Lean in infrastructure - delivering more for less

Lean in Infrastructure
Delivering more for less

Stuart Smith, Chairman
January 2013

APM Jan 2013 page 1 © Bourton Group 2013

Objectives for today

• Provide an overview of Lean and Six Sigma

• Discuss how organisations in the Construction and
Infrastructure sector can achieve improved performance by
implementing a sustainable lean approach

• Consider how to get started and how to overcome
implementation issues


Bourton Group
We have a successful track record of improving complex processes in major
public and private sector organisations.
Our consultancy takes a holistic approach to:
• Focus on your strategic objectives
• Deliver lean sigma process improvement
built around your needs
• Transfer full capability so your
organisation can sustain the change
• Maintain direction and progress through
strong programme management

We provide full support on the ground until continuous improvement is fully
embedded. We also like to move at pace so your organisation becomes self-
sufficient as soon as possible.

Some of our clients

nationalgrid


Challenges our clients face

Time Agility

Waste Internal Capability

Defects Processes


Our recently published book
• What is Lean?
• Does Lean apply to construction?
• The benefits of Lean in construction
• Shortcomings and difficulties in the
construction context
• A suggested route map
• What is a good climate / culture for Lean
and how to get it
• How to align effort
• How to lead a Lean transformation
• What and how to measure
• How to sustain Lean

What should we focus on to improve?

“Brilliant process management is our strategy.
We get brilliant results from average people managing
brilliant processes. We observe that our competitors
often get average (or worse) results from brilliant
people managing broken processes.”

Fujio Cho, Vice Chairman of Toyota Motor Corporation


Background and History of
Lean


The Lean Timeline
Techniques Adoption
Increasing
used outside spreading:
adoption of Lean
Japan – outside Government
Sigma in Service
auto industry Healthcare
FW Taylor’s “Scientific US War Dept – Job sector –
Construction/
Management”– the instructions for Banks &
Infrastructure
“one best way” munitions workers Telecomms

1890 1908 - 1926 1941 1950-60s 1980s 1987 1990s 1996 2000-11

Toyota develop the The term “Lean” Jack Welch
Henry & the Model T Toyota Production coined to describe the launches Six
Ford –flow lines and System and begin method that made Sigma at GE
mass production their rise Toyota so much better
than its competitors.
Motorola launch “the
Six Sigma Quality
Program”

Lean thinking is . . .

Out of shape? Cost-cut thin? Lean and
fit?

Strong at delivering the right outcomes at minimum cost


Lean encompasses many levels of improvement
Type of problem Improvement Vehicle Bene
Top down
interventions Complex business process Process Redesign Signif

Complex, cross- Lean approach integrated intodedicated team over a
problems with multiple
‘handovers’ and variables.
Involves
all
longer timescale (6 months+).
perfo
servic
functional business strategic and transformation driven and
Problems identified by Centrally

Increasing complexity of problem/issue
processes senior managers. resourced.
changes
Problems involving broader Lean Sigma DMAICT Reduc
Basic cross-team business processes that cut methodology and tools. waste
business processes across several teams. Focused participation of Impro
‘Intervention’ driven
Problems identified by application –
process stakeholders, servic
Managers. customers and suppliers.
solving operational problems and
Problems affecting work
improving processes –Lean Rapid Improvement
team performance,
Rapid
events (5-day blitz to 6 week
Good
‘step’
Improvement Events (RIEs) & Lean
identified by team and/or project). Impac
Work team team leader.
Sigma projects Focused effort to resolve servic
level issues using Lean problem
solving tools.

Small, local problems of working –Management
Daily ways Lean Daily Small
affecting team and
Lean embedded in how generated
individuals – below the
System®
improvement including:
impro
and in
Work team and ‘radar’ problems. operate – all staff
teams • 20 Keys® perfo
colleague level • Daily the
involved in both doing Work Group Meetings May id
• Primary Visual display comp
Bottom up job and improvingKaizenway Sheets
• the Action
continuous it’s done • Short Interval Leadership
improvement

Fundamentals and Basics


The Five Principles of Lean
CUSTOMER
VALUE
• Understanding and agreeing exactly what
your customer needs

VALUE STREAM • Understanding all of your processes

FLOW
• Smoothing the flow

PULL
• Pulling value through the chain

STRIVE FOR
PERFECTION • Continuing to attack waste
Principles now adopted world-wide in a variety of sectors and professions

Lean Improvement

Simple Objectives

Difficult Delivery


The key Lean concepts – Waste & Value

Value-Adding

Waste
Non Value-Adding
(but necessary)


The Three Stakeholders of Lean
Highest satisfaction
of needs

CUSTOMER

Total elimination What’s in it for
of waste (Speed, ORGANISATION EMPLOYEE me and respect
Quality and Cost) for individuals

Balancing the needs of these stakeholders is central to Lean thinking

Process improvement today uses the best of
Lean and Six Sigma – Lean Sigma!
1. All processes have inherent variation and waste
2. Customers judge our processes on some measure of time,
quality and cost

Time Quality

Lean Sigma

Lean Six Sigma
Waste removal Variation reduction
Cost

These three process measures and the causes that impact them are
all interdependent

Lean Sigma process improvement in a nutshell
2. Processes are fed by a 3. Processes convert those
number of inputs. inputs through a series of 5. . . . that are received by
4. Into process
Information, raw materials, activities . . . customers
outputs . . .
etc.

Inputs Process Outputs Customers

1. Everything we do is a process, from
creating a document to delivering
materials to site
7. We can measure the outputs of our
process to determine whether we are
Not Not consistently meeting those
What the OK requirements.
OK OK
customer
wants What the
process
produces

8. Failing to meet the customer
Lower Target Upper requirements causes problems. It
Limit Limit creates customer dissatisfaction and
6. Customers have expectations or incurs cost to the business – delays,
requirements that can be defined waste, cost of putting things right.

The solution is unlikely to be

‘more checking’ !!

Finished files are the result of
years of scientific study
combined with the experience
of many years


Lean Sigma is . . .

Business focused

+
Customer centric
+ Process focused

+ +
Targeted on waste
and variation + Data driven

+
Team-based

Project-based and Intact work group

Benefits achieved in Construction sector
Reduction in total scheme costs (excluding land). ~ 4% p.a

Construction timescale on specific activities halved

Rework (e.g. Technical Queries) halved

Approval process time shortened by 20%

Design growth significantly reduced

Supply chain lead times halved completion 3 months early

Productivity on specific activity increased 80%

Plant and labour cost on specific activity reduced 60%

Defect rates on mechanical process down by 90%

Data driven decisions increased

Continuous improvement culture started

What is a process?

S I P O C

suppliers a b c customers
inputs outputs
activities

PROCESS UNDER
INVESTIGATION
start finish

“A process is a series of activities that takes an input, transforms it
and produces an output for a customer”


Process complexity and the likelihood of error

Probability of success, each process step
Number of
steps
0.95 (95%) 0.99 (99%) 0.999 (99.9%)

1 95% 99% 99.9%

25 28% 78% 98%

50 8% 61% 95%

Think about the number of steps in one of your typical processes –
how good does each step need to be to achieve the overall target
performance?

Speed: a fundamental Lean Sigma measure

Speed: the measure of speed through a process
Before

Waste Waste Waste Waste Value Adding x 100
Actual Lead time = 6 Days Lead time
= 1.5%
After

W W Value Adding
Lead time x 100
Actual Lead time = 0.5 Days

= 17%

Increasing pace throughout the process

Identifying value streams
• A time series of all activities and steps
conducted to deliver to the customer
what they require
• Value streams follow processes, are
not confined to departments, teams or
even to business activity of the
product, but the management and
information systems that support the Current State to Future State
basic process
• Value Stream mapping is a Lean tool
which enables analysis of a process to:
– Identify opportunities to eliminate
waste
– Engage people in the process of
improvement

What do we mean by ‘flow’….

• The continuous movement of an item through the
Value Stream (or process)
• Queuing, stopping, reversing or repeating is waste
• When processes flow, cycle time & defects reduce

Process speed
Throughput
FLOW Cost

Quality


What do we mean by ‘pull’

• Activity in the Value Stream is triggered by a request (pull) from
the customer

• The customer pull leads to each step in the process pulling from
the preceding step

• No more than the amount needed is taken and therefore no more
than this is produced

• The rhythm and pace of the process is determined by the
customer demand pull


What adds Value & What is Waste?
Minimise

Non Value Added
(but necessary)
Non Value
Added (Waste)

Value Added
activity

Eliminate
Optimise

Any activity that does not add value from the perspective of the
customer can be defined as Waste

TIMWOODS – construction examples
Motion
Inventory • Excessive excavator
Transportation movement
• Stock piling of
• Transporting material • Fetching of tools and
aggregates or imported
from excavation to equipment from the stores
fill
deposition site • Or in the office, when
• Materials in storage
• Moving materials from looking for files, reports,
stores to work site contracts, etc.

Over-Production
Waiting (Idle Time) • Laying more black top than
• A gang waiting for necessary Over-Processing
instructions or materials • Debogging to an excessive • The need for signatures for
• Payroll waiting for depth work permits, etc.
timesheets • Producing too much • Multiple handling of
• Waiting for site permits documentation timesheets
• Plant waiting to be serviced • Pouring concrete to a better
specification than needed
• Designing something that is
better than required
Skills Misuse • Over compacting of fill
• Waste of untapped material
Defects/Rejects/Re-work human potential
• Concrete pour does not
• Not fully using the skills
meet specifications
that people possess e.g.
• Any non-conformance
Supervisor acting as a
‘banks-man’


TIMWOODS – office examples
Motion
Over-Processing ─ Searching for files /
Transportation handling paperwork
─ Repeated manual entry of
─ Retrieving or storing ─ Extra key strokes
data
files ─ Walking to get
─ Rolls-Royce report when a call
─ Taking material to copy information
would do
machine, fax, shredder ─ Handoffs
─ Un-needed steps, duplication
─ Carrying or posting ─ Going to get signatures
─ More information than
paperwork customer needs
─ Checking and layers of
approval Defects / Rejects/
─ Creating reports no one reads Re-work
Waiting (Idle Time) ─ Sending out un-needed copies
Waiting for… ─ Data entry errors
 Faxes ─ Pricing error
 System to come up ─ Missing information
 Customer response Over-Production
 Queuing for photocopier
 A handed-off file to come back ─ Doing more or ahead of Inventory
customer need
─ Doing things for a customer ─ Queues paperwork
Skills Misuse not there! ─ Open projects
─ Continually using a higher skilled ─ Creating reports no one reads ─ E-mails unread
person on low skilled work ─ Making extra copies (in case) ─ Office supplies
─ Using a big computer when paper ─ Unused records in database
OK

Can we eliminate waste?

It depends:

• Some will be obvious

• Some will be designed in – and must be designed out (Error
Proofed)

• Much will require a change of mindset

• Some would require a change of law

• Identify root causes – only when these are changed can the
waste be removed


The DMAICT Methodology for Lean Sigma projects
Define: Define the project – forming a team with agreed, clear goals and
effective sponsorship
Measure: Measuring the Process – gathering data on current performance
Analyse: Analysis of the Process – identifying and quantifying root causes
of current performance
Improve: Improving the Process – implementing performance
improvements
Control: Controlling the Process – achieving predicted benefits and project
closure
Transfer: Sustain performance, maximise the benefits of the learning gained
during the project and sign off

Business Recognise Define Measure Analyse Improve Control Transfer
opportunities TRANSFER


The climate for Lean
• Challenge & Involvement
– How challenged, how emotionally involved, and how
committed am I to the work?
• Freedom
– How free am I to decide how to do my job?
• Trust & Openness
– Do people feel safe in speaking their minds and openly
offering different points of view?
• Idea Time
– Do we have time to think things through before
having to act?
• Playfulness & Humour
– How relaxed is our workplace – is it OK to have fun?
• Personal Conflict
– To what degree do people engage in interpersonal
conflict or "warfare?"
• Idea Support
– Do we have a few resources to give new ideas a try?
• Debate
– To what degree do people engage in lively debates
about the issues
• Risk Taking © CPSB, Inc
– Is it OK to fail when trying new things?

The Deployment Challenge

Does the CEO know how the strategy will
How? be delivered at all levels of the
STRATEGY
organisation to have confidence that the
required results will be achieved?

Where?
Do Management know where
the company is going so that
they can provide the correct
leadership to the workforce?

What
and
why?
Do Operations know what they should be
doing on a daily basis and how they fit into EXECUTION
the “big picture” i.e., why they have these
objectives (context)?


M6 Extension – major intervention

Scheme
The £120m upgrade of the A74 between Carlisle and Guards Mill – the ‘missing link’
in the M6. This included two major structures crossing the River Esk and West Coast
Main Line, demolition of the Mossband Viaduct and provision of an all-purpose road.

Largest application of
Lean Sigma in
Solution Construction &
The programme focused on Lean Sigma efficiency improvements in Approval, Design Infrastructure to date
and Construction processes. Our approach was pragmatic: work with the team to
identify projects with the highest potential value; provide on-the-ground consultancy
to support delivery of improvements through the DMAICT methodology; transfer of “Despite initial
knowledge and skills, giving Carillion Roads internal capability for the future. scepticism, I am
convinced Lean Sigma
Results can deliver massive
•£5m of savings directly attributed to Lean Sigma with notable individual projects: benefits within
Earthworks (£1.56m); Piling Operations (£970k); Post Public Enquiry Process (£950k); construction and
infrastructure. “
Structures Design Process (£500k). Steve Kennedy
•An established CI culture, strengthening Carillion’s position for future HA tendering Operations Director


Lean Sigma speeds up the rail network

Problem
When Network Rail took on the UK infrastructure it identified five areas causing 50%
of train delays: Points; Track Circuits; Signalling; Seasonal preparedness; and
Operational procedures. Performance in these areas needed to improve to reduce
government penalties - averaging £400m a year at the time.

A major improvement
programme following
Solution Network Rail’s successful
Our role was to implement a wide range of process improvements through projects bid to manage the UK’s
that also achieved large-scale transfer of knowledge and skills to Network Rail’s rail infrastructure.
teams. In total, 150 projects were fully implemented and our consultants trained
1200 staff to create an infrastructure of Lean Sigma capability in the organisation.
“There is an innate
integrity to the
Results Bourton Group and a
•£100m of efficiency savings refreshing flexibility of
response from
•Lean Sigma improvements integral to 50% reduction in train delay minutes
everyone.”
•Over 1200 Network Rail staff trained
Rob Freeman
•Client now has full capability to sustain and build upon performance improvements Operations Director
•National Training Awards – Winner 2006

Service levels up 14% profitability up 35%

Problem
In 2006, poor organisational processes at Siemens Energy Services led to 20% of
appointments being routinely cancelled. Unsurprisingly, customer complaints were
sky-high – not a good recipe for success as the major utility companies started to
prepare the next round of contracts to supply metering services.

Business transformation
in the Metering Services
Solution operation at Siemens
Process improvements through: streamlining capacity planning, work scheduling, job Energy Services
completion and billing; redesigning districts to optimise coverage; augmenting IT
systems, logistics processes, performance measurement and reward mechanisms; and
developing new ways of communicating with customers and consumers.

“An amazing turnaround.
Results My team was incredibly
•Customer complaints dropped by 50% as service levels increased 14% unified with fantastic
•Profitability increased by 35% as lost time dropped by 90% and quality issues by 50% skills transfer from
•Employee satisfaction greatly increased Bourton. “
Finbarr Dowling
•The programme won the Siemens UK TOP+ Award 2007 Operations Director


Serco Occupational Health

Problem
Serco Occupational Health’s National Service Centre administers 25,000 health referrals
per year. These referrals may be dealt with by a Doctor, Nurse or Technician and may be
face-to-face, on-site or over the phone. The task for the National Service Centre was to
reduce lead times experienced by clients at the same time as reducing operational costs.
Lean project
identifies annual
Solution savings in excess of
A systematic review was carried out of all of the key processes and a variety of wastes £120k with a
were identified which were common across different types of work. New processes reduction in the
were designed based on Lean principles which removed rework and delays and enabled lead time
shorter end-to-end lead times.
experienced by the
customer of up to
Results 50%
•Over £120k of annual savings – with reduction in lead times of up to 50%
• Process changes allowed for the removal of report re-writes from employed and
sessional doctors.
• Appointment booking procedures changed to improve convenience to the employee and
increase the attendance rate.
• Admin organisation re-designed to give better end-to-end accountability and visibility of
case progress.
• Design and introduction of templates to ensure information to and from clients is
APM Jan 2013 right first time.
recorded page 38 © Bourton Group 2013

Top tips for successful Lean Sigma
implementation
Recipe for success – key learning points

• Top team commitment, clear vision of where you are going and what
you expect to happen

• Strong programme deployment leadership and governance

• Full-time Practitioners/Belts selected against a specification where
attitude is more important than technical ability

• Clear performance measures and auditable benefits

• Continuous support and challenge to embed the changes into daily
work habits


Summary

• Lean is a proven approach that has been in use for decades
• It’s focus has always been on “Doing more for less”
• The ‘Customer’ is at the heart of the Lean approach
• It focuses on reducing cost not making cuts
• It enables, and depends upon, true empowerment of staff
• It engages people and is effective (and fun!)


Lean in infrastructure - delivering more for less

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