STRIVING FOR CONTINUOUS IMPROVEMENT

STRIVING FOR CONTINUOUS IMPROVEMENT

With the right balance of resources, personnel and commitment, companies can make continuous improvement disciplines work well for their supply chain operations. LORI LOCKMAN reports on learnings from APL Logisticsʼ successful implementation of its continuous improvement programme.

It’s no exaggeration to say that Charlie Jacobs has a quality about him, at least where his job is concerned. For the past five years, he has spent all of his working time launching and leading APL Logistics’ continuous improvement programme – an effort that has saved the company more than US$22 million (and counting). Yet don’t ask him to take credit for doing anything extraordinary.

“Our results may seem unusual,” said Jacobs who recently addressed the subject in a session at the Council of Supply Chain Management Professionals’ annual conference in Philadelphia, Pennsylvania. “However with the right resources, personnel and level of commitment in place, I believe many companies could make continuous improvement disciplines work equally well for their supply chain operations.”

In the spirit of that statement, Jacobs recently agreed to accompany Logistics Insight Asia on a written walk through of a year (or more) in the life of a typical continuous improvement programme start-up – and to weigh in on a few key choices that he thinks could make all of the diff erence.

CHOOSE YOUR STARTING POINT

One of the fi rst things any company needs to do when launching or revamping a formal improvement initiative is select the quality discipline or combination of disciplines it will employ. Two of the most well-known and widely embraced have been Lean and Six Sigma. Each of these has the potential to help companies achieve their quality goals. However due to diff erences in corporate cultures and organisational structures, one discipline may be a much more fi tting starting point for a company than another. “The Lean Six Sigma combination offers a very compelling proposition for companies looking to start a continuous

improvement programme today,” said Jacobs. “The environment for the combo practise wasn’t as mature back in 2007 when my company had to pick one for our internal programme. We proceeded with Lean then, which gave us the combination of structure and fl exibility we needed at that time. With Lean, we could get our operations trained, run projects and generate positive results almost immediately. But because we believe in continuous improvement, and now that our Lean programme is in steady state, we are starting to incorporate Six Sigma into our system as well. Eventually, we see us moving towards a Lean Six Sigma combo model.”

Your company may have equally compelling reasons for leading off with Six Sigma or the combined practice of “Lean Six Sigma”. Either way, Jacobs advises organisations to think twice before choosing any other improvement practice that’s especially informal or simple right out of the gate.

“The fi rst methodology you use can really set the tone for the rest of your continuous improvement programme. That’s why I have no regrets about waiting until a couple of years down the road to employ simpler tools like JDI (Just Do It), even though it’s a discipline that would have been fast and easy to implement,” he said. “In fact, I think the reason JDI works well for us now is because we have such a solid foundation of Lean enabling it. It wouldn’t have been nearly as eff ective without it.”

CREATE A STRATEGIC PROGRAMME PLAN

Even though Lean and Six Sigma are extremely disciplined structures, that doesn’t mean that they alone can provide the framework for a company’s continuous improvement programme.

“It’s essential to have a defi nitive, high-level plan in place at the onset,” said Jacobs, “because in order for continuous improvement to be more than just another fl avour of the month, there has to be a roadmap for how it will become part of an organisation’s essential DNA.”

Some key components of the plan should include:

• The creation of an executive steering committee that can help ensure full engagement from all of a company’s functional groups;

• A clear articulation of the deliverables that are expected of the programme (Is it lower costs? Improved quality? A certain percentage improvement in customer satisfaction?);

• Identifi cation of the measures that will be used to gauge success;

• An outline of the resources required and the way these resources will be obtained (In the case of APL Logistics, this wound up being a “pay it forward” arrangement, where the successful savings from one project were used to fund the creation of another team and the launch of another project); and

• A clearly established relationship between programme goals and corporate goals – including deciding where continuous improvement will fi t into individuals’ annual performance plans or bonus structures.

Said Jacobs: “I strongly believe that plans like this often spells the diff erence between programmes that wind up being only marginally effective versus programmes that meet and often exceed – initial projections.”

Like sophisticated sports cars, quality methodologies tend to be only as highperformance as the people who know how to operate them. In light of this, some companies prefer to cultivate an elite group of in-house quality experts whose extensive acquaintance with Lean or Six Sigma is intended to fuel the successful management of every improvement project, while others opt for a more grassroots approach, providing formal quality training for as many employees as possible and then counting on those employees to serve as project champions and trainers to other employees throughout the organisation.

“We ultimately decided to take the more ‘viral’ route,” Jacobs said. “Among other things, it enabled more of our operations to receive training and begin working on projects sooner. It also paved the way for a corporate culture that is now populated with hundreds of experienced quality advocates, and that’s something an improvement programme can never have too many of.”

However Jacobs also says that building quality expertise within an organisation doesn’t have to be an either-or proposition. “I always tell our operations that if someone is especially interested in learning more about any of these tools and becoming something like a green belt, we can point them in the direction of additional training,” he said. “And I’m pleased to say some people have defi nitely taken us up on that.”

Companies are faced with yet another choice when it comes to identifying the kinds of scenarios that employees will work with during the hands-on portion of their quality training sessions. The options include:

• Using a simple problem or challenge such as building a better paper airplane;

• Creating a hypothetical scenario that refl ects an activity a company might routinely engage in; or

• Using real-life situation from trainees’ own operations or departments.

If keeping training as brief and simple as possible is a priority, then the first two alternatives could be a good fi t for your organisation. However if time permits, Jacobs says that going with option number three has the potential to yield higher dividends.

“We’re incredibly glad we chose to work with real-life situations,” he said. “They helped our team members get a feel for just how practical and applicable the tools were in a way that no amount of lecturing or fabricated scenarios could have. Plus in many cases, the results our newly trained teams achieved after they returned to work and put their projects into action more than off set the cost of training.”

BUILDING PROJECT TEAMS

Although the importance of the previous decision points cannot be overemphasised, they are merely the prequel to the raison d’etre of any successful quality programme: working on actual projects. To do that, organisations must fi rst form project teams.

“This is one area where I truly believe there’s only one viable option,” said Jacobs. “No matter what your organisation is like, it’s essential to be as open-minded and egalitarian as possible about the composition of these teams.”

According to Jacobs, not only can supply chain professionals from all levels of an organisation wind up being incredibly valuable contributors to project teams, it’s often employees such as forklift operators, truck drivers or pick-and-pack specialists rather than senior managers who come up with some of the best ideas for projects and solutions because they’re the most acquainted with the day-to-day particulars of a process.

“The last thing you want to do is get too ivory tower about who should be participating,” he said. “It doesn’t require stacking the deck with employees who have advanced degrees or years of logistics management experience to get good results. These projects are truly golden opportunities to allow various personnel to shine – and to help your operations do the same.”

A democratic approach is equally useful when it comes to identifying viable projects for teams to work on. “If I had to pick one word to describe the nearly 500 projects our teams have now completed, it would be ‘varied,’” said Jacobs. “Some have tackled high-level issues such as a client’s entire valueadded services process – and achieved enormous savings of nearly US$2 million. Others have helped save just a few thousand dollars by doing something much simpler like changing the position of a label printer.”

“We’re careful to applaud and encourage both kinds of projects, because in the long run, they all support the cause of continuous improvement.”

Jacobs pointed out that smaller projects often have value for another reason, too: They can help assure success of a programme during its critical early phases, when the jury is often still out on whether or not quality programmes are worth the investment of time and money. “Skepticism is a common hurdle in a programme’s infancy, especially if an organisation has spent considerable money on sending people to quality training in the past and then failed to see them apply it – or if people have been with a company long enough to remember similar programmes that never gained traction,” he said. “There’s no better way to silence it than to show some tangible results early, and there’s no better way to do that than by starting with easy projects.”

That’s the tack APL Logistics’ programme took during Year One of its continuous improvement initiative, when teams were encouraged to focus on what Lean enthusiasts call Quick Wins and incremental improvements.

“The savings weren’t huge compared to where we are now,” Jacobs said. “But they remain some of the most signifi cant our company has ever achieved, because they were the ones that provided the proof of concept any programme needs. They inspired many of our people and demonstrated that the tools really worked.”

MAINTAINING AND BUILDING UPON SUCCESS

Once a programme has achieved internal acceptance and begun generating substantial results, it would be easy to assume that the hardest part of the continuous improvement journey is complete. Unfortunately nothing could be further from the truth.

During the early phases of a programme, organisations’ teams often have a very easy time identifying and pursuing opportunities for improvement and making a big impact. But over time, as teams complete more projects and become more adept at incorporating Lean, Six Sigma and JDI principles into everything they do, it often becomes increasingly diffi cult for them to fi nd the same number – or kinds – of opportunities to improve.

“The possibility of a hitting a plateau during the second or third year is very real, especially if a programme or operation has experienced a great deal of initial success” said Jacobs. “So if you want your programme to enjoy sustained momentum, you can’t fall into the trap of resting on your laurels and thinking you’re done once you’ve trained your teams. Instead, you have to constantly be on the lookout for ways to keep things fresh and interesting.”

In other words, your company has to make sure it’s continuously improving its continuous improvement programme. Some of the possibilities for doing this include:

• Adding new disciplines to project teams’ tool kits; if your company is using only one of the big three disciplines, it might be time to roll out one or both of the other two;

• Making it easier for teams to exchange project details and ideas with each other via web portal programmes – because in the world of quality, project replication is not only permitted, it’s encouraged; • Adding fi nancial incentives for the achievement of minimum programme metrics;

• Expanding training options for teams; for example, if your company has been training teams via on-site training sessions, consider supplementing those options with online courses; and

• Launching an internal programme publication to help keep people better informed. Another option is to roll your company’s programme out to other corporate functions or other geographies – as APL Logistics began doing in Latin America and Asia once the programme had taken root in the United States.

“The bottom line is, there’s always a way to make the concept of improvement fresh and interesting,” said Jacobs. “But you do have to keep working at it. It’s not something you can ever put on auto-pilot – unless of course, you’re okay with your results levelling out.”

_________________________________________________

ALL ABOUT LEAN, SIX SIGMA AND JDI

Lean: Coined by John Krafcik in an article describing Toyota’s much admired production system (and shortly thereafter brought into the vernacular by author James Womack) Lean is a term that describes the focused elimination of waste and redundancy in seven key areas: transportation, defects, inventories, motion, wait time, overproduction, over-processing. Most Lean projects can be started and completed in a very short period of time, such as a few weeks, and often can be implemented almost immediately.

Six Sigma: First conceived by Motorola in the mid-‘80s, Six Sigma is a process that focuses on improving quality, increasing reliability and improving output by reducing variations and virtually eliminating defects . It stands for Six Standard Deviations (which means just 3.4 defects per million), the metric of near-perfection that all of its projects aspire to. Six Sigma uses advanced business, statistical and engineering techniques. Its projects typically are considerably longer in duration and often rely on the leadership of professionals who have completed advanced Green Belt or Black Belt training.

JDI (Just Do It): An abbreviation for Just Do It, JDI is a small-scale, commonsense approach to process improvement that can quickly and easily be tackled by a small number of employees, including – when appropriate – just one individual. It consists of an identification of an opportunity for improvement, suggestion for a solution (that is briefly documented), approval of that suggestion and implementation. Besides being quick, JDI projects do not use high degrees of data collection or analysis, because their solution is usually already known. Advocates say it’s a good accessory to add to any results-oriented quality improvement programme because it allows participants to formally capture – and get acknowledgement for any improvements made that didn’t require the application of many Lean or Six Sigma process improvement tools.

THE CASE (STUDIES) FOR CONTINUOUS IMPROVEMENT

Looking for proof that process improvement tools like Lean, Six Sigma and JDI aren’t just for manufacturing – or that they can pay their own way? Take a look at just a few of the 500 projects that APL Logistics’ project teams have completed thus far.

MODE SHIFTS, NOT SNOW DRIFTS

The Challenge/Opportunity: Most products at a Santiago, Chile distribution centre arrived via trucks that had to travel over the Andes Mountains. The arrangement worked well during temperate-weather months but created high container demurrage charges during the winter, when it wasn’t uncommon for the trucks to get stuck in the mountains’ notoriously thick snows. The Solution: A team recommended shifting many of the facility’s transits from truck to water transportation, a longer but more effective way for goods to travel during winter. The Savings: US$1.8 million

MORE SPACE ON THE DOUBLE

The Challenge/Opportunity: Even though it was already using the highly flexible option of multi-user warehouses, a consumer goods company still routinely found itself using significant amounts overfl ow space at additional facilities – and paying a high price to do so. The Solution: A team’s detailed space utilisation analysis uncovered several efficient ways, such as double-stacking on racks’ highest levels, to accommodate more inventories within the company’s existing public warehouse buildings. The Savings: $1 million

SECOND LOOK EQUALS BETTER SAVINGS

The Challenge/Opportunity: After spending three weeks on a lines-per-labour-hour improvement project that saved its security company client an impressive US$400,000, a team began to question the decision it had made to focus its project solely on the packaging and shipping area. The Solution: The team revisited the process in a follow-up project and decided to change the layout of the facility’s conveyor and work stations, too. The Savings: An additional US$1.1 million

GIVING OVERTIME THE BOOT

The Challenge/Opportunity: A longtime operation found itself paying for an increasing amount of costly overtime labour. The Solution: After re-evaluating the facility’s order flow and work requirements, a team advised a change in work shifts that would better distribute the workload and virtually eliminate the need for overtime. The Savings: Nearly US$200,000 in annual labour costs as well as improved employee morale.

INSPECTING PALLETS SOONER

The Challenge/Opportunity: A chemical distribution facility’s order pickers could only pick so many lines per hour as long as they had to spend extra time changing out any wood damaged pallets they came across on the pick line. The Solution: The team recommended that pallets be inspected during receiving instead, leaving pickers free to focus on what they did best. The Savings: US$60,000

ADDING A NEW DIMENSION TO TRAILER CUBE UTILIZATION

The Challenge/Opportunity: Trailer cube utilisation for a cosmetics company’s outbound shipments appeared to be good. But a team suspected that it could be better if more precise dimensional data were available about the product being shipped. The Solution: Using actual outgoing truckloads, the team spent several weeks collecting that data and running the numbers. As a result, it was able to recommend a 200- case increase per trailer and reduce the company’s shipments by ten trailer loads a month. The Savings: US$350,000

LESS DIRECT EQUALS LESS EXPENSIVE

The Challenge/Opportunity: A team at a cross-dock/consolidation centre for an upscale grocery retailer suspected that some unused space in its outgoing trailers going to the retailer’s stores could help the retailer (which was using direct store delivery from some of its vendors) achieve greater transportation economy. The Solution: With the retailer’s blessing, the team convinced one of the retailer’s vendors to deliver to its cross-dock/ consolidation centre instead of the retailer’s stores. As a result, it was able to load that vendor’s products into the excess space on its outgoing trucks. Other vendors later followed suit. The Savings: US$40,000 from the first vendor alone.

PAPERLESS SAVINGS

The Challenge/Opportunity: After completing eight projects that had generated more than US$700,000 in savings a chemical facility’s team knew the time was ripe to tackle something even more ambitious: transforming its entire operation to a paperless one. The Solution: Using funding from its client as well as a dedicated IT professional, the team made a four phase, nine-month transformation towards a fully-automated data collection system supported by radio frequency technology. The Results: At press time, these were still being reported. However the company ultimately expects them to be some of the best in programme history, which means savings

PORTRAIT OF A SUCCESSFUL TEAM LEADER

Naturally, the head of a companyʼs quality programme is going to be a big fan of continuous improvement eff orts. But how do a companyʼs other personnel feel about being recruited for the cause? Thatʼs what we aimed to find out during a short visit with Adnan Qadri, a long-time APL Logistics employee and currently its Singapore-based operations manager who told us what itʼs really like to use Lean, Six Sigma and JDI.

Q: How long have you been involved in your company’s continuous improvement programme?

A: I’ve been involved since Day One. I was one of the first people trained on Lean when my company launched the programme several years ago. And I was one of the first to get Green Belt training.

Q: Judging by the number of projects your team has completed, it looks like you’ve really taken the ball and run with it.

A: Over the years we’ve completed 13 or 14 projects, including one that won our company’s project competition last year.

Q: You once won your company’s internal contest for project of the year. What did your winning project address?

A: It was a project that looked at the framework of my client’s transportation, and as memory serves it resulted in about $150,000 to $160,000 worth of savings for the client. That project was actually my boss’s idea, and our team had a really good time with that one.

Q: Did you REALLY just use the words “good time?”

A: I did. It’s truly enjoyable to work something like Lean that brings about so much positive change. And once you learn its tools and embed them into your culture, you realise that they actually provide the structure to drive a lot of good things.

Q: Speaking of learning, you recently completed Green Belt training and worked on a Green Belt project. What was that like?

A: It was a lot more in-depth. The methodologies are different. The tools are different. And the length of the average project is different – about four to six months as opposed to four to six weeks. Plus you tend to go much deeper with all of the tools. But I also liked it better because Green Belt tools are considerably more robust and capable of doing a lot more things and the potential results are more substantial.

Q: In what kinds of ways are Green Belt tools different?

A: The cool thing about them is they can be used by themselves, so you can even apply them outside the scope of a project. Plus there are some, like the system capabilities analysis (which shows how well your staff is replicated efforts), that I had never come across until I did Green Belt. Now that I’ve recently taken a new position with the company in Asia, I’ll using Green Belt, Lean and other continuous tools even more because part of my new job is to develop and grow quality initiatives at our operations in Asia. I’m looking forward to taking what I’ve learned through my training and involvement in the United States to other parts of the world.

Q: Sounds like you’re the right person for that job. Any parting words as you head off?

A: If you look at Lean, JDI and other APL Logistics Continuous Improvement projects as a “have to” you’re not going to get very far. But if you look at it as an opportunity to really drive change, the change is going to come. And it’s going to be a positive change.

PROJECT MANAGERS’ KEYS TO CONTINUOUS IMPROVEMENT VICTORY

• Don’t underestimate the importance of involving temps. If you can get their interest sparked early, it makes a huge difference.

• Aim for having a lot of people involved. Once people do a project, the benefits of the programme tend to sell themselves. In addition they become continuous improvement champions.

• When in doubt, JDI. Even if your clients are small in nature, there’s probably something about the way you’re performing for them that could lend itself to being improved.

• Don’t think of using Lean and other tools as a “have-to”. View them as an opportunity to make some changes your operation probably needs to make anyway.

• Let Lean, JDI and Six Sigma work for you. Their tools truly give you a framework for getting from Point A and Point B instead of forcing you to rely on gut decisions.

• Build the right kind of teams. A good project team will not only include people at many organisational levels but will also include the ones likely to be the most familiar with the processes. For this reason, don’t underestimate the importance of using line staff.

• Money talks. You can always enhance acceptance with the help of financial incentives. Bonuses, prizes and ties to compensation all have a way of motivating many people. An excerpt from APL Logistics’ quarterly newsletter on quality.

PROJECT MANAGERS’ KEYS TO CONTINUOUS IMPROVEMENT VICTORY

• Don’t underestimate the importance of involving temps. If you can get their interest sparked early, it makes a huge difference.

• Aim for having a lot of people involved. Once people do a project, the benefits of the programme tend to sell themselves. In addition they become continuous improvement champions.

• When in doubt, JDI. Even if your clients are small in nature, there’s probably something about the way you’re performing for them that could lend itself to being improved.

• Don’t think of using Lean and other tools as a “have-to”. View them as an opportunity to make some changes your operation probably needs to make anyway.
• Let Lean, JDI and Six Sigma work for you. Their tools truly give you a framework for getting from Point A and Point B instead of forcing you to rely on gut decisions.

• Build the right kind of teams. A good project team will not only include people at many organisational levels but will also include the ones likely to be the most familiar with the processes. For this reason, don’t underestimate the importance of using line staff.

• Money talks. You can always enhance acceptance with the help of financial incentives. Bonuses, prizes and ties to compensation all have a way of motivating many people. An excerpt from APL Logistics’ quarterly newsletter on quality.