Lowering business costs: Mitigating risk in the software delivery lifecycle
2 1 13 short presentation_ steps for reducing complexity
1. Six Sigma Integration, Inc.
1 March 2010
3 Steps for Reducing
Supply Chain Complexity:
Creating Safer Operations
James William Martin (2011), Unexpected Consequences,- Why
The Things We Trust Fail, Copyright 2011 by Praeger Publications
. Publishing date July 2011. Not to be reproduced or modified
without written permission from Praeger Publications.
1
Copyright 2010 Six Sigma Integration, Inc.
2. Introductions
James William Martin is a consultant and president of a
management consulting firm, located south of Boston. He
is also the author of several books focused on product
and process design. He has coached thousands of
people across
Japan, China, Korea, Singapore, Malaysia, Thailand, Aust
ralia, and North America to use fact based methods to
improve their products and services. As a management
consultant and teacher for more than twenty years, he
also served as an instructor at the Providence’s College
Graduate School of Business where he instructed
courses in decision analysis and related courses, and
counseled graduate students from government
organizations and leading corporations in the greater
Boston/Providence area. His interests include
environmental friendly design as well as personal and
organizational ethics, productivity and change
management. He holds a Master of Science in
Mechanical Engineering, Northeastern University; Master
of Business Administration Providence College; and
Bachelor of Science degrees in Industrial
Engineering, and Biology from the University of Rhode 2
Island.
Copyright 2010 Six Sigma Integration, Inc.
3. Our Competitive Advantage
We can sustain
results
Our mission: Reducing supply
chain complexity, improving
productivity and safety We know how
to reduce risk
We know complexity
and risk
We know supply chain
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Copyright 2010 Six Sigma Integration, Inc.
4. Complexity is:
“the condition of being difficult to analyze,
understand, or solve …. the condition of being
made up of many interrelated parts” (Encarta
Dictionary)
4
Copyright 2010 Six Sigma Integration, Inc.
5. You can see it in these ways:
Higher level symptom: Measured by:
Organizational cultural • Item proliferation
issues resulted in significant • High percentage non-value
previous failures adding operations (time)
A lack of risk analysis and • Long lead-times
contingency planning • High demand variation
Dependent on complicated
•
•
Low productivity
Low asset utilization
logistical systems and
resources for failure • High unit costs
mitigation • Near misses
•
Poor root cause analysis and
•
Known issues
Accidents
mitigation
• Etc.
5
Copyright 2010 Six Sigma Integration, Inc.
6. How is it measured?
• Item proliferation
• High percentage non-value
adding steps (time)
• Long lead-times
• High demand variation
• Low productivity
• Low asset utilization
• High unit costs
• Near misses NVA BVA VA
• Known issues
• Accidents
• Etc.
You must identify and measure complexity drivers to
improve performance
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Copyright 2010 Six Sigma Integration, Inc.
7. It is most dangerous if:
Dangerous equipment
Dangerous application environment
People dependent or cognition issues
Significant potential financial loss or loss of life if failure
occurs
Would impact many people across large geography
Politically sensitive
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Copyright 2010 Six Sigma Integration, Inc.
8. We analyzed the effects of complexity:
Complexity increases demand
variation and lead-time, requires
higher inventory levels and lowers
asset utilization.
Increases operating cost, reduces
cash flow and lowers revenues.
Increases risk and the likelihood of
unsafe operations.
We wrote the books for supply chain
complexity reduction….
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Copyright 2010 Six Sigma Integration, Inc.
9. What are recurrence risks?
Risk Example Risk Example
1. Organizational cultural 8. Significant potential
Interference by key stakeholders, misalignment of Operations which pose risks of injuries and death,
issues resulted in financial loss or loss of life
resources, ethical lapses. widespread damage or environmental contamination.
significant previous failure if failure occurs
9. Would impact many Typically natural events or man-made events such as
2. A lack of risk analysis Project the future using historical information rather
people across large environmental contamination over wide areas. Also,
and contingency planning than considering worst case scenarios.
geography poor relief responses to such events.
Inefficient or ineffective laws and regulations which
10. Politically sensitive If these occur, the public and media complain to the
3. Regulatory laxness permit an industry to short-cut and take inordinate
extent politicians become engaged.
risks.
11. Application technology Creating systems for production without systems to
Rotating equipment which can injure or kill people.
4. Dangerous equipment ahead of control monitor, and control them to prevent injury, deaths or
Equipment which can crush people.
technology property and environmental damage.
12. Dependent on
5. Dangerous application Non-existent, resource starved or poorly managed
Environmental extremes of temperature, noise, light, complicated logistical
environment logistical systems to coordinate and provide relief
vibration or other dangerous conditions. systems and resources for after a catastrophic event.
failure mitigation
6. Complex systems Systems relying on combinations of people, A chronic failure to investigate the causal factors for
13. Poor root cause
technology and information for their operation. These failure or to implement effective solutions to prevent
may be best solutions and cannot be simplified. analysis and mitigation their recurrence.
7. People dependent or Systems requiring people gather , interpret and act on
cognition issues information.
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James William Martin (2011), Unexpected Consequences,- Why The Things We Trust Fail, Copyright 2011 by Praeger Publications . Publishing date July 2011. Not to be reproduced or modified without written permission from Praeger Publications.
Copyright 2010 Six Sigma Integration, Inc.
10. Supply chain complexity causes
process breakdowns
Operations Billing Administration Finance
•Lead-times too long •Billing errors •High utilities expense •Accounts payable cycle time
•Late orders •Excess mailing expense •High insurance costs per employee •Variance to budget
•Average cycle time per order too •High facility costs per employee •Margin improvement
long Purchasing •High material and supplies expense •Overtime expense
•Emergency maintenance •Suboptimum year over year cost •Account receivable cycle time
reduction
•Too many suppliers
HR
Distribution
•Too many contractors •HR staff per total employees Quality Assurance
•Shipments exceeding standard
•High cost per invoice •Absenteeism rate •Defects
•Excess freight charges (inbound
•Purchasing errors •Training hours per employee •Customer complaints
and outbound)
•Employee cost to hire and retain •Claims
•High inventory investment and low
turns •Health costs per employee •Rework
Call Center
•Excess and obsolete inventory •Lost time accidents •Scrap
•Long average handling time
•Order shortages •Disability costs •Warranty
•Unnecessary call transfers
•Premium freight costs •HS&E issues
•Cost per call
•Retuned product
•Abandoned calls
•Unnecessary product transfer
between facilities
•Poor on-time delivery
James W. Martin, Lean Six Sigma for Supply
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Chain Management- The 10 Step Improvement
Process, McGraw-Hill Professional; 1 edition
(October 12, 2006).
Copyright 2010 Six Sigma Integration, Inc.
11. Behavior influences supply chain complexity
• Cognition and group behavior
influence how products and
services are designed and
used…
• This picture is not
moving!
Akiyoshi KITAOKA, Professor, Department of Psychology,
Ritsumeikan University, Kyoto, Japan
studying visual perception, visual illusion, optical illusion,
trompe l'oeil AIC2009 ICP 2016
http://www.ritsumei.ac.jp/~akitaoka/index-e.html
(Not incorporated into the book)
Attitudes and behaviors increase supply chain complexity 11
Copyright 2010 Six Sigma Integration, Inc.
12. There are universal principles for good
design of supply chain operations
Alignment Issue
• Influence
• Learning
• Usability
• Appeal
• Decision making
Alignment Issues
http://australianpolitics.com/news/2000/00-11-12.shtml
(Not incorporated into the book)
Effective designs accentuate the positive and neutralize the negative influences of cognition and
group behavior…there are perhaps more than 100 non-technical factors to consider…
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Copyright 2010 Six Sigma Integration, Inc.
13. Cognition influences process complexity, how people
work and misuse products and services
Interpret ambiguous images Same color! Perception Issues
as simple and complete
Law of Pragnanz (Interpret ambiguous images as simple and complete)
http://www.marsartgallery.com/pragnanzlaw.html
(Not incorporated into the book)
http://www.lottolab.org/articles/illusionsoflight.asp
http://picocool.com/culture/color--the-brain-beau-lottos-optical-
illusions/
(Not incorporated into the book)
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Copyright 2010 Six Sigma Integration, Inc.
14. Cognitive errors cause mistakes
• Forgetfulness ( not concentrating)
• Misunderstanding ( jumping to conclusions)
• Identification ( sensory error)
• Inadvertent errors ( distraction & fatigue)
• Delay in task execution ( information processing)
• Inability to compensate for new situations
• Intentional errors ( sabotage)
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Copyright 2010 Six Sigma Integration, Inc.
15. Things fail because error conditions align
Failure Model
Failure condition A
Failure condition B
Failure condition C
Failure condition D
James William Martin (2011), Unexpected Consequences,- Why
The Things We Trust Fail, Copyright 2011 by Praeger
Failure
Publications . Publishing date July 2011. Not to be reproduced
or modified without written permission from Praeger
Publications.
Catastrophic failures occur when contributing factors align … We must detect weak signals
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and “near misses” … and apply failure analysis to products, services and logistical systems
Copyright 2010 Six Sigma Integration, Inc.
16. Organizational structure and culture can
help or hinder complexity reduction
Transportation … Inventory … Motion … Waiting … Overproduction … Over processing … Defects … Safety
Formal and Efficiency of
Structure Culture informal groups Individuals
design
• Bureaucratic, functio • Organizational • Team organization • Personal •Performance, schedule, co
nal, divisional, matri culture, norms, v and dynamics attitudes, concept of st, customer, suppliers and
x, collaborative, virtu alues self, values, norms other project risks and
al issues
Arbitrary goals … Conflicts of interest… Tolerating a violation of organizational policies, procedures or laws and
regulations... Tolerating incompetence … Violations of law or regulations … Lying and falsifying information …
Making threats to others … Engaging in disruptive or demoralizing conduct with peers, employees, customers or
suppliers … Leaking or misusing confidential information … Stealing property … Misrepresenting intellectual
capital and other rights … Making untrue claims regarding product or service features
James William Martin (2011), Unexpected Consequences,- Why
16
The Things We Trust Fail, Copyright 2011 by Praeger
Publications . Publishing date July 2011. Not to be reproduced
or modified without written permission from Praeger
Publications.
Copyright 2010 Six Sigma Integration, Inc.
17. 4 hour executive workshop agenda: 3 steps for
reducing supply chain complexity:
The workshop goal: become familiar with the concepts, identify areas of
applications and integrate with current programs e.g. OMS and CI Essentials.
Step 1:Complexity
• Become aware of risk (recurrence risks)
• Design low risk processes (supply chain focus)
Step 2 Human factors
• Social psychological effects on supply chain safety (error conditions, culture and
ethics)
• Estimating and reducing risk (reduce variation and errors)
Step 3 Next steps
• Where to focus? / Prioritization?
Next step: 2 day supply chain workshop to identify and reduce supply chain complexity
and improve safety
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Copyright 2010 Six Sigma Integration, Inc.
18. Questions?
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Copyright 2010 Six Sigma Integration, Inc.
Hinweis der Redaktion
The Law of Praganaz recognizes the fact that people interpret ambiguous information as complete i.e. create and see patterns where there are none. The effect occurs when a person mentally fills in blanks between visual elements arranged as a shape or pattern, but, incomplete in form. An example is a visual pattern of a series of lines which contain intermittent blank spaces. People will tend to mentally fill in the blanks between the lines and perceive the actual and imagined lines form a shape or pattern. This perceptual effect can be either useful or dangerous depending on the application. It is useful if the design intent is to convey information in this manner, but, dangerous if people misinterpret the intended pattern. It’s usually best to not leave anything to chance in these circumstances by creating partially completed shapes and leaving their interpretation to a user. This phenomenon is also called closure because people close a shape’s outline. Closely associated with closure is the design principle called continuation. People tend to more easily understand how to use a design’s functions and features when they are arranged in straight lines since they are perceived as being more connected or related. This implies designers should consider arranging functions and features in this way to show related functions and features unless there are reasons for not doing so. It is known fact that people often misinterpret visual information for several reasons. A physiological example is visual cortex adjustments of brightness and color variation to view an object. These are called correction errors and a primary example is constancy. Constancy occurs when the visual cortex attempts to maintain a constant image as the size and color of objects change relative to their environment. Correction errors also occur when the brain minimizes variations of light or sound. The existence of correction errors increases the likelihood of failures when alarms and controls are not highly differentiated from normal or safe conditions. A common design principle is to use color to compensate for constancy. Examples include, using red for danger and green for calm and normal. But, the use of color is culturally dependent. This implies designers should understand how their customers perceive the colors of new products; to the extent color is used for making decisions. This is also true for service systems.
Attitudes: Expressions of approval or disapprovalPersonal prejudices and biases which determine beliefs influencing the types of work activities, their priority and how they should be performed. In the absence of facilitation, incorrect work activities will be selected, prioritization will be ineffective and required information may not be acquired or analyzed correctly.Persuasion: Methods used to influence adoption of an attitudeFacilitative methods are used to obtain consensus for team behavior, members are removed or added to a team, members are counseled regarding their behavior. Correct persuasive methods will move a team to a high performance stage otherwise it becomes dysfunctional and fails to achieve its goals in a timely and efficient manner.Social cognition: Perception formation of others or patterns including filtering of environmental stimuliTeams which are not diverse, balanced with respect to required work activities or do not use facilitative tools will filter out important information. Incorrect goals will be selected and information will be incorrect interpreted resulting in wrong conclusions.Self-concept: Comparisons to others or standards which contribute to self-esteemSome team members have low self-esteem and others are egotistical. Failure to propose correct ideas, engage in group activities, and oppose incorrect ideas or behavior. Incorrect goals will be selected, not prioritized and team issues will not be effectively facilitated.Cognitive dissonance: Inconsistencies between personal actions and beliefsTeam members have not been persuaded to agree with group’s goals and work activities. Cannot support the group. Information is leaked. Work tasks not completed. Dysfunctional behavior occurs, People may leave the team.Social influence: Influence of group size, beliefs and status on individual behavior.Team cohesiveness and its maturity stage depend on group cultural norms and values. Flexibility is required for multi-cultural teams. Group size must be managed to control dynamics. People may engage in dysfunctional behavior if social norms and values can not be effectively communicated to them.Group dynamics: Rules, norms and relationships which people within a group use to influence each other, differentiate themselves from other groupsThe dynamics of a group change as its membership changes as a result group norms, values must be clearly communicated and facilitated. If not properly facilitated the group may break up into subgroups and engage in dysfunctional behavior.Interpersonal relationships: The ways in which people interact with each other both positively and negativelyRelated to group dynamics, interpersonal interactions must be facilitated to manage personal attitudes, social influence and group dynamics. If not properly facilitated the group may break up into subgroups and engage in dysfunctional behavior.Interpersonal attraction: Factors which influence the desire of people to associatePeople have different reasons for wanting to join a development team based on perceived value of rewards and recognition. People need to see an advantaged of associating otherwise other priorities receive their attention.
Arbitrary goalsConflicts of interestTolerating a violation of organizational policies, procedures or laws and regulations.Tolerating incompetenceViolations of law or regulationsLying and falsifying informationMaking threats to othersEngaging in disruptive or demoralizing conduct with peers, employees, customers or suppliersLeaking or misusing confidential informationStealing propertyMisrepresenting intellectual capital and other rightsMaking untrue claims regarding product or service features