Operational Excellence

Through Enterprise Risk

Reduction (ERR)
 BeforeWeGetStarted

About The Presenter

UC COE for Healthcare Injury Prevention
Previously worked with:
UCLA
Fender Guitars
Boeing
E! Network

About the presentation:

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

Define ERR
ERR Background
ERR Concepts
High Reliability Organization
The Enterprise in ERR
Opportunity to Apply Concepts
Review and Summary
 WhatisEnterpriseRiskReduction?

Enterprise Risk Reduction (ERR) is:

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.

4
 WhataretheGoalsofERR?

ERR Goals
As a team of SMEs, 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
 OperationalExcellencethroughERR

Operations encompass all business processes.

All operations are based off of one key similarity:

OUTPUT EFFICIEN
(creating a product or .which is reliant on
service) CY

BUT WE'RE RISK!!! Why look at efficiency?

 Firstwemustanswer:Whatisefficiency?

Efficiency is how fast you can get something done..

Right?

EFFICIEN ...is the

COST PER
CY UNIT

Unit = Value Measurement

 So,whatisefficiencymadeof?

Any ideas?

RISK!
 EfficiencyRisks

In ERR, everything is a risk!

ERR Risks are broken down into Risk Variables

Operational Risk (task time, productivity, reliability, user
interaction, etc)
Loss/Hazard Risk (assets, materials, safety, injuries, etc)
Regulatory/Compliance Risk
Quality Risk (Right First Time, liability risk, product/service
failure , etc)
Financial Risk (pricing, currency, liquidity , etc)
Reputational Risk (brand, customer satisfaction , etc)
Strategic Risk (competition, capital availability , etc)
and many more.

All risks tie in together.

 KeyConcepts

Operatio
ns

Dependent
On Output

Dependent
On Efficienc
y

Based
On Risks

Everythi
ng is a
Risk
Identifying &
Controlling
Risks
 ERRStrategiestoIdentifyRisks

ERR Strategies:
LEAN
Hazard Analysis
Six Sigma
Ergonomics
Organizational Behavior Management
Failure Mode & Effects Analysis

These strategies address:

Productivity
Loss
Quality
Predictability
Reliability
 LEANinERR
(Productivity)
Background - Started by Henry Ford in early 1900s - Improved by Toyota in
1930s Continually improving ever since

LEAN focuses on:

Value Add and Non-Value Add task steps
Operational wastes
Optimizing processes

Typical types of waste:

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:
1. Break down and outline all task steps
2. Identify which steps add value to your Output
3. Eliminate or control wastes and non value add tasks
 HazardAnalysis(HA)inERR
(Loss)

Background - Started at the dawn of time

HA focuses on:
Identifying potential loss of life, health, or property

Typical types of loss:

Property (Fire, flood, etc)
Employee injury (lacerations, ergonomics, falls, death, etc)
Tool/equipment breakdown

ERR Goals:
1. Break down and outline all task steps
2. Identify where loss may occur
3. Eliminate or control loss
 SixSigmainERR
(Quality)
Background - Developed by Motorola in 1986 to reduce quality errors

Six Sigma focuses on:

Identifying & removing the causes of defects (errors)
Minimizing variability of processes (Ensure consistency &
predictability)
Defect/error metrics

Typical types of metrics:

# of errors per operation/process cycle
# of injuries, lost time days, modified duty days
Lost/wasted assets

ERR Goals:
1. Identify, track, & trend defect (errors) metrics
2. Review metrics for cause & effect trends
3. Remove causes of defects/errors to create a consistent &
predictable process.
 ErgonomicsinERR
(Productivity,Loss,Quality)
Background May have started as early as ancient Greek & Egyptian
times.

Ergonomics focuses on:

Physical risk factors where musculoskeletal stress occurs.
User interaction with a process (is the process intuitive).
Tool design

Typical ergonomic risks:

Waste movements
Static postures
High or repetitive forces (not necessarily movements)
User interaction with the task (easy to use.dummyproof)

ERR Goals:
1. Identify musculoskeletal stress factors.
2. Engineer out stress factors
3. Dummyproof the process
 OrganizationalBehaviorManagement
(OBM)inERR(Predictability)
Background Started at the dawn of time Successfully modified by
marketing strategists who found a way to control consumer behavior.

OBM focuses on:

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:
1. Identify possible negative behavioral outcomes
2. Design SIRE based rewards system to direct employees toward desirable
goals
 FailureMode&EffectsAnalysis(FMEA)
inERR(Reliablility)
Background Developed by military reliability engineers in the 1950s to
ensure high reliability. Used heavily in weapons design and airplane
manufacturing.

FMEA focuses on:

Where a process can fail.
Testing a process with the goal of making it fail.

Typical failure points:

User interaction & behavior
Equipment
Process design
The design of your control methods

ERR Goals:
1. Anticipate failure points (especially the failure points of your controls)
2. Test the revised process and try to make it fail
3. Plan for failure mitigation
 FailureModeExamples

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:

4. Consistent
5. Predictable
6. Reliable
 FailureIndicators

Almost all failures are indicated by something

This makes failure predictable if youve identified the indicators.

How to identify failure indicators

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:
1. Anticipate failure points (especially the failure points of your
controls)
2. Test the revised process and try to make it fail
3. Plan for failure mitigation
 HowtoIdentifyFailureIndicators

Example Patient falls in the hospital

Patient Fall Indicated Overall # of Caused Unstable

By
Injury Claims By patient falls Patients

Indicated
By

These are Patient

Identifying Mobility
the Factors
&
Should we source (balance, cognitive
controlling
track and
status, etc)
indicator
them these?
trend will
s
prevent the
claims
 DevelopingSolutionsforERRRisks

Base your solutions on quantifiable data when possible:

Time
Repeatability
Accuracy
Force output
Behavior Reliability
Rate of failure per cycle

All risks are quantifiable to an extent, youll just need to

define how you are quantifying each

ERR Solutions are based on ideas

Encouraged to be creative
Some will be bad thats okay (I have many bad ideas)
A bad idea often has merit and can be used to better another idea
Just dont follow bad ideas to a dead end street
 KeyConcepts

Hazard Control
Loss
Analysis
Organization
Reliability Organization

Eliminate
LEAN Waste
Creates a
Creates a

Six Eliminate
Eliminate Improve
FMEA
High Reliability

Errors
Sigma Failure
Efficiency

Ergonomi Eliminate (Reduce the Cost

Stressors
cs per Unit)
High

Encourage
OBM desired
behavior
 WhatisaHighReliabilityOrganization?

An organization where:
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:
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
 BreakingtheSilos

Injuries, Grants, Equipme Operations

Liability, Material Employee
Environm Chemical nt, costs,
Property, costs, turnover,
ental, s, Data Quality, Reputation,
Litigation Productivi regulator
Regulator Security Productivi Capital
, etc ty, etc y, etc
y, etc etc ty, etc availability

Leaderships Glass Barrier

EH&S & Work Comp

Is in place to prevent overloading of

Risk Management

Support Services
insignificant problems.
BARRIER
Is difficult to penetrate by a singular
Researchers

Operations

Leadership
risk group.
Is broken by large adverse events, or

HR
losses.
 OneBigSilo

Operations
costs,
ALL Risks Reputation,
Capital
availability

BARRIER
Entire Organization

Leadership
Collaborative
Everyone:
approach Considers all risks.
penetrates the Leads for their subject
barrier area.
Takes ownership of all
other subject areas.
 WorkingTogether

Include everyone in ERR projects, but keep member size

manageable
Actively engage primary risk holders
Keep secondary risk holders informed in real time
Report findings to all

Know your project groups personality types:

Program builders
Visionaries/Innovators
Devils advocates
Program managers
Sustainers
People Leaders

Assign responsibilities in line with personalities.

 WhoOwnstheERRProcess?

Project Owner

eps Project On Target Considers All Risk

Control Ideas

Owns Project Success

Removes Obstacles Addresses Problems
Head On

Or Failure
 Make the
Business Case
 BusinessCase

Executives rely on Return on Investment (ROI) estimates

In order to have ROI estimates, you must have metrics

Quantifiable ROI Difficult to quantify

This all boils down
metric examples to metric
ROI the examples

Cost per unit Liability savings

Time improvements Employee satisfaction &
(productivity) COST PER retention
Employee injury cost Brand improvement
savings (medical, lost time, UNIT Competitive edge
mod time, replacements,
training, litigation)
Quality improvement (Less
waste, happier customer,
minimized errors)
Insurance benefits (lower
rates, increased rebates)

If it was a risk it can be estimated in the ROI.

 Sustain &
Continually Improve
Sustain&ContinuallyImprove

ERR process Implement solutions

Create checks and
balances
Establish metrics

PLAN DO

CHEC
ACT
K
Report metrics to Track & review
stakeholders metrics
Re-evaluate if metrics Audit checks and
are off. balances
Opportunities to
Apply Concepts
(or at least food for thought)
 HandsonScenarioJob

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.
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.
Do your risks change?
How can you control the risks?
What are the failure modes?
How can you sustain risk control?
 HandsonScenarioProcess

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.

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?
 HandsonScenarioEntireOperation

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.

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
 KeyConcepts

Operatio
ns

Dependent
On Output

Dependent
On Efficienc
y

Based
On Risks

Everythi
ng is a
Risk
 KeyConcepts

Hazard Control
Loss
Analysis
Organization
Reliability Organization

Eliminate
LEAN Waste
Creates a
Creates a

Six Eliminate
Eliminate Improve
FMEA
High Reliability

Errors
Sigma Failure
Efficiency

Ergonomi Eliminate (Reduce the Cost

Stressors
cs per Unit)
High

Encourage
OBM desired
behavior
 OneBigSilo

Operations
costs,
ALL Risks Reputation,
Capital
availability

BARRIER
Entire Organization

Leadership
Collaborative Everyone:
approach Considers all risks.
penetrates the Leads for their subject
barrier area.
Takes ownership of all
other subject areas.
 WhoOwnstheERRProcess?

Project Owner

eps Project On Target Considers All Risk

Control Ideas

Owns Project Success

Removes Obstacles Addresses Problems
Head On

Or Failure
Sustain&ContinuallyImprove

ERR process Implement solutions

Create checks and
balances

PLAN DO

CHEC
ACT
K
Report metrics to Track & review
stakeholders metrics
Re-evaluate if Audit checks and
metrics are off. balances
Questions?