RETHINK EXCELLENCE: A SYSTEMS APPROACH

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RETHINK EXCELLENCE:

A SYSTEMS APPROACH

Vern Campbell, EIR University of Manitoba, Principal -Process Management

Howard Matthews, Vice President of Power Production, SaskPower

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INTRODUCTION

Did you know that…

Only 10% of the Fortune 500 Companies from 1955

remained in 2020.

Greater than 95% of Lean/OpEx initiatives “fail”?

Operational Excellence Sustainability:

20% Tools/Techniques

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SESSION, PURPOSE & AGENDA

Our Purpose: To provide a systems approach to Operational

Excellence.

Agenda:

1. Operational Excellence Overview

a) Definition

b) Overview of System

c) General Approach

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DEFINITION OF A SYSTEM

A system is a network of interdependent components that work

together to try to accomplish the aim of the system. A system

must have an aim. Without an aim, there is no system. A

system must be managed, it cannot manage itself.

Dr. W. Edwards Deming,

The New Economics

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OPERATIONAL EXCELLENCE SYSTEM AIM

A comprehensive leadership system designed to

systematically improve the performance of the enterprise for

all stakeholders through the collective talent and efforts of

focused & engaged people.

The Goal:

Improve Safety, Improve Quality, Reduce Cost, Improve

Delivery, Sustainable Environment & Improve Morale

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THE CHALLENGE

Technical Project based approach Build capability Process Management based approach Strategic Results Systems based cultural approach Sustainability P er fo rm an ce Im pr ove m ent Time

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Intrinsic Technology (Industry) & Motivation General Education, etc.

Concepts: - Customer - Process - Fact/Data PDCA - Quality - Flow - Respect for humanity - Deming, Etc. Techniques: - QJ Story - 7 QC Tools - 7 Mgmt & Planning Tools - Advanced Stat Tools

- IE, VE, etc.

System Components: - Leadership - Strategy Management - C.F. Management - Daily Management - SGA/QI

Safest Workplace, Highest Quality, Lowest Cost, Best Delivery, Highest Morale, Sustainable

Environment

HOUSE OF EXCELLENCE

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Intrinsic Technology (Industry) & Motivation General Education, etc.

Concepts: - Customer - Process - Fact/Data PDCA - Quality - Flow - Respect for humanity - Deming, Etc. Techniques: - QJ Story - 7 QC Tools - 7 Mgmt & Planning Tools - Advanced Stat Tools

- IE, VE, etc.

System Components: - Leadership - Strategy Management - C.F. Management - Daily Management - SGA/QI

Safest Workplace, Highest Quality, Lowest Cost, Best Delivery, Highest Morale,

Sustainable Environment

Adapted from “TQM House” - TQM Guide for Service Industries– Noriaki Kano

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GENERAL SYSTEM APPROACH

• Develop Leaders at all levels (Starting with senior leadership team going to

front line supervisors)

– Develop OpEx System knowledge & capabilities

– Set direction, Focus Action, Get Results, Build the team – See & solve problems using facts, data & PDCA

– Why? – The implementation must be led by the leadership team: it cannot

be delegated!

• Develop and implement Daily Management Systems (“Linchpin”)

– Develop and deploy Daily Management Systems (Operating system).

– Develop everyone’s capability to surface and solve problems systematically, scientifically and continuously every day.

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GENERAL APPROACH CONTINUED

• Develop and deploy cross functional management systems

– Identify and systematically improve and innovate cross functional processes critical to the enterprise aim or mission.

– Why? Cross functional processes deliver step change in performance, critical

to both the results and the development of people.

• Develop and implement Strategy Management Systems (Hoshin Kanri).

– To set and deploy direction, focus Strategic Process Improvement and Innovation efforts to achieve continuous and breakthrough results.

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GENERAL APPROACH CONTINUED

• Align all support systems.

– Review and align support systems i.e. Leadership development (all levels), HR systems, Finance/Accounting systems, etc.

– Why? All support systems need to align with the philosophies, principles and goals

of the Operational Excellence system, or the system will not be sustainable.

• Develop an Enterprise Excellence Structure

– Structure the organization to sustain Operational Excellence.

– Why? Structure is critical to institutional knowledge, learning, and focused, custom

execution.

• Benchmark Progress

– Benchmark progress every 6 months (L-WC Model). – Benchmark score/targets are strategic KPIs

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BENCHMARK PROGRESS – LEARNER TO WORLDCLASS

1. Score – 1-10 (Learner)

1. No formal systems in place and no recognized need for formal systems.

2. Score – 11 – 20 (Developer)

1. Recognized need for formal systems. Formal Systems are developing.

3. Score – 21 – 30 (Performer)

1. Formal systems are in place although gaps may exist. 2. KPIs in place and showing improvement.

4. Score – 31 – 40 (Contender)

1. Formal systems entrenched throughout organization.

2. KPIs in place demonstrating sustained positive trends aligned to strategic targets.

5. Score – 41 – 50 (World Class)

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POWER PRODUCTION’S JOURNEY

THROUGH OPERATIONAL EXCELLENCE

AND QUALITY MANAGEMENT

SYSTEMS

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AGENDA

• SaskPower

• The Challenge

• The Strategy

• The Results

“Show me a low-quality plant, and I will show you a high-cost plant”

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540,727 CUSTOMERS 4,993 MW CAPACITY 157,000 KM OF POWER LINES 3,792 MW PEAK LOAD (2017)

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Business Environment

• Declining Equivalent Availability

Factor (EAF) (Reliability)

• Flat budgets

• Aging equipment run harder &

longer

• Flight Risk (customer) 10/50%

• Regulatory requirements (CO2...)

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0 50,000,000 100,000,000 150,000,000 200,000,000 2010 YTD Actual 2011 YTD Actual 2012 YTD Actual 2013 YTD Actual 2014 YTD Actual 2015 YTD budget 2016 YTD Budget 2017 YTD Budget

PPBU Actual Base 2010 - 2017

Actual Base 75.0% 80.0% 85.0% 90.0% 95.0% 100.0% 2008 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 EA F P er cen t

All Steam EAF Forecast vs. Actual (Including Scheduled Overhauls) Allowable Variance Forecast EAF Higher numbe

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With ZERO new money $$$$

• Increase reliability (EAF), decrease

spending, improve safety, improve

environmental performance

• Increased Productivity.

• Fewer Breakdowns.

• Less OT, Less Contractors

• Eliminate Lost Time Injuries

• Operations, Maintenance, Engineering

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Can OpEx be applied to:

• Power plant vs Manufacturing: • Maintenance • Operations • Engineering • Office environment • Engineering • Purchasing • Human Resources (HR)

THE CHALLENGE

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Build leadership team

• Purpose, roles, responsibilities • Problem Solving Capability

• Visual Management team meetings • Who? Senior Management (VP, Plant

Managers)

• Yellow Belt, Green Belt (Quality Journal, Advanced Quality Journal)

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4 3 2 1 24 22 20 18 16 14 12 10 Benchmark Number Le ad er sh ip S co re

Individual standard deviations are used to calculate the intervals.

Leadership Assessment Scores Average of All Assessments (Spring 2017 - Fall 2018)

4 3 2 1 24 22 20 18 16 14 12 10 Benchmark Number Da ily M an ag em en t S co re s

95% CI for the Mean

Daily Management Assessment Scores

4 3 2 1 24 22 20 18 16 14 12 10 Benchmark Number Q ui ck Im pr ov em en t S co re s

Quick Improvement Assessment Scores Average of all Assessments

4 3 2 1 24 22 20 18 16 14 12 10 Benchmark Number Pr oc es s I m pr ov em en t S co re s

Interval Plot of Process Improvements 95% CI for the Mean

EXTEND TO ALL PLANTS

Build Leadership Team

• Daily Management

• Process Improvements

• Quick Improvements

• Regular evaluations

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Fiscal 2017

Fiscal 2018

•Reduce Unscheduled Work QEPS Pilot •Quality Notification •Reduce Rework •Notification Prioritization •Meeting Optimization •Improve Monthly Reporting

YB Class 1

•Return to Service

•Completion of Operator PM’s •Supervisor Training Manual •Utilization/Creation of EMR’s •Scheduling of Mandatory Training •Standardize SPOAD data

•Timing of Engineering Scope Definition

YB Class 2 •Procurement Daily Management •Forward OH Planning GB Class 1

LEARNING JOURNEY

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Fiscal 2019

• Material Disposal • Time Entry Error

Reduction • Athabasca

Operator Training • Utilization of the Ice

Road • Reliability Metric Improvement • Project Employees Evaluation YB Class 3 • Planning Accuracy GB Class 2

LEARNING JOURNEY

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TREMENDOUS EFFORT = BIG BENEFITS

YB Level Problem Solving • 57 Yellow Belts • 28 Projects GB Level Problem Solving • 13 Green Belt Attendees • 4 Projects OpEx Systems • Leaders Go & See • Visible Leadership • Daily Management • Unwavering discipline to Methodology & Analytics Quality Overhauls •Forward Planning Team •Quality Work Packages •Cross Division Decision Making

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Results Matter - Stunning improvement

Cost reduced $20Million, ongoing $5M per year next three years $35M reduction – 15%

Equivalent Availability Factor increased to target

Safety - stunning

Environment – stunning Culture – Yes !

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28 75 80 85 90 95 2000 CY 2002CY 2004CY 2006CY 2008CY 2010CY 2012CY 2014CY 2016CY 2019FY 2021FY 2023FY 2025FY EA F ( % ) Target Actual

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Like real estate…..

• Management, Management,

Management

• Leadership Commitment !

• Roundtable 2.0 – Communications,

Engagement

Culture change

INSIGHTS

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• _{Hope is not a strategy}

Safety

• _{We have stopped making excuses}

Accountability

• _{Our Directors and others are actively}

involved in site assessments.

Collaboration

• _{See something, say something}

Openness

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• _{Roundtable Discussions}

• _{Stand-up Meetings}

• _{Listening to feedback from the shop}

floor

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Speaker Contact Information:

• Vern Campbell,Process Management, (204) 793-9829

[email protected]

• Howard Matthews, Vice President of Power