COP

Session 1

Prof. Christian Terwiesch

Reality

World of Thought

Problem Solving Framework

Immerse into your user domain => Go where the action is

As the process unfolds, you need to iterate between the user domain and your office
Prof. Christian Terwiesch

COP Overview

Prof. Christian Terwiesch

Four Dimensions of Performance: Trade-offs

Quality

Cost

Efficiency

Measured by:
- cost per unit
- utilization

Product quality (how

good?)
=> Price

Process quality (as good

as promised?)
=> Defect rate

Variety

Time

Responsiveness to
demand

Measured by:
- customer lead time
- flow time

Customer heterogeneity
Measured by:
- number of options
- flexibility / set-ups
- make-to-order

Prof. Christian Terwiesch

Efficient Frontier
Responsiveness
Customer choice
Quality
[you pick]
High

Current frontier
In the industry
Competitor A
Eliminate
inefficiencies
Competitor C

Low

Competitor B
Low labor
productivity

High labor
productivity

Labor Productivity
(e.g. $/call)

Narrative for process improvement what would success look like?

Prof. Christian Terwiesch

Milestone 1: Check List and Submission

Check List
I know on which dimension I want to focus
I have thought about the key trade-offs/ the efficient frontier
I have access to the operations that are associated with this dimension
Submit
A short description (five sentences) about your business; name is optional (Slide 1)
The dimension you want to focus on (Slide 2)
One or several performance measures that capture this dimension for YOUR operation (Slide 2)
The key trade-offs associated with this dimension (Slide 2)
A vision for an improvement / narrative (What would success look like)? (Slide 3)

Prof. Christian Terwiesch

COP
Session 2

Prof. Christian Terwiesch

Problem framing: WHY-HOW Ladder

How might we

Pick a problem formulation

-Make it broader (by asking WHY) and making it narrower (by asking HOW)
-Choose one formulation
Prof. Christian Terwiesch

The Customers Perspective

How much time does a patient spend on a primary care encounter?

20 minutes

Driving
Labs

Parking
Check-in
Drive home

Vitals

Flow Time Efficiency (or %VAT) =

Waiting

PCP Appt.

Total value add time of a unit

Total time a unit is in the process

Interview a recent customer

Mystery shopper / try it yourself (dont rely on the corporate data)

Prof. Christian Terwiesch

Check out

Process Flow Diagram

Completed
applications

Applications

Preparation

Analysis 1

Analysis 2

Underwriting

Start with a high level process flow diagram

Describe some activities going on in each box
What happens before your starting point/ after the end-point
Where is the constraint on the system (bottleneck, demand constrained)?
Prof. Christian Terwiesch

KPI Tree

Price

Demand
Available time

Profit

Time spent productively

Volume
Capacity

Rework
Idle time

Fixed costs
Cost
Variable costs

Map out the basic drivers of financial performance

Come up with a narrative for improvement: top line increase, cost reduction,?
Link the problem definition / outcome metrics to the KPI tree

Prof. Christian Terwiesch

Milestone 2: Check List and Submission

Check List
I have considered multiple problem definitions and chosen one
I have mapped out a KPI tree and understand which variables in the tree are related to my problem
I have drawn a process flow diagram and understand the main constraint
I have talked to a recent customer / been a customer myself and took the customers perspective
Submit
Problem statement / definition (Slide 1); include alternatives
KPI tree (Slide 2)
Process flow diagram (Slide 3)
Customers perspective (Slide 4)

Prof. Christian Terwiesch

COP
Session 3

Prof. Christian Terwiesch

The Principles of Scientific Management

We can see and feel the waste of material things. Awkward, inefficient, or ill-directed movements of men,
however, leave nothing visible or tangible behind
Employers derive their knowledge of how much of a given class of work can be done in a day from either
their own experience, which has frequently grown hazy with age, from casual and unsystematic
observation of their men, or at best from records [..]
=> Observe at the front-line (do not rely on corporate data / your memory)

Prof. Christian Terwiesch

Here is What You Are Looking For:

The Three Enemies of Operations
Is associated with longer wait times
and / or customer loss
Requires process to hold excess
capacity (idle time)
Variability

Waste

Use of resources beyond what is

needed to meet customer
requirements
7 different types of waste
OEE framework
Lean: do more with less

Buffer or suffer
Often times: quality issues
Inflexibility
Work Waste Value- Work Waste Valueadding
adding

Additional costs incurred because of supply

demand mismatches
Waiting customers or
Waiting (idle capacity)

Prof. Christian Terwiesch

Customer
demand
Capacity

Source: Reinecke / McKinsey

Total paid time

Time in practice

Time booked
For appointments

Time with
patients

Start with the very left end of the chart

Subtract the time the resource is not even active/present
Then, look for waste
Prof. Christian Terwiesch

Activities that dont

have to be done by MD

Patients that dont

have to see MD

Cancelations

Time not
booked

Sick

Vacation

An Example for a Value-Add Analysis

True value
add time

Time and Motion Study for 21st Century

Observation of a Resource
(myObserver)
Recording arrivals
Recording losses
Benefit of fast moving process

Prof. Christian Terwiesch

Forms of Variability to Look For

Variability in demand
Variability vs Seasonality
Can be any time frame

Variability in productivity
Quartile analysis
Across workers
Across time

Forecasting skills
How good on average?
How big of a variance (scatter plot)

Prof. Christian Terwiesch

Forms of Inflexibility to Look for

Volume flexibility
Adjusting capacity to demand that varies over time
Flexibility to serve product mix
Set-up times
Cross training (did you ever see a waiting customer and an idle worker at the same time?)

Prof. Christian Terwiesch

Milestone 3: Check List and Submission

Check List
I have spent an appropriate amount of time observing on the front line
I have collected PRIMARY data (based on observation)
I have mapped out the waste in the process and built an OEE chart (as needed)
I have looked for variability in the process and have done some analysis (as needed)
I have looked for inflexibility in the process (as needed)
Submit
A short description about your subjective experience observing at the front line (Slide 1)
Slides for (as needed): Value-Add` chart, Variability analysis, Description of Inflexibility
(as many as needed)

Prof. Christian Terwiesch

COP
Session 4

Prof. Christian Terwiesch

Some Process Improvement Suggestions

To increase capacity:
Line balancing
Waste reduction
Capacity smoothing
Reduce rework
To deal with variability
Pooling
Pre-produce / make to stock
Look at forecast quality
To deal with inflexibility
Outsourcing some peak capacity
Overtime rules
X-training
Set-up time reduction
Standardization

Prof. Christian Terwiesch

Do a Small Thing Well Rather Than a Large Thing Poorly

Who creates a bigger dent in the asphalt?

Bad: My idea is to retrain the work-force to improve efficiency
Good: My idea is to train Jim and Mary and see if I can reduce their processing time by 10%
Pick a very SPECIFIC outcome variable that you want to move
=> What can you do tomorrow? (Milestone 5)
Acknowledgement: Roy Rosen, PennMedicine
Prof. Christian Terwiesch

Milestone 4: Check List and Submission

Check List
I have generated at least THREE ideas for improvement
These ideas are FOCUSED and actionable
The ideas are grounded on the analysis done for milestone 3
I have thought about the criteria that I will apply to select the best improvement idea
I have discussed the ideas with employees / co-workers

Submit
A description about the top THREE ideas (slide 1)
Empirical support: what do you expect to change (slide 2)
Table comparing the ideas relative to criteria (slide 3)
Prof. Christian Terwiesch

COP
Session 5

Prof. Christian Terwiesch

Reality

Models

The Power of Iterative Problem-solving

Prof. Christian Terwiesch

The Nature of a Good Experiment

Face reality quickly your plans are rarely correct
Iterative problem solving
Internet development style
Experiments are like crystal balls: they help you answer a question

Cheap
Experiment can be
done with less than
$1000

Fast
Experiment can be
done within one day

Focused
Experiments targets
one specific question

Informative
Experiment will tell you
more than it did not
work
Prof. Christian Terwiesch

Milestone 5: Check List and Submission

Check List
I have formulated a small experiment to answer a specific question
Based on experiment I have changed something in my operations based on Milestone 4
I have measured the improvement (before and after)

Submit
A description of the question that you want to have answered by the experiment
A short description of how you changed your operations
Improvement in performance (before / after comparison)
Estimated financial value (extra profits per year)

Prof. Christian Terwiesch