Following Through on Lean Improvements: Starting the Lean Journey Presenters:

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Harry Kenworthy, Principal & Manager of the Quality and Productivity Improvement Center (QPIC, LLC) Shannon Crouch, Process & Compliance Manager, City of Boca Raton Date:

Lean is… Developing an Organizational Culture of Continuous Improvement through the relentless elimination of WASTE Quote from 5 year old Katie: “Lean is getting rid of stuff that bugs you!” 2

What does Lean do? REDUCES

INCREASES

CHANGES

Costs Wastes

Service Capacity

The CULTURE

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Lean Overview True North Thinking People System (TPS)

Continuous Improvement

Challenge

Kaizen

Respect For people

Genchi Genbutsu

Learn to See

Respect

Teamwork 4

The 4Ps of TPS

Problem Solving

The Lean Essentials

(Continuous Improvement & Learning)

People & Partners (Respect, Challenge & Grow Them)

Process (Eliminate Waste – the 8 Wastes)

Philosophy (The Core Values of True North) 5

Five Basic Principles of Lean (Womack & Jones, 1996)

1. 2. 3. 4.

Add value for your customer Value Stream Mapping – “Learn to See” Create Flow – “one stop shopping” goal Pull from the customer – keep pace with the customer demand rate 5. Aim for perfection – “Right the first time” – eliminate errors and rework We add: No lay offs – reduction by attrition (46%/year) and no new hires (unless a critical skill). 6

City of Boca Raton Accounts Payable (AP) Process Can you identify with any of these? Requisition Department incorrectly enters the receiver in the system which causes re-work for Accounts Payable AP receives invoices by either email, US mail, fax, or Requisition Department Invoices are not electronically centralized Departments scan and save invoices electronically but a hardcopy is still kept AP runs the Expenditure Approval Listing (EAL) multiple times in one day

AP manually enters over 570 electric bill accounts in an excel file AP uses a substitute W-9 form instead of the official IRS form which causes confusion 7

City of Boca Raton Accounts Payable (AP) Process Can you identify with any of these?

What if there was a method to help solve these problems by utilizingLean simpleProcess tools that did Improvement not require an investment in new technology? 8

City of Boca Raton’s Lean Journey o Our Journey began on February 10, 2014 • Thank you to Linda Davidson, Director of Financial Services and GFOA Past President for starting us on this journey. • Our Journey started with training. We had Lean Process Improvement Training for 25 members of our staff conducted by Harry Kenworthy (QPIC, LLC) and Shayne Kavanagh (GFOA). • The City had a Kaizen event focusing on the Accounts Payable (AP) process – The “AP Lean Team” was created. 9

What is Kaizen? Kai To break apart To modify To change

Zen Think Make good Make better

Kaizen  Change for the better  Improvement  Continuous Improvement 10

City of Boca Raton’s Kaizen Accounts Payable (AP) Lean Team

Linda Davidson – Team Sponsor Shayne Desiree Emmanuel Ed Connie Kavanagh Sanchez Posadas Rolon King

Stephen Shannon Rosis Victoria Ella Harry Timberlake Crouch Suarez- Guinn Moore- Kenworthy Poitier Elias 11

City of Boca Raton’s Kaizen “Observers”

Ken Dames

Nicole Gasparri

Jean Bonds

Mickey Panella

Gary Lynn Kapalka Drew-Sugerman 12

AP Lean Team at work

Kaizen DAY 1

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AP Lean Team Preliminary Project Charter

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AP Lean Team Elevator Speech o What is the Project? • The Accounts Payable (AP) Lean team is looking to improve the AP process by identifying and minimizing areas that create duplicate efforts, excessive process times, and errors. o Why are we doing it? • To find ways to improve the AP process, to simplify the workflow and to improve vendor relationships. o What do you expect out of me? • Positive attitude, cooperation, your perspective and ideas for improvements. o What’s in it for me? • Improving the process and simplifying the work will generate better results to make your job process easier and less frustrating. 15

Preliminary AP Process Map

Discussing the process in a meeting room is not as valuable as visually watching the process. An effective process map is developed by directly observing the process to understand it. The AP Lean Team learned that direct physical observation of the process is key to help identify the value added and non- value added steps (waste). 16

What are Value Added vs. Non-Value Added Activities? o Value-Added Activities • Transform materials and information into programs and services the customer wants and it is done right the first time.

o Non-Value Added Activities (WASTE) • Consume resources, but do not directly contribute to a program or service.

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8 Forms of Waste 8 Forms of Waste 1 Transportation 2 Inventory

Examples of Waste Great distances between process steps or having customers move between multiple work stations and areas, offices, floors, buildings etc.

Too many emails to read or voice mails to be processed or bulk purchase deals. 3 Motion (Unnecessary) Human motion that does not add value to the service that is being performed. Some causes include poor office layout, unorganized workplace and looking for items. 4 Waiting 5 Overproducing

In Lean, Waste is the Enemy!

Waiting to complete the next step i.e. waiting for a signature/ approval/ email response (the more process steps the more waiting). Making too much, too soon, or too fast. Or making the wrong things at the wrong time.

6 Over processing

Effort that adds no value to the customer i.e. multiple approvals or signatures, duplication of efforts within or between departments.

7 Defects

Work is done incorrectly or with errors and causes re-work. Aim for perfection – “Right the first time” – eliminate errors and rework.

8 Underutilized people

Ignoring or underutilizing the employee's knowledge, skills ideas and abilities. 18

Lean Provides Tools to Make Waste Visible

o Lean teaches employees to recognize the 8 forms of waste that occur in a business process. o Kaizen and Lean tools i.e. “Learn to See,” Process Mapping, 5S are tools used to make waste visible and to eliminate it.

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“Learn to See” o Directly observe the process to understand it. o The AP Lean Team split off into 3 teams. The teams were off to “Learn to See” how other departments handle their invoice/ receiving process. o The Lean approach is about empowering employees and involving them in the process.

Kaizen DAY 2 AM

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“Learn to See” Lean is about obtaining as much knowledge of a process as you can and sharing the problems identified with others so that solutions are easily accepted and implemented.

Kaizen DAY 2 AM

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“Learn to See” Mapping the Process

Mapping out the Process makes waste visible. Kaizen DAY 2 PM

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“Learn to See” Sharing our Findings

Kaizen DAY 2 PM

Cross share your findings with the rest of the Kaizen team to ensure everyone agrees with the results. 23

“Learn to See” Current State Process Maps Blanket POs

Contractors - Utilities Regular POs

Analysis showed of 52 process steps, 31 steps “added value” by Lean Definition.

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“Learn to See” Countermeasures Problem Identified Receivers entered incorrectly causes re-work for Accounts Payable.

Countermeasure AP tracks errors to determine the education needs for vendors and internal end users.

Invoices are not electronically centralized

IT to work with the AP Staff to centralize a Invoices are scanned and saved electronically repository of invoices Citywide. but a hardcopy is still kept. AP manually enters over 570 FPL account Request to obtain the FPL bills statement amounts in an excel file electronically in an excel or pdf file format. AP uses a substitute W-9 form versus the official IRS form which causes errors when vendors submit the form.

Create a new vendor package utilizing the official IRS W-9 form.

Effective use of countermeasures removes problems identified. 25

Countermeasures Error Tracking

In a two week period, AP found that there were 169 errors with concentration in five departments. Departments will be notified of the errors so that training can be provided. 26

Countermeasures Obtain Electronic FPL Statements

City has over 570 Florida Power & Light (FPL) accounts AP Clerk manually entered each amount AP Processing Time = 2 Hours 27

Countermeasures Obtain Electronic FPL Statements AP Clerk obtains the FPL data electronically AP Processing Time = 45 minutes

The time gained may now be used on value added activities.

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Countermeasures Vendor Package DRAFT

Substitute W-9 Form

Put the areas that errors occur the most at the top of theWeform or found that section of the form and theredevelop were 15 bad W-9s out of 197 concise forms by minimizing within a 12 day unnecessary words. period resulting in a 7.5% error rate.

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Stakeholders Analysis

Kaizen DAY 3

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Preparing the Presentation to Management

Kaizen DAY 4 AM

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Presenting the Kaizen Results to Management

Kaizen DAY 4 PM

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Lean 5S Makes Waste Visible o Lean 5S is a methodology for standardization, organization, and cleanliness and helps improve workplace organization. At the heart of 5S is the Lean goal of reducing waste. o The five words that make up the 5S: 1. 2. 3. 4. 5.

Sort - clearly distinguish needed items from unneeded and eliminate the latter. Straighten – keep needed items in the correct place to allow for easy and immediate retrieval. Find things quickly. Shine – keep the workplace neat and clean Standardize – the method by which sort, straighten and shine are made habitable. Sustain – maintain established procedures. 33

What comes to mind when you see this picture?

Looks like a great opportunity to use the 5S Lean Tool! 34

Before and After Pictures: Purchasing Manager’s Office Before

After

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What happens after the Kaizen? o The Kaizen Project Leader is the person responsible for ensuring that Kaizen action items are completed. • AP Lean Team meets monthly to discuss the status of action items and the successes. • Project Leader creates and publishes a monthly newsletter to share the results and successes with the Organization. 36

April 2014 Lean Newsletter

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AP Lean Team Action Items: Status o Created an error tracking form to track errors submitted by depts. to AP. The form is displayed as a visual control and is used to identify training needs. o Purchasing Department educated employees on how to obtain contract information to verify prices when entering receivers. o IT is working with the AP Staff to centralize a repository of invoices Citywide utilizing Laserfiche (electronic records management system). o Expenditure Approval Listing is run 1/day versus 3/day.

As of 5/19/14, 90% of action items have been completed

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Keeping the Lean Momentum Going

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Lean Steering Committee Responsibilities

Some of the responsibilities of the Committee include: 1. Developing a framework for the Boca Lean Journey, including process improvement strategy. 2. Developing plans to increase awareness of the Boca Lean Journey. 3. Prioritizing process improvement initiatives 4. Developing processes to identify and share successes, accomplishments, and best practices. 40

Summary of Lessons Learned o You have to “Learn to See” • Watch the process from beginning to end • Conference room discussions of processes are not as valuable as physical observations of the processes o Map out the process to make waste visible – TIMWOOD • Transportation, inventory, motion, waiting, overproduction, overproducing, defects, and underutilized people. o You can never have enough data and it can be simple to capture. o Good teamwork is important. o Don’t be afraid to speak up and share your thoughts/ideas. o Constant improvement – although little incremental steps is good. o Lean 5S is a great organization and standardization tool. o Get people excited about Lean! 41

QPIC, LLC

www.Leangovcenter.com

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