down and outline all task steps Identify which steps add value to your “Output” Eliminate or control wastes and non value add tasks Hazard Analysis (HA) in ERR (Loss) Background - Started at the dawn of time… HA focuses on: • Identifying potential “loss” of life, health, or property Typical types of “loss”: • • • Property (Fire, flood, etc) Employee injury (lacerations, ergonomics, falls, death, etc) Tool/equipment breakdown ERR Goals: 1. 2. 3. Break down and outline all task steps Identify where loss may occur Eliminate or control loss Six Sigma in ERR (Quality) Background - Developed by Motorola in 1986 to reduce quality errors Six Sigma focuses on: • • • Identifying & removing the causes of defects (errors) Minimizing variability of processes (Ensure consistency & predictability) Defect/error metrics Typical types of metrics: • • • # of errors per operation/process cycle # of injuries, lost time days, modified duty days Lost/wasted assets ERR Goals: 1. 2. 3. Identify, track, & trend defect (errors) metrics Review metrics for cause & effect trends Remove causes of defects/errors to create a consistent & predictable process. Ergonomics in ERR (Productivity, Loss, Quality) Background – May have started as early as ancient Greek & Egyptian times. Ergonomics focuses on: • • • Physical risk factors where musculoskeletal stress occurs. User interaction with a process (is the process intuitive). Tool design Typical ergonomic risks: • • • • Waste movements Static postures High or repetitive forces (not necessarily movements) User interaction with the task (easy to use….dummyproof) ERR Goals: 1. 2. 3. Identify musculoskeletal stress factors. Engineer out stress factors Dummyproof the process Organizational Behavior Management (OBM) in ERR (Predictability) Background – Started at the dawn of time… Successfully modified by marketing strategists who found a way to control consumer behavior. OBM focuses on: • • • How people interact and act at both work and at home. Based on foundations of motivation (“SIRE”) A carrot just big enough to chase, but not too big to weigh down the rabbit What is SIRE? • Status – Status in social heirarchy • Incentive – Physical or monetary reward • Recognition – Recognition for actions • Encouragement – Support for desirable action *This is what casino/store rewards are based off of… ERR Goals: 1. 2. Identify possible negative behavioral outcomes Design SIRE based rewards system to direct employees toward desirable goals Failure Mode & Effects Analysis (FMEA) in ERR (Reliablility) Background – Developed by military reliability engineers in the 1950’s to ensure high reliability. Used heavily in weapons design and airplane manufacturing. FMEA focuses on: • • Where a process can fail. Testing a process with the goal of making it fail. Typical failure points: • • • • User interaction & behavior Equipment Process design The design of your control methods ERR Goals: 1. 2. 3. Anticipate failure points (especially the failure points of your controls) Test the revised process and try to make it fail Plan for failure mitigation Failure Mode Examples Throwing a ball Need 3 volunteers to throw a ball at a target 1. Manually throw the ball Were their mechanics consistent? Was the outcome predictable? Accurate? What could have failed? How likely is each? 2. Throw the ball with a lacrosse stick 3. Launch the ball with a catapult A process vetted by failure modes will be: 1. 2. 3. Consistent Predictable Reliable Failure Indicators Almost all failures are indicated by “something” • This makes failure predictable… if you’ve identified the indicators. How to identify failure indicators • • • • • Start with the problem Identify sources of the problem Accumulate metrics on each source Identify the sources of the sources And so on…. ERR Goals: 1. 2. 3. Anticipate failure points (especially the failure points of your controls) Test the revised process and try to make it fail Plan for failure mitigation How to Identify Failure Indicators Example – Patient falls in the hospital Patient Fall Injury Claims Indicated By Overall # of patient falls Caused By Unstable Patients Indicated By Identifying & controlling Should wethem track will the andprevent trend these? claims These are the “source” indicators Patient Mobility Factors (balance, cognitive status, etc) Developing Solutions for ERR Risks Base your solutions on quantifiable data when possible: • • • • • • Time Repeatability Accuracy Force output Behavior Reliability Rate of failure per cycle All risks are quantifiable to an extent, you’ll just need to define how you are quantifying each ERR Solutions are based on ideas • • • • Encouraged to be creative Some will be bad… that‘s okay (I have many bad ideas) A bad idea often has merit and can be used to better another idea Just don’t follow bad ideas to a dead end street… Creates a High Reliability Organization Key Concepts Hazard Analysis Control Loss LEAN Eliminate Waste Six Sigma Eliminate Errors Ergonomics Eliminate Stressors OBM Encourage desired behavior FMEA Eliminate Failure Improve Efficiency (Reduce the Cost per Unit) What is a High Reliability Organization? An organization where: • • • • • Cost per unit is optimized Operations are reliable and predictable Adverse events are very rare Expectations are very well defined Everyone takes ownership for all risk areas, not just their own Background: • • • Concept developed @ UC Berkeley in 1987 Initially focused on adverse events in high risk tasks Over time, morphed to include reliability in business operations The “Enterprise” in ERR Breaking the Silos Liability, Property, Litigation, etc… Injuries, Environmen tal, Regulatory, etc… Grants, Chemicals, Data Security etc… Equipment, Quality, Productivity , etc… Material costs, Productivity , etc… Employee turnover, regulatory, etc… Operations costs, Reputation, Capital availability HR Support Services • Is in place to prevent overloading of insignificant problems. Is difficult to penetrate by a singular risk group. Is broken by large adverse events, or losses. Operations • Researchers EH&S & Work Comp Risk Management • B A R R I E R Leadership Leadership’s Glass Barrier One Big Silo ALL Risks Entire Organization Collaborative approach penetrates the Everyone: barrier • • • Considers all risks. Leads for their subject area. Takes ownership of all other subject areas. B A R R I E R Leadership Operations costs, Reputation, Capital availability Working Together Include everyone in ERR projects, but keep member size manageable • • • Actively engage primary risk holders Keep secondary risk holders informed in real time Report findings to all Know your project groups personality types: • • • • • • Program builders Visionaries/Innovators Devil’s advocates Program managers Sustainers People Leaders Assign responsibilities in line with personalities. Who Owns the ERR Process? Project Owner Considers All Risk Control Ideas Keeps Project On Target Removes Obstacles Owns Project Success Or Failure Addresses Problems Head On Make the Business Case Business Case Executives rely on Return on Investment (ROI) estimates In order to have ROI estimates, you must have metrics Quantifiable ROI metric Difficult to quantify ROI This all boils down to the metric examples examples • • • • • Cost per unit Time improvements (productivity) Employee injury cost savings (medical, lost time, mod time, replacements, training, litigation) Quality improvement (Less waste, happier customer, minimized errors) Insurance benefits (lower rates, increased rebates) • • COST PER UNIT •• Liability savings Employee satisfaction & retention Brand improvement Competitive edge If it was a risk it can be estimated in the ROI. Sustain & Continually Improve Sustain & Continually Improve • ERR process • Create checks and balances • Establish metrics • Report metrics to stakeholders • Re-evaluate if metrics are off. • Implement solutions PLAN DO ACT CHECK • Track & review metrics • Audit checks and balances Opportunities to Apply Concepts (or at least food for thought) Hands on Scenario - Job A group of 100 employees in a medical billing office have all complained of injuries from working at their computer. You have one ergonomics specialist. • • • • • • What is your cost per unit? (wages, benefits, injury costs, equipment breakdown, new equipment, etc) What risks (efficiencies) are there? Who should be involved in the ERR project? How can you control the risks? What are the failure modes? How can you sustain risk control? Now plan for 50,000 of these employees at UC… You still only have one ergonomics specialist. • • • • Do your risks change? How can you control the risks? What are the failure modes? How can you sustain risk control? Hands on Scenario - Process Your custodial department for your office building needs to cut 40% of its budget & staff, but still maintain the same level of service to the university. The major tasks that they do are: empty all large & small trash bins in the building, vacuum all carpets weekly, mop floors every day, clean the grounds, & clean the restrooms 3x daily. • • • • • • What is your cost per unit? (wages, benefits, injury costs, equipment breakdown, new equipment, etc) What risks (efficiencies) are there? Who should be involved in the ERR process? How can you control the risks? What are the failure modes? How can you sustain risk control? Hands on Scenario – Entire Operation • PI just received a grant to perform research on a newly discovered, and highly contagious, infectious disease. He/she has nothing set up… no lab, no equipment, no staff, no procedures. • • • • • • What risks are there to this research? Who should be involved in the ERR process? How can you control the risks? What risks can you anticipate and control to help them optimize their research dollars? How will they transport, receive, handle, & dispose of this new disease? What happens if something goes wrong in the research? (foreseen reactive controls) Summary Key Concepts Operations Dependent On Output Dependent On Efficiency Based On Risks Everything is a Risk Creates a High Reliability Organization Key Concepts Hazard Analysis Control Loss LEAN Eliminate Waste Six Sigma Eliminate Errors Ergonomics Eliminate Stressors OBM Encourage desired behavior FMEA Eliminate Failure Improve Efficiency (Reduce the Cost per Unit) One Big Silo ALL Risks Entire Organization Collaborative approach penetrates the barrier Everyone: • • • Considers all risks. Leads for their subject area. Takes ownership of all other subject areas. B A R R I E R Leadership Operations costs, Reputation, Capital availability Who Owns the ERR Process? Project Owner Considers All Risk Control Ideas Keeps Project On Target Removes Obstacles Owns Project Success Or Failure Addresses Problems Head On Sustain & Continually Improve • ERR process • Create checks and balances • Report metrics to stakeholders • Re-evaluate if metrics are off. • Implement solutions PLAN DO ACT CHECK • Track & review metrics • Audit checks and balances Questions?