rethink excellence: a systems approach

RETHINK EXCELLENCE: A SYSTEMS APPROACH

Vern Campbell, EIR - University of Manitoba, Principal -Process Management

Howard Matthews, Vice President of Power Production, SaskPower

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INTRODUCTIONDid you know that…

Only 10% of the Fortune 500 Companies from 1955 remained in 2020.

Greater than 95% of Lean/OpEx initiatives “fail”?

Operational Excellence Sustainability:20% Tools/Techniques80% Leadership/management & a systems approach

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SESSION, PURPOSE & AGENDA

Our Purpose: To provide a systems approach to Operational Excellence.

Agenda:1. Operational Excellence Overview

a) Definitionb) Overview of Systemc) General Approach

2. SaskPower Power Production Operational Excellence Journey

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DEFINITION OF A SYSTEM

A system is a network of interdependent components that work together to try to accomplish the aim of the system. A system must have an aim. Without an aim, there is no system. A system must be managed, it cannot manage itself.

Dr. W. Edwards Deming, The New Economics

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OPERATIONAL EXCELLENCE SYSTEM AIM

A comprehensive leadership system designed to systematically improve the performance of the enterprise for all stakeholders through the collective talent and efforts of focused & engaged people.

The Goal:

Improve Safety, Improve Quality, Reduce Cost, Improve Delivery, Sustainable Environment & Improve Morale

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THE CHALLENGE

Technical Project based approach Build capability

Process Management based approach Strategic Results

Systems based cultural approach Sustainability

Perf

orm

ance

Impr

ovem

ent

Time

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Intrinsic Technology (Industry) & Motivation

General Education, etc.

Concepts:- Customer- Process- Fact/Data

PDCA- Quality- Flow- Respect for

humanity- Deming, Etc.

Techniques:- QJ Story- 7 QC Tools- 7 Mgmt &

Planning Tools

- Advanced Stat Tools

- IE, VE, etc.

System Components:- Leadership- Strategy Management- C.F. Management- Daily Management- SGA/QI

Safest Workplace, Highest Quality, Lowest Cost, Best Delivery, Highest Morale, Sustainable

Environment

Adapted from “TQM House” - TQM Guide for Service Industries– Noriaki Kano

HOUSE OF EXCELLENCE

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Intrinsic Technology (Industry) & Motivation

General Education, etc.

Concepts:- Customer- Process- Fact/Data

PDCA- Quality- Flow- Respect for

humanity- Deming, Etc.

Techniques:- QJ Story- 7 QC Tools- 7 Mgmt &

Planning Tools

- Advanced Stat Tools

- IE, VE, etc.

System Components:- Leadership- Strategy Management- C.F. Management- Daily Management- SGA/QI

Safest Workplace, Highest Quality, Lowest Cost, Best Delivery, Highest Morale,

Sustainable Environment

Adapted from “TQM House” - TQM Guide for Service Industries– Noriaki Kano

HOUSE OF EXCELLENCE

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GENERAL SYSTEM APPROACH• Develop Leaders at all levels (Starting with senior leadership team going to

front line supervisors)– Develop OpEx System knowledge & capabilities– Set direction, Focus Action, Get Results, Build the team– See & solve problems using facts, data & PDCA– Why? – The implementation must be led by the leadership team: it cannot

be delegated!• Develop and implement Daily Management Systems (“Linchpin”)

– Develop and deploy Daily Management Systems (Operating system).– Develop everyone’s capability to surface and solve problems systematically,

scientifically and continuously every day.– Why? To sustain and continually improve performance.

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GENERAL APPROACH CONTINUED

• Develop and deploy cross functional management systems– Identify and systematically improve and innovate cross functional processes

critical to the enterprise aim or mission.– Why? Cross functional processes deliver step change in performance, critical

to both the results and the development of people.• Develop and implement Strategy Management Systems (Hoshin Kanri).

– To set and deploy direction, focus Strategic Process Improvement and Innovation efforts to achieve continuous and breakthrough results.

– Why? Align and focus everyone in the organization.

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GENERAL APPROACH CONTINUED• Align all support systems.

– Review and align support systems i.e. Leadership development (all levels), HR systems, Finance/Accounting systems, etc.

– Why? All support systems need to align with the philosophies, principles and goals of the Operational Excellence system, or the system will not be sustainable.

• Develop an Enterprise Excellence Structure– Structure the organization to sustain Operational Excellence.– Why? Structure is critical to institutional knowledge, learning, and focused, custom

execution.• Benchmark Progress

– Benchmark progress every 6 months (L-WC Model).– Benchmark score/targets are strategic KPIs– Why? Reflection, learning, focused actions to strengthen the system

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BENCHMARK PROGRESS – LEARNER TO WORLDCLASS 1. Score – 1-10 (Learner)

1. No formal systems in place and no recognized need for formal systems.2. Score – 11 – 20 (Developer)

1. Recognized need for formal systems. Formal Systems are developing.3. Score – 21 – 30 (Performer)

1. Formal systems are in place although gaps may exist.2. KPIs in place and showing improvement.

4. Score – 31 – 40 (Contender)1. Formal systems entrenched throughout organization.2. KPIs in place demonstrating sustained positive trends aligned to strategic

targets.5. Score – 41 – 50 (World Class)

1. Formal systems entrenched throughout organization. 2. Industry/beyond performance benchmark.

POWER PRODUCTION’S JOURNEY THROUGH OPERATIONAL EXCELLENCE

AND QUALITY MANAGEMENT SYSTEMS

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AGENDA

• SaskPower• The Challenge• The Strategy• The Results

“Show me a low-quality plant, and I will show you a high-cost plant”

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SASKPOWER FACILITIES

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540,727 CUSTOMERS

4,993 MW CAPACITY

157,000 KM OF POWER

LINES

3,792 MW PEAK LOAD

(2017)

SASKATCHEWAN’S PRIMARY ELECTRICITY SUPPLIER

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Business Environment

• Declining Equivalent Availability

Factor (EAF) (Reliability)

• Flat budgets

• Aging equipment run harder &

longer

• Flight Risk (customer) 10/50%

• Regulatory requirements (CO2...)

WHY OP EX

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0

50,000,000

100,000,000

150,000,000

200,000,000

2010YTD

Actual

2011YTD

Actual

2012YTD

Actual

2013YTD

Actual

2014YTD

Actual

2015YTD

budget

2016YTD

Budget

2017YTD

Budget

PPBU Actual Base 2010 - 2017

Actual Base

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

2008 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

EAF

Perc

ent

All Steam EAF Forecast vs. Actual (Including Scheduled Overhauls)

AllowableVarianceForecast EAF

Higher numbe

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With ZERO new money $$$$

• Increase reliability (EAF), decrease

spending, improve safety, improve

environmental performance

• Increased Productivity.

• Fewer Breakdowns.

• Less OT, Less Contractors

• Eliminate Lost Time Injuries

• Operations, Maintenance, Engineering

THE GOAL

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Can OpEx be applied to:• Power plant vs Manufacturing:

• Maintenance

• Operations

• Engineering

• Office environment

• Engineering

• Purchasing

• Human Resources (HR)

THE CHALLENGE

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Build leadership team

• Purpose, roles, responsibilities

• Problem Solving Capability

• Visual Management team meetings

• Who? Senior Management (VP, Plant

Managers)

• Yellow Belt, Green Belt (Quality

Journal, Advanced Quality Journal)

STARTING POINT - PILOT

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4321

24

22

20

18

16

14

12

10

Benchmark Number

Lead

ersh

ip S

core

Individual standard deviations are used to calculate the intervals.

Leadership Assessment ScoresAverage of All Assessments (Spring 2017 - Fall 2018)

4321

24

22

20

18

16

14

12

10

Benchmark Number

Daily

Man

agem

ent S

core

s

95% CI for the Mean

Individual standard deviations are used to calculate the intervals.

Daily Management Assessment Scores

4321

24

22

20

18

16

14

12

10

Benchmark Number

Qui

ck Im

prov

emen

t Sco

res

Individual standard deviations are used to calculate the intervals.

Quick Improvement Assessment ScoresAverage of all Assessments

4321

24

22

20

18

16

14

12

10

Benchmark Number

Proc

ess I

mpr

ovem

ent S

core

s

Interval Plot of Process Improvements95% CI for the Mean

Individual standard deviations are used to calculate the intervals.

EXTEND TO ALL PLANTSBuild Leadership Team

• Daily Management

• Process Improvements

• Quick Improvements

• Regular evaluations

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Fiscal 2017 Fiscal 2018

•Reduce Unscheduled Work

QEPS Pilot

•Quality Notification•Reduce Rework•Notification Prioritization•Meeting Optimization•Improve Monthly Reporting

YB Class 1•Return to Service•Completion of Operator PM’s•Supervisor Training Manual•Utilization/Creation of EMR’s•Scheduling of Mandatory Training•Standardize SPOAD data•Timing of Engineering Scope Definition

YB Class 2

•Procurement Daily Management

•Forward OH Planning

GB Class 1

LEARNING JOURNEY

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Fiscal 2019

• Material Disposal• Time Entry Error

Reduction• Athabasca

Operator Training• Utilization of the Ice

Road• Reliability Metric

Improvement• Project Employees

Evaluation

YB Class 3

• Planning Accuracy

GB Class 2

LEARNING JOURNEY

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TREMENDOUS EFFORT = BIG BENEFITS

YB Level Problem Solving• 57 Yellow Belts• 28 Projects

GB Level Problem Solving• 13 Green Belt

Attendees• 4 Projects

OpEx Systems• Leaders Go & See• Visible Leadership • Daily Management• Unwavering discipline

to Methodology & Analytics

Quality Overhauls•Forward Planning Team

•Quality Work Packages

•Cross Division Decision Making

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Results Matter - Stunning improvement

Cost reduced $20Million, ongoing

$5M per year next three years

$35M reduction – 15%

Equivalent Availability Factor increased to

target

Safety - stunning

Environment – stunning

Culture – Yes !

KEY PERFORMANCE INDICATORS

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75

80

85

90

95

2000CY

2002CY

2004CY

2006CY

2008CY

2010CY

2012CY

2014CY

2016CY

2019FY

2021FY

2023FY

2025FY

EAF

(%)

Target Actual

ALL STEAM EAF BUDGET vs ACTUAL

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Like real estate…..

• Management, Management,

Management

• Leadership Commitment !

• Roundtable 2.0 – Communications,

Engagement

• Culture change

INSIGHTS

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• Hope is not a strategySafety

• We have stopped making excusesAccountability

• Our Directors and others are actively involved in site assessments.

Collaboration• See something, say something

Openness

CULTURE CHANGE

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•Roundtable Discussions

• Stand-up Meetings

• Listening to feedback from the shop floor

WE NEED TO TAKE IT TO THE NEXT LEVEL – HOW?

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DAILY MANAGEMENT WORKS!

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EPILOGUE

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REJECTED PERMIT APPLICATIONS SINCE PP VP DIRECTIVE

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Permit Switch Plan Error Rate Since PP VP Directive

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QUESTIONS ?

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Speaker Contact Information:• Vern Campbell,Process Management, (204) 793-9829

vern.Campbell@verncampbell.com

• Howard Matthews, Vice President of Power Production, SaskPower, hmatthews@saskpower.com