measuring and evaluating the roi from six sigma
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1Copyright BCBSF™ 2005
Measuring and Evaluating the ROI from Six Sigma
WCBF
Six Sigma in Healthcare
March 4, 2005
2Copyright BCBSF™ 2005
Presentation Outline
• Six Sigma at Blue Cross Blue Shield of Florida
• Calculating the costs and savings from Six Sigma projects
• Building an effective tracking system for CI/Six Sigma
• Integrating Six Sigma as part of your general Continuous Improvement toolkit
3Copyright BCBSF™ 2005
Six Sigma at BCBSF
WCBF
Six Sigma in Healthcare
March 4, 2005
4Copyright BCBSF™ 2005
Six Sigma at BCBSF
• Deployment initiated in July, 2003– First “wave” of Black Belt training in September, 2003
– Infrastructure launched in October, 2003
– First “wave” of Green Belt training in March, 2004
• Results to date– $6.8 million in savings during 2004, $8 million forecasted for 2005
– Over 2,000 Yellow Belts
– 43 Black Belts, 20 more scheduled for April
– 38 Green Belts
– “DNA” Index• Project Pipeline Ratio
• Project Leadership
• E-Learning/Training
• Certification
5Copyright BCBSF™ 2005
Six Sigma at BCBSF
Infrastructure Highlights– Leadership/Governance
• CEO
• Office of the COO
• Continuous Improvement Enablement Office (CIEO)
• Continuous Improvement Council
– Black Belts• Two year assignment/full-time
• Decentralized matrix reporting structure
– Green Belts• Short term assignment/training project
– Enabling Area Integration• Finance
• Human Services
• Information Technology
• Decision Support
6Copyright BCBSF™ 2005
Calculating the Costs and Savings from Six Sigma Projects
WCBF
Six Sigma in Healthcare
March 4, 2005
7Copyright BCBSF™ 2005
Valuation Deliverables
1. Project Opportunity Assessment
2. Unvalidated Forecast
3. Initial Validated Forecast
4. Final Validated Forecast
5. Realization/Reforecast
8Copyright BCBSF™ 2005
Project Opportunity Assessment
• Required for the project to be submitted into the pipeline
• Owned and delivered by the sponsoring champion
• Based on high level assumptions
• Benefit rangesSix Sigma Project Candidate For assistance, please see document instructions on the next tabProject Opportunity Assessment (P.O.A.)
Project PipelineProject NameChartering BeltChampionBusiness Area Finance Lead
Benefit 1Benefitting AreaBenefit TypeBenefit Value
Describe calculation details and sources of data
Benefit 2Benefitting AreaBenefit TypeBenefit Value
Describe calculation details and sources of data
Benefit 3Benefitting AreaBenefit TypeBenefit Value
Describe calculation details and sources of data
Total Estimated Benefit $0
Approval of Initial EstimateApproval = belief that the P.O.A utilizes available data to estimate project benefits in a fair manner while understanding that the estimate may evolve as more information is gathered.
Champion Name, 1/15/05Chartering Belt Name, 1/15/05
Business Area Finance Lead Name, 1/15/05
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Financial Valuation Timeline
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Unvalidated Forecast
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Unvalidated Forecast
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Validated Forecasts
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Validated Forecasts
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Validated Forecasts
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Keys to Valuation
• Engage Champion, Implementation Lead and Finance Rep early and often
• Don’t spend too much time trying to get perfect numbers at the beginning of your project
• Be careful in managing expectations
• Document delays in benefit realization
• Get the organization to own the financial results
16Copyright BCBSF™ 2005
Building an Effective Tracking System for CI/Six Sigma
WCBF
Six Sigma in Healthcare
March 4, 2005
17Copyright BCBSF™ 2005
Project Tracking Infrastructure
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Roles and Responsibilities
3.1.1 - May request Ad-hoc changes to plan
through BB
1.2 -PA w/BB reviews and baselines the project plan
1.3 – PA publishes plan to Project Server
2.2 - See Weekly Update Cycle
2.5 - Accepts wkly updates in PWA by
COB Monday
4.1 - Approves Forecastsand maintains Financials
(Actuals)
At the start of Define Phase Ad-hoc changes to plan available in 1
business day
Wkly Updates (Avail. Tuesday AM) Monthly updates to Financials avail. day
after closing
2.6 - Project plan updated and published to server
2.1 - Log into PWA to view new tasks
2.3 - Log into PWA and view new tasks
2.7 - Func. Admin. locks down prior time period by
Wed noon of following week
2.4 - See Weekly Update Cycle
End of Control Phase
5.4 – Change project resources (except
Financial resources) from “Committed” to
“Proposed”
Lockdown project after all tasks are 100% complete (except benefit realization)
Ch
amp
ion
/ IL
BB
/GB
Fina
nce
SM
E/T
M
Pro
ject
Web
Acc
ess
(PW
A)
2-3 Days 1 Day 1 hr
4.2 - OLAP cube auto-refreshed the night of month-end closing.
Financial views updated.
Financials updated by COB of month-end closing
Mondays - Fridays
Weekly updates to be completed in PWA by
COB Friday
3.5 - Publish updated plan
3.4 - Performs changes to project plan, and Re-
baselines if requested.
3.2 - Approve/Reject Ad-hoc Project changes in PWA
3.1 - Request Ad-hoc changes to project plan(See Ad-hoc updates)
Ad-hoc update requests to be sent by 3pm
WE
WE
R1 - IDEAs/Potential projects input to pipeline
R2 - Pipeline project
submitted
R3 – Pipeline project gets
approved by CIEO, belt is assigned,
project plan created from pipeline
Recognize Phase
1A 2A, 2B 3A, 3B 4A 5A 6A
During Realization
Phase
CIE
O
Pro
ject
Pro
& P
WA
Version: 2.0 Last updated on: January 21st, 2005 Last updated by: Neil Johnson (Pcubed) Project Plan Management High Level Process Flow
6.1 - Tracks Financial Benefits (Actuals) & signs-
off
6.4 - End of Phase – Close
out project.
6.2 - At end of realization-
requests project closure.
5.2 – Champion sends request to PA to lockdown
project
1.1- PA customizes the project plan using Project Pro with input
from Belt
wf
3.3 – Views change requests to project plan in PWA – Action Items page.
5.1 - Sends request to Champion to lockdown
project after all tasks are 100% complete
5.3 – Views lockdown request to project plan in
PWA – Action Items page.
Pro
ject
Ana
lyst
6.3 - Views Project closeout request in PWA
Monthly basis (for 12 months)
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Pipeline – General Information Screen
Project Tracking System
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Pipeline – Criteria Selection Screen
Project Tracking System
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Pipeline – Criteria Selection Screen (cont.)
Project Tracking System
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Pipeline - Project Charter Screen
Project Tracking System
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Pipeline – Initiate Project Screen
Project Tracking System
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Project Health Indicators
1. Project Level View
Project Tracking System
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Project Tracking System
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Project Health Indicators
1. Task Level View
Project Tracking System
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Project Tracking System
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Integrating Six Sigma as part of your General Continuous
Improvement Toolkit
WCBF
Six Sigma in Healthcare
March 4, 2005
29Copyright BCBSF™ 2005
High
Low
Medium
Medium High
Lean DFSS“InvestingProjects”
Go Do NA
Scope / Complexity
Financi
al Im
pact
DMAIC(Sweet Spot)
Project Identification
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Basic Continuous Improvement
Low Complexity
High Project Volume
Green Belt ProjectsMedium Complexity
Moderate Project Volume
Black Belt ProjectsHigh Complexity
Low Project Volume
Overarching Framework
Balance!
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Although this focus has produced substantial results, we have identified several gaps:
– Opportunities for both Black and Green belt projects are slow to develop
– Projects have not been yielding financial returns consistent with our assumptions
– Projects often lack data or commissioned to solve problems that have not been substantiated
– Incorporating CI/Six Sigma into our DNA has taken hold in pockets, but is inconsistent
Gap Analysis
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CI/Six Sigma Training Structure
MBB
Black Belt
Green Belt
Blue Belt
Yellow Belt
All Employees
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Six Sigma Integration
• Go Do Projects
• “Individual” Process Improvement Techniques
• Process Management
• Rapid Process Improvement/Workout
• Lean
• DMAIC
• DFSS
Pro
ject V
olu
mes
Pro
ject C
om
ple
xity
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Questions and Answers
WCBF
Six Sigma in Healthcare
March 4, 2005