process excellence
DESCRIPTION
by Steve Withers of Canada Post shown at the 1st Lean Service Summit on 23rd June 2004 run by the Lean Enterprise AcademyTRANSCRIPT
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Process Excellence at Canada Post Corporation
Lean Summit, June 2004
Steven Withers
Senior Advisor, Lean
Version 1.0
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Agenda
1. About Canada Post
2. Value
3. Value Streams
4. Flow
5. Pull
6. Perfection
7. Learning
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About Canada Post
• Canadian Crown Corporation
• Group of companies, CPC,Purolator, Innovapost,Progistix, ePost, IntelcomCourier, CPIL
• Over 64,000 employees, 7th
largest employer in Canada
• Services 13 million domestic addresses – growing at 170,000 per year
• 22 major plants
• 37 million pieces delivered daily
• $6 B revenues annually
Section 1 – About Canada Post
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Impressive Results
• Exceeded annual profitability goals – 9 years of consecutive profit
• Returned dividends and income taxes to Canadians each year
• Improved and stabilized on time delivery
75 8467 71
253
0
50
100
150
200
250
300
99/00 00/01 2001 2002 2003
Net Income $M
On Time Delivery
•3.2 million sq. ft. of space freed for divestment or consolidation
•Dramatic plant inventory reductions
•Improved labor relations – no labor disruptions since starting lean
•Improved visuals – line of sight and less fire fighting
Section 1 – About Canada Post
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Historical Lean Perspective
1996 – Womack & Charlton talk about Postal1996 – 1999 Learn through isolated experimentation1999 – 2002 LEI internships2000 – First supplier VSM experience with Air Canada2001 – Plant reorganization – value streams2001 – VSM used for future state planning2002 – Deployment of “Process Excellence” advisors2003 – Integration of lean and six sigma2003 – New operations planning process based on policy deployment2004 – Getting serious about administration, 1st focus order to cash
1996 2004
Section 1 – About Canada Post
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Unusual Characteristics
• Customers on each end of the value stream− The paying customer is at the start - where the supplier
would be in manufacturing. If they are bad quality mail suppliers you can’t fire them!
− The receiving customer often doesn’t know mail is coming, and often doesn’t want it!
• Ultra short cycle business− What comes in that night must be processed that night –
1000 inventory turns! (4X per night)− No ability to use finished goods supermarkets, or level
production between days like Toyota
Section 1 – About Canada Post
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Plant Value Stream Organization
Plant DirectorProduction ControlTech ServicesOperations Improvement Value Stream Leader
ParcelSort CUPW CUPW
APOC(Sups)
Section 1 – About Canada Post
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Customer Value
• Perfect process performance (e.g. on-time, no damage, right address)
• Easy to do business with:− Simple, accurate billing and
invoicing (order to cash value stream)
− Superior customer service
• Supply chain visibility through scanning information
• Price
• Hassle free borders
Section 2 – Value
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Value Streams
Letters - Publications and Admail – Parcels - International
Sorting large envelopes - Windsor
Section 3 – Value Streams
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Continuous Flow – Hamilton Plant
Reduced Annual Operating Cost - $5.6 M
Freed floor space – 4678 sq meters or 46% of S/L area
Reduction in EquipmentMLOCR – 7 to 6LSM – 6 to 4VES Desks – 44 to 14Manual Cases – 255 to 60Mail Handling Equipment –reduced 33%
S / L C e l l sB u s i n e s s U n i t # 3
S h i f t 1J u l y 2 0 0 1
G e n C o n
M L O C R 1 2 3
M L O C R 1 2 4
C u l l s
R e j
C F C
S t a f f = 3 2
T / A
R e j
S o r t a t i o n C a s e s
A E G L S M
A
B
V E S
F
F
F
F
R T S
A E G L S M
A
B
M a n u a l / M e c h
L V R
6
4
51
2
1
2
3
4
5 3
4
5B R M
3
T o B R M
F r o m R T S
T o C F C
1
2
1
2
3
2
1
3
1
2
3
4
1
2
3
4
1
2
3 4
S u p e r v i s o r
S u p e r i n t e n d a n t
Section 4 - Flow
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Cells in Calgary
CFC #3
CFC #2
MLOCR 88
1 Ltr every 106 Seconds
1 Ltr every 106 Seconds
1 Ltr every 53 Seconds
Before:
-Throughput not achieving takt
-Poor flow
-Frequent stops/downtime
-Feeder idle time
After:
-Capable of achieving takt
-4000 pph throughput improvement
-Reduced stoppage/downtime
-Out of cycle work removed
Section 4 - Flow
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Kaikaku Results – Toronto
Toronto plant beforeToronto plant before Toronto plant afterToronto plant after
Travel DistanceBefore After
% Reduction
Bag of Mail 806' 76' 91%
Culler to OpticalReader 998' 12' 99%
Optical Readerto Refeed 250' 17' 93%
Oversize Letterto Mech Sort. 461' 307' 33%
Dispatch Cart to Dock 537' 230' 57%
Before(sq. ft.)
After(sq. ft.)
% Reduction
Mail Prep. 51,000 21,000 59%
Final Sort to
Stations83,000 20,000 76%
Priority CourierFacility
75,000 0 100%
Toronto Exch'ng Office
45,000 0 100%
Space
Section 4 - Flow
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Quebec – Flow Reduces Inventory
Before After
Section 4 - Flow
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Flow in Administration
Payment Processing• 1140’ traveled• Pick-up/Put-down 49X• 9 people involved• 4 Elevator Rides• <13 Minutes of work• 2-3 minutes of VA activity
Section 4 - Flow
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Administrative Flow
Layout and material flow
Section 4 - Flow
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Load Leveling Administration Work
Basic sort stationnumber
Post dated file
Basic sort station
SIS Cards Post datedcalendar
Section 4 - Flow
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Building Standard Work Elements in Administration
Making Customer Calls – Payment Processing
?
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Building Standard Work in Administration
Basic Payment Processing
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Pull
• Issue #1: Large volume mailing houses− Scheduling− Small batch issue: getting paid the right amount versus JIT
• Issue #2: Street box collection− 900,000 access points− End of day mailing habit versus our leveling dilemma
• Issue #3: Between plants− Problem simplification: 5 biggest suppliers can make a difference − The ‘grid’ is 22 x 22 or 484 critical links
• Issue #4: Between delivery depots and plants− Creating supplier – customer standard work− A single plant might supply over 100 delivery depots
• Issue #5: Administration− Huge culture change required to make pull work
Section 5 - Pull
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Perfection
• Visual depot, and 5S depot approach− 13 ‘prescribed’ kaizens
• Recognition that successive kaizens yield additional benefits
• Integration of lean and six sigma− Rath & Strong provides training and coaching
horsepower− Future integration of six sigma and lean training
Section 6 - Perfection
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5S – Continually Seeking Perfection
Before After
Section 6 - Perfection
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Measures of Success
• Change from… old metrics:− Utilization maximization (machines,
trucks)− Point velocity (pph)− Direct labor optimization
• To… new metrics:− Lead time− System cost− Space− New focus on process metrics
Section 6 - Perfection
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Process Excellence Strategy and Training
Training
6 SigmaInfluence Skills
Change Management
Leadership
Lean
Lean Black Belt
•5 weeks in class
•2 value stream projects – defense
•Written case study
6 Sigma Black Belt
•5 weeks in class
•2 projects - defense
•Written case study
Section 6 - Perfection
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Reflections on what we’ve learned
• Constancy of purpose essential
• The right people in the right place− From ‘directing’ to coaching− Value stream management
• Nothing happens without clear responsibility for improvement− Process Owner and Process Manager roles− New metrics needed, focus on lead time− The means as important as the results
• There are many roads that reach the same destination− The same methods work in postal as in basic manufacturing, but they
need to be customized− Six Sigma and Lean are not competing methods – they work together
Section 7 - Learning