Operational Excellence
Through Enterprise Risk
Reduction (ERR)
Before We Get Started
About The Presenter
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UC COE for Healthcare Injury Prevention
Previously worked with:
UCLA
Fender Guitars
Boeing
E! Network
About the presentation:
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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
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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:
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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.
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What are the Goals of ERR?
ERR Goals
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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
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Operational Risk (task time, productivity, reliability, user interaction, etc)
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Loss/Hazard Risk (assets, materials, safety, injuries, etc)
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Regulatory/Compliance Risk
Quality Risk (Right First Time, liability risk, product/service failure , etc)
Financial Risk (pricing, currency, liquidity , etc)
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Reputational Risk (brand, customer satisfaction , etc)
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Strategic Risk (competition, capital availability , etc)
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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:
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LEAN
Hazard Analysis
Six Sigma
Ergonomics
Organizational Behavior Management
Failure Mode & Effects Analysis
These strategies address:
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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:
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“Value Add” and “Non-Value Add” task steps
Operational “wastes”
Optimizing processes
Typical types of “waste”:
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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:
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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:
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Identifying potential “loss” of life, health, or property
Typical types of “loss”:
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Property (Fire, flood, etc)
Employee injury (lacerations, ergonomics, falls, death, etc)
Tool/equipment breakdown
ERR Goals:
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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:
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Identifying & removing the causes of defects (errors)
Minimizing variability of processes (Ensure consistency & predictability)
Defect/error metrics
Typical types of metrics:
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# of errors per operation/process cycle
# of injuries, lost time days, modified duty days
Lost/wasted assets
ERR Goals:
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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:
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Physical risk factors where musculoskeletal stress occurs.
User interaction with a process (is the process intuitive).
Tool design
Typical ergonomic risks:
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Waste movements
Static postures
High or repetitive forces (not necessarily movements)
User interaction with the task (easy to use….dummyproof)
ERR Goals:
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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:
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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:
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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:
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Where a process can fail.
Testing a process with the goal of making it fail.
Typical failure points:
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User interaction & behavior
Equipment
Process design
The design of your control methods
ERR Goals:
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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:
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Consistent
Predictable
Reliable
Failure Indicators
Almost all failures are indicated by “something”
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This makes failure predictable… if you’ve identified the indicators.
How to identify failure indicators
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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:
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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:
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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
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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:
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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:
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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
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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
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Researchers
EH&S & Work Comp
Risk Management
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Leadership
Leadership’s Glass Barrier
One Big Silo
ALL Risks
Entire Organization
Collaborative approach
penetrates the Everyone:
barrier
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Considers all risks.
Leads for their subject area.
Takes ownership of all other
subject areas.
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Leadership
Operations costs,
Reputation,
Capital
availability
Working Together
Include everyone in ERR projects, but keep member size manageable
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Actively engage primary risk holders
Keep secondary risk holders informed in real time
Report findings to all
Know your project groups personality types:
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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
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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)
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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.
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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.
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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.
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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.
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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:
•
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•
Considers all risks.
Leads for their subject area.
Takes ownership of all other
subject areas.
B
A
R
R
I
E
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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?