Lean in a cold fiscal climate: the public sector in an age of reduced resources

Reflecting on recent public sector reform, this paper examines the use of Lean during a period of financial austerity. The paper outlines several challenges for public sector organizations as they manage performance targets, and engage in service re-design. The author challenges the current use of Lean working arguing for a re-evaluation of the traditional public sector model of work and for a collective approach to co-production of service redesign.     

Pillar or platform—a taxonomy for process improvement activities in public services

Research into Lean in public services and particularly implementation, needs to develop from reporting cases to provide a taxonomy for researchers and practitioners. The paper outlines two approaches to process improvement activities (PIAs)—’Pillar’ and ‘Platform’ and tests the validity of these approaches through two organizational case studies (96 PIAs are considered). The degree to which this taxonomy supports decision-making is explored and issues associated with implementation are discussed.     

Implementing Lean Six Sigma in healthcare: issues from Italy

Lean Six Sigma is a method for strategic process improvement that aims to improve operational uniformity and quality, and reduce variations and waste. Lean thinking and Six Sigma have traditionally been applied to manufacturing. This paper examines ways of using Lean Six Sigma in healthcare organizations. The authors discuss the implications of their research for practitioners (managers and physicians) and present an agenda for future research.     

Performance effects of multiple control forms in a Lean organization: A quantitative case study in a systems fit approach

The primary objective of this paper is to research and test how control forms function and perform in a Lean organization. In the present quantitative case study, we provide statistical support that Lean is a set of multiple control forms (output, behavioral, and social controls) that complement each other to enhance performance, i.e., it is a control package. Therefore, performance is increased if the average level of control forms is increased, and performance is further increased if the control forms are balanced at the same level representing a complementary effect between them. Moreover, we provide a refinement to the statistical approach in testing systems fit models like ours by supplementing the Euclidian distance with the city-block distance. In this way, we are able to show that the control forms in Lean have a balanced complementary effect on performance, which is distinct from a solely additive effect or no effect. The refined understanding of complementary effect between control forms, the notion of balance, in a Lean organization can be utilized in understanding and testing more general control package theory in other contexts. Our data are archival data spanning multiple years in a dedicated Lean organization. This Scandinavian organization has around 2000 employees and produces small electronic components that are sold to business customers.     

Understanding before implementing: the context of Lean in public healthcare organizations

A three-year study of Lean implementation in public healthcare organizations in Québec identified poor understanding of the organizational context as a contributing factor to unsustainable Lean implementation. This paper presents a holistic perspective of the unique context of public healthcare organizations and discusses its implications with regards to Lean implementation.     

Using bandwidths to visualize and improve patient pathways

Global healthcare systems are struggling to manage the increasing demand for services. What is becoming apparent is the need for a greater understanding of the design of existing patient care pathways (journeys) and how these might be improved. Taking a Lean perspective, a popular approach employed for improving healthcare services, the authors consider how existing patient pathways can be visualized. Examples are used to illustrate varying degrees of complexity within the design and when Lean principles might help in providing a standardized and predictable service. The merits and challenges associated with using bandwidths are discussed and suggestions for future research are provided.     

Local adaption and central confusion: decentralized strategies for public service Lean implementation

There are a number of arguments for implementing public service Lean in a decentralized fashion, characterized by employee participation and local adaptions of the concept. This paper reports on a longitudinal case study of decentralized Lean implementation in a large Norwegian public service provider. The analysis points to unintended consequence of communication and co-ordination difficulties. The authors suggest ways of striking a reasonable balance between centralized and decentralized strategies of Lean implementation.     

Order in the courts: propagating a culture of efficiency within the Irish Court Services

This paper exposes two 5S style experiments that introduced Lean Six Sigma (LSS) techniques to the Irish Court Services Dublin Circuit Court. Manufacturing concepts were adapted to the service industry, including a new definition of ‘informational workpiece’, to minimize waste and process variation reduction. Senior management subsequently embraced the authors’ recommendations of change management using a bottom-up approach. Other post-project outcomes include improved staff morale, decreased risk, and the simplification of complex processes.     

New development: 4P recommendations for implementing change,from research in hospitals

How are hospital staff involved in process improvement initiatives such as Lean? What can we learn from Lean implementation experiences about the sustainability of such initiatives? The authors considered such questions in a study of workplace change in Australia and Canada. They found that Lean is more likely to be sustained when leaders adopted the 4P recommendations presented in this article.     

Market impact: a systematic study of the high frequency options market

This paper deals with a fundamental subject that has seldom been addressed in recent years, that of market impact in the options market. Our analysis is based on a proprietary database of metaorders—large orders that are split into smaller pieces before being sent to the market—on one of the main Asian markets. In line with our previous work on the equity market [Said, E., Bel Hadj Ayed, A., Husson, A. and Abergel, F., Market impact: A systematic study of limit orders. Mark. Microstruct. Liq., 2018, 3(3&4), 1850008.], we propose an algorithmic approach to identify metaorders, based on some implied volatility parameters, the at the money forward volatility and at the money forward skew. In both cases, we obtain results similar to the now well-understood equity market: Square-Root Law, Fair Pricing Condition and Market Impact Dynamics.     

The development of the management accountant's role revisited: An example from the Swedish Social Insurance Agency

This study traces the development of the management accountant (MA) role at the Swedish Social Insurance Agency (SIA). In 2012, the agency began a reformation by implementing the Lean management system in hopes of increasing customer trust. The results of this study show that the authority of the MA rests on decentralization and the proximity of MAs to managers, as previous research has shown, and more specifically on a definitional and a moral prerogative that may or may not be awarded to MAs enabling them to act as de facto managers. The study shows how the role of the SIA's operative level MAs changed into a helpdesk function with the role of assisting other groups to help themselves, in this case operative‐level teams that had begun performing management accounting tasks. Thus, this study bears witness not to the expansion and hybridization of existing MA roles, but to the reduction in authority and de‐hybridization of the MA role, from business partner to a pedagogical role on a consultative basis.     

New development: Wang Anshi's Wanyanshu as the origins of modern public management?

The drive for efficiencies across all areas of public spending in the UK has accelerated the need for improvements in service performance. This article considers how police performance might be improved through the adoption of a ‘Lean’ philosophy. This is seen as a potential driver for internal police improvements and is made in response to the government's call for reform and to address the challenges of a decrease in future police funding.     

“Economic Capital Allocation Derived from Risk Measures”, Eddy Van den Borre,January 2003

Abstract

The sustained reduction in mortality rates and its systematic underestimation has been attracting the significant interest of researchers in recent times because of its potential impact on population size and structure, social security systems, and (from an actuarial perspective) the life insurance and pensions industry worldwide. Despite the number of papers published in recent years, a comprehensive review has not yet been developed.

This paper attempts to be the starting point for that review, highlighting the importance of recently published research—most of the references cited span the last 10 years—and covering the main methodologies that have been applied to the projection of mortality rates in the United Kingdom and the United States. A comparative review of techniques used in official population projections, actuarial applications, and the most influential scientific approaches is provided. In the course of the review an attempt is made to identify common themes and similarities in methods and results.

In both official projections and actuarial applications there is some evidence of systematic overestimation of mortality rates. Models developed by academic researchers seem to reveal a trade-off between the plausibility of the projected age pattern and the ease of measuring the uncertainty involved. The Lee-Carter model is one approach that appears to solve this apparent dilemma.

There is a broad consensus across the resulting projections: (1) an approximately log-linear relationship between mortality rates and time, (2) decreasing improvements according to age, and (3) an increasing trend in the relative rate of mortality change over age. In addition, evidence suggests that excessive reliance on expert opinion—present to some extent in all methods—has led to systematic underestimation of mortality improvements.     

An Approach to Fair Valuation of Insurance Liabilities Using the Firm’s Cost of Capital

Abstract

There are two competing and seemingly different methodologies for calculating fair values—the direct and indirect methods. The direct approach has the advantage of providing a more reliable assessment of the risk of financial leverage. The indirect method can be structured to adjust for financial leverage, however, the methodology becomes excessively complex. The advantage of the indirect method is that it can be more easily related to exit prices. Intuitively, an exit price should reflect both the creditworthiness of the firm and the cost of capital of the firm. How are these two concepts related? This paper attempts to advance the fair valuation methodology by addressing these questions and presenting a methodology for deriving the firm or own credit risk assumption (to be used with the direct method) that is consistent with the cost of capital assumption used with the indirect method.     

An index of market shocks based on multiscale analysis*

Abstract

Financial markets are places of sudden and violent price movements. Nevertheless, financial crises lack a universally recognized way of assessing their gravity. This has motivated the measure recently proposed and applied to the exchange rates market by Zumbach et al (2000a Int. J. Theor. Appl. Finance 3 347–55). This measure relies on an analogy with geophysics: the scale of market shocks (SMS) is equivalent to the Richter scale used for earthquakes. More precisely, as a market is the place where economic agents—with different investment horizons—interact, the SMS definition is a weighted aggregation of volatility measures corresponding to these different horizons. In this paper, we implement and apply a similar measure to stock markets, and adapt it to take into account some extra features of these markets.

The volatilities are first described, and then used to assess the market instability perceived by a market participant. The evolution of our index of market shocks (IMS)—after rescaling for easy interpretation—is presented using different computational methods.

The IMS is then compared with another multiscale measure, the multifractal spectrum width, and we also investigate the links between the IMS and the daily close-to-close returns and volatility. Finally, we describe the recent turbulence on the French market using the IMS as an exploratory tool, concluding that the events of September 2001 proved to be a major shock compared to the Russian and Asian crises.     

A novel Monte Carlo approach to hybrid local volatility models

We present in a Monte Carlo simulation framework, a novel approach for the evaluation of hybrid local volatility [Risk, 1994, 7, 18–20], [Int. J. Theor. Appl. Finance, 1998, 1, 61–110] models. In particular, we consider the stochastic local volatility model—see e.g. Lipton et al. [Quant. Finance, 2014, 14, 1899–1922], Piterbarg [Risk, 2007, April, 84–89], Tataru and Fisher [Quantitative Development Group, Bloomberg Version 1, 2010], Lipton [Risk, 2002, 15, 61–66]—and the local volatility model incorporating stochastic interest rates—see e.g. Atlan [ArXiV preprint math/0604316, 2006], Piterbarg [Risk, 2006, 19, 66–71], Deelstra and Rayée [Appl. Math. Finance, 2012, 1–23], Ren et al. [Risk, 2007, 20, 138–143]. For both model classes a particular (conditional) expectation needs to be evaluated which cannot be extracted from the market and is expensive to compute. We establish accurate and ‘cheap to evaluate’ approximations for the expectations by means of the stochastic collocation method [SIAM J. Numer. Anal., 2007, 45, 1005–1034], [SIAM J. Sci. Comput., 2005, 27, 1118–1139], [Math. Models Methods Appl. Sci., 2012, 22, 1–33], [SIAM J. Numer. Anal., 2008, 46, 2309–2345], [J. Biomech. Eng., 2011, 133, 031001], which was recently applied in the financial context [Available at SSRN 2529691, 2014], [J. Comput. Finance, 2016, 20, 1–19], combined with standard regression techniques. Monte Carlo pricing experiments confirm that our method is highly accurate and fast.     

New development: Lean Thinking in smart cities

The smart city concept lacks a set of coherent criteria for evaluating its effectiveness as an urban management system, its compatibility with human rights principles, and its contribution to a democratic, participatory, social urban regime. The author explains why Lean Thinking principles can be applied to evaluate the ‘smartness’ of cities and serve as guidelines for improvement.     

The Bank Lending Channel Transmission of Monetary Policy in the EMU: A Case Study of Portugal

Abstract

This paper confirms the importance of bank performance to the credit-lending channel of monetary policy in the countries of the EMU and particularly in Portugal during recent years. The paper’s main innovations are (1) its use of macro and microeconomic statistical data; (2) the introduction of three calculated bank-performance indicators—asset structure, conversion of clients’ resources into credits and financial margins—into an adaptation of the Bernanke and Binder model; and (3) the use of panel data estimations not only to demonstrate the importance of the bank lending channel, but also to analyse the effects of the calculated indicators in bank-lending growth.     

Some problems connected with the calculation of stop loss premiums for large portfolios

Abstract

Experience will not, as a rule, be sufficient to permit a direct empirical determination of the premium rates of a Stop Loss Cover when the portfolio to be reinsured is a large one, and when the treaty runs on such terms that there is only a small probability of the total amount of claims exceeding a stipulated limit. In such cases we have to fall back upon mathematical models from the theory of probability—especially the collective theory of risk—and upon such assumptions as—insofar as they cannot be empirically grounded —may be considered reasonable with regard to the nature of the problem.     

Local management of schools: The road to privatisation?

The education system has become the central focus for management change in the public sector. Two recent reports—on assessment and testing and local management in schools—have tried to take the argument from generalities to practicalities, but have they succeeded?