Changing Culture and Delivering Lean Six Sigma Results at ... · TODAY • GNBs performance excellence journey – A brief history • The Formal Management System – How GNB delivers

Changing Culture and Delivering

Lean Six Sigma Results at the

Government of New Brunswick

An integrated approach to

executing strategic priorities

TODAY

• GNB’s performance excellence journey– A brief history

• The Formal Management System– How GNB delivers on Government’s vision and strategy

• Integrating Lean Six Sigma into strategy implementation– Aligning projects to strategic priorities as a vehicle to meet financial and

other organizational goals

• The results are clear! – Demonstrated savings and service improvements

• Critical success factors– Takeaways for your own performance excellence journey

NEW BRUNSWICK GOVERNMENT

Chamber of the Legislative Assembly, Fredericton(Gérard Sirois)

GNB’S PERFORMANCE

EXCELLENCE JOURNEYA brief history

• GNB’s performance excellence journey

• The Formal Management System

• Integrating Lean Six Sigma into strategy

implementation

• The results are clear!

• Critical success factors

Sugarloaf Provincial Park, Campbellton

HISTORY

Office of Strategy Management

2012-2013

GNB and Pilot Departments

2013-2014

Wave 2 Departments2014-2015

Wave 3 Departments

pre 2011

NB LiquorNB PowerService New BrunswickDepartment of Natural Resources

OFFICE OF STRATEGY MANAGEMENT

Responsible for developing the principles, methods and tools by which NB Government leaders can:

– enhance alignment and execution of strategy,

– drive improvement results,

– build a sustainable continuous improvement culture.

Clerk of Executive Council and Head of the Public Service

Chief of Strategy Management


“Less than 10% of strategies effectively formulated

are effectively executed”

Fortune Magazine

“In the majority of failures –we estimate 70% – the real problem isn’t bad strategy…. It’s bad execution.”

“Why CEO’s Fail”, Fortune Magazine

Mount Carleton Provincial Park(Sandra Rhodda)

LEADING STRATEGIC CHANGE

1. PURPOSE is customer driven…

…solve their problems.

2. 85% of problems are PROCESS (not people)…

…deliver faster, better, cheaper.

3. Engage PEOPLE…

…involve employees,

differentiate performance,

develop leaders.

PRINCIPLES OF HIGH PERFORMANCE

Wave I

• Environment & Local Government

• Natural Resources

• Service New Brunswick

• Transportation & Infrastructure

• Horizon Health Network

• Finance

Wave II

• Justice & Attorney General

• Education and Early Childhood Development

• Agriculture, Aquaculture & Fisheries

• Public Safety

• Post-Secondary Training, Education & Labour

• Social Development

• New Brunswick Internal Services Agency

Wave III

• Health

• Facilicorp NB

• Executive Council Office

• Economic Development

• Invest NB

• Healthy & Inclusive Communities

• Efficiency NB

• Human Resources

• Tourism, Heritage & Culture

• Energy & Mines

GNB DEPARTMENTS(at time of launch)

EARLY ADOPTERS

DepartmentAlignment Champion

Deputy Ministers

ADM/VP ADM/VP

ALIGNMENT CHAMPION NETWORKClerk of Executive Council and Secretary to Cabinet


GNB

Dept.

Process Improvement Facilitators

(Lean Six Sigma Black Belts)

BUILD CAPACITY FOR SUSTAINABILITY

Future Leader?

Personal Attributes

Cognitive Ability

Leadership Potential

Knowledge & Experience

CULTURAL SUSTAINABILITY =

BUILDING IMPROVEMENT LEADERS

Improvement Roles Operational Roles

Individual Contributors

Managers

Directors

Assistant Deputy

Ministers

Deputy Ministers

Lean Six Sigma Black Belt (2yrs)

Change Champion lead significant

organizational change

THE FORMAL

MANAGEMENT SYSTEM How the GNB public service delivers on

Government’s vision and strategy




implementation



Formal Management SystemDriving Organizational Improvement


CHOICE

“ON” WORK

“IN” WORK

STANDARD WORK

Disciplined Leaders, Teams,Actions

StrategicImprovement

(ON) Operations

(IN)

http://www.gnb.ca/

http://www.gnb.ca/

Strategy Management (choice)

Initiative Management (ON work)

Daily/Plan Management (IN work)

Process Management(Standard Work)

Standardized leadership, operational and enabling

processes

Performance Management

Disciplined leaders, teams and actions

Strategy Map Balanced Scorecard

Hold the gains


Program, project , process improvement

Priorities and speed

StrategicImprovement

(ON)

Operations(IN)

MEASURING TO IMPROVE OR CONTROL?

Working “IN” the business (day-to-day operations)

Initiatives

Action Plans“change, add ordelete processes”

REVIEW RESULTSCalendar of Commitments

Measure forIMPROVEMENT:

Measure for process CONTROL:

Working “ON” the business (prioritized improvement)

MISSIO

N

Improvement Plan

VIS

ION

Value Stream

Processes“individual responsibilities

(process owners)”

Operating Plan

Balanced Scorecard DASHBOARD: Key Process Indicators (KPI)

Strategy Map


February 2, 2015

CHOICE

“ON” work “IN” work

Standard work

Disciplined Leaders, Teams,

Actions


A well designed process should flow like a river.

“Lean“ is a systematic method for the elimination of waste (“Muda") within processes and systems, from the perspective of the client who consumes a product or service.

Saint John River Valley

Six Sigma (6σ) seeks to improve the quality of

the output of a process by identifying

and removing the causes of defects and minimizing variation.

THE DMAIC CYCLE

better, faster, cheapercreating more value for the customer at less expense

IMPROVEMENT =

value of project # black beltscycle timex x

Project

Kaizen

5S

Waste Walk

Daily Management

Value Stream

day to day

project

organizational

Process improvement accessible to all staff:

• Introductory training on Lean Six Sigma and wastes

• Coaching from Black Belt

• Formal report-outs at 30, 60, and 90 days

WASTE WALKS

TYPES OF WASTE

Transportation

Inventory

Motion

Waiting

OverproductionOverprocessing

Defects

People's Knowledge /

Skills

Unevenness

Overburden

• High inventories

• Wasted materials

• Absenteeism

• Late deliveries

• Rework

• Invoices

• Returns to Suppliers

• Repackaging

• Inspecting

• Expediting

• Moving

• Counting

• Sorting

• Loading / Unloading

• Receiving Report






processes




Hold the gains




PROCESS STANDARDIZATION

Standard Operating Procedure (SOP)

Standard Work Visual Board

• Achieved 82% improvement.

EXAMPLE: MEC PROCESSING TIME






processes




Hold the gains




DAILY MANAGEMENT

A focused team approach to regularly

monitor and improve work.

Team

Huddles

Visual

Management

Leader

Standard

Work

A regular, short meeting with

process team to discuss Key

Performance Indicators (KPIs).

A visual display board with measurements against targets.

Standard structure for management to monitor, coach

and report on progress of the

team.

All three pieces are required for the

wheel to turn…

DAILY MANAGEMENT: HOW IT WORKS

More Jobs

% of referrals to PETL

• SD Regional & Departmental BSC measure (contributory to Labour force size)

Labour force size • PETL measure

Support/

Develop the workforce

• GNB objective

Missed appointments

STRATEGIC ALIGNMENT

• Daily Management metric (Fredericton)

2014-2015 # of referrals to PETL 2015-2016 # of referrals to PETL

Region 1 522 (18.1%) 467 (16.3%)

Region 2 329 (7.8%) 310 (7.8%)

Region 3 364 (13.8%) 521 (19.7%)

QUARTERLY RESULTS (Q3)

Region 3-Fredericton

-11%

-6%

+43%






processes




Hold the gains




QUARTERLY PERFORMANCE

REVIEW MEETINGS

1. Overview of GNB BSC Measure Performance

2. Strategy Execution Barriers

– Review on track and off track measures and initiatives

– Discussion and decisions

3. Successes to recognize

– What happened, who did it, how should we recognize?

4. Feedback on the meeting

EXAMPLE

SCHEDULE TO DEVELOP, COMMUNICATE

AND REVIEW STRATEGY

FMS MATURITY: SAMPLE DEPARTMENT RESULTS

DepartmentAlignment Champion

Deputy Ministers

ADM/VP ADM/VP

Clerk of Executive Council and Secretary to Cabinet


+ Master Black Belts (MBBs)

GNB

Dept.

PEOPLE IN THE PROCESS

DRIVEN BY PURPOSE

MBBs, black belts, green belts Process Owners (projects) Daily Management OwnersCertified “Waste Walkers”

Building a high-performance culture

INTEGRATING LEAN SIX

SIGMA INTO STRATEGY

IMPLEMENTATION Aligning projects to strategic priorities to meet

financial and other organizational goals




implementation



Sackville Waterfowl Park(Craig S. Dow)

CROWN FOREST

SCALE

ADMINISTRATION

Project Example

Energy and Resource

Development (ERD)

• Scale Administration is one category of Licensed Managed Services paid by Government to Crown Licensees

– “Scaling” measures the cut trees to determine the scale (volume) and quality (grade) of the wood to be used for manufacturing.

– Licensees are paid in $/m3 of wood harvested

• ERD requires Licensees to arrange reporting on scale throughout the year.

• ERD pays Licensees approximately $800,000/year for these services – (0.14/m3 x 5.5 Million m3)

• Government was targeting a $10 million reduction in forest management costs, including $450,000/year for Scale Administration across the province

This project focused on one license only

and met the goal of saving $150,000/year

BACKGROUND

Summary Metrics

Metric Baseline

$/m3 payment $0.14/m3

Absolute payment $260,000

$/m3 cost $0.16/m3

Absolute cost $295,000

Fiscal Responsibility

• Ratio of Actual to Budgeted Expenses

Reduce Expenditures

• Ratio of Actual to Budgeted Expenses

Scale Administration •$150,000/year

Problem Statement:

• There is a need to reduce ERD License Management Services expenditures (outside of road construction and maintenance) by 60-65%.

Goal:

• By April 2015, pilot a scale administration process that costs both industry and government $0.06/m3

while maintaining current standards of accuracy and accountability.

DEFINE PHASE

$0.16/m3 mean, considerable variation around mean

Mean=0.1571-3CL=-0.0287

+3CL=0.3429

-0.2

0

0.2

0.4

0.6

0.8

1

1163

325

487

649

811

973

1135

1297

1459

1621

1783

1945

2107

2269

2431

2593

2755

2917

3079

3241

3403

3565

3727

3889

4051

4213

4375

4537

4699

4861

Ind

ivid

ua

l V

alu

e

I-MR Chart - TotalProcess Performance

DEFINE Phase Summary• Key Project Metric = $/m3 cost• Current process is out of control • Very high variation between cubic meters• Payment is less than cost• Volume may not be a good predictor of total cost/m3

Six Sigma: reduce variation

Lean: eliminate waste (reduce costs)

In what ways can

the step go wrong?

What is the effect

on the customer if

the failure mode is

not prevented or

corrected?

How severe is

the effect on

the customer?

What causes the step to go

wrong (how could failure

mode occur)?

How

frequently is

the cause

likley to

occur?

What are the existing

controls that either prevent

the failure from occurring or

detect it should it occur?

How probable

is detection of

the failure

mode or its

causes?

Sev x Occ x Det

Wrong conversion is

applied Volume is lost 3

Licensee enters wrong

conversion 4

Sample/audit

date/product/conversion 3 36

TCs are purposley

manipulated Volume is lost 9 Operator fills out TC wrong 2 Roadside compliance checks 4 72

Product not

produced to

utilization standard Value is lost 5 Operator training/supervision 9

Roadside

inspections/penalties 3 135

Too few TC checks Volume is lost 9 Operators manipulating TCs 2 Roadside compliance checks 4 72

Products are mixed Value is lost 5 Operator training/supervision 9

Roadside


Truck improperly

weighed Volume is lost 3

Unmaned, improper

maintenance 2 Scale Checks 3 18

Scales are wrong Volume is lost 3

Unmaned, improper

maintenance 2 Scale Checks 3 18

Wood reported to

wrong section Value is lost 7 Not marked, not piled right 6

Roadside


Sampling is

inaccuratly scaled Volume is lost 2 Mill scaler does poor job 1 Check Scaling 2 4

Sampling doesn't

match population Volume is lost 2 Poor sampling design 1 None 2 4

Wood is transferred

before scaling Volume is lost 3 Wood goes missing 2 Spreadsheet tracking 3 18

Errors in reporting

process Volume is lost 7

Volume doesn't match original

unit of scale 3 Audit 3 63

Wood on truck can't

be identified as

Crown wood Volume is lost 9 Wood is not marked with an X 4 Marked with an X 5 180

Dry wood

conversion not

applied Volume is lost 3 Underestimate of volume 9 Audit 5 135

DNR does not receive full value or volume

PeopleMachinery

MaterialsMethods

Scales are off

Improper Maintenance

Scale checks are too few

Partial weighing of truck

Scales are unattended

Scale not checked correctly

Product not produced to utilization standard

Products are mixed on truck

Wrong conversion applied

Dry wood conversion not applied

Wood is stolen

Scaling is not accurate

Wrong wood discounted

TC Legislation not followed

Wood is wasted on block

Conversions are calculated wrong

Volume Tables incorrect

Unscaled volume is lost

Sampling is inaccurate

Poor scaler

Sample doesn’t meet populationIntensity is off

Variability Isn’t captured

Sampling doesn’t match tree form

Zone or Season or product is wrong

Human Error

Computer Error

No process to track dry wood

Believed to be in reg. conversions

Mills not paid to sample

Not following manualToo few checks

Scaling arrangements not followed

Wood reported to wrong section

Complex Block numbering

Piles marked incorrectly

Volume rots or is downgraded

Wood is piled but not trucked

Tables in manual need updating

Moves at night

Night checks are too few

Can’t identify the wood as Crown

Allowed to bring self loader home

Trucker using TCs from different ownerships

Wood is transfered No estimate of in volume to match out volume

Volume not scaled firstOwnerships are mixed

Use ‘cancel’ to move two loads

Using ’missing’ to steal wood

Change ‘time’ on TC to move mulitple loads

Costs to sort are highNot paid by product

Operator not trainedHigh turnover

Not paid enough

Operator is not trained

High Turnover

Not paid enough

Higher truck volume

Short wood produced

MEASURE PHASE

MEASURE Phase Summary• Identified waste through interpreting value/risk• Reduced process steps by ~35 steps• Reduced costs by ~$178,000 ($0.10/m3)• Identified 7 variables that may cause variation in scale

administration costs• Team grouped process into 4 sub-processes:

Planning, Tracking & Transporting, Reporting, Audit

ANALYZE PHASE

ANALYZE Phase Summary• Critical Xs: Both # of operators and # of subs are factors

describing variation in planning costs• Critical X: Volume is a factor describing variation in

tracking and transporting costs• Non-critical X: # of products is not a factor describing

variation in costs• Non-critical X: Volume is not a factor describing

variation in planning or reporting costs

Collect Data

Perform various statistical tests to determine

critical factors (Xs) that describe variation

NOTES:

• Planning is a fixed cost

• Trucking and transporting costs

vary with volume

• Planning and reporting costs do not

vary with volume

IMPROVE PHASE

Mean=0.0632-3CL=0.0389

+3CL=0.0874

-0.2

0

0.2

0.4

0.6

0.8

1

1140

279

418

557

696

835

974

1113

1252

1391

1530

1669

1808

1947

2086

2225

2364

2503

2642

2781

2920

3059

3198

3337

3476

3615

3754

3893

4032

4171

4310

4449

4588

4727

4866

Ind

ivid

ua

l V

alu

e

I-MR Chart - TotalImproved Process Performance

IMPROVE Phase Summary• Tested 4 independent variables affecting

variation in costs• Some costs vary with volume; some do not• To best match cost with compensation:

• Pay for planning, reporting, audit in lump sum

• Pay for tracking / transporting and audit by volume

Simplified planning

Relied on Licensee

tracking / transporting

Reduced reporting

duplication

Audit remains same

CONTROL PHASE

CONTROL Phase Summary• Two-part control plan:

• Scale accuracy/accountability- will continue year-end audit and improve in-year communication between ERD and Licensee

• Payment- Licensee will report at end of year the costs to administer scale

• Daily Management:• EMS / Conformance Tracking Tool• District/Region Staff to report issues• Monthly ‘Huddle’ - review, Pareto, and focus efforts

Control Plan

+

Future Opportunities:

At least 3 more projects under scale admin would result in significant savings:• Utilization Checks• FN Royalty Payment• Conversions

Daily Management

IMPROVING THE PAY EQUITY PROCESS

FOR THE NEW BRUNSWICK

PUBLIC SECTOR

Project Example

PROJECT SUMMARY

Problem Statement:• Current process draws invalid conclusions about pay equity for women• Process is biased and may overstate the size of inequities • Stakeholders complain pay equity implementation is slow, commenced 2010

Goals:• Create a clear, effective and transparent pay equity process• Ensure statistically valid conclusions about inequities

Results:• 11-step checklist ensures process control• Process applied and wage adjustments made for over 3000

(15% of PNB female employees)• Happy stakeholders• Confidence in setting wages

CURRENT PROCESS FAILURES

Selection of male male jobs biased -picked high wage

Not enough male jobs to compare

Data not evenly distributed

NEW PROCESS STATISTICALLY VALID

More male jobs used, not biased

New regression line is usable for

assessing equity

NEW FINDINGS ON PAY EQUITY!

$2 gap

$6 gap

THE RESULTS ARE

CLEAR!Demonstrated savings and service

improvements




implementation



City Market, Saint John(Brian Atkinson)

CUMULATIVE HARD SAVINGS ACTUAL VS. TARGET

3,998,435

15,304,961

32,776,264

55,345,344

69,440,918

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

$100,000,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Actual

Stretch Target

Target

FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17

LEAN 6σ PROJECTS

285+ projects

2700+ involved

Top $ project $5.5M

Sugarloaf Provincial Park

$345,000 increased revenue

(+34% from base year)

Asphalt Leveling

Completed in 2 months

instead of 3; $453,259 in

procurement savings.

Veterinary Pharmacy

inventory

$270,000 in hard savings

Cash Balances at

Regional Health Authorities

Bank interest savings of

$719,900

Light Vehicle Driving Costs

$999,487 in savings; 35% increased

compliance with Travel Policy

Operating Room Supplies

and Equipment

Savings of $378,939 in first year

GNB PROJECT EXAMPLES

5SORGANIZING WORKSPACES FOR

EFFICIENCY AND EFFECTIVENESS

Problem: Amalgamation of DNR district offices required movement of some staff, vehicles and equipment to other DNR office locations. In some cases, the DNR locations were not adequately equipped to receive the additional staff, vehicles and equipment.

Solution: Organized warehouses and created space to avoid building new storage spaces.

5S EXAMPLE: DEPARTMENT OF

NATURAL RESOURCES

GNB WASTE WALK EXAMPLES

$4,700,000+ hard savings

$3,800,000+ soft savings

Suppliers of IV Lines

Switched suppliers for 24,000

primary gravity IV lines;

saved $87,000/year

Telephone Contract

Added Local Service District

fire stations to the GNB

contract; saved $26,000/year

Envelope Size

Reduced envelope size and

decreased postage from

$1.34 to $0.63/unit; saved

$78,100/year

Equipment Inventory

Sold spare parts to auction or for

scrap ($40,050 from 1 yard) +

cancelled contract for new

products that year; cost

avoidance savings of $200k

Interest Cost Reduction

Changed nursing home

payment schedule from 3

days to 1 day prior to the due

date; saved $23,589/year

Atlantic 2013 Canadian 2014 International 2014

Leadership Award: “providing improved public service at lower cost”

EXTERNAL RECOGNITION:GNB FORMAL MANAGEMENT SYSTEM

CRITICAL SUCCESS

FACTORS Takeaways for your own performance

excellence journey




implementation



Port Saint John(Brian Atkinson)

CRITICAL SUCCESS FACTORS

1. Have a (real) executive champion

2. Demonstrate what is possible: Pilot with early adopter leaders to get early wins

3. Initial framework: Integrate best practices but don’t wait for perfection

4. Align Lean Six Sigma to corporate strategy execution; measure and report results

5. Select key staff for leadership potential to build sustainable continuous improvement capacity

6. Evolve and improve the management system framework (Formal Management System)

7. Have a rigorous review process: Calendar of Commitments

8. Apply Six Sigma as well as Lean

9. Deliver results = permission to carry on

10. Don’t let it go – constantly strategize for sustainability

CRITICAL SUCCESS FACTORS

THANK YOU! MERCI!

Questions and discussion

Documents

Changing Culture and Delivering Lean Six Sigma Results at ... · TODAY • GNBs performance excellence journey – A brief history • The Formal Management System – How GNB delivers