Audit Commission

Presentation Lean thinking - what is it?

Too much jargon!

Audit Commission

Presentation

Lean thinking - what is it?

• Lean thinking provides a way to do more
with less, while coming closer to providing
customers or users with exactly what they
want.
• It focuses on creating value and capacity
rather than eliminating jobs in the name of
efficiency. The methodology eliminates
waste while improving performance and
quality as flow and capacity increase.
Audit Commission

Presentation

Value
Audit Commission

Presentation Lean thinking - what is it?

Don’t get mislead by the jargon and hype -

stick to the basics

- Purpose
- Value – for the user
- Analyse demand
- End to end measures
- Variation
- Flow
- Waste
Audit Commission
Comparison of approaches
Presentation
Value Analysis
Deming Cycle Six Sigma (DMAIC) PLANNING
PLAN DEFINE INFORMATION GATHERING
- Problem analysis - customers & requirements •
project boundaries Key information on the
- Current process & product/service to be
performance - boundaries of the process the
process to be improved examined
- variation
MEASURE ANALYSIS
- Devise workable solution
- Performance of core process • Analysing the problem
- Action plan
- Compare • functions, processes and
ANALYSE costs of the service
DO
- Root causes of problems & INNOVATION
- Implement solution
Improvement opportunities • Generating new ideas &
- Identify sources of variation solutions
STUDY EVALUATION
IMPROVE
- Review & evaluate
- Design and implement Evaluating potential
solution
ACT solutions
CONTROL
- Assess results & change - Prevent reverting back to the REPORTING
as required "old way" • Management approval&
- Standardise process - an ongoing monitoring plan staff consultation
- Continuous improvement - Institutionalize the IMPLEMENTATION:
improvements • Putting new methods into
practice
FOLLOW-UP:
• Project implementation is
reviewed regularly
Audit Commission

Presentation

Lean Thinking
• Viewing the organisation or the service as a system
• And from a customer perspective:
– Define purpose and value
– Understand demand
– Measure performance of the system
– Understand and act on variation
– Manage the system – not the people
– Improve the system by designing against demand
– Introduce single piece flow – move away from batching and
queueing
– Identify and work on system constraints, where possible
Audit Commission

Presentation

Results
• Reducing average benefit claim times from 140 days
to 12 days without any major investment in ICT.
• Magistrates’ court: 30% increased case throughput
resulting in increased revenue, lower costs and
improved service.
• Reducing prescription errors by 40 per cent
• Reducing the time to produce an assessment of
special education needs from 17 weeks to 4 weeks.
Audit Commission
Results - Housing
Presentation

Repairs
• End-to-end time was reduced on average from 46 days to 5.9 days.
• Customer satisfaction following a repair shows that 61% of tenants score the
service
• 10/10 with a total of 90% scoring 8/10 or above. This compares to the latest
STATUS survey, where 77% of tenants had rated the service above average.
• Potential six-figure efficiency gains.
Rent collection
• For new tenants, first payment on the account was reduced from
• an average of 34 days to 20 days.
• Only 18% of new tenants falling into arrears compared to 43%
• previously.
Re-housing
• 64 steps in the process reduced to 32 steps.
• Reduced void relet time of 50 days to an average of 25 days. The potential
reduced void loss as a consequence estimated in excess of £90,000.
Audit Commission

Presentation
Other successes
• Senior managers had not been aware of the degree of waste in
the system prior to the systems thinking review. In all three pilots,
the work has been generally well received and supported by
senior managers.

• In each pilot, an in-house team (Systems Team) was seconded to

learn and apply the ‘lean systems’ method. The self-development
of Systems Team members was apparent and continued as the
new process was implemented.

• All members of the Systems Teams gained an understanding of

the whole system in which they work. They worked with
colleagues, senior management, councillors and board members.
Their confidence and skills around training, assertiveness
andworking with people at all levels have noticeably improved.

• Other employees involved in the process were enthusiastic as

their input directly led to changes in the way they worked.
Audit Commission

Presentation

Costs
• Costs fall as waste is taken out:
– Only the value work is done – non-value adding work is
minimised or eliminated
– Failure demand is reduced or eliminated (40%)
– The improvement-led approach leads to greater savings than
cost-centred approach – hard for the FD to get their heads
around!

• At the moment there is a lack of comprehensive cost

data for comparison purposes
Audit Commission

Presentation

Capacity and quality

• Capacity is increased due to:
– Improved flow
– Elimination of waste and failure
• Quality improves:
– Better performance
– Less variation, i.e. improved consistency
• User satisfaction
– Tends to go through the roof
Audit Commission

Presentation

Magistrates’ Courts example

Success is defined as:

“the delivery of local justice fairly and

consistently, in a manner that commands the
confidence of the community in the criminal
justice system and offers value for money”
Audit Commission

Presentation

Criminal justice system value chain

Customer need identified

organisational boundary

Crown Probation Magistrates Crown

Solicitors Police Prosecution Service Court Court
Service

suppliers

Customer need satisfied

Audit Commission

Presentation

Identifying and managing the barriers to a

successful project: the people issues
• Lack of understanding of how the process works
• Complexity of customers with conflicting needs
• Allocating time: people already have busy “day jobs”
• Conflicting organisational goals and targets: blame
culture
• Lack of “quality maturity”
• Fear of measurement and statistics
Audit Commission
Process Team Structure
Presentation Criminal Justice
Excellence Forum

Process
improvement
facilitator
Key Process Team: Case Management
Probation Service

Magistrates’ Court
Witness Service

Crown Court
Solicitors

Police

CPS

CJE Forum
“Champion”

Dyason/Kaye 2004
Audit Commission

Presentation

Advantages of the process team strategy

• The team operates across organisational boundaries whilst
accountability is clear
• Those who know the work best contribute to improvement ideas
• Action-learning approaches could be applied to learning and
development when and as appropriate, including “servqual”
methodology and “balanced scorecard”
• Best practice is identified and shared
• There is greater understanding of roles and responsibilities
• Process mapping helps to identify opportunities to add value
• Non value-added activities are scrapped (e.g. duplication)
• Resources are most effectively deployed and planned for
• Internal and external benchmarking can be carried out
Audit Commission

Presentation Measuring lost value in financial terms

The budget allocation for the magistrates’

courts is based upon weighted caseload, that is
the number of cases actually completed in a
year. No allocation is made for cases not
completed.

The key process is the throughput of a case

from start to completion.

If a process failure is identified at the court

hearing, the court hearing is adjourned and the
process starts again.
Audit Commission

Presentation

In the example case study approximately

20,000 cases are completed in a year. The
opportunity exists however to complete
30,000 cases in this period. One third of the
cases are adjourned two to three times on
average before they are completed.

The purpose of the application of the six

sigma methodology is to optimise the process
so that maximum value is achieved and
thereby maximum funding attracted.
Audit Commission Results achieved
Presentation
Customer perspective
Witness satisfaction – satisfaction
with waiting time increased by 22%
Witness treatment, facilities and
information increased to 90%
Community confidence –
increased by 14%
Learning and growth
External recognition – Quality
awards: Finalist in International
Award
(International Quality and
Productivity Centre)
IIP and Charter Mark: first
criminal justice-wide area
Financial perspective
Cost efficiency: savings of
£360,000 achieved (18%)
Productivity increased by 30%
Expenditure reduced 5% year on
year
Internal Business process
Timeliness: Reduced from 35
to 33 days (all cases)
Optimisation of resources:
increased by 10%
In top three areas for timely
provision of sentence reports
Audit Commission

Presentation

Next steps
• Do your own research
• Get top management buy-in
• Identify support and facilitation
• Tell your auditor or inspector what you are doing