The client was one of the five largest web printing firms in the United States. The culture of the organization was such that the division president felt the need to introduce a more participative management style. The decision was made that the development and implementation of a closed loop reporting system would be the appropriate vehicle to introduce this organizational change.
Over a period of several years, various consulting organizations had implemented numerous separate reporting systems, primarily for the purpose of managing production and productivity. At the end of each reporting period, senior management invariably got a surprise: rarely did periods, during which the daily, weekly, and period-to-date numbers looked good (or bad), turn out as expected. Too frequently did management and, through the invariable “trickle down,” supervision suffer the rude awakening and embarrassment of reporting a profitable period throughout the period only to have to admit to the corporate offices that they had actually incurred a loss.
Assembling a team combining seasoned consultants and client staff became the first order of business. The client personnel ranged from supervisors-in-training to area managers to a division vice president. After training “the staff” in various problem solving techniques, the team tackled its mission.
Each staff member was assigned to separate functional areas: one in which they had significant experience and one in which they had relatively little. The feeling here was that their participation was meant to be a learning experience not just in project-oriented techniques but also in expanding their horizons within the organization. Within each functional area, work teams were recruited, mostly from a list of volunteers. One or more of the eight project staff members was assigned as a participant, but not necessarily a leader, of each work team.
Each work team was assigned the following tasks:
- develop a floor plan of each functional area;
- develop a work flow diagram showing each operational step;
- examine the work flow for bottlenecks and operational problems;
- with input from management as needed, prioritize the list of problems for solution;
- design, using all necessary and available resources, solutions to identified problems;
- review the problems and the proposed solutions with all affected management personnel for approval;
- implement the solutions to each problem in order of its priority;
- collect each and every piece of “paperwork” which flowed through the area regardless of source or destination;
- assemble the collected paperwork in such a way as to provide relatively easy examination of the flow or lack-of-flow of information;
- examine the “paper flow” to identify redundancies, information gaps, and lack of flow;
- design new reporting documents to eliminate redundancies, fill identified gaps, and enable a timely, accurate flow of information;
- review the new documents and the new flow with all affected management personnel for approval;
- write detailed procedures in a uniform format to describe:
- who completes each document
- why each document is used
- when it is used
- where it goes and to who
- how it is stored and for how long
- review the new documents and their procedures with all appropriate personnel in each area;
- install the new documents in each area, on each shift providing on-the-floor training and follow-up; and
- revise and re-install each document as necessary.
The problems identified included:
- excessive clutter causing damage to raw materials;
- inadequate documentation of raw materials;
- improper techniques used in determining the amount of product produced against the target volumes;
- poor communication between operating departments as exemplified by regular “finger pointing” between departments in response to resolving day-to-day problems;
- inaccurate scheduling of work based on negotiated standards rather than anything resembling actual production rates;
- inability to track performance by magazine title (analogous to brand or model number in other environments);
- poor inventory management; and
- little or no feedback to previous departments – most feedback that was given had little credibility because it was generally provided without sufficient documentation.
The easiest problem to solve was that of excessive clutter. The plant was relatively filthy. Waste paper, scrap lumber, partial rolls of paper, cups and cans, outdated equipment and a host of other unnecessary items were scattered throughout the facilities three production buildings and two warehouses. The clutter led to the perception that nobody cared about the mess. This became somewhat circular in its effect because it seemed to lead to more clutter. In less than one week, all plants were relatively tidy. This immediately improved morale: first that of the project staff and then of many of the remaining fifteen hundred employees. The other result was that damage to materials being transported within the facilities was reduced substantially.
Improper documentation of the individual rolls of paper led to unnecessary delay in the production schedule. Fork lift drivers had a difficult time identifying which rolls of paper were to be delivered to which presses for which production runs. Frequently, the rolls did not reach the presses when needed. This led to idle presses (before the run began) and sometimes to presses stopping (in the middle of a run). While a press sitting idle is expensive because it is not in use while its work force is “on the clock,” a press which has come to a halt in the middle of a production run causes excessive waste, downtime, and occasional machine damage. New four-ply tags were designed and put into use to eliminate this problem. The previously-mentioned reduction of clutter combined to make the rolls of paper easier to find and easier to reach.
One of the reasonably universal problems facing the high speed printing industry is that of inaccuracy when it comes to counting their production. As basic as it may seem, when you are producing in excess of several hundred thousand copies of sections of magazines or books, it can be very problematic to ascertain a reasonably precise production count. Printing presses, just like common office photocopy machines, come equipped with counters. These counters, because of speeds approaching 40,000 units per hour, are somewhat inaccurate. Adding to the inaccuracy is the question of quality. If a printing plant needs to produce 950,000 good finished copies of an entire magazine, the bindery section of the plant may need 1,000,000 good copies of each particular section of that magazine in order to complete the order. This may mean that the presses need to produce 1,050,000 copies of that section to assure that 1,000,000 of them to be useable by the bindery. Unfortunately, the accuracy of the press (and bindery) counters and the speed of the presses (and binders) is such that overruns and underruns are relatively common. To compound the problem, it is not unusual to encounter press and binder operators who intentionally overrun their targets by 10-20% in order to be sure that the work does not have to “go back to press” because of a shortage.
One solution to the problem is to weigh the production. Fairly accurate counts can be determined by weighing a sample of the production. The drawback to weighing is that it takes time. The time involved is such that the pressman can certainly overproduce before he has the backup count from the scales that he has overshot the mark. However, the combination of weights and counter counts can yield acceptable accuracy; through several trial runs it was demonstrated that the increased accuracy more than made up for the increased time. The key was in training the pressmen to use each of the two measurements to gauge the other. By implementing a system by which all production was both counted and weighed, over-production and under-production was substantially improved to the extent that paper usage was reduced by almost ten percent (up to two hundred thousand pounds of paper per month at a value of over thirty cents per pound).
As a corollary to the poor count problem, poor communication between operating departments was common. The most frequent example of this was related to claims of under-production directed by the bindery department toward the press. Of course, since the pressroom really didn’t feel too comfortable with their counts, they really couldn’t stand up to the criticism. As a result, it became the convention to quantify the amount of the bindery waste as whatever the standard for the job was; the remainder of the waste for the entire production effort was “credited” to the pressroom. The pressroom “knew” they weren’t producing all the waste but couldn’t prove it. The bindery could literally see the amount of waste that they were producing but lacked the incentive to own up to it.
Once the new “counts system” was implemented, the pressroom had a better basis by which to justify its production amounts. The bindery, on the other hand, had less room to claim that the pressroom hadn’t provided enough product. This new system gave management the ability to somewhat accurately determine the amount of bindery waste. It also provided realistic data for the estimators and the schedulers to use in setting up the jobs.
Additionally, once the real production and waste figures became accurately measured and known, the problems in each of the areas could start to be addressed. Production problems which had gone ignored and unresolved for years started receiving attention and getting solved. Accurate production rates and, later, accurate schedules could start to be calculated.
Even though the production rates were not actually known, scheduling of work was based on negotiated standards rather than anything resembling actual production rates. Every year, production supervision and management, finance, and union representation would meet to determine the production standards to be used for the next contract year. Because “management” had poor data to work with, its bargaining position was poor. Every year, actual rates versus the standard rates were almost unrelated. The inaccuracy of the reported production data led scheduling and estimating to start “seasoning” their standards with recent history. As reported rates became more accurate, the “seasoning” of the estimating and scheduling rates led to more accurate estimates and schedules.
Historically, production information was tracked only by press, by binder, and by standard classification. There was no provision for reporting by individual magazine title or by paper weight or paper brand. This inability to track performance by some of the potentially key indicators had proven to be a drawback, especially when the client was negotiating new contracts with publishers or with paper suppliers. A system, integrated with the “counts” system, provided several reports which, summarized in several ways, provided management with necessary performance-based information to be used in the negotiation of contracts.
The client had accumulated a large inventory of both completed magazines and printed individual sections. This inventory represented a substantial investment in labor, materials, machine time, and floor space. Most of it, however, resulted directly from the inability of the client to count production. There was essentially no market for this over-production. The publishers were under no obligation to buy the product.
One of the first project actions was to discard all the product which had been identified as not sellable. The immediate impact was visual; just the sight of a large amount of “useless” inventory being discarded was a morale booster. However, as a result of the inventory reduction, the client was soon able to eliminate the rental of an off-site warehouse saving $26,000 per month.
Total savings for this six-month project totaled in excess of $86,000 monthly.
A productivity improvement program for the Department of Health Services of county in the western United States lasted seven months with two full-time consulting staff and two full-time resources from the county’s Department of Organizational Development.
The Department of Health Services primarily provides indigent health care to county residents. The approach included working with county employees to develop and implement specific recommendations for productivity improvement. The scope of this program included Accounts Payable, Data Processing, Claims Processing, Income Recovery, Long-Term Care, and Utilization Review functions of the Department.
Two goals were established for this program. The first is a commitment to a participative approach to productivity improvement. The second is to train Organizational Development staff. The strategy for this program was to select an area of the County to be used as both the initial implementation area and the training ground for the Organizational Development staff.
Five individuals from the Office of Organizational Development were selected to participate on this project. This group received extensive training in the techniques mentioned above. Also receiving training was the management team from each of the areas within the Department of Health Services. The Department of Health Services was divided into twelve areas. Within each area, focus groups were established to develop and implement specific recommendations for productivity improvement.
The methodology employed was included:
- flow-charting all essential work processes;
- mapping all major processes to uncover potential reengineering opportunities;
- observing all essential tasks to establish time required for completion;
- establishing definitive quantitative relationships between measurable work volumes and staffing requirements;
- reviewing organizational structure and span of control and recommending structural changes to improve span of control, accountability, and process flow;
- training all supervisory and management personnel in tools and techniques associated with determining staffing requirements, defining appropriate spans of control, and work simplification.
In one area, work assignments were shifted to allow parallel processing of incoming claims. Other recommendations included the addition of a second shift to avoid capital expense associated with the purchase of computer terminals, automation of a link between two previously separate computer systems to eliminate the need for manual re-keying of data and to improve the cycle time of the bill-paying process. In another area, work loads were balanced resulting in reduced backlogs. In a third area, reject causes were documented. Once documented, formal action could then be taken to eliminate that cause and its corresponding rework.
In other areas, work volumes were determined to have decreased as the result of automation. Staffing had not been adjusted to account for this. Such staff were now identified as available to be transferred to areas that had been identified as understaffed.
|Summary of Project Savings||Savings|
|Staff Savings (18 FTE’s)||$ 431,819|
|Discounts ($62,000 per month average increase)||744,000|
|Potential Revenue-Income Recovery Identified||100,000|
|One-Time Increase for Backlog Reduction (10 Temps @ 17 Weeks Each)||(94,520)|
|Index Savings (Productivity Increase)||371,772|
A productivity improvement program for the Department of Correctional Health Services of the Justice and Law Enforcement Agency of a county in the western United States required ten months and two full-time consulting staff.
As with the Health Services Agency program, two goals were established for this program: the first, a commitment to a participative approach to productivity improvement; the second, to train Organizational Development staff.
Three individuals from the Office of Organizational Development were selected to participate on this project. This group received extensive training in the techniques mentioned above. Also receiving training was the management team from each of the areas within the Department of Correctional Health Services. Focus groups were established in each of sixteen project areas to develop and implement process improvements and organizational changes.
1. Correctional Health Services provides medical and psychiatric services at eleven sites within the County jail system. This includes five outpatient medical clinics serving the adult population, two outpatient medical clinics serving the juvenile population, a twenty-three bed infirmary for intermediate care, two sixty-bed inpatient psychiatric units, and an intake area to assess arrestees’ medical condition before they are accepted into the jail system. CHS also operates a dental clinic, a pharmacy to distribute medications throughout the jail system, and a radiology room for taking and developing x-rays.
2. Nine of the eleven sites operate twenty-four hours per day, seven days per week. The two juvenile sites operate sixteen hours per day, seven days per week.
3. The department operates with a $12,000,000 budget and approximately 190 permanent and contract employees. Slightly more than half of the employees are registered nurses and licensed practical nurses. The remainder of the employees include contract medical doctors and physician’s assistants, psychiatrists, psychologists, counselors, pharmacists and pharmacy technicians, dental assistants, and support staff.
4. The County’s Correctional Health Services is one of the largest accredited correctional health care settings in the country.
In each of the sixteen project areas, the following methodology was followed:
1. All work processes were flow-charted and, where appropriate, mapped.
2. All essential tasks performed by area staff were identified and 1) observed to establish the time required to complete the task and 2) monitored by area staff to establish the number of occurrences during a representative period of time.
3. Project staff developed tables to correlate the number of staff required with anticipated measurable work volumes and reviewed task assignments to balance workloads.
4. The process flow charts and process maps were compared with the task lists and were reviewed with area staff and supervision. Work simplification and methods and systems analysis was applied to all essential work and numerous recommendations were presented and implemented to improve productivity and service levels. When appropriate, staffing tables were modified to reflect the new work requirements.
5. Simple reporting systems were installed to record accomplishment and balance staff based on actual workloads.
Throughout the department, project staff worked with area supervision and management to analyze processes which crossed area boundaries and to assess organizational structure and supervisory span of control.
Project staff identified and scrutinized all activities and processes in each area to necessity, time requirements, and frequencies. The development of Key Volume Indicators provided management with tools to staff based on measurable work volumes for all major processes. The result was a more efficient and productive department through slimming of staffing levels and simplification of processes. In addition, CHS added nurse recruiter and training facilitator functions without hiring or additional expenditure.
Focus groups and project staff uncovered numerous organizational change opportunities which improved accountability, utilization of non-supervisory resources, and supervisory span of control. Nine Nurse Manager positions were consolidated into four Nurse Manager positions, two Shift Supervisor positions, and two Staffing Coordinator positions. Administration positions were redefined to clearly place responsibility for Medical Cost Containment, Quality Control, Education and Training, Procurement, and Recruiting. The addition of a full-time Recruiting position was expected to reduce the historic reliance on nurse registry positions and its related costs.
1. Task assignments were shifted to balance work loads and reduce staff (see charts following).
2. Re-engineered processes reduced cycle times and redundancy and improved service levels.
3. A staffing model based on measurable work volumes allowed better management control over staffing needs and allowed reduced use of registry nurses.
4. Initiation of utilization review reduced county costs for laboratory and hospital services.
In the words of the then-Acting Director of Correctional Health Services:
“In looking back over the project, the features that stand out and also addressed my concerns were the attention to process detail, the organizational change recommendations, and finally, the relating of task time to workload determiners – all of this leading to a more efficient and productive department through slimming our staffing levels. We even added functions that were not being performed, but were vital to our future such as nursing recruitment and a training facilitator.
The subject of re-engineering typified this project and extended from re-identifying the major workload “driver” from encounters to sick calls, through balancing our mix of LPN’s and RN’s per shift, to studying medical and psych provider needs, to finally recommending supervisory presence on second and third shifts.”
The subject facility is one of the largest manufacturing or processing facilities under one roof in the world. Its staff of nearly two thousand people operate some of the most highly-automated and computer-integrated equipment in the world on two million square feet (roughly forty-six acres) of floor space under one twenty-seven acre roof. Its annual output represents one-fifth of the total annual domestic cigarette output. It processes over 800,000 pounds of tobacco daily.
Virtually every step in the processing is computerized for maximum precision in process control and product quality assurance. Except for quality sampling, no human hands touch the tobacco. The degree of automation presented numerous challenges in training the floor supervisors and in the design of the managing systems. The consulting project began as construction was ending and continued through the completion of the start-up phase to the beginning of full, steady-state operation.
Within the scope of the project were the following major objectives:
- To develop and install the methods, procedures, and managing techniques necessary for achieving high efficiency, quality, and output from this “state-of-the-art” facility; and
- To refine the traditional organizational duties and responsibilities as well as the staffing levels of all plant personnel in order to improve utilization and productivity of these resources.
The two-year involvement was separated into two distinct projects: Production/Maintenance and Quality Assurance. Each of the objectives was specifically addressed in each project area. The resulting “product” acted as a prototype for the management techniques and organizational structure for the remainder of the client’s manufacturing organization.
Efficiency and Quality
In both of the project areas, the following efficiency and quality elements were addressed:
- operating procedures
- skills training
- problem solving techniques
- management control
- performance measurement
Procedures for how to keep each piece of equipment clean, and for when to clean it were developed and implemented. On-the-floor training in the evaluation of cleaning effectiveness for all levels of plant supervision and management was conducted. Random audits of cleaning effectiveness were installed. Cleaning was stressed early because of its perceived impact on equipment longevity and performance in addition to reasons of basic sanitation.
Because almost every piece of equipment in the facility was new to every operator and mechanic working there, on-the-floor skills training programs were developed. These programs dealt with real-time evaluation of the extensive on-line diagnostics available to the production staff. The skills training ultimately led to the development of a prioritized system of problem solving.
The standard collection of efficiency and production data was enlarged to include various reject and downtime data. This data was summarized for various levels of management in both the Production and Maintenance arenas for reasons which included not only operator and mechanic performance evaluations but also preventive and predictive maintenance. This data collection became essentially fully-automated by the conclusion of the start-up phase.
The combination of prioritized problem solving and automated data collection led to the concept of an on-line, real-time system of diagnostics for production and maintenance personnel to use in managing the production equipment. This system, which combines statistical process control and artificial intelligence, has resulted in improved efficiency and effectiveness at troubleshooting and in the ability to anticipate mechanical problems rather than waiting for them to occur. This, in turn, has resulted in an increase in net production of over ten percent over the projected plant production levels.
Within the Quality Assurance area, while the optimization of all QA resources was the charter, the transition of the organization’s orientation from a “quality control” role to one of actual quality assurance was the goal. Early in the involvement with Quality Assurance, it became obvious that the Quality Assurance function was “trying to inspect quality into the product” which is clearly impossible. Rather than random sampling, the department was using systematic sampling. Sample sizes were so small that statistical confidence in the reported results was negligible. Inspectors were looking for over one hundred defects within each pack of cigarettes, most of which had nothing to do with the consumer’s perceptions of quality as indicated by a combination of consumer panels and customer complaint data.
The specific objectives of the Quality Assurance part of the project were as follows:
- To develop a cost effective Quality Assurance program with both short and long term goals.
- To define the functional roles within the plant organization and create the teamwork essential for a good Quality Assurance program.
- To improve the product sampling validity to achieve acceptable and reasonable confidence levels.
- To implement control procedures that impact and reduce internal costs associated with defects.
- To reduce the cost of in-plant laboratory testing.
- To redirect the efforts of some Quality Assurance resources into areas where cost/quality ratios will be more productive.
As part of this resource optimization effort, the team of client and consulting personnel set out to define the role of Quality Assurance at the plant level and the role of each functional area with respect to quality. A task force was assembled to involve the following functional areas:
- Quality Assurance;
- Product/Process Control Engineering; and
- Plant Production Engineering (Maintenance).
The task force process prompted each member to reevaluate the duties and inter-relationships of each of the functional areas in general. Once these duties and inter-relationships were defined, the task force examined and redefined the required activities of the quality control/assurance process at the plant level, including the identification of the functional area which would be responsible for each activity. All recommendations were approved by plant and company management.
As part of the effort to improve the product sampling validity to achieve acceptable and reasonable confidence levels, an appropriate scenario was developed by which Production could control the visual defects and Quality Assurance could provide a statistically-based estimate of the quality level of the out-going product. The objective was to make the program more consistent, more relevant to customer complaints, and more statistically based. This required fewer defects, a randomized sequence for sampling, and larger volumes of product than had been used in previous inspection programs.
The first task was to reduce the number of defects checked to a number which included only those which were truly related to product quality. This, as expected, turned out to be more of a political issue than anything else. The standard inspection categories and the customer complaint items were evaluated to provide the framework for determining which attributes of the final product were significant in nature and which were inconsequential. While most people involved in the decision could agree that fewer than thirty defects could actually be associated with perceived product quality, many of those same people felt that the other defects should be checked if only for historical reasons.
Ultimately, the deciding factor was practical. It was proven to the upper-management task force charged with this issue that, in order to inspect enough product to provide the desired high degree of confidence in the results, maintenance of the existing number of defects would require a seven-fold increase in inspection personnel. Agreement was ultimately reached on twenty-seven defect categories.
Given the new twenty-seven defect categories, the responsibilities and mechanisms for the control and audit of these attributes needed re-alignment. This, in turn, required a re-thinking of the approach to detecting out-of-specification product. In the past, the onus for identifying undesirable product rested with Quality Assurance; in effect, “if QA didn’t catch any bad product, then Production didn’t make any bad product.” This attitude is both inappropriate and costly in today’s highly competitive environment where market-share and competitive pressures must be addressed day to day. To this end, the emphasis shifted to making the product correctly rather than on the ill-founded assumption that Quality Assurance would or could screen out undesirable product after it had been made.
The next task was to transfer the control function from the Quality Assurance area to the Production personnel. Equipment operators and their immediate supervision were given hands-on training in how to inspect for the drastically-reduced number of defects. Plans were also developed, and later implemented, to use optical sensors to perform many of the actual inspections. This ultimately led to the implementation of a random inspection of proper sensor functioning rather than the more labor-intensive manual inspection of product for most of the defects.
Reporting tools were designed around the management structure so that production managers could see those items that related specifically to their area(s) in micro terms and upper management could view more concentrated forms of information to allow them to take a macro view of operations. The reports allowed for the identification of trends and facilitated the determination of any correlation with customer complaints.
Once the control baton was successfully passed to Production and Maintenance (for the inspection of the sensors), Quality Assurance could concentrate on taking larger random samples of product. A sampling plan was developed to accommodate various staffing and production levels. Once implemented, this procedure yielded higher confidence levels in the reported out-going product quality that were then reported together on a shift, daily, weekly, and monthly basis by production unit and by brand.
As mentioned earlier, the new, highly automated environment required new ways of viewing the operation and management of the facility, and presented opportunities to staff the facility more efficiently and effectively than had previously been done.
The elements which were addressed within the staffing/organizational aspects are as follows:
- Task Lists: activities, frequencies, times required, criticality, and degree of difficulty;
- Degree of Human Resource Utilization; and
- Potential for revisions to staffing/organizational structure.
Within each Production and Maintenance area, every task for every hourly worker was identified. Each task was then broken down into the specific activities within that task, the frequency (hourly, each shift, daily, etc.) of the task, the amount of time required to perform the task, the relative importance of the task, and the relative amount of skill required to perform the task. These task lists were then used to update the various skills training programs and to more clearly define individual responsibilities.
While developing the task lists, preventive and predictive maintenance procedures and responsibilities were updated. These task lists also served as a basis for the development of trouble-shooting guides for Maintenance and Production personnel.
The task database ultimately included over two thousand activities to be performed. These included routine operational and preventive maintenance tasks as well as troubleshooting procedures. The process of compiling this database resulted in the identification of duplication of responsibility, equipment errors, and various omissions. It also provided one standardized format rather than the collection of formats which had been assembled over the years.
Ten different staffing options were developed from the task analysis. Each option represented various combinations of the following:
- combinations of operator and mechanic tasks
- reduction of staffing levels for various positions
- transfer of organizational responsibility between Production and Maintenance and/or Quality Assurance
One option was chosen which resulted in the elimination of seventy Production positions, sixty-six Maintenance positions, and sixty-two Quality Assurance positions from the total payroll of almost two thousand hourly and supervisory personnel. These positions were cut through a combination of attrition and early retirement incentives. Total annualized savings exceeded eight million dollars. Where possible these staffing configurations were implemented in the client’s other facilities for additional labor savings in excess of five million dollars.
Summary of Project Results
- Staffing levels within all areas were determined with the direct involvement of plant management and departmental supervision; changes from existing staffing levels were implemented.
- Potential capital expense items were evaluated with respect to their net benefit and impact on process capabilities. One such evaluation forestalled the purchase of seventy-two $700,000 pieces of equipment.
- Organizational roles were defined or re-defined to provide a logical basis for departmental accountabilities.
- Procedures were established or modified to address identified needs that were either not being met or were not being met adequately.
- Work flows were evaluated to minimize bottlenecks and unnecessary handling of materials.
- Management control and reporting systems were designed or updated to accommodate the specific challenges and capabilities of the “state-of-the-art” facility and equipment.
- Supervisors and managers were trained, in actual situations, in the use of the tools at their disposal for analysis of correctable problems and in follow-up for control and to stimulate horizontal and vertical communication.
- A cultural change was begun whereby a continual examination of procedures, processes, and accountabilities could occur. Barriers began to be viewed, not as roadblocks, but rather as items to be overcome in the improvement process.