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Lean Thinking (Critical Analysis and Challenges)

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“There’s a fallacy perpetuated by some that government is fat and wasteful,” says Eric DeLong,deputy city manager for the City of Grand Rapids, MI. “We’ve had to cut almost 300 people, andwe’ve still found a way to provide exceptional services in most cases. I challenge people to comehere and find any fat.”With a history of innovation dating back to 1916, when it was one the first municipalities to enact acommission­ manager form of government, the City of Grand Rapids, MI, has embarked on a leanjourney that has freed up limited resources and impro...

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“There’s a fallacy perpetuated by some that government is fat and wasteful,” says Eric DeLong,deputy city manager for the City of Grand Rapids, MI. “We’ve had to cut almost 300 people, andwe’ve still found a way to provide exceptional services in most cases. I challenge people to comehere and find any fat.”With a history of innovation dating back to 1916, when it was one the first municipalities to enact acommission­ manager form of government, the City of Grand Rapids, MI, has embarked on a leanjourney that has freed up limited resources and improved customer service.That doesn’t mean there aren’t any opportunities for the city to do more, and do it more efficiently.Inspired by local businesses and coaxed by the mayor and city manager, DeLong has led a teamon a lean thinking initiative that will eventually touch every administrative department of this city of200,000 people. After two and­a­half years, they’ve done more in some areas than others. But theimportant thing is that they continue to make progress.Like many lean transformations in the private sector, external forces had a hand in pushing cityleaders to find a better way of doing things. With its economy tightly linked to the fortunes of U.S.manufacturing and the auto industry, in 2006 Michigan was the only state in the country whereGDP declined from the previous year, according to figures from the U.S. Bureau of EconomicAnalysis. Adjusted for inflation, Michigan’s GDP fell 0.9 percent from 2003 to 2006. Over this samethree­year period total employment climbed just 1.0 percent. The unemployment rate for December2007 was 7.6 percent compared to the national average of 5.0 percent.In Grand Rapids and other Michigan cities, flat tax revenues and rising healthcare costs havecontributed to perennial budget shortfalls. Compounding the problem, Michigan’s state governmenthas been struggling with billion­dollar budget deficits of its own. It has frozen and cut millions ofdollars of revenue­sharing payments from sales taxes that it used to give back to municipalities. Tobalance its budget and make up for $9 million in annual funding no longer provided by the state,Grand Rapids has eliminated hundreds of jobs over the past six years. Today, the city employsaround 1,700 people. While the city’s lean initiative hasn’t made up for the job losses, it has helpedto temper the impact.“The essence of lean thinking is to engage staff members responsible for the work in redesigningit, keeping in mind the need to provide the best possible product or service to our customers,”DeLong wrote last May in a progress update to the mayor and City Commission. “Lean thinking is11/04/2017 Using Lean Thinking to Reinvent City Government | Lean Enterprise Institutehttps://www.lean.org/common/display/?o=810 2/13also a critical way of coping with the reduction of 282 employees which has taken place over thelast six years.”One of the challenges of the city’s lean initiative has been convincing people internally and at theCity Commission level that it’s not about figuring out new ways to cut more city personnel. Byapplying lean principles and tools to their departments, many city employees have learnedfirsthand how consolidating operations, eliminating wasted time and effort, and streamliningprocesses can help them provide the quality of service that city residents want, in less time andwith less effort and frustration.“I think we’ve overcome the misconception that it’s about eliminating people,” DeLong says.They’ve also overcome some of the baggage from previous change initiatives that had varyingdegrees of success. “If you’re an adventuresome organization, you have probably tried a lot ofthings because you’re always working to get better,” he adds. “It’s important to prove to theorganization that this is how we intend to do business.”City of Grand Rapids, MI, at a GlanceLocation: West central Michigan, 30 miles east of Lake Michigan, on the Grand RiverPopulation: 197,800 (2000 U.S. Census)Area: 45 sq. mi.Government: Six elected commissioners from three wards plus the mayor, who is elected atlarge, and the city manager (appointed)Starting at the TopBefore it could get off the ground, Grand Rapids’ lean thinking initiative first had to get approvalfrom the City Commission. Voters here elect two commissioners from each of the city’s threewards. Elected at­large by the entire city to a four­year term, the mayor is the official head of thecity and presides over council meetings, but he has no veto power over the commission'sdecisions. The commission hires the city manager who serves as the chief administrator. The citymanager is responsible for the coordination of all departments and for the execution of policies setby the commission.As the local economy continued to struggle, lean success stories at manufacturers and otherbusinesses in the region, including a local hospital, caught the ears of both Mayor GeorgeHeartwell and City Manager Kurt Kimball. After further research, and conversations with variousadvisors, they became convinced that applying lean principles could help the city maintaincustomer service levels with fewer resources. In making their lean proposal to the commission,they promised results, just like a chief operating officer would promise results to a board ofdirectors. They received support from a majority, but not all, of the commissioners.To be successful in the long run, any lean program has to have executive­level commitment. InGrand Rapids, Mayor Heartwell talks about the city’s lean thinking program when he’s out givingspeeches. City Manager Kimball writes about it when he’s putting together the annual budget.They do all of the things that the leaders of any organization must do to signal that something isimportant.11/04/2017 Using Lean Thinking to Reinvent City Government | Lean Enterprise Institutehttps://www.lean.org/common/display/?o=810 3/13“Because we are a public organization, we have to be very deliberate about how we implementthings or it doesn’t work,” says Kimball. The fact that they’re still talking about it after several yearsclearly demonstrates that their lean thinking initiative is important and isn’t going away.Setting PrioritiesA lean team led by Deputy City Manager DeLong and made up of department heads and othersenior management coordinates the city’s lean efforts. This team identifies the valuestreams wherethey need to focus attention. A value stream includes all of the actions, both value­creating andnon value­creating ­­ almost always crossing departmental boundaries ­­ that it takes to deliver cityservices to customers. The team also keeps tabs on current projects. When the program launchedin 2005, the team visited Monarch Hydraulics, Inc., and Saint Mary’s Health Care, a local businessand not­for­ profit that have had some success with their lean initiatives. The visits helped the teammembers to better understand the opportunities within their own departments.To provide training, and to lead the first value stream improvement workshops, DeLong brought inTom Shuker, a Lean EnterpriseInstitute faculty member and president of Lean Concepts LLC(www.leanconcepts.com ). Shuker is a 30­year veteran of GM. Among other manufacturing roles,he spent two years at New United Motors Manufacturing Inc. (NUMMI), the GM­Toyota jointventure in Fremont, CA. He has co­authored several books and workbooks on value­streammanagement and how to apply lean concepts to administrative areas.DeLong says that retaining a consultant who could provide the fundamental lean training andfacilitate their initial workshops was critical to their success. In searching for such assistance, headvises, you have to find someone who can talk about lean just as easily with top managers asthey can with everyone who participates in the lean projects.From the beginning the city’s goal has been to develop internal competencies so they wouldn’t bereliant on outside assistance. To that end, Shuker provided in­depth lean training to a select groupof staff members, some of whom then helped to facilitate the initial value­streamimprovement workshops. They now facilitate the city’s workshops in teams of two without the needfor consultant assistance. Each of these workshops consists of an initial scoping session followedby a three­day event. During these all­day sessions, participants map out the current process tosee what’s working and what activities can be eliminated or adjusted, they sketch out a futurestate process, and then develop an implementation plan. Today, the city only asks Shuker to comein and help out when they’re tackling a particularly difficult value stream.Defining the value streamThe root cause of the rare workshop failures that Grand Rapids has experienced can be traced tothe initial scoping phase. After the lean team has selected the process that needs to be improved,and identified the process owner, they schedule a three to four hour scoping session that includesthose employees most closely associated with the targeted areas. During the scoping session, thegroup agrees on start and end points for the value stream and reviews performance metrics andobjectives. With resources stretched thin, it can be a struggle to pull people away from their regularjobs for three days.“I really appreciate the fact that people are willing to work earnestly on these value streamsbecause they are doing it in addition to everything else,” says DeLong.11/04/2017 Using Lean Thinking to Reinvent City Government | Lean Enterprise Institutehttps://www.lean.org/common/display/?o=810 4/13The scoping session also determines who will be on the “decision panel.” The decision panelreviews the workshop participants’ future­state proposal after the second day, and provides theresources needed to execute the implementation plan that the team develops on day three. Thepanel is usually made up of a mixture of lean team members, department directors, and mayinclude Delong, the city manager and even members of the City Commission.Grand Rapids’ initial workshops targeted three areas: the material return process at the PublicLibrary, the purchasing process, and the engineering design process. Touching almost everyonewho works for the city, the purchasing department was selected because any improvements wouldhave a broad impact. The department happened to be undergoing management changes, whichmade it a good time to redesign the process. The Engineering Department was also in a state offlux. Its budget had been moved out of the city’s General Fund. As a separate business unit, thedepartment now works more like an independent engineering firm, relying on earned billings forsurvival.“In retrospect, the Public Library was a brilliant choice because it was the right­sized value stream.The scope was appropriate. We’ve tried to follow a 30­, 60­, 90­day implementation plan. And thelibrary met that target,” says DeLong.After almost two years they’re still implementing the recommendations that came out of the initialpurchasing workshop. Partly that’s because of some personnel changes and the time required toimplement a complex IT solution. What they have implemented so far has worked. First­timequality was zero when they started. Today, the percentage of requisitions that go throughthe process without any rework is way up. The Engineering Department is still implementingchanges as well, for different reasons.“What could have been broken down into multiple value stream workshops [for Engineering] endedup being one. We got a great solution but it has taken time to move it through the system,” saysDeLong. Since these three initial workshops, the lean team’s scoping has become more concise,and results are coming more rapidly.The Magic of the Current­State MapFollowing the scoping activity, the first day of a value­stream improvement workshop starts with alean orientation. The facilitator explains how the workshop is supposed to work and introduces leanprinciples, including value­added and nonvalue­added work, focusing on the needs of internal andexternal customers, continuous improvement and key metrics. Following the general guidelinesthat have recently been documented in Mapping to See training kit (Lean Enterprise Institute,2007), this introduction is followed by a value­stream mapping exercise.“Then we start the magic of drawing the Current­State Map,” says DeLong. “We know thebeginning point and the end point from the scoping session. What happens in between?It’s amazing what comes out of that.”The mapping exercise helps participants visualize everything that everyone does, see the delays,ask questions, and begin to think about solutions. This step can generate a lot of emotion andangst. If there’s blame, if there’s conflict or anger, it always pops up on the first day. At times, thefacilitator has to be part psychologist and part referee to help people get through their feelings ofloss, anger, and frustration as their work and job are scrutinized.11/04/2017 Using Lean Thinking to Reinvent City Government | Lean Enterprise Institutehttps://www.lean.org/common/display/?o=810 5/13“If anyone comes into the workshop thinking that everything is perfect, by the end of the first daythey know it’s not,” says DeLong. “Sometimes you see these hurricanes of rework, it’s usuallybetween a couple steps in the process, and it becomes pretty evident what needs to be fixed.”Two years ago, the city’s Fire Department tackled its business inspection process. The valuestream improvement team included the fire prevention inspectors, an IT manager, and arepresentative from the building department, which passes new construction over to the FireDepartment when it’s time for the owner to get use and occupancy permits.“Because it was so obvious that we had a problem with the whole process, it was much easier foreverybody to get involved and make a change,” recalls Laura Knapp, deputy fire chief for GrandRapids, who is the process owner for this value stream. “Initially, when we started laying it out onthe board, sure there were some outside things that people wanted to bring in, and blameproblems on workload issues. Getting them focused on just this process was a little bit difficult.”But once they were focused, they were able to map out the current work flow and move on to thenext step.On the second day of the value­stream improvement workshop, the teams start by consideringwhat the customer actually needs and when it’s needed. Looking at the Current­State Map, theyidentify opportunities to smooth the work flow. They look for rework, unnecessary duplication, stepsthat can be combined or eliminated, and areas where the workload needs to be better balancedamong staff members. The team pays close attention to the flow of information, which can be a bigcontributor to delays and rework.For example, when the customer is internal they can contribute to delays by not providing thecorrect information when it’s needed, as was the case with the city’s requisition process. In manycases the necessary information wasn’t being forwarded to Purchasing so it could produce aPurchase Order. This basic realization has changed the attitudes of some people who used toblame other departments for their mistakes, according to DeLong. The cross­functional structure ofthe workshop helps overcome misplaced blame, opens up dialog between departments and beginsto break down departmental silos. At the end of the day the team emerges with a future­statemap and a much­improved workflow that everyone can start to visualize. They then present thatfuture­ state map to the decision panel.“They know they’re going to show it to a senior management team, so there’s an edge to doing agood job,” says DeLong. “They’re always very interesting presentations because you can see thatthey have really internalized the workalready, they’re committed, and they really want to improveit.”That’s very different from the response managers usually encounter when they start talking about“change.” The difference with lean is that the people doing the work have identified the problemsand potential solutions. The presentations to the decision panel prompt senior management’s buyin to the solution, getting them to commit resources if necessary and to provide protection fromother priorities. Almost all of these sessions have gone well.“The process depends on the decision panel not just being a rubber stamp,” says DeLong. “If theyhaven’t delivered, you have to tell them.”That happened with one value­stream improvement workshop that focused on the handoffbetween the Development Center, which facilitates development and approves developers’ plans,and the Building Department, which inspects new construction. The team developed a future­statemap in which all of the proposed workflow changes were within one department, and the actualhandoff hadn’t been addressed. They had designed a new processthat would have guaranteed11/04/2017 Using Lean Thinking to Reinvent City Government | Lean Enterprise Institutehttps://www.lean.org/common/display/?o=810 6/13that no development projects would be approved the first time through. The decision panel askedthem to go back and try again.The second time through Tom Shuker helped facilitate the development of the future­ state map.Shuker reports that more dialog up front with people in both areas, and consistently communicatedobjectives, would probably have avoided the initial misfire.Day Three: The Implementation PlanNow that the team knows where they’re headed, workshop participants meet again on the third dayto develop an implementation plan. The team establishes detailed 30­, 60­ and 90­day goals, andassigns responsibility for meeting the milestones. At the end of the day the decision panel reviewsthese plans as well. Despite the participants’ best efforts and cross­functional involvement, duringexecution process owners have sometimes run into unexpected complexities, which have delayedimplementation.“The important thing for us, we determined, is to make it happen at all,” says DeLong. “If we canget it done in 90 days, that’s great. If it takes 180 days, that’s okay too, because in the end youhave an improved process.”For Good MeasuresPerformance measurement in a manufacturing plant where everyone is trained to keep a close eyeon part costs, cycle times, and quality, is relatively easy compared to an administrative settingwhere the work is much less visible. Pressured to report a return on their investment in lean ­­specifically the cost of bringing in an outside consultant and hundreds of hours of employee time ­­the Grand Rapids' Lean Team developed some core metrics.In addition to overall lead time (the total time to provide a service from initial engagement throughdelivery), the city's value­stream improvement teams track process time (the amount of work doneto complete a task), wait time, and productivity. Any wait time reductions that they can achievebetween their current and future­ state maps translate into better customer service. While suchbenefits can't easily be monetized in a government setting, serving customers better is alwaysgood, and it has the added bonus of making people feel better about their work.Reductions in process times are another story. process changes that reduce work requirementsreduce hourly labor costs. Even if that labor is dedicated to other critical activities, these savingscan be calculated. For example, by reducing the amount of time required to execute abuilding inspection from 10.3 hours to 4.5hours, mostly by increasing first­ time compliance, theFire Department saved 5.8 hours per case and more than doubledproductivity. Averaging 500inspections per year, this equates to 2,900 hours. A savings of 2,900 hours at an employee hourlyrate of $40/hour works out to $116,000.Other savings from this project that could be calculated include a reduction in fuel and depreciationfor city vehicles because of fewer trips that inspectors have to make to a single building. In the longterm, even though they're already at a fairly low frequency rate, increasing the number of codecompliant and safe buildings saves money by reducing the number of fires.“It's not an exact science, but it is important to do the best you can do to demonstrate results,” saysEric DeLong, deputy city manager.11/04/2017 Using Lean Thinking to Reinvent City Government | Lean Enterprise Institutehttps://www.lean.org/common/display/?o=810 7/13The Fire Department’s inspection team was able to meet the 90­day implementation target. Theyused a project monitoring model that the city is adopting for all value­ stream improvementprojects. It’s a simple spreadsheet with action steps, responsibilities, and review status indicators;red indicates that an item hasn’t been started, yellow that it’s in process, and green that it has beencompleted.“You have to realize that it’s a commitment and you have to stick to that commitment,” says DeputyFire Chief Knapp. “You need to stick to the timelines as close as you can and see it through. Whenyou let things continue out and go on and on, other priorities come in.”With the overall goal of increasing the number of fire code­compliant buildings, and reducing thenumber of fires annually, the fire inspection team developed a pre­ inspection checklist and anew inspection form. By educating their customers about fire code requirements, they gavebusiness owners an opportunity to identify and correct violations before inspectors arrive. As afurther incentive, they now waive inspection fees if a facility is compliant on the first inspection, andeven extend the time between scheduled inspections depending upon the type of facility. Suchefforts have increased the percentage of first­time compliant businesses, dramatically reducing theneed for re­ inspections.“The key to code compliance is education,” says Knapp. “There are always going to be somebusiness owners that aren’t going to buy into some things. We have to deal with those individuals.But you can show them the value in maintaining their business and talk about safety for theircustomers, employees, and firefighters.”The Fire Department has also streamlined the inspection intake process, improved electronicaccess to case information, and eliminated some unnecessary steps.Inspectors used to do an inspection and then come back to the office to type it up and mail the firstviolation letter requiring correction within 30 days. Now, they issue the first violation notice on siteat the end of the inspection, cutting days out of the overall lead time.Such changes have reduced processing timeper case from 10.3 hours to 4.5 hours on average,doubling the number of inspections that they can complete in a year.The changes to the inspection process have supported an IT project that will give inspectors fullmobile access to case information when they’re out in the field. Knapp believes that fixingthe inspection process first has helped them to avoid automating steps that did not add value.“For me, the whole lean thing just makes a lot of sense. It’s something that I think a lot of people doall of the time, but they don’t do it in a formal way,” Knapp adds. “You look at one piece of thewhole process and see what you could do differently, but you never sit down and look at the wholething.”Don’t Defeat SpontaneityEven though their departments were not selected for the pilot projects, some members of the leanteam were so inspired by the initial two­day training program that they started projects on theirown. “All of the sudden we had three value­stream processes happening that weren’t supervised,that were lead by champions who had a modicum of training and facilitators who had even lesstraining,” DeLong recalls. After some initial reservations over these “renegade” projects, hedecided to step back and see what happened.11/04/2017 Using Lean Thinking to Reinvent City Government | Lean Enterprise Institutehttps://www.lean.org/common/display/?o=810 8/13The Community Development Department pulled together people from their Housing Rehabilitationand Accounting divisions to map its process for granting homeowner rehabilitation loans. Theydiscovered that the loan approval and closing process had a wait time of 20 weeks.Internal processing time was over 28 hours. Incomplete applications contributed to significantrework. The team’s initial improvement plan reduced homeowner wait time to 12.5 weeksand internal processing time to 21 hours.Following some personnel changes, they’ve since attacked the loan approval process twice moreto formalize the process improvements and maintain performance levels. As DeLong reports,“They found out that if you don’t write down the rules, and aren’t very specific, then the next personwho comes in, they’re going to do it their own way.”Another renegade project addressed the city’s parking card refund process. Mapping it out, theParking Services staff found that it took customers 20 days on average to receive a refund check,and 32 minutes for them to process and approve the request. Because it was thought to be moreefficient, the majority of the delay came from holding requests until there was a large enough batchto enter them into the accounting system.Of the 440 annual parking card refunds, 85% were for less than $50, and 60% were for less than$25. When they sat down to figure out the future state, the team realized that theycould process the vast majority of refunds at the counter if they had $500 in petty cash on hand.With permission and assistance from the city’s Comptroller’s Office, they were able to reducecustomer wait time from 20 days to 12 minutes, and processing time to 14 minutes.Why couldn’t the Parking Department implement such improvements independently of the city’slean thinking initiative? Focusing directly on the needs of the customer and involving the frontlinestaff in identifying problems and solutions is not standard management practice. The leanmethodology that Grand Rapids has adopted is bottom up, allowing employees and managers togenerate and organize ideas that wouldn’t happen otherwise.“We’ve usually tried to think our way to a new way of acting,” says DeLong, recalling pasttransformation efforts “Thinking to a new way of acting has some value, but the way lean works isthe reverse of that. If you’re doing it, you internalize it, and all of the sudden you’re thinkingdifferently.”Other processes that the city has addressed or begun to address through lean workshops includecontract compliance in the Equal Opportunity Department, how they issue water tap permits, howcash receipts from satellite departments are transferred to the Treasurer’s Office, and collections atthe District Court. They’ve had to balance these initiatives with budget cuts and leadershiptransitions, struggling at times to maintain momentum.Sustaining their progress, DeLong has discovered, requires a good communication network. Lastsummer he realized that the lean team was losing track of the status of the lean initiatives in eachdepartment. They have since worked to standardize the reporting procedures forthe process owners.“It’s like any other campaign, you need to set up your communication tools,” he says. In addition,team members are now assigned as a coach to each process owner. In part, they are there tokeep him informed. Still, keeping it all going requires a never­ending effort and commitment.“It’s not just finding a lean consultant, although that’s critically important,” says DeLong. “It’s notjust having the resources to pay the consultant, although that’s important. It’s not just having a leanteam or doing the value streams. It’s about having a vision for where this is headed and finding the11/04/2017 Using Lean Thinking to Reinvent City Government | Lean Enterprise Institutehttps://www.lean.org/common/display/?o=810 9/13time to stick with it that’s critically important. It has to become a business practice. It has to be asnatural as taking a shower and brushing your teeth.”Lean Principles Heal Poor Circulation at Public LibraryLocal patrons may know little about the lean thinking initiatives that have been happening behindthe scenes at the Grand Rapids, MI, Public Library, but they have certainly enjoyed the benefits.Today, high­demand materials, both new items and those already in circulation, are available daysand even weeks faster than they were only a couple of years ago.The library system consists of a main downtown facility and seven branches located throughout thecity. Every year it serves over 1 million visitors and circulates over 1.5 million items. Two years agoit was selected for one of the city’s initial lean projects. Library managers targeted the materialreturn value stream. The goal: Get all materials returned by patrons or from branch libraries backon the shelves within 36 hours. Because they are circulating, these books, CDs and DVDs, tend tobe the most popular.

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Lean thinking has become one of the most studied processes or methodologies in business management. It refers to incorporating smart and intelligent ways to optimize consumer or client value; the chief objective of this process is to eliminate waste of any kind and in every sector that is involved in the business.Based on this approach the Eric DeLong, the deputy city manager for the city of Grand Rapids, MI stresses on changing the notions and administration of government in that particular region.The central focus of lean thinking is to appoint efficient and responsible people who will help redesign the entire system. DeLong observes that improvement and constructive projects cannot remain limited to the private sector. He states that lean methods must be incorporated to enhance the governance of the city. DeLong believes that there are several opportunities and they should to be explored to bring about positive changes in the city. 

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