process excellence

Process Excellence at Canada Post Corporation

Lean Summit, June 2004

Steven Withers

Senior Advisor, Lean

Version 1.0

Agenda

1. About Canada Post

2. Value

3. Value Streams

4. Flow

5. Pull

6. Perfection

7. Learning

About Canada Post

• Canadian Crown Corporation

• Group of companies, CPC,Purolator, Innovapost,Progistix, ePost, IntelcomCourier, 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

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 8467 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


Historical Lean Perspective

1996 – Womack & Charlton talk about Postal1996 – 1999 Learn through isolated experimentation1999 – 2002 LEI internships2000 – First supplier VSM experience with Air Canada2001 – Plant reorganization – value streams2001 – VSM used for future state planning2002 – Deployment of “Process Excellence” advisors2003 – Integration of lean and six sigma2003 – New operations planning process based on policy deployment2004 – Getting serious about administration, 1st focus order to cash

1996 2004


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


Plant Value Stream Organization

Plant DirectorProduction ControlTech ServicesOperations Improvement Value Stream Leader

ParcelSort CUPW CUPW

APOC(Sups)


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

Value Streams

Letters - Publications and Admail – Parcels - International

Sorting large envelopes - Windsor

Section 3 – Value Streams

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 EquipmentMLOCR – 7 to 6LSM – 6 to 4VES Desks – 44 to 14Manual Cases – 255 to 60Mail Handling Equipment –reduced 33%

S / L C e l l sB u s i n e s s U n i t # 3

S h i f t 1J u l y 2 0 0 1

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S u p e r i n t e n d a n t

Section 4 - Flow

Cells in Calgary

CFC #3

CFC #2

MLOCR 88

1 Ltr every 106 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

Kaikaku Results – Toronto

Toronto plant beforeToronto plant before Toronto plant afterToronto plant after

Travel DistanceBefore After

% Reduction

Bag of Mail 806' 76' 91%

Culler to OpticalReader 998' 12' 99%

Optical Readerto Refeed 250' 17' 93%

Oversize Letterto 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

Stations83,000 20,000 76%

Priority CourierFacility

75,000 0 100%

Toronto Exch'ng Office

45,000 0 100%

Space

Section 4 - Flow

Quebec – Flow Reduces Inventory

Before After

Section 4 - Flow

Flow in Administration

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

Administrative Flow

Layout and material flow

Section 4 - Flow

Load Leveling Administration Work

Basic sort stationnumber

Post dated file

Basic sort station

SIS Cards Post datedcalendar

Section 4 - Flow

Building Standard Work Elements in Administration

Making Customer Calls – Payment Processing

?

Building Standard Work in Administration

Basic Payment Processing

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

Perfection

• Visual depot, 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

5S – Continually Seeking Perfection

Before After


Measures of Success

• 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


Process Excellence Strategy 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


Reflections on what 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

process excellence

Education

s r e j c f c s t

r t s t o c f c

r e j s o r t

s b u s i n e s s u

b v e s f f f f r t

n t section

s o r s u p e r i n

t o b r