Posted by: knightbird | January 14, 2015

Potential Benefits from Lean Government for Alaska

Alaska has approximately 16,000 employees. The examples I am citing demonstrate the substantial benefit other states and one city experienced through a Lean Government Culture. I can cite many more. However, it is not dreaming to achieve a huge increase in performance through Lean. It is reality. Achieving a 20% improvement in performance across all 16,000 positions in Alaska frees up 3,200 FTE’s to do other work or to be eliminated from necessity or by attrition in the work force. In addition to freeing up time, the quality and response time for services provided improves substantially.

It’s hard to believe that these results are achievable. I have been explaining the huge improvements achieved by businesses to skeptics for many years. Only about 5% believe me, and very few do anything about it. If each Alaska FTE is valued at $100,000, 3,200 FTE’s equate to creation of $320,000,000 in direct value. The benefits to customers of the State are not included in this calculation, but are also substantial.

Strategic and Operating Lean Government skills need to be learned by doing. The initial events pursued should prove the concept. But Lean Government is a culture that relies on every employee becoming willing to recognize problems and apply the skills of Lean to solving them. When every employee realizes the benefits and applies lean to their workplace, the benefits magnify considerable. Consider this example involving timecard.

Lets assume that a time card takes 10 minutes to process. With 16,000 employees being paid 26 times a year, 416,000 time cards must be processed annually requiring 69,333 hours of effort (FTE’s of 35.5). Cutting 2 minutes off processing time to 8 minutes saves 13,867 hours (FTE’s of 7.1). Minutes count when you are dealing with large numbers. With that in mind, lets look at a few examples.

Washington State Department of Corrections (WDOC)[i]

WDOC reported on 2 Lean Government events that achieved results in both cost savings and time savings (which can be converted to cost savings in certain circumstances. One concept for lean is that every process can be substantially improved. 8 improvement events were reported with a focus on 5 S and a couple of more detailed Value Stream analyses. The improvements were significant. I am converting measurement into FTE’s based on a work year of 2080 hours and annual cost of $100,000 (not actual but convenient).

The first effort deals with the cost of Urinalysis Cups and their distribution system. Bulk buying and reformation of the distribution system achieved a $64,000 reduction in cost of the cups. The Lean Event did not analyze any cost or time savings during the procurement or distribution process. There seems to be a lot more that could be done to evaluate the entire Urinalysis Process that would create greater benefits. But this is typical of a starting effort when employees are just starting to learn about Lean Processes. Guidance from an experienced Sensei may have resulted in a more comprehensive project with substantially more in savings. This small effort produced an FTE equivalent of .64.

A second effort only dealt with time reduction and workplace organization. A 5 S event at a Corrections Textile Tool Room achieved a reduction in time savings for 2 related processes of 33 minutes per day, on average (143 hours). This time reduction equates to a .145 FTE. More improvement would likely be achieved with a greater understanding of standard work and the Sustain component of a 5 S Improvement Method.

State of Wisconsin Department of Safety and Professional Services (WDSPS)

WDSPS reported on a Lean project to create a paperless office.[ii] The results they reported were:

Eliminated 214 file cabinets, 18 bookcases, 144 feet of open shelving. This reduction led to the ability for the agency to add workstations to the existing space. As a result, the Division of Industry Services was able to move from the former Commerce building into the Department’s Madison East space. Estimated monthly cost savings of nearly $65,000. Further, the Division of Policy Development has moved to providing paperless agendas via SharePoint for an estimated annual savings of $21,000.

Total savings of $801,000 produces an 8 FTE equivalent in savings. Not calculated in the savings were the various wastes[iii] associated with document management, including Motion, Transportation and Defects. Achievement of a paperless office means that employees are no longer searching for documents, walking to pick them up or filing. The time savings are substantial, but not quantified by WDSPS yet. And bare in mind this is only one small department. Multiplied across many departments and employees, the time savings are considerable.

Chula Vista, CA Flexible Benefits Initiative:[iv]

The City of Chula Vista had laid off 350 employees as a consequence of budget cutting, but still had need to complete required work. One project involved re-keying data from one of its vendors managing flexible spending accounts. The results achieved were amazing. Process steps were reduced by 60% (61 to 24) and manual processing reduced by 70%. Because the data reported is incomplete, I am unable to calculate an FTE equivalent. However, I am confident it is substantial.

The message is clear. Lean Government practices applied across the 16,000 employees working for the state of Alaska can have a profound impact, especially maintaining services, as inevitable reductions in force are required.

[i] 2014 Report on Process Improvements from Lean

[ii] Governor Walker Report on Lean Government – Results

[iii] Toyota uses the concept of waste to identify improvement opportunities, including the 8 listed: Time; Inventory; Motion; Transportation; Over Production; Over Processing; Defects; and Creativity.

[iv] http://www.lean.org/common/display/?o=1992

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