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Leveraging Lean Six Sigma

By Ron Crabtree CPIM, CIRM, MLSSBB
President, MetaOps Inc.

Part 1 of 2

In this entry of the column in MiBiz on Lean Six Sigma, we are going to venture something more topical that all residents in Michigan are keenly watching — the downsizing of government operations statewide.

Given the state of economic affairs here Michigan in recent years — and particularly as we have entered 2011 and look ahead — everyone I know is extremely concerned about how we can bring the cost of government operations in line with the economic reality: declining revenues and unfortunately in Michigan, even declining numbers of taxpayers to serve. At the same time we have to create a business environment that attracts and keeps good-paying jobs in the Michigan economy. In light of this our government operations — state, counties, cities, villages, colleges and K-12 schools — must find ways to do more with less - a lot less - than the cost of operations we see today while supporting a pro-business/pro-jobs mandate.

I've had the privilege to work directly as a consultant and mentor inside parts of state government operations over the past two years to identify and kick-off improvements with an "inclusive" approach that engages the workforce in the process. Recently we completed the development and delivery of an on-line training program called Government Process Reengineering for the Michigan Department of Management, Budget and Technology. This is now being made available to state agencies and MiDEAL members statewide. While this training is not a silver bullet solution, it does get at some of the key issues that must be understood when we are looking for ways to do more with less. Contact me for more details about that.

In areas of Michigan state government operations efforts have been underway to apply Lean Six Sigma (LSS)/Business Process Reengineering (BPR) and Operational Excellence (OpEx) techniques. Without getting into particulars; they have been very successful in looking hard a discrete parts of operations and finding very large opportunities for improvement to the tune of tens of millions of taxpayer dollars to be saved outright and finding ways we can re-deploy assets to other activities and under-served public interests. A key here is that they have been focused on the results accomplished for the "customers" of the processes, versus just the needs of "special interests." As I have found in most private and non-profit sector organizations over the years, those that embrace OpEx and techniques LSS with a will to succeed see first-year improvement opportunities of 20 to 30 percent improvements in speed, cost and customer/stakeholder satisfaction.

Alas, as is true in the private and non-profit sectors, a great plan is useless without execution and the will to see things through. There are several vexing and problematic things that work as roadblocks to rapidly deploy the improvement to processes that are unique to governmental operations. I am going to share my observations here NOT with the intent to vilify anyone who currently works in government operations. Let's face it — it has taken over 100 years to create the current state of government operations. Instead, I believe it's important that all the concerned parties face up to some facts and begin working together to break those roadblocks down.

Only through understanding the roadblocks in an open and honest way can we find ways to break through and quickly improve "efficiency" and "right-sizing" in government operations. These issues are not unique to the state of Michigan either — they are alive and well in the federal, city, school, college and county government operation in Michigan and in every state in the USA.

The issues we must understand and address together that precede any meaningful changes include:

1. Breaking the status quo - takes willingness to change
2. Focusing on innovations and outcomes versus protecting "turf"
3. Facing the reality of cost: 80 percent or more of the cost of most government operations is people
4. Facing the reality of the solution: all organizations can only function through people and only the people working in government can make the necessary changes effectively - noone knows the work better than the people who do it, and no one can do a better job making the necessary changes.
5. This is where YOU come into the picture. Only an informed public that understands the options will be able to support a non-partisan solution.

Let's look at each of these.

Breaking the status quo - a willingness to change

Without a compelling reason for change — there won't be any. This is a leadership challenge that ultimately can only be fixed by you. Each taxpayer has a voice in who will be the leaders of our government operations — our politicians who make the laws and set the budgets. Only by making "efficiency" a non-partisan platform issue will we end up with the leaders at all levels of government who will have the courage — and support of voters — to act.
The good news is this: Getting more efficient in government is not unprecedented. In parts of our government operations you will find examples of how this works in practice. The Detroit Free Press recently recognized the Michigan Department of Corrections as a leader in this area in their supply chain transformation efforts. The U.S. military has been on the quest to learn and apply operational excellence and LSS methods for years — and has succeeded in many areas to achieve great improvements in efficiencies without decreasing our nation's security. I personally know many people who are living proof it works.

All we need now is the will to require change. More on how we can do that later.

Focusing on innovation and outcomes versus "turf"

Once we get past the top-levels of leadership — we now get to the thousands of middle-level managers in government, the unions, communities and other "special interests." The trick here is to get currently divided, "silo" structured organizations to come together and look at what can be done to innovate what we do and streamline and reduce the cost of government operations without sacrificing value-add services provided to the public.

Here again we do have examples of success in government operations. Examples that come to mind include recent changes taking place in the 2009 Detroit Public Schools Facility Consolidation and Reinvestment Plan. In addition to school closures in the face of declining student populations, they have correctly looked for other consolidations of functions. A simple idea is consolidating purchasing and accounting to a single location — thereby fully leveraging the purchasing power of the entire organization with fewer vendors who in turn can share savings based on a bigger economy of scale.

This area — consolidation and streamlining of government operations — offers a huge and quick opportunities. State, county and city government operations are all full of redundant processes that are candidates for consolidation.

In the next issue of this column we will continue this discussion, examine some interesting examples of innovative thinking in government operations and get to the heart of the challenge in leveraging LSS in government operations.

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