New York Sanitation Department Kensuke Ono Yasuyuki Kaji

Agenda The Bureau of Motor Equipment –Background –Performance in 1978 –Discussion for improvement –Action taken Example of process improvement –Kaizen –Japanese postal office case Question

The Bureau of Motor Equipment Background 1,200 employees $38 million operating budget Maintaining department’s 5,000 vehicles 75 repair garages and one central repair facility

The Bureau of Motor Equipment in 1978 Employees –Well compensated –Job secured –High level of benefits Measurement –Work standard –“Job Sheet” : Record the actual time to do a job

The Bureau of Motor Equipment in 1978 Chaotic Productivity –Over half the vehicles are out of order –Overtime pay for labors assigned to remaining vehicles –Wasted more than $16 million Why? –Are employees not motivated? –Is there a measurement problem?

The Bureau of Motor Equipment Need help to improve productivity! Need ideas from the private sector!!! –Lincoln Electric –Nucor –Analogue Device

Discussion How can your policy/system help increase the productivity in the public sector? How can your policy/system help motivate labors in the public sector? Is there any challenge in adopting your system in the public sector?

The Bureau of Motor Equipment Action taken for improvement Improved labor/management relations Created “profit centers” –Compared values created with outside prices Supplied 100% of vehicle needed Motivated employees Productivity factor became higher than 1  More productive than private sector

Kaizen(Process Improvement) Kaizen = Improvements (without spending much money, involving everyone from managers to workers, and using much common sense.) (Developed by TOYOTA motor company) Key aspects: On-going, Never-ending process Soft and Gradual method

Kaizen Japan has long been sensitive about waste, as the land and raw materials are scarce. Waste can be turned into profit if it is eliminated and everybody is encouraged to participate process improvement.

Kaizen Eliminate “Muda”-Wastes (non-value activities) Overproduction and inventory, items not immediately needed Defective products requesting repair or scraping Motion; unnecessary movement and energy used to perform tasks Process imposing inefficient and/or unnecessary tasks, fail to synchronize system

Kaizen Idling; by excessive set-up or equipment breakdowns Transport, poor timing; too frequent movement of goods and deliveries Muda result in direct loss of money or at least fail to increase efficiency or productivity

Kaizen Turning loss into profit by muda elimination is one of the easiest ways for a organization to improve its operations. Elimination of waste, does not request many efforts. # small change + small improvement = kaizen Go to “Gemba” (real work place) first, observe, recognize muda and take steps to eliminate it.

Kaizen: Japanese Postal Office Japanese post office - 24,752 regional post offices - 260,779 employees - Mail collection, delivery - Savings and Loans - Insurance Deficit; Mail collection and delivery 580,000,000,000yen = $5,370,370,370

Kaizen: Japanese Postal Office Chose 1 middle-size post office; 700 workers Invited 5 Kaizen specialists from Toyota Went to Gemba, observed and videotaped Analyzed workers’ daily activities Found 370 muda Communicated with every employee Took steps to eliminate muda (but kept quality)

Kaizen: Japanese Postal Office Reduced 20.1 percent of work time (in 6 months) Implement Kaizen program to 1,000 other post offices this year Estimated cost reduction 30 to 40 billion yen = $278 to $370 million a year

Question Would you like to work in the public sector? Why or why not? How would you, as a manager, improve the productivity in the public sector?