The Lean Approach to Public Services and the Basis for Successful Application in Local Authorities Professor Tony Bendell MD, Services Ltd. Nottingham

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The Lean Approach to Public Services and the
Basis for Successful Application in Local
AuthoritiesProfessor Tony BendellMD, Services
Ltd. Nottingham Visiting Professor, Middlesex
University Business School
www.servicesltd.co.uk 0115 9669460
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Services Ltd

• Nottingham based
• Been working with the public, private voluntary
  sectors since established in 1983
• Work with Central Government, Agencies Local
  Authorities, Health Service, Police, Probation
  Service, BBC,DTI, Design Council and House of
  Commons
• Acted as Lead consultants for DTI on
  Accreditation for Business Links and as part of
  Managing in the 90s and various other
  government campaigns
• Also worked with public sector internationally
  Hong Kong, India, Dubai and Abu Dhabi
• Experts in Quality Productivity improvement,
  Customer Service and Lean Management

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Lean Public Services

• Great current interest in Lean to make scarce
  Public Resources go further, deliver Efficiency
  Savings Save Money
• Also, a recognition that Lean can deliver a
  positive impact on customer service and
  satisfaction, staff morale, risk management and
  continuous improvement
• But concerns that in practice may involve
  headcount reductions, reduced services, reduced
  quality of service, less choice, more work
• In addition, concerns as to lack of clarity of
  method, level of consultancy commitment and
  reliance on either manufacturing based approaches
  or proprietary theory

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Evidence of Successful Application

• Manufacturing and Service Industries
• Central Government
• Agencies
• NHS
• Uniformed Forces
• Probation Service
• Local Authorities

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What is the Lean Approach?

• Drive to reduce cost and improve customer
  satisfaction by improving process efficiency
• Focuses everything on Value to the customer (and
  possibly other stakeholders)
• Non Value Adding activities are minimised
• Value Adding activities are streamlined

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The Lean Context

• Process Inefficiencies and Waste
• Think about
• Obtaining a mortgage
• Going to hospital

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The Origins of Lean

• Manufacturing
• Automotive Industry
• TPS
• The war on waste
• Just-in-Time - a pull system
• Reduced inventory
• Supplier partnership
• Jidoka - identification of defects at source
• Operator empowerment
• autonomation

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Lean Principles

• Value
• The Value Stream
• Flow
• Pull
• The Pursuit of Perfection

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Value

• As perceived by the customer (and what he will
  pay for) and fully understood by the supplier
• Quality
• Key characteristics, quality spec.
• Cost
• Economies of scale, premiums
• Delivery
• JIT, specific delivery schedules
• Danger when organisational value overrides
  customer perceived value
• It is not uncommon for function or
• departmental priorities/needs to undermine
• the process
• In Public Sector processes, value also needs to
  reflect all stakeholders value perceptions.

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The Value Stream

• Identifying and defining the main flow of the
  value adding activities to achieve the customer
  or stakeholders perceived value of product or
  service.
• Recognition and identification of a process
• First opportunity to identify non-value adding
  activities MUDA
• A lean organisation will be mindful of
  maximising the ratio of added value to
  non- added value activities

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Value Added Analysis

• Real value added activities as perceived by the
  customer or stakeholders
• Improve efficiency
• Improve speed of reaction
• Business value added activities required to run
  the business
• Reduce to a minimum
• Non-value added activities do not add customer
  or stakeholder perceived value nor are required
  to run the business i.e. WASTE

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Typical Examples of Value andNon-Value Added
Activities

• Real Value Added
• Acknowledging a Customer Order
• Delivering a product or service
• Processing a Customer Order
• Providing after sales service

• Business Value Added
• Updating financial accounts
• Updating training records
• Issuing Purchase Orders
• Negotiating price

• Non-Value added
• Rework
• Authorisations and Approvals
• Checking and Inspection
• Internal transport

• Reviews and Audits
• Complaint Handling
• Processing Customer claims/credits
• In process storage

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Typical Examples of Value and Non-Value Added
Activities in the Public Sector

• Real Value Added

Business Value Added

• Non-Value Added

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Waste - The Enemy of Competitiveness and Best
Value

• 7 Wastes originated by Taiichi Ohno of Toyota
• The Elimination of Waste leads to a leaner and
  fitter operation leading to improved
• Quality
• Cost
• Delivery
• Waste is when we are not Adding Value for the
  Customer
• Waste is "Public Enemy No. 1"

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The 7 Wastes Are

• OVER PRODUCTION making, or doing more than is
  required
• WAITING for something to happen!
• unnecessary TRANSPORT of materials or
  work-in-progress
• OVER PROCESSING due to poor design of services,
  products, equipment or processes
• INVENTORIES that are bigger than they need to be
  - just in case!
• unnecessary MOTION by people doing their work
• the creation of parts, products or services which
  have DEFECTS

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New Wastes

• The Waste of Talent
• Lack of people/skill development
• Failure to encourage and establish an environment
  of innovation and creativity
• Inefficient use of utilities and transport
• Creating harmful emissions and products/bi
  products

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What is Waste?

• Waste and Emissions
• Utility Consumption
• Unnecessary use of Raw Materials
• Unnecessary Processing and Process Inefficiencies

Muda
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Carbon Reduction Imperative
Why Lean? Cost and Customer Focus Emphasis on
Process Efficiency
Why Environmental Management? Legal
Compliance Emphasis on Waste and Emissions
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Waste of Overproduction

• Making or doing too much, too early,
  just-in-case
• Excessively long lead times
• Increases work-in-progress (work-not-in-progress)
• Cost issues dictate big batches because of
  lengthy set-ups
• Makes us feel safe
• Make or do what is required just-in-time
• Smooth the flow - Speed the flow
• Control the flow around the bottleneck
• Focus on set-up reduction

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Waste of Waiting

• Time is of the Essence
• Impatient Customers and Shorter Lead Times
• 70 to 80 of Lead Time is Queuing or Waiting
• Reduce the number of Jobs flowing through the
  process
• Keep the bottleneck working
• Move jobs to the next operation quickly
• Examine Waiting at Equipment?
• Machines
• People
• Pressures for efficiency dictate that we must
  find something else to do during cycle times

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Waste of Waiting

• Throughput Efficiency Work Content x 100
• Time
  in System

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Waste of Over Processing

• Using a "Hammer to Crack a Nut"
• Inappropriate machine for the job
• Is technology always the answer?
• Complicated Set-Ups

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Waste of Unnecessary Inventory

• Too much Inventory
• Hides the problems - quality issues
• Slows down the flow
• Occupies expensive space
• Ties up working capital
• Minimal Inventory
• Is the Goal (zero may not be achievable)
• Aids visibility - stock and job counting, quality
• Most applicable in a repetitive environment

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Process Flow

• Value must flow through the process
  continuously
• Traditional to batch processing
• Excuses for batching can be financial,
  operational, paradigm or policy e.g. full
  utilisation of capital equipment, reduced
  changeovers/set-ups

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Pull

• This is the action of the customer pulling the
  added value activities through the process to
  receive goods or service how and when needed

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The Pursuit of Perfection

• Effective transformation to lean is achieved
  when
• Value is specified and understood
• Added value to non-added value is maximised and
  waste is eliminated
• The value stream flow is smooth and continuous
• The value added activities are pulled in line
  with customer demand
• BUT

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The Pursuit of Perfection

• All of this could come to nothing if
• The effort to sustain the transformation falters
• Policies not in place to develop a continuous
  improvement

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Applying the Lean Approach in the Public
Sector

• Complex Services
• Multiple Stakeholders with different wants and
  concepts of value, not just service users
• Regulations and Targets
• Waiting for information, not materials and less
  control over suppliers
• Inventory may have less of a direct cost impact,
  but adds to complexity and waiting lists
• Policy and Paradigm Constraints may be more
  important than physical ones

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Applying Lean Value Stream Mapping (VSM)

• A simple tool for visualising the door-to-door
  service flows in an organisation
• Focuses lean efforts on improving the whole value
  chain (rather than optimising the parts) to
• Establish flow
• Eliminate waste
• Add value
• Captures material movements and information flows
  in one current state picture
• Provides step-by-step approach to creating an
  ideal future state (where non-value adding
  activities are minimised)

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Why is VSM Important?

• It helps you visualise more than a single
  operation (e.g. data entry, case evaluation etc.)
• It helps you see sources of waste
• It provides a powerful communication tool
• It bring lean concepts and tools to life
• It focuses improvement activities
• It shows the link between information flow and
  material and job flow

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Stages of VSM

• (1) SELECT A PRODUCT/SERVICE the selection of a
  product/service, or family of products/services
  which follow similar process routes
• (2) CURRENT STATE MAP drafting a current state
  map to reflect work flow, information flow and
  sequence of processes
• (3) FUTURE STATE MAP creation of a future state
  map. This is the teams vision of the ideal
  condition in which wasteful elements have been
  resolved
• ACTION PLAN development of an action plan. A
  detailed to do list which prioritises each
  action to realise the future state
• IMPLEMENT MONITOR PROGRESS ACCORDING TO THE
  PLAN
• CONTROL TO KEEP THE GAINS
• THINK ABOUT WHATS NEXT

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Mapping the Process
Current State Map

• Start with customer need e.g. service level,
  quantity, frequency, order size
• Map each service process using a box - a
  separate box indicates that processes are
  disconnected and job flow stops (e.g. jobs are
  moved in batches). Start at the customer end and
  work backwards using post-it notes.
• Collect process data for each box that is a
  measure within the process
• C/T (cycle time)
• C/O (changeover time)
• Batch size
• Number of operators
• Number of product or service variations
• Job size
• Working time (i.e. excluding breaks)
• Rework/Scrap rate
• Value added time
• Note the location and amount of inventory
• Map the supply process e.g. volume, batch size,
  frequency

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Constructing the Current Value Stream Map
3. Who is in charge for providing the service?
4. Who are the Suppliers?
1. Who are the Customers?
5. What are our instructions to Suppliers?
6. What are our Process Steps?
8. What are our process step metrics, standards
and performance data? 9. What inventory is there
between steps?
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Typical Current State Value Stream Map for
Manufacturing
Operating Hours Shift Pattern Usage Rate
Delivery Window
Supplier Lead Time Batch size
Production Control
Daily/weekly/monthly
Deliveries per day/week/month Delivery batch size
Production Manager
Ship
Batch size
Inspection
Operators




Batch size
Inspection
Set up
C/over
Cycle
Process
Availability
Batch size
Inspection
Set up
C/over
Cycle
Process
Availability
Batch size
Inspection
Set up
C/over
Cycle
Process
Availability
Batch size
Inspection
Set up
C/over
Cycle
Process
Availability
Batch size
Inspection





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Current state map
An Example Current State Map (Automotive Seat
Manufacturing)
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Current State Maps for Public Services - Issues

1. Who controls service? and to what extent?
2. Suppliers may have choices outside Head of
   Service/Service Manager control.
3. Multiple recipients of services with different
   criteria/metrics.
4. Customers may be Suppliers and vice versa.
5. Regulators and targets etc. as inputs to Head of
   Service.
6. Complexity of Services.

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Example Current State Map (Local Authority)
information required
information required

• Local Businesses Associations
• Visitors
• Council Department
• Other Councils
• National Government
• Press and Media etc.

• Event Organisers
• Facility Managers
• Museums
• Nightclubs
• Restaurants
• Associations, Chambers of Trade, Rotary etc.

Head of Service
Collate
Edit
Draft
Check
Publish
Distribute
Gather Data Info
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District Council Current State Map (Waste
Collection)
Regulations Targets
Service agreement or contract parameters (e.g.
Regulatory)

• Residents Businesses
• County Council
• Recycling Contractor

In-house or out sourced Supplier
Head of Service
deliver to waste amenities
allocation of Vehicles people from depot
collect on set route
re-batch at depot
store and deliver recyclables
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Future state map
Aims of Future State Map

• Get one process to provide only what the next
  process needs when it needs it
• Link all processes from the final customer back
  to initial input
• Avoid detours in the process
• Develop continuous flow wherever possible

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Implementation

• The 5 Stages are
• Creating a framework for the programme
• Identifying the value stream, analysing and
  standardising the process
• Streamlining the process to create flow of the
  value-creating steps
• Pulling the product or service according to
  customer demand
• Continually improving the process in the pursuit
  of perfection

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Current Public Sector Lean Implementation

• Diverse
• Reviews by Warwick University
• Current approaches mainly consultancy based,
  rather than focus on training and education
• Typically, they either take the form of Rapid
  Improvement Events (Blitz Kaizen) or Systems
  Thinking

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Key Findings from HMRC

• Link between involvement of senior leaders and
  staff attitude towards Lean
• Impact of Lean on tools, structure, practices and
  behaviours leading to improved quality and
  productivity, clearer processes and practices and
  new ways of working
• Some felt that the process aspect of Lean leads
  to deskilling and lack of flexibility
• Whilst there was more structured approach to
  problem solving, it was frustrating when action
  were not followed through
• Managers are more visible and accountable
• Teamwork is better and there is better team spirit

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Is HMRC a Lean Organisation is Lean Suitable
for HMRC?

• HMRC is on a journey and there is some way to go
  on the journey toward a Lean organisation BUT
  HMRC is moving in the right direction
• The Lean element is driving a process view,
  improving quality and productivity, removing
  waste and addressing problems
• HMRC still requires a realisation of the need to
  improve, the capacity to deal with change and an
  organisational culture receptive to making
  changes to processes as a result of customer
  demand
• Staff should also be engaged in the changes and
  thereby encouraged to make improvements to the
  process in which they work

Source Scottish Executive Report, Warwick
Business School, 2006
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Lean Public Sector Examples
Case or Pilot Study Outcomes/Achievements
Health Agency 48 reduction in throughput time and necessary contact time per patient 80 reduction in the number of steps in a process
Government Agency The outcome of the project was simply to be able to cope with the additional workload within existing resource constraints
Local Authority The time taken for planning applications registration was reduced from an average of 5 days across the six areas to an average of 2
Local Authority The remove of abandoned vehicle service moved from an average of 28 days to remove vehicle reduced to 3 days Average 1000 enquiries per annum increased to 2500 enquiries
Health Agency Increased their of patients meeting their fixed target from around 40 in 2003 to currently 75-80 as an overall 62 day target
RAF Base Two value stream analysis events generated a 105 person reduction in manpower and 31m budget saving. A more recent estimate of the total savings for the programme to date was over 60m
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Source Scottish Executive Report, Warwick
Business School, 2006
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Factors for Successful Lean

• Senior Management Commitment crucial, failure to
  do so means only partial engagement, lack of
  attendance at Lean events and a reluctance to
  implement
• Buy-in staff accept approach and develop a sense
  of responsibility/ownership
• Resources necessary for implementation
• Readiness realism re timescales, staff have
  visibility and understanding of Leans impact,
  capacity and demand and a process and customer
  view
• Good communication success stories, transfer of
  good practice within and between
  departments/sections/sites

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Challenges include

• Leadership failure no clear commitment from
  senior management
• Ownership failure My job as a doctor is to just
  make sure that the patient gets better. This is
  more of a management exercise.
• Disjoint between strategy and improvement
  activities
• Lack of resources including knowledge,
  experience and skill
• Poor communication absence of clear improvement
  message,
• Lack of understanding impact of variation,
  systems thinking, customer focus and process flow

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Applying Lean in the Public Sector

• An approach that aims to develop good practice in
  terms of process analysis and operations
  improvement, that is centred on the customer, on
  improving process flow, reducing waste, and
  having a better process view that is achieved
  through a continuous improvement culture that
  involves everyone. (Scottish Executive Report,
  2006).

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Current Public Sector Implementations

• Rapid Improvement Events/Blitz Kaizen
• Manufacturing approach, but a Minor part of
  Lean
• Extensively used in Healthcare and some Local
  Authorities
• Easy short-term fix
• Often suffers from insufficient planning,
  measurement, prioritisation and action
  planning/implementation

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Current Public Sector Implementations

• Systems Thinking
• Based on historically seminal work of Edward
  Deming
• Main advocate today is John Seddon
• Can be seen as complex, obscuring and
  proprietary
• Obscures the simplicity of the Lean Value message
  and the Low hanging fruit

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Principles for Public Sector Implementation

• Learn by Doing
• Done by Us
• Learn together and support each other
• Keep it simple
• But not too simple!

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A Training-Based Approach to Implementing Lean in
the Public Sector

• 3-day How to Implement Lean in Local Authorities
  and the Public Sector
• 6 - 8 July 2009
• - tools, cultural management
• - planning and deploying in delegates specific
  service areas
• - on-call advisory service following training
• Delegates can complete further training modules
  to achieve Master Lean Belt status
• - Incorporating individual supervised delegate
  projects within their service area