Applying Lean Six Sigma to Business Continuity Planning

1. Applying Lean Six Sigma to Business Continuity Planning Jason RaddeOffice of Emergency Response and RecoveryPeter RusselburgOffice of the Chief People Officer11 May 2011 Applying Lean Six Sigma to Business Continuity Planning

2. Introduction • Background • What is Lean Six Sigma? • Continuity Planning and Lean Six Sigma • Lean Six Sigma Role • GSA Case Study Agenda

3. In recent years, organizations (public/private, large/small) have begun to value the importance of conducting high-quality continuity planning • The key to business continuity planning is to fully understand the critical business processes required to support an organization's essential functions, along with the resources are required to deliver them • The growing complexity of day-to-day operations and dependencies on strategic business partners and IT systems has amplified the need for organizations to develop reliable Continuity Plans and a resilient infrastructure to ensure a minimum level of service during a disaster • Lean and Six Sigma process improvement programs have been used to significantly improve financial and operational performance across all sectors of the commercial business spectrum, and have extended their impact into all major business functions and activities • Over the past decade, the public sector has begun to adopt Lean and Six Sigma principles and roll-out internal Continuous Process Improvement (CPI) / Lean Six Sigma (LSS) programs to accommodate budget cuts and staffing reductions, as well as to improve efficiency, effectiveness, and accountability Introduction

4. LSS is the private and public industry standard for continuous process improvement • Increase throughput • Shorten cycle times • Reduce defects • Lower costs Internal Revenue Svc. GSA NIH US DoD Wells Fargo Fifth/Third Bank CitiGroup Bank Of America Intuit United Health Group Cardinal Health Blue Cross Providence Health Home Depot Xerox Lean Six Sigma Background Maytag Praxair Ford Air Products Honeywell Johnson Controls Johnson & Johnson Siebe Foxboro Lockheed Martin Bombardier John Deere Whirlpool GenCorp Nokia Sony Siemens Compaq Seagate PACCAR Toshiba DuPont Dow Chemical Motorola ABB TI IBM DEC Kodak AlliedSignal GE 1992 1995 2000 Today

5. Focuses on improving speed and efficiency while eliminating waste within business processes • Targets the “Seven Deadly Wastes” that plague virtually all businesses • Reduces process complexity through the use of pull techniques, lean work methods and sourcing/supplier integration • Reaches beyond visible symptoms (defects, waiting, etc.) to address structural factors and the root causes of waste • Lean Thinking can be summarized in five principles: • “Specify and Focus on Value” • “Identify the Value Stream” • “Allow Value to Flow Without Interruptions” • “Let the Customer Pull Value” • “Continuously Pursue Perfection” Lean is a discipline that aims to systematically eliminate waste and other non-value adding activities while improving the flow of value to the customer. Lean expands the limited focus of more traditional improvement efforts, leveraging the discipline across all value streams. What is Lean?

6. An approach to identifying and eliminating waste (low value-added activities) Seven Deadly Wastes Identifying and Eliminating Waste Typical White Collar Process Excessive Motion • Data at different source locations, • Manual signature and approval workflow • Office equipment distance from work areas Searching for information Other Waiting Time • Waiting for decisions, approvals, meetings, etc. • Functional silos prevent end-to-end process ownership • Inappropriate prioritization of work Approval Wait Time Overproduction • Focusing on details that go unnoticed by customer • Employees not empowered by full process visibility forces need for “rule by committee” Value-Added Project Work ~35% Unnecessary Processing Time • Policies prevent task completion • Redundant or unnecessary paper work • Transcribing information multiple times Defects • Re-work of any kind • Customer requirements that are misunderstood or not communicated well drive downstream rework Meetings & Conference Calls Excessive Inventory • Overstaffing work streams due to lack of understanding of critical path • Minimal understanding of bottlenecks = True Value-Added Unnecessary Transportation • Multiple unnecessary signatures needed for an approval • Circulating products for unnecessary review

7. Complements Lean by eliminating costly defects and variations from business operations • Provides a highly structured approach/process to business improvement through the elimination of variation (defects) in products and service processes (true Six Sigma performance equates to 3.4 DPMO) • Ensures that process objectives and outputs are targeted towards customer defined objectives • Is typically supported by a “belt” certification program. “Green Belts” and “Black Belts” execute projects under the guidance of Six Sigma “Master Black Belts.” Six Sigma is a discipline that enables companies to eliminate costly defects in their operations – and realize breakthrough profits. To achieve this, Six Sigma managers use data and statistical analysis to locate process errors. A "sigma rating" is then determined, which pinpoints the number of defects-per-million-opportunities (DPMO) in any manufacturing, service or transactional procedure. What is Six Sigma?

8. Six Sigma offers a potent suite of tools used in improving the quality of a company’s operations and support processes Phase Activities Tools Six Sigma Methodology Define • Establish project structure and scope • Identify the problem • Identify factors critical to the process • Set goals • Project charter • Cause & effect, process mapping, SIPOC diagram • Quality tools, DPU analysis • Problem statement Measure • Refine process to be measured • Develop means of input measurement • Quantify process capability and determine variation in the measurement process • Process capability analysis • Gage R&R concepts • Quality tools • Process mapping, cause and effect drilldown • t-Tests, Chi-square test, hypothesis testing, ANOVA • Ishikawa diagrams, root cause analysis • Pareto analysis, histograms, run charts Analyze • Utilize tools to determine key drivers causing variation in process • Identify root causes and hypotheses • Search for correlations among variables Improve • Quality tools (QFD) • Regression analysis, capability analysis • Change management concepts • Process mapping • Prepare organization for change • Establish operating tolerances for key drivers • Identify and implement improvements • Test new process and solicit feedback Control • Mistake proofing concepts • Post project metrics • Making change last • Implement controls to ensure improvements are accepted • Monitor and adjust process as necessary, focusing on customer’s point of view

9. Continuity Planning Elements Lean Six Sigma Principles • Assess organization functions to identify personnel, materials, processes and equipment necessary to keep the business operating • Review process flow charts and identify operations critical to survival/recovery and cross organization interdependencies; including expedited decision-making capability and high-value systems • Define crisis management procedures and individual responsibilities in advance; make sure the individuals involved know their roles and responsibilities, understand your gaps, and plan for how they can be filled • Develop a comprehensive Continuity Plan; with input from major stakeholders and process owners from all Mission Essential Functions • Establish procedures for succession of management, and engage suppliers, shippers, resources and other partners in planning • Review emergency plans annually to ensure as business/priorities change so does your preparedness requirements • Who are the customers and what are their priorities? What is the performance standard? • Identify core processes, key customers and customer requirements • Engage stakeholders and clearly determine objective • How is the process performing today and how is it measured? What might be causing it? • Understand the flow of value across an enterprise • Understanding workload and capabilities • What are the most important causes of the process issue? • Conduct appropriate analysis – using real data (FMEA, QFD, Root Cause, Cause and Effect, 5-Why, etc.) • What are the solutions? How do we implement them? • Use the LSS philosophy to drive out waste and risk • Model and pilot results • Execute implementation and deliver relevant training • How do we sustain the benefits? • Establish control plan • Initiate continuous improvement plans Continuity Planning and Lean Six Sigma

10. Waste / Risk Question: If the focus of Lean is to reduce non value added activities how does that apply to Business Continuity? • Visible Symptoms • Excessive Motion • Waiting Time • Over-Engineering Continuity Planning and Lean Six Sigma • Structural Factors • Process Villages • Matrix Organizations • Functional Ownership • Outdated Metrics • Root Causes • Poor configurations of work • -Physical • -Organizational • -Policies • -Information • Excessive infrastructure Mission Essential Functions

11. In May 2007, the President issued National Security Presidential Directive 51/Homeland Security Presidential Directive-20 (NSPD-51/HSPD-20). The National Continuity Policy is an updated, integrated approach to maintaining a comprehensive and effective continuity capability. The directive replaced Federal Preparedness Circular (FPC 65) as the primary continuity guidance document for the Federal Executive Branch. • The directive, along with the associated implementation plan (2007), and Federal Continuity Directive 1 and 2 (2008), altered continuity planning requirements for Federal Executive Branch Agencies. • As a result, GSA reevaluated its existing continuity program and in June 2009, issued GSA Order 2430.1 (General Services Administration Continuity Program) which established new priorities for GSA’s continuity program. Project Background

12. Three key parts of GSA Order 2430.1 are: • Utilize functional devolution to GSA regional entities • Emphasize the permanent and routine geographic distribution of leadership, staff, systems, and infrastructure • Ensure the performance of the GSA Primary Mission Essential Function (PMEF) and supporting Mission Essential Functions (MEFs) during any emergency for a period of up to 30 days or until normal operations can be resumed • To comply with this guidance, as well as Federal Continuity Directive 2, GSA began a thorough Business Impact Analysis to fully understand its Enterprise Mission Essential Functions and how best to ensure their execution • In 2010, OERR engaged the Office of Performance Improvement’s CPI Program to utilize Lean Six Sigma methodology and tools to conduct the Business Impact Analysis • GSA is currently in the final phase of this effort GSA Case Study

13. Define Measure Analyze Improve Control Our approach focused on the application of a clear, common definition of MEF across the agency, to document, quantify and analyze all critical processes, resources, and dependencies, and to develop an effective agency-wide Continuity Plan enabling MEF owners to plan their support appropriately, launch focused improvement initiatives, and engage in agency continuity planning activities Project Approach Objectives • Clearly define MEF criteria criteria with agency stakeholders, to include defining not just what is in scope, but what is out of scope • Document through process mapping / value stream mapping all agency activities that comply with the definition for MEFs as established during the Define Phase • Analyze time and resource requirements for each MEF, including risk / resiliency profiles, and contingency options • Develop a comprehensive GSA Resiliency Improvement Plan, including highlighting areas with high risk or resiliency deficiencies • Begin to execute tactical planning using Continuity Plan and address risk areas / deficiencies with integrated improvement initiatives Key Activities • Define the scope of the project effort and identify key Stakeholders • Define MEF selection criteria • Develop a prioritization strategy for MEF selection • Identify and validate the MEFs (and respective MEF owners) • Identify key processes and interdependencies • Identify all major inputs and outputs • Obtain and analyze current MEF universe • Determine MEF outage impact • Determine gaps • Determine time and resource requirements • Determine opportunities to streamline processes • Define system requirements • Define required modifications to current state operations • Ensure MEF owners are aware of their roles in Continuity Planning • Deploy improvement efforts to shore up resiliency of operations • Conduct integrated planning Representative Products / Deliverables • Project Charter • Standard MEF definition • Stakeholder Analysis • Data Collection Plan • Data collection results (workload, resources, locations, work volume) • Suppliers, Inputs, Processes, Outputs, Customers (SIPOCs) • Value Stream Maps • Time and Resource vs. Capacity Analysis • FMEA • 5-Why Analysis • MEF QFD – Prioritization Matrix • Resiliency Improvement Plan • Agency-Wide Out-brief • Development of Future Project Charters • Contingency Planning Efforts

14. Completed Actions Utlizing a lean tool known as a CTQ tree, OERR developed criteria for defining what GSA considers Enterprise Mission Essential Function. OERR than worked with the GSA Staff and Service Offices (HSSO’s) to apply these criteria. The result was a list of 25 Enterprise Mission Essential Functions Define Phase Challenges Typical Deliverables/Tools • Developing and deploying a jointly developed standard for agency MEFs to enable primary agency business lines to identify precisely their MEFs the same way across the agency • This effort reduced variability in identifying mission essential activities and established clear guidance on what activities qualified as in and out of scope • This clarity also made the process of identifying MEF process owners and the task of documenting processes easier and translated into a higher value content for analytical and planning purposes Key Success Factors • To ensure success, it is critical to get a commitment from the key stakeholders and process owners – as well as rigorously ensure the definition is applied uniformly across a diverse range of business activities

15. Completed Actions To gain a thorough understanding of the underlying business processes behind each Enterprise Mission Essential Function, GSA developed business process maps using two lean tools: SIPOCs and Value Stream Maps. Measure Phase Challenges Typical Deliverables/Tools • A wide variety in the maturity level of business processes exists throughout GSA (some are very well defined and others are not) • Several GSA functions are highly dependant on external processes/entities. These “off map processes” are currently not well understood and GSA has limited control over them. Key Success Factors • This effort requires a significant time investment and is extremely dependent on the quality of the data collected and open participation on the part of process owners and key stakeholders SIPOC Value Stream Maps

16. Objective Once GSA had a solid understanding of the underlying business processes, an analysis was done to identify and rank potential risks to the execution of each Enterprise Mission Essential Function. This was done by analyzing the value stream maps and using a lean tool known as a Failure Modes Effects Analysis (FMEA). This data was then used to create a graphical risk profile. Analyze Phase Challenges Typical Deliverables/Tools • Analyze current state MEF capabilities (across organizations and regions) to assess gaps and vulnerabilities, inter-dependencies, deficiencies, and opportunities to improve enterprise visibility and clarity for the planning process and determine the optimal distribution of key activities and critical infrastructure needs Risk Profile Key Success Factors • The success of this phase was highly dependent on the quality of the data gathered during the Measure Phase. FMEA MAP/PROCESS Analysis

17. Objective GSA is currently conducting this phase. This consists of taking data gathered in the define, measure, and analyze phases and working with the GSA HSSOs to incorporate it into a new GSA Enterprise Continuity Plan, that is better aligned with GSA Order 2430.1. Improve Phase Challenges Typical Deliverables/Tools • Design a plan that focuses exclusively on the critical agency activities required to support the PMEF, and identifies and prioritizes functional delivery risks and deficiencies that require immediate resolution • Developing a plan that captures the intricate organizational and resource inter-dependencies to ensure minimum service delivery • Develop a plan that reduces the functional and process complexity that can compromise mission effectiveness and process reliability in an disaster scenario and enhances the management process 5-S Prioritization Matrix Key Success Factors • This phase requires broad participation from process owners and stakeholders, with a strong understanding of the core requirements and philosophy driving this effort Before and After VSM

18. Objective Utilize test, training, and exercise activities to identify areas for improvement in the GSA continuity program and incorporate appropriate remedial actions into a formal Corrective Action Program. Control Phase Challenges Typical Deliverables/Tools • GSA will implement a regular test, training, and exercise program based on the requirements and recommendations outlined in the Continuity Plan - designed specifically to test and improve upon GSA’s ability to support the requirements of the PMEF Implementation Plan Governance Plan Key Success Factors • A good testing/training program should be designed to challenge capabilities, identify potential risk areas, and document improvement opportunities with the use of realistic, challenging situations Control Plan Improvement Charters

19. Understanding an organization’s essential functions and critical business processes is key to conducting proper business continuity planning, and Lean Six Sigma offers specific tools and methodologies which can greatly facilitate and improve this process • In addition to the direct benefits achieved on the Continuity Planning project, indirect benefits will be gained through an increased knowledge about agency processes that could provide valuable, time-saving support to unrelated improvement efforts • The driving cultural transformation behind Lean Six Sigma is the “Continuous Improvement” element – organizations and individuals are empowered to take hard looks at their operations, identify improvement opportunities and pursue them • This cultural element is supported by a rigorous training effort directed across the enterprise to help individuals identify waste, with the tools and techniques to eliminate it – but also requires significant outreach and education of senior leadership to inform them of how they can support these types of initiatives Summary

20. If you have any questions about the Continuity Planning effort and/or the Continuous Process Improvement program at GSA please contact: • Jason RaddePolicy LeadOffice of Emergency Response and Recoveryjason.radde@gsa.gov202-208-0630 • or • Peter RusselburgCPI Program ManagerOffice of the Chief People Officerpeter.russelburg@gsa.gov202-501-3447 Questions