Lean Six Sigma in Industries

This report discusses the implementation and optimization of Lean Six Sigma in healthcare industries for process optimization. It covers the approach to LSS implementation, benefits, and the importance of process orientation in hospitals. The report also includes a cause and effect relationship diagram and a flow chart for process optimization.

Lean Six Sigma
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Lean Six Sigma in Industries

Lean Six Sigma
Executive Summary
Process optimization has become an essential approach to the be updated challenges of a modern
hospital management system. The goal is to make the individual (business) processes free from
waste and error, by monitoring with meaningful metrics and control, built on the identification of
essential value drivers, success factors. The value drivers for this purpose, there are two
approaches are used as process optimization, which have already proven themselves in business
and spread now various hospitals. They are namely Lean Management and Six Sigma. By
combining these two known as lean six sigma, (Lean 6σ or LSS). Today process optimization is
a vital approach to mitigate the current challenges of modern healthcare management. The
objective is to design business processes free of defects and waste, as well as their monitoring
and controlling with meaningful test statistics. Based on the identification of essential key
performance indicators, key success factors and value cash generator the above said two basic
approaches used to process optimization,
Keywords: Process optimization, process management, interface management, performance
measures, Lean, Six Sigma
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Contents
TASK A- 6σ in Industries................................................................................................................4
Introduction..................................................................................................................................4
Literature reviews........................................................................................................................5
Approach to LSS implementation...............................................................................................6
Implementation............................................................................................................................9
Control and Standardisation......................................................................................................10
TASK B- Solution of Winemakers Problem.................................................................................11
Solution a)..................................................................................................................................11
Solution b).................................................................................................................................13
Solution c)..................................................................................................................................13
Solution d).................................................................................................................................13
Conclusion /recommendation....................................................................................................14
Part A (lean 6σ in industries).................................................................................................14
Bibliography..................................................................................................................................15
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Lean Six Sigma
TASK A- 6σ in Industries
Introduction
In recent years there have been significant incidences in hospital management area. Most of the
countries have introduced diagnostic related group for standardising the patient treatment and
lower the cost variation. Therefore, the cost of hospital management got strong and systematic.
In this condition, the objective is making more automated and structural such that, the outcome
will be process oriented. In this condition, targeted service, cost reduction as well as quality
service, all are simultaneously improved. This kind of development is happening from a long
time in industries, but for hospital system, the implementation and optimisation is still in
immature stage. This report is regarding the implementation and optimisation in hospital
management area, we will discuss how, the LSS is being implemented and got benefitted in the
healthcare industries.
Edward Deming, one of the forefathers of modern quality management, has coined the phrase
that “Those who don’t not know the whole processes in the company, he does not control the
company '‘. J Hill, 2017 (J, et al., 2017), urges that, the most important process in health care
industries general OPD. Not only because of high number of patients in this section but also due
to transparency required in processing the activity in general OPD section. The location, the
doctor’s availability and all become very important for day-care schedule. One more important
factor is process orientation in the hospitals (J, et al., 2017).
The process orientation in the hospital is more important today because the Structure
organization splits into more and more individual organizational units with the goal of better
control. This creates frequent interfaces, i.e. a change in responsibility and competency. The
trisection of control areas and responsibilities in the medical, nursing and administration sectors
reinforces this interface problem in the autonomous healthcare organisation.
The increasing diagnostic and treatment processes, on the other hand, helps to overcome
interface problems. However, the "classical" architectural features of a clinic with many
individual buildings often counteract this process thinking, because they rather hinder an
integrated overall process. This is especially true when treatment processes and patient transports
degenerate into "jogging on the clinic grounds". In addition, the spatial proximity of individual
structural units in the process can also have a positive effect on cooperation, the level of
expertise and thus the quality (Zhu, et al., 2018).
Elimination of interfaces and simplifying procedures not only reduces sources of error, but also
increase the throughput speed and promote quality, and simultaneously improve the cost
element. So, here's the chance to get better, faster and leaner at the same time. This begins, e.g.
the master data of each patient and his indication and treatment-related data - comprehensively
and fully documented are communicated not only between individual medical departments, but
also between the three clinical areas at an appropriate information technology level. A process is
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a temporal sequence of activities, i.e. as work steps in a contextual situation and in which
upstream activities in a transformation process input factors for downstream activities as result
and impact factors. Each process has question, who is our external customer, e.g. the patient or
referring physician, or even an internal client, e.g. it can be another department in the hospital. If
a process does not have a customer, then, strictly speaking, the entire process is up for grabs, as
the receiver and the benefit are undetectable.
Through a clear analysis and improvement of processes and processes in the hospital, not only
the demands on the quality but also on the patient orientation can be improved e.g. through
shorter waiting times and more friendliness and service quality, better measuring and controlling.
At the same time, possible risk factors can be better measured and reduced. Quality and risk
management therefore achieve a higher level of content and results through process
management. The interaction of several sub processes with the phases Input - Transformation -
Output represents a process chain. The goal is to achieve the required level of results in the form
of a defined added value in every single process and over the entire process chain.
By comparison, the Six Sigma approach concentrates on value creation processes from the
outset, with demonstrably more frequent deviations of critical customer requirements (Critical to
Quality Characteristics - CTQs) and thus high error costs due to insufficient quality occur. With
this process-oriented improvement concept, the comprehensible variation, i.e. the average
deviation from the mean, which has occurred in a process, should be reduced. This approach is
based on the term sigma, coined and shaped by the German mathematician Carl Friedrich Gauss,
as mathematical sign σ indicates the standard deviation in a normal distribution. The goal is to
minimize deviations from the given target value with is practicable zero-defect quality. The σ
Value can thus be identified as a dimensionless quality index for each process. This requirement
and this result can be expressed in specific quantities relative to a product or e.g. to express a
service in the hospital. Based on an extrapolated and thus assumed - volume of 1 million units
services may then - in absolute numbers - only 3.4 faulty process outputs.
Literature reviews
(Gabrielle, et al., 2018) indicates that, errors and omissions in the input factors have a negative
impact on the quality of the output factors. Thus, the "performance" of the process and the
benefits to the customer, e.g. the recovery of the patient, as well as overall the success of these
content-related activities for the hospital itself. To achieve this performance through a process as
a link between the input and the output, in addition to the actual transformation, additional
potential factors, such as a specific qualification of the employees or special technical devices, as
well as steering activities, like e.g. a work plan or leadership performance required to translate
factual input into desired output. Since the "input" in a hospital always involves humans and the
transformation is always a service in the form of diagnostic and treatment, the associated
requirements for process control and the perceived quality of results are significantly higher or
different than for physical technical production processes of industrial companies. In addition,
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there must also be more empathy in the hospital for service, which is more difficult or
measurable only through indicators. For a process and its temporal sequence of activities as
components the general demands on the efficiency and the effectiveness of the achieved apply
value addition (Aline, et al., 2018).
The factors of efficiency demand and the result is greater than the criteria of value creation. The
relation between output and input must therefore be greater than value creation thus indicates a
positive relation between output (achieved result) and input (used resources) in the technical
sense (productivity, for example measured in numbers) and in the business sense (economy, for
example measured as value in currency). If the relation between output and input is less than 1,
then the targeted efficiency is not given and there is reactive power. An increase in value for the
company comes about only when the customer is willing to pay the asking price because the
value he receives with this market service is "worth it". Even with patients in hospital, who do
not pay for their treatment, thinking in these benefit categories is becoming more and more
prevalent. Within the framework of individual performance contracts between hospitals and
health insurance, thinking is intensified in value creation categories. In addition, a poor process
and result quality leads to renewed, expensive for the health insurance treatments of patients and
affects their satisfaction with their health insurance; the more the deficiencies of the process and
result quality of them are recognized. The criterion of effectiveness is then met when the effect
of the result achieved as high as possible. The realized output is then equal to 1 in relation to the
previously established goal. This ensures the required outcome as a result effect in the form of
the medical service for the recovery of the patient as well as the care and service quality for the
well-being of the patient (Werner, et al., 2014).
By the central power processes in the clinic, the business processes are controlled referring to the
strategy defined in the business fields of the hospital and will be achieved by the direct or
indirect business objectives goals. It is conveniently processing usual division into three core
processes, management processes, and collapsing and resource-developing process by
management of business processes basis for the entire process landscape in a hospital. In this
condition, Critical Success Factors (Key Success Factors) are the criteria that position the
hospital well in the marketplace and in competition. They are therefore to be expanded as
externally oriented control parameters. For example, they refer to a high level of patient
satisfaction, which leads to an increasing demand for the offered market services of the clinic
and thus improves their competitive position. They lead to qualitative and quantitative increases
in value. This includes, for example, a high satisfaction of the referrers and payers as additional
addressees (Martin, et al., 2018).
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Approach to LSS implementation
First, the question arises, which general concepts for process optimization are available and
where and how the tools in process optimization is to be set. Basically, all activities of a process
optimization are based on the strategy and thus the strategic goal of a hospital. The thinking and
analysis approach for the design of the entire process is necessary.
This is given below is the flow chart which can be traced in Fig. 1. According to the analysis
direction, these are determined by the strategy defined in the strategy. The core businesses of the
clinic, i.e. their defined activity fields on the health market, core processes and core activities are
defined. In them, the externally directed, critical success factors on the market as well as the
internal value drivers are worked out. From this, the required core competencies can be defined
as critical success capabilities and then strengthened it. In line with the conflicting design
direction, these core competences are again required to align the core businesses with future
market success.
The question arises that which general concepts for process optimization are available and where
and how the lever in the process optimization is to be set up. Basically, all activities need for
process optimization strategy on the state of the art, goal setting to base a hospital. The thinking
and analytical approach to the design of the entire process community is the in Fig. 1 traceable
from flow chart is given above. According to the analysis towards the advertising of the strategy
in the fixed-written core businesses of latest technology, so its defined activity of hospital in the
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Analysis direction
Core Business
Core Process
Critical Success
factor
Core competencies
Core Activity
Design direction Process / activity
with gross
improvements
cause quantum
leaps
Patient
satisfaction
Success of
medical service
Figure 1 Cause and Effect relationship diagram (In other context)

Lean Six Sigma
healthcare market processes and customer derived core activities. In them, the externally
directed, critical success factors are market. Therefore, the internally-oriented value drivers
identified. From this, the required core competencies working as a mission, to define and amplify
critical skills. If an orthopaedic clinic wants to specialize in hip surgery, then the medical
expertise of the surgeons must be established at an early stage, especially the infrastructure
related to the technical equipment and the correspondingly qualified personnel. This requirement
and view are not new. However, it is now derived from a self-contained clinic strategy and with
all its consequences
As Fig. 2 shows, the starting point is always define, measure and analysing the actual process.
This phase is important in every process optimization, but not critical. In practice, this often too
much time and resources are used, which are missing for the later steps. The six sigma
professionals thus become a past-oriented accountant of inadequate procedures that are supposed
to be overcome. Therefore, it is more appropriate to limit these actual shots to essential facts and
contexts and to precede only a little more precisely when measuring the previous contributors.
We are looking at a more effective approach to the Lean concepts.
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What is the
problem?
How can the
effects be
measured?
What are the
causes of the
problem?
How can the
problem be
eliminated?
How is the
improvement
anchored in
practice?
DEFINE
MEAUSURE
ANALYSE
IMPLEMENT
CONTROL
Defining the customer's main
requirements as CTQ
Measure relevant impact and
outcome measures in practice
Analyze and prioritize key causes
using statistics
Develop improvement / optimal
solution and implement
Eliminate root causes of the
problem permanently.
Figure 2- DMAIC as a Six Sigma process in the project.

Lean Six Sigma
We all know that practicing lean 6σ always results in zero defect quality with reduced waste.
Often, when the process is measured, the staffs already notice obvious deficiencies in the
process, so that meaningful simplifications and appropriate improvements fall into a "ripe fruit".
In our scheme, however, this is only step 3. From a fundamental and strategic point of view, it is
more expedient after the actual measurement, as step 2 to identify the essential CTQs (critical to
quality) of the customers and thus the success factors of the hospital on the medical and / or the
caretakers measuring target-leading, as Step 2 enable the most important CTQs the customers
and the success factors of the hospital system is Identify a market that may relate to medical
and / or nursing care. We have already carried out the analysis of the value drivers in the
company as causes for the realization of the success factors. From the interaction of these two
types of control criteria can make statements on the nature and level of value generators of the
hospital in this business process. Along with the obvious opportunities for improvement, these
analyses provide the basis for defining and measuring the desired process. Both in terms of the
phases and on the implementers are more rigid in this regard. After all, it is easier and easier to
integrate a department / area or activity than a parted sections. Customer-related is the
improvement of the outcome from the patient's point of view. There is no question that almost all
projects for process optimization have an impact on the situation and the emotions of the
employees. In principle, it is therefore advisable to actively involve employees in such change
projects, even if this is not always possible or opportune in individual cases. The key question
here is how these improvements in the clinic can be initiated and controlled as effectively as
possible and without conflict. In the followings, we briefly go little lean management to avoid
waste of resources in process based on given requirements and criteria and thus lead to cost
savings. Lean 6σ avoids deviations from defined target values in processes. The aim is to
increase the quality in the direction of zero-defect quality, which also results in cost savings. In
both cases, the goal is to sustainably improve processes and the associated performance results,
as well as optimize quality, throughput times and costs. For a deeper understanding of these two
approaches, reference is made to the literature (Malek & Darshak, 2015) (Debadyuti, 2018)
(Ang, et al., 2015).
Implementation
Lean management involves value creation processes in their entity, Often even the entire
company is "subjected" to this philosophy. The goal of eradicating waste relates to time,
employees or employer both involved in activities, and above all, to use the medical equipment
or infrastructure and material. This always has negative effects on the costs of the process or the
entire hospital. In practice, when applying the lean management concept, 7 forms of waste can be
distinguished, which are common and can account for up to 30% of the total costs as possible
with error costs. The problem in business practice is not only that these costs of waste arise.
Rather, another problem is that these waste costs, so reactive power in the sense of cost without
value creation as corresponding consideration, in the least company perspective hospitals are at
all meaningful and holistic. If you do not make the costs transparent, they cannot be influenced
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and eliminated. All these problems of misuse also occur in hospitals. In order to visualize and
reduce the complexity and waste as a loss of value in processes, the instrument of value stream
analysis and value stream design is used in lean management. The result is reduced lead times
and cost savings in standardized lean processes. As is easily understood, the introduction of
clinical paths makes important preparatory work and support in this regard.
Control and Standardisation
The main arguments for and against greater process orientation and optimization in the hospital
sector are as follows. Since hospitals were and are always highly hierarchical in comparison to
most industrial and service companies, a greater process orientation leads to a series of
adaptation and need of changes.
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• The organization of the hospital follows
the sequence of activities or the
sequence of activities.
• The process organization (film)
determines the structure organization of
the structure (photo), so that as
between these two few frictions arise.
• Interfaces can be quickly identified and
eliminated, and processes can be made
more efficient overall.
• The process results can be collected
and measured immediately at the place
of their origin. Transparency as a basis
for advanced quality management
• This promotes goal-oriented and
result-oriented action as well as
concentration on value-creating and
sustainability Customers (especially
health insurance companies and
patients) rewarded activities.
• Changes in the direction of process
orientation often face opposition from
bureaucracy, fear, and adherence to the
familiar due to inadequate change
management
• In addition, they represent an
additional effort that should not be
underestimated in the introductory
phase
• The existing organizational structure in
the clinic is often overwhelmed by the
management of organization, since the
manager-employee relationships (VMS)
in the areas are not congruent with the
VMS in the processes -3 employees thus
have at least two supervisors
• The change of perspective from a
horizontal (divisions and hierarchy) to a
vertical consideration (processes)
requires a fundamental rethinking of
management and workforce
+ -
Figure 3- Advantage with methodology for LSS

Lean Six Sigma
TASK B- Solution of Winemakers Problem
Solution a)
The use of linear programming, with the use of excel solver, is very common techniques now a
days, one of the problems is stated below
As per details given in question,
The wine maker wants to produce, both kind of wine, in such a way that, the profit should be
maximised, we z1 is the amount of table wine and z2 is the amount of desert wine by which the
winemaker can make maximum profit, for any kind of linear programming, there are mainly
three section in, decision variable, objective function and condition, on which the process should
be optimized, in this condition, the decision variable is given as below.
The labour hour z1∗0.40+ z2∗0.6≤1000labour hours
The bottling hour z1∗0.30+ z2∗0.2≤800labour hours
The grapes required z1∗1.50+ z2∗0.8≤2000kg
The SUMPRODUCT of decision variable with production of wine is the maximum amount of
profit, which winemaker can make.
We have provided all the data in solver, condition is given as seen in solver, and make it to run,
after few seconds, we got the solver data which is as follows.
The answer and sensitivity are given as follows
Microsoft Excel 16.0 Answer Report
Worksheet: [814490.xlsx]Solution(a)
Report Created: 10/2/2018 11:55:12
PM
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: GRG Nonlinear
Solution Time: 0.016 Seconds.
Iterations: 0 Subproblems: 0
Solver Options
Max Time Unlimited, Iterations Unlimited, Precision 0.000001, Use Automatic Scaling
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Convergence 0.0001, Population Size 100, Random Seed 0, Derivatives Forward, Require Bounds
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%, Assume Nonnegative
Objective Cell (Max)
Cell Name
Original
Value Final Value
$B$2
2 Total_profit $10,672.53 $10,672.53
Variable Cells
Cell Name
Original
Value Final Value Integer
$B$3 Litres produced Table wine
1332.60098
9 1332.600989 Contin
$C$3 Litres produced Dessert wine
2.34362663
1 2.343626631 Contin
Constraints
Cell Name Cell Value Formula Status Slack
$D$1
6 Labour Hour Total
534.446571
5
$D$16<=$G$1
6
Not
Binding
465.553428
5
$D$1
7 Bottling Hours Total
400.249021
9
$D$17<=$G$1
7
Not
Binding
399.750978
1
$D$1
8 Grapes (kg) Total 2000
$D$18<=$G$1
8 Binding 0
Sensitivity
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [814490.xlsx]Solution(a)
Report Created: 10/2/2018 11:55:12
PM
Variable Cells
Final Reduced
Cell Name Value Gradient
$B$3 Litres produced Table wine
1332.60098
9 0
$C$3
Litres produced Dessert
wine
2.34362663
1 0
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Constraints
Final Lagrange
Cell Name Value Multiplier
$D$1
6 Labour Hour Total
534.446571
5 0
$D$1
7 Botteling Hours Total
400.249021
9 0
$D$1
8 Grapes (kg) Total 2000
5.33333329
5
Solution b)
From the above sensitivity report, the maximum profit which was made is 10672.53, and the
resources which is unutilised is average 32%, the grapes are the constraints which is utilised
100%.
As per the situation, the extra labour, and other resources are available for $ 2, and the
winemaker has $1000 to spend, in this condition, the winemaker has at least double kind of
options, first option is he must start from the scratch, and provide new constraint as cost
If we use the six-sigma process here, then we must utilize the available resources at this point of
time. Since, lot of resources in labour and bottle are still available, therefore we must use 1000 to
purchase only grapes, for making this condition run I must increase the resources of grapes by
500 kg. In this condition, the solver is returning max profit which $ 13339.80
Solution c)
To run the solver, we have to redesign the solver as per given condition in question, the amount
of table wine will be less than or equal to 600 litres and amount of Desert wine should be less
than or equal to 600 litres
We must add constraints as given above in excel solver, after running the result obtained as the
73.59 % is resources unutilised, and maximum profit that can be made is 5171.
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Lean Six Sigma
Solution d)
As per given condition, we must use excel solver twice and see the which one is making higher
profit
After adding the constraint, we, run the solver, and result we get after running is 10672.00 is the
maximum profit, the resources which got unutilised is 67.77%
For another option, we must add the solver with following constraint
After running the solver, it was found that, the unutilised resources come at 63% and profit that
was made is around $ 499.99
For the above two cases, the best solution is for case (i) in which only table wine is produced, the
maximum profit by producing table wine is $ 10672. Resources unutilised is 67.77 %
Conclusion /recommendation
Part A (lean 6σ in industries)
As we can see that, the implementation of 6σ in health care industries needs more lean than that
of 6σ. But the benefit of implementation as whole cannot be ignored, because control on cost
items is as important as waste. In fact, in health care industries, precision measurement is already
an important parameter for medicine and diagnostic process, if these can be implemented in
management process, definitely, it will help a lot, as the 6σ is helping in other industries. There is
a scope for continues improvement even after implementation of lean 6σ. This provides us the
way of future direction of research, the region especially in South East Asia; the need of such
great tool like lean 6σ is very helpful, if the health care organisation starts implementing it.
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