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Process Excellence
The document outlines the application of Lean and Six Sigma methodologies at Canada Post Corporation, highlighting its focus on process excellence, customer value, and continuous improvement strategies. Key achievements include increased profitability, improved delivery times, and substantial cost savings through facility and operational efficiencies. Additionally, it emphasizes the importance of training, leadership, and adapting lean practices to the unique characteristics of the postal service industry.
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Process Excellence
- 1. Process Excellence at CanadaPost Corporation Lean Summit, June 2004 Steven Withers Senior Advisor, Lean Version 1.0
- 2. Page 2 Agenda 1. AboutCanada Post 2. Value 3. Value Streams 4. Flow 5. Pull 6. Perfection 7. Learning
- 3. Page 3 About CanadaPost • Canadian Crown Corporation • Group of companies, CPC, Purolator, Innovapost, Progistix, ePost, Intelcom Courier, 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
- 4. Page 4 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 84 67 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
- 5. Page 5 Historical LeanPerspective 1996 – Womack & Charlton talk about Postal 1996 – 1999 Learn through isolated experimentation 1999 – 2002 LEI internships 2000 – First supplier VSM experience with Air Canada 2001 – Plant reorganization – value streams 2001 – VSM used for future state planning 2002 – Deployment of “Process Excellence” advisors 2003 – Integration of lean and six sigma 2003 – New operations planning process based on policy deployment 2004 – Getting serious about administration, 1st focus order to cash 1996 2004 Section 1 – About Canada Post
- 6. Page 6 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
- 7. Page 7 Plant ValueStream Organization Plant Director Production Control Tech Services Operations Improvement Value Stream Leader Parcel Sort CUPW CUPW APOC (Sups) Section 1 – About Canada Post
- 8. Page 8 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
- 9. Page 9 Value Streams Letters- Publications and Admail – Parcels - International Sorting large envelopes - Windsor Section 3 – Value Streams
- 10. Page 10 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 Equipment MLOCR – 7 to 6 LSM – 6 to 4 VES Desks – 44 to 14 Manual Cases – 255 to 60 Mail Handling Equipment – reduced 33% S / L C e l l s B u s i n e s s U n i t # 3 S h i f t 1 J 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 5 1 2 1 2 3 4 5 3 4 5 B 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
- 11. Page 11 Cells inCalgary 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
- 12. Page 12 Kaikaku Results– Toronto Toronto plant beforeToronto plant before Toronto plant afterToronto plant after Travel Distance Before After % Reduction Bag of Mail 806' 76' 91% Culler to OpticalReader 998' 12' 99% Optical Reader to Refeed 250' 17' 93% Oversize Letter to 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 Stations 83,000 20,000 76% Priority Courier Facility 75,000 0 100% Toronto Exch'ng Office 45,000 0 100% Space Section 4 - Flow
- 13. Page 13 Quebec –Flow Reduces Inventory Before After Section 4 - Flow
- 14. Page 14 Flow inAdministration 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
- 15. Page 15 Administrative Flow Layoutand material flow Section 4 - Flow
- 16. Page 16 Load LevelingAdministration Work Basic sort station number Post dated file Basic sort station SIS Cards Post dated calendar Section 4 - Flow
- 17. Page 17 Building StandardWork Elements in Administration Making Customer Calls – Payment Processing ?
- 18. Page 18 Building StandardWork in Administration Basic Payment Processing
- 19. Page 19 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
- 20. Page 20 Perfection • Visualdepot, 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
- 21. Page 21 5S –Continually Seeking Perfection Before After Section 6 - Perfection
- 22. Page 22 Measures ofSuccess • 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
- 23. Page 23 Process ExcellenceStrategy 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
- 24. Page 24 Reflections onwhat 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