u.s. general services administration applying lean six sigma to business continuity planning jason...

U.S. General Services Administration

Applying Lean Six Sigma to Business Applying Lean Six Sigma to Business Continuity PlanningContinuity Planning

Jason Radde Office of Emergency Response and RecoveryPeter RusselburgOffice of Performance ImprovementGSA Training Conference and Expo04 May 2010

Agenda

• Introduction

• Background

• What is Lean Six Sigma?

• Continuity Planning and Lean Six Sigma

• Lean Six Sigma Role

• GSA Case Study

Lean Six Sigma Background

LSS is the private and public industry standard for continuous process improvement

Increase throughputShorten cycle timesReduce defectsLower costs

MotorolaTIIBMKodak AlliedSignalGE

Lockheed Martin BombardierJohn DeereWhirlpoolGenCorpNokiaSony

Siemens Compaq Toshiba DuPont Dow Chemical

MaytagFordHoneywellJohnson ControlsJohnson & Johnson

Bank Of AmericaUnited Health GroupCardinal HealthBlue CrossHome DepotXerox

US DoDWells FargoCitiGroup

20001992 1995 Today

IRSGSA NIH

Introduction

• In recent years, organizations (public/private, large/small) have begun to value the importance of conducting high-quality continuity planning

• The key to business continuity planning is to fully understand the critical business processes required to support an organization's essential functions, along with the resources are required to deliver them

• The growing complexity of day-to-day operations and dependencies on strategic business partners and IT systems has amplified the need for organizations to develop reliable Continuity Plans and a resilient infrastructure to ensure a minimum level of service during a disaster

• Lean and Six Sigma process improvement programs have been used to significantly improve financial and operational performance across all sectors of the commercial business spectrum, and have extended their impact into all major business functions and activities

• Over the past decade, the public sector has begun to adopt Lean and Six Sigma principles and roll-out internal Continuous Process Improvement (CPI) / Lean Six Sigma (LSS) programs to accommodate budget cuts and staffing reductions, as well as to improve efficiency, effectiveness, and accountability

What is Lean?

Lean is a discipline that aims to systematically

eliminate waste and other non-value adding

activities while improving the flow of value to the customer.

Lean expands the limited focus of more

traditional improvement efforts, leveraging the discipline across all

value streams.

• Focuses on improving speed and efficiency while eliminating waste within business processes

• Targets the “Seven Deadly Wastes” that plague virtually all businesses

• Reduces process complexity through the use of pull techniques, lean work methods and sourcing/supplier integration

• Reaches beyond visible symptoms (defects, waiting, etc.) to address structural factors and the root causes of waste

• Lean Thinking can be summarized in five principles:

“Specify and Focus on Value” “Identify the Value Stream” “Allow Value to Flow Without Interruptions” “Let the Customer Pull Value” “Continuously Pursue Perfection”

Identifying and Eliminating Waste

An approach to identifying and eliminating waste (low value-added activities)

Seven Deadly Wastes

Excessive Excessive MotionMotion

• Data at different source locations,• Manual signature and approval workflow• Office equipment distance from work areas

Waiting TimeWaiting Time• Waiting for decisions, approvals, meetings, etc.• Functional silos / Lack of Ownership• Inappropriate prioritization of work

Over-Over-productionproduction

• Focusing on details not valued by customer• Employees not empowered by full process

visibility forces need for “rule by committee”

Unnecessary Unnecessary ProcessingProcessing

• Policies prevent task completion• Redundant or unnecessary paper work• Transcribing information multiple times

DefectsDefects• Re-work of any kind• Poorly communicated customer requirements

that drive downstream rework

Excessive Excessive InventoryInventory

• Overstaffing work streams due to lack of understanding of critical path

• Minimal understanding of bottlenecks

Unnecessary Unnecessary TransportationTransportation

• Multiple unnecessary signatures needed for an approval

• Circulating products for unnecessary review

Typical White Collar Process

= True Value-Added

Searching for Information

Approval Wait Time

Meetings & Conference

Calls

Value-Added Project Work

~35%

Other

What is Six Sigma?

Six Sigma is a discipline that enables companies to

eliminate costly defects in their operations – and realize

breakthrough profits.

To achieve this, Six Sigma managers use data and

statistical analysis to locate process errors. A "sigma

rating" is then determined, which pinpoints the number

of defects-per-million-opportunities (DPMO) in any

manufacturing, service or transactional

procedure.

• Complements Lean by eliminating costly defects and variations from business operations

• Provides a highly structured approach/process to business improvement through the elimination of variation (defects) in products and service processes (true Six Sigma performance equates to 3.4 DPMO)

• Ensures that process objectives and outputs are targeted towards customer defined objectives

• Is typically supported by a “belt” certification program. “Green Belts” and “Black Belts” execute projects under the guidance of Six Sigma “Master Black Belts.”

Six Sigma Methodology

Six Sigma offers a potent suite of tools used in improving the quality of a company’s operations and support processes

Phase Activities Tools

Define• Establish project structure and scope• Identify the problem• Identify factors critical to the process• Set goals

• Project charter• SIPOC diagram• Problem statement

Measure • Develop means of input measurement• Quantify process capability / determine

variation in measurement process

• Process capability analysis• Gage R&R concepts• Quality tools

Analyze• Utilize tools to determine key drivers

causing variation in process• Identify root causes and hypotheses• Search for correlations among variables

• Process mapping, cause and effect • Ishikawa diagrams, root cause analysis• Pareto analysis, histograms, run charts

Improve• Prepare organization for change• Establish operating tolerances drivers• Identify and implement improvements• Test new process and solicit feedback

• Quality tools (QFD)• Regression analysis, capability analysis• Change management concepts• Process mapping

Control• Implement controls to ensure

improvements are accepted• Monitor and adjust process as necessary,

focusing on customer’s point of view

• Mistake proofing concepts• Post project metrics• Making change last

Continuity Planning and Lean Six Sigma

Continuity Planning Elements

• Assess organization functions to identify personnel, materials, processes and equipment necessary to keep the business operating

• Review process flow charts and identify operations critical to survival/recovery and cross organization interdependencies; including expedited decision-making capability and high-value systems

• Define crisis management procedures and individual responsibilities in advance; make sure the individuals involved know their roles and responsibilities, understand your gaps, and plan for how they can be filled

Lean Six Sigma Principles

• Who are the customers and what are their priorities? What is the performance standard?

Identify core processes, key customers and customer requirements

Engage stakeholders and clearly determine objective

• How is the process performing today and how is it measured? What might be causing it?

Understand the flow of value across an enterprise

Understanding workload and capabilities

Continuity Planning and Lean Six Sigma

Continuity Planning Elements

• Develop a comprehensive Continuity Plan; with input from major stakeholders and process owners from all Mission Essential Functions

• Establish procedures for succession of management, and engage suppliers, shippers, resources and other partners in planning

• Review emergency plans annually to ensure as business/priorities change so does your preparedness requirements

Lean Six Sigma Principles

• What are the most important causes of the process issue?

Conduct appropriate analysis – using real data (FMEA, QFD, Root Cause, Cause & Effect, 5-Why, etc)

• What are the solutions? How do we implement them?

Apply LSS philosophy to drive out waste and risk

Model and pilot results

Execute implementation and deliver relevant training

• How do we sustain the benefits?

Establish control plan

Initiate continuous improvement plans

Project Background

• In May 2007, the President issued National Security Presidential Directive 51/Homeland Security Presidential Directive-20 (NSPD-51/HSPD-20). The National Continuity Policy is an updated, integrated approach to maintaining a comprehensive and effective continuity capability to ensure the preservation of our constitutional form of government and the continuing performance of National Essential Functions under all conditions.

• In August 2007, the President approved the National Continuity Policy Implementation Plan (NCPIP), which directed Departments and Agencies (D/As) of the Executive Branch to identify their Primary Mission Essential Functions (PMEF) which support the eight National Essential Functions (NEF’s) and directed the Secretary of Homeland Security to issue Federal Continuity Directives to provide guidance to D/As on how to implement the NCPIP.

GSA Case Study

• In February 2008, the Secretary of Homeland Security issued Federal Continuity Directive 2 (FCD-2) which provides guidance for D/As on identifying their Mission Essential Functions (MEF’s), and potential PMEF. It further provides direction to D/As on conducting Business Process Analyses (BPA) and Business Impact Analyses (BIA) and the process for submission and approval of the approved PMEF

• In 2009 the Office of Emergency Response and Recovery embarked on an effort to identify and develop a resilient operational infrastructure for the agency’s PMEF; this effort included the development of a BIA designed to identify assets that support the GSA PMEF, the initial inter-dependencies between them and the potential outage impact following a disruption

• Building on the results of the BIA Phase I effort, OERR engaged the Office of Performance Improvement’s CPI Program to further zero-in agency MEFs, specifically to de-scope the number of functions and volume of workload covered by the PMEF to establish a more manageable, lower risk requirement

Project Approach

Define Measure Analyze Improve Control

• Clearly define MEF criteria criteria with agency stakeholders, to include defining not just what is in scope, but what is out of scope

• Document through process mapping / value stream mapping all agency activities that comply with the definition for MEFs as established during the Define Phase

• Analyze time and resource requirements for each MEF, including risk / resiliency profiles, and contingency options

• Develop a comprehensive GSA Resiliency Improvement Plan, including highlighting areas with high risk or resiliency deficiencies

• Begin to execute tactical planning using Continuity Plan and address risk areas / deficiencies with integrated improvement initiatives

Objectives

Key Activities• Define the scope of the

project effort and identify key Stakeholders

• Define MEF selection criteria

• Develop a prioritization strategy for MEF selection

• Identify and validate the MEFs (and respective MEF owners)

• Identify key processes and interdependencies

• Identify all major inputs and outputs

• Obtain and analyze current MEF universe

• Determine MEF outage impact

• Determine gaps• Determine time and

resource requirements

• Determine opportunities to streamline processes

• Define system requirements

• Define required modifications to current state operations

• Ensure MEF owners are aware of their roles in Continuity Planning

• Deploy improvement efforts to shore up resiliency of operations

• Conduct integrated planning

• Project Charter• Standard MEF definition• Stakeholder Analysis• Data Collection Plan

• Data collection results (workload, resources, locations, work volume)

• Suppliers, Inputs, Processes, Outputs, Customers (SIPOCs)

• Value Stream Maps

• Time and Resource vs. Capacity Analysis

• FMEA• 5-Why Analysis• MEF QFD – Prioritization

Matrix

• Resiliency Improvement Plan

• Agency-Wide Out-brief

• Development of Future Project Charters

• Contingency Planning Efforts

Project Objective

Establish and apply a common interpretation of MEF across the agency, to document, quantify and analyze all critical processes, resources, and dependencies and to develop an effective agency-wide Continuity Plan

Representative Products / Deliverables

Define Phase

Phase Objective

Clearly define Mission Essential Function (MEF) criteria with agency stakeholders, to include defining not just what is in scope, but what is out of scope

Challenges Develop and deploy a jointly

developed standard for agency MEFs Reduce variability in identifying

mission essential activities and establish clear guidance on activities qualified as in and out of scope

Facilitate the identification of MEF process owners and high-analytical value process documentation

To ensure success, it is critical to get a commitment from the key stakeholders and process owners – as well as rigorously ensure the definition is applied uniformly across a diverse range of business activities

Key Success Factors

Typical Deliverables/Tools

Project Charter CTQ Tree

RACI Matrix Level I Process Map

Measure Phase

Phase Objective

Document through process mapping / value stream mapping all agency activities that comply with the definition for MEFs as established during the Define Phase

Challenges Conduct comprehensive process

documentation of GSA MEFs Identify and document key processes

that support the MEFs, including workload, locations, inputs and outputs, resources, internal and external interdependencies

Understand the end-to-end flow of work, and the exact portion of a function that support the MEF itself

This effort requires a significant time investment and is extremely dependent on the quality of the data collected and open participation on the part of process owners and key stakeholders

Key Success Factors


SIPOC Value Stream Maps

Data Collection Plan

Analyze Phase

Phase Objective

Analyze time and resource requirements for each MEF, including risk / resiliency profiles, and contingency options

Challenges Analyze current state MEF capabilities

(across organizations and regions) to assess gaps and vulnerabilities, inter-dependencies, deficiencies, and opportunities to improve enterprise visibility and clarity for the planning process and determine the optimal distribution of key activities and critical infrastructure needs

The success of this phase is dependent on data quality, but can be enhanced by engaging key process owners and technical experts in the analysis and knowledge sharing regarding enterprise responsibilities

Key Success Factors


Pareto Analysis

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FMEA

Cause and Effect Analysis

Quality Function Deployment

Improve Phase

Phase Objective

Develop a comprehensive GSA Continuity Plan, including highlighting areas with high risk or resiliency deficiencies

Challenges Design a plan that captures the critical

activities to support the PMEF, and identifies functional delivery risks

Develop a plan that captures the intricate organizational and resource inter-dependencies

Develop a plan that reduces the functional and process complexity that can compromise mission effectiveness and process reliability

This phase requires broad participation from process owners and stakeholders, with a strong understanding of the core requirements and philosophy driving this effort

Key Success Factors


Prioritization Matrix5-S

Before and After VSM

Control Phase

Phase Objective

Begin to execute tactical planning using Continuity Plan and address risk areas / deficiencies with integrated improvement initiatives

Challenges

GSA will implement a regular test, training, and exercise program based on the requirements and recommendations outlined in the Continuity Plan - designed specifically to test and improve upon GSA’s ability to support the requirements of the PMEF

A good testing/training program should be designed to challenge capabilities, identify potential risk areas, and document improvement opportunities with the use of realistic, challenging situations

Key Success Factors


Implementation Plan

WK6WK5WK4WK3WK2WK1

PHASE 2 – PLAN EXECUTION

Step 2.1 – Determine Priorities & Design Roadmap

Del. 2.1.1 – Recommendations & Benefits Projections

Del. 2.1.2 – Prioritized Opportunity Set

Del. 2.1.3 – Organizational Effectiveness Plan

Del. 2.1.4 – Strategy Deployment Program

Del. 2.1.5 – Design & Implementation Schedule

Del. 2.1.6 – Risk Assessment & Mitigation Requirements

Del. 2.1.7 – Business Case

Step 2.2 – Design Detailed Initiatives

Del. 2.2.1 – Detailed & Executable Project Plans

WK7

PHASE 1 – Set Supply Chain Vision

Step 1.1 – Define Supply Chain Requirements

Del. 1.1.1 – Definition of Vedanta Strategic Vision

Del. 1.1.2 – Evaluation of Internal Staff Points of View

Del. 1.1.3 – Definition of Extended Supply Chain Requirements

Step 1.2 – Baseline Assessment & Gap Analysis

Del. 1.2.1 – Gap Analysis & Requirements

Del. 1.2.2 – Analysis of Extended Supply Chain Processes

Del. 1.2.3 – Analysis of 3rd-Party Networks & Mgmt. Practices

Del. 1.2.4 – Analysis of Business & Manual Systems

Del. 1.2.5 – Assessment (Int. & Ext.) of Personal Care Sector

Del. 1.2.6 – High-Level Spend Analysis

WK8 WK12WK11WK10WK9PHASES, STEPS & DELIVERABLES

WK6WK5WK4WK3WK2WK1

PHASE 2 – PLAN EXECUTION

Step 2.1 – Determine Priorities & Design Roadmap

Del. 2.1.1 – Recommendations & Benefits Projections

Del. 2.1.2 – Prioritized Opportunity Set

Del. 2.1.3 – Organizational Effectiveness Plan

Del. 2.1.4 – Strategy Deployment Program

Del. 2.1.5 – Design & Implementation Schedule

Del. 2.1.6 – Risk Assessment & Mitigation Requirements

Del. 2.1.7 – Business Case

Step 2.2 – Design Detailed Initiatives

Del. 2.2.1 – Detailed & Executable Project Plans

WK7

PHASE 1 – Set Supply Chain Vision

Step 1.1 – Define Supply Chain Requirements

Del. 1.1.1 – Definition of Vedanta Strategic Vision

Del. 1.1.2 – Evaluation of Internal Staff Points of View

Del. 1.1.3 – Definition of Extended Supply Chain Requirements

Step 1.2 – Baseline Assessment & Gap Analysis

Del. 1.2.1 – Gap Analysis & Requirements

Del. 1.2.2 – Analysis of Extended Supply Chain Processes

Del. 1.2.3 – Analysis of 3rd-Party Networks & Mgmt. Practices

Del. 1.2.4 – Analysis of Business & Manual Systems

Del. 1.2.5 – Assessment (Int. & Ext.) of Personal Care Sector

Del. 1.2.6 – High-Level Spend Analysis

WK8 WK12WK11WK10WK9PHASES, STEPS & DELIVERABLES

Workshop Steering Committee MeetingBi-Weekly Update

Illustrative

Governance Plan

Monitor performance of SC initiatives

Measure initiative progress in addressing business objectives

Determine cost, schedule, and technical initiative risks and issues

Review/resolve risks and issues and escalate for resolution as necessary





Update SC effectiveness by conducting and documenting detail business objective review

Define new SC initiatives as required and conduct financial impact analysis

Update SC initiative deployment roadmap

Communicate updates to key stakeholders





Submit SC budget request and provide funding rationale

Assess impacts of budget changes and escalate issues as necessary

Reprioritize SC initiative deployment roadmap in response to budget changes

Update SC effectiveness plan and communicate changes





SC Effectiveness Management Process

Frequency of Occurrence

Primary Processes

KeyManagement

Activities

Review Review Business Business

ObjectivesObjectives

Manage SCManage SCInvestmentInvestment

Measure SCMeasure SCPerformancePerformance

Maintain SC Maintain SC EffectivenessEffectiveness

ContinuouslyContinuously MonthlyMonthly QuarterlyQuarterly AnnuallyAnnually

Collect and document new business objectives and requirements

Define required SC capabilities and filter based on importance

Identify SC capabilities required to meet business objectives and determine financial impact

Define new initiatives or changes to existing ones





























SC Effectiveness Management Process

Frequency of Occurrence

Primary Processes

KeyManagement

Activities

Review Review Business Business

ObjectivesObjectives

Manage SCManage SCInvestmentInvestment

Measure SCMeasure SCPerformancePerformance

Maintain SC Maintain SC EffectivenessEffectiveness

ContinuouslyContinuously MonthlyMonthly QuarterlyQuarterly AnnuallyAnnually









Control Plan Improvement Charters

Summary

• Understanding an organization’s essential functions and critical business processes is key to conducting proper business continuity planning, and Lean Six Sigma offers specific tools and methodologies which can greatly facilitate and improve this process

• In addition to the direct benefits achieved on the Continuity Planning project, indirect benefits will be gained through an increased knowledge about agency processes that could provide valuable, time-saving support to unrelated improvement efforts

• The driving cultural transformation behind Lean Six Sigma is the “Continuous Improvement” element – organizations and individuals are empowered to take hard looks at their operations, identify improvement opportunities and pursue them

• This cultural element is supported by a rigorous training effort directed across the enterprise to help individuals identify waste, with the tools and techniques to eliminate it – but also requires significant outreach and education of senior leadership to inform them of how they can support these types of initiatives

Questions

• If you have any questions about the Continuity Planning effort and/or the Continuous Process Improvement program at GSA please contact:

Jason RaddePolicy and Plans Division (DP)Office of Emergency Response and [email protected]

or

Peter RusselburgCPI Program ManagerOffice of Performance [email protected]

u.s. general services administration applying lean six sigma to business continuity planning jason...

Documents

value streamallow value

flow of value

business continuity

sigma principles

value streams

lean work methods

sigma backgroundlss

business processestargets