The publishing industry is on the threshold of major structural changes. The arrival of e-books is only the first threat, and it is having an impact sooner than expected. For example, Amazon.com sold more e-books than paper books in the first quarter of 2010. The credit crunch also has reinforced retailers’ demands for smaller, more frequent deliveries to reduce their inventories, coupled with the perennial demand for lower costs.
At Hachette UK, the largest book publisher in the United Kingdom, management noted that consumers are increasingly buying books directly from Hachette’s various websites. Short-run, print-on-demand services are now available, and large print runs often are sent direct to the retailer, bypassing the distribution center. It is well recognized that standing still at the distribution centers is not an option, whereas excelling at book distribution may provide significant opportunities, even though the market is shrinking.
To ensure that it could handle these rapid changes in the book publishing business, Hachette UK’s parent company, Hachette Book Group, embarked on a Lean Six Sigma training program in 2009 that has led to a streamlining of the publisher’s processes and shortened lead times for small-batch book orders.
Denis Mahoney, from Silicon Beach Training, provided a standard Lean Six Sigma Champion and Green Belt training course for the group’s IT management and staff. The course was well received, and Chris Emerson, Hachette Group’s chief operating officer, asked Silicon Beach to provide a bespoke program for the management and staff at Hachette’s two U.K.-based distribution centers: Bookpoint in the town of Didcot and Littlehampton Book Services (LBS) in Worthing.
Bookpoint Training Program
The management team at the Bookpoint distribution center have extensive experience in the publishing industry. Some have been involved in continuous improvement programs in other organizations, and it is fair to say that, initially, they didn’t all hold a positive impression of this type of initiative.
The program started with a two-day Champion and Executive program, which focused on providing understanding about the approach, the infrastructure required and their role as change leaders. The issue of waste in their organization was brought home by going to gemba (the workplace) and looking for waste, and by a 10-minute video on waste in their distribution activity. The outcome of the course was a commitment to appoint a program manager, set up an infrastructure and implement, as far as possible, the recommendations that came out of the subsequent training program.
The entire training program was focused on analyzing and improving the “small packet” value stream that processed, on average, 1,000 customer orders per day. For small-packet customers, orders are printed overnight in priority sequence and then launched in batches of five in tote boxes (259 totes are potentially in circulation). The launch operator, who covers two lines, launches orders continuously in priority sequence until complete or until told to stop, in case the conveyor circling the picking area becomes clogged. Numerous queues would form in the picking zones; the most severe was usually at the packing machine, which occasionally had more than a full day’s orders to process.
The Five-day Program
The five-day Lean training program, aimed at managers and senior supervisors from all areas of Bookpoint, was focused on Lean tools and used the Six Sigma DMAIC methodology as a structure. Training was split into two parts: the first two days (Define and Measure) were followed by a break of five weeks while the process was measured. The second three days (Analyze, Improve and Control) used this information to understand how the process currently worked, assess its performance and identify waste. A future-state value stream map was then developed and an implementation action plan identified. The analysis and recommendations were presented to the management team at the end of the training.
The Lean training started with the delegates drafting a project charter, developing a critical-to-quality tree for the consumers of the books. A SIPOC (suppliers, inputs, processes, outputs, customers) diagram was used to capture the key process steps, which became the basis of the current-state value stream map. A measurement plan was developed to capture all of the key data – such as cycle time, queue time and customer satisfaction – to complete the current-state map in the second phase of the training.
Analyzing the measurement data found that the lead time from receipt to dispatch of orders was two days, yet the cycle time was only 3 minutes and 50 seconds. The delegates identified a number of queues as well as significant setups in customer service (which was not as automated as many had believed) and in the decanting of tote boxes at packing.
A positive conclusion was that the packing machine was not a bottleneck, as it was only working at 25 percent capacity. The machine also was not as unreliable as management had thought, losing only 10 minutes to breakdowns per shift. The issue, the team found, was the highly intermittent feeding of the machine.
The Lean training delegates then went on to design a future state, focusing on customer demand, flow and leveling against a takt time of 40 seconds per order and a pitch of 10 minutes. Implementing the future state would halve the order-receipt-to-dispatch time and double the percentage of value-added time. The value stream would change from a batch-and-push process with significant queues and delays to single-piece flow and a pull process, with the packaging machine acting as the pacemaker for the whole process. The process would be much tighter, with 15 orders being launched every 10 minutes, a FIFO (first in, first out) lane to control the 60 trays (one per order) and a heijunka box – a visual scheduling tool consisting of a grid of boxes that represent specific periods of time – to level the schedule at the launch station. The process can run for a maximum of 30 minutes before a problem with the packing, picking or launch processes is identified.
Kaizen and Train the Trainer
Two three-day sessions of Kaizen training, aimed at supervisors and team leaders, followed the Lean training. Again, the DMAIC methodology was used, but the tools were at a more detailed work-center level. Each of the two Kaizen sessions used an improvement action from the Lean training for the small-packet value stream – one focused on the launch process and the other on the packing process. They defined standard work for the two operations, revised layouts to minimize walking and handling, and conducted 5-S audits. The analysis and recommendations were presented to the management team at the end of each of the Kaizen training sessions.
The final component of the training was “Train the Trainer”, where Silicon Beach taught a group of four delegates from the earlier training sessions to deliver a one-day Continuous Improvement training session for its staff. In addition to becoming familiar with the material, the delegates also delivered the training to the first batch of staff.
Throughout all of the training, there was a strong emphasis on going to gemba to understand what actually happens – to observe, to ask and to occasionally perform tests.
Results to Date
Bookpoint has implemented the more immediate recommendations from the Lean and Kaizen training. For insthe queue, decanting and setup at the packing machine have been eliminated; the conveyor now flows right to the packing machine, with each order in a separate tray. Empty trays going back to launch act as a pull signal. Standard work has been implemented. These improvements have reduced the staff from three to two on the packing machine for the same small-packet order volume.
5-S, so far, has become one of Hachette’s biggest initial successes. Initially, the Lean tool was applied to the small-packet value stream and was later expanded to the rest of operations and, finally, the office complex. Weekly audits are conducted and results are widely displayed.
The small-packet launch area also has been transformed. A heijunka box is now used to level the schedule. Orders, still printed overnight (a further improvement action from the future state map), are sorted into groups of 15 and placed into the heijunka box, which has a slot for each 10-minute pitch. The small-order launch operator takes the next set of 15 orders every 10 minutes and places them into individual trays.
The heijunka box provides a level rate of activity and visibility on both status and the volume of orders to be processed that day. A FIFO lane is used to organize stacks of 15 empty trays; it can hold a maximum of 45 trays, or 30 minutes of work. If there are no trays, then the small-batch launch finds out if there is a problem with either packing or picking within 30 minutes. Alternatively, if there is no space in the FIFO lane for the 15 trays returned from packing, then there is a problem with the launch process.
The tighter, leaner process in the small-packet value stream has exposed other problems in the picking area that now need to be tackled to further improve the process. This has reinforced the metaphor used on the training course: “Lowering the water level in the swamp to expose new problems to be solved.”
While the implementation of many of the changes recommended by the training course is satisfying, more important is the drive to expand the Continuous Improvement activity to all areas of Bookpoint. The CI program has been dubbed “BITE” (an acronym for Bookpoint Initiative to Improve Effectiveness). A senior management board has been established to review improvement proposals, review projects already under way, manage the 5-S program and plan training.
Six Lean and Kaizen projects have been completed and are starting to deliver results. The projects will extend the small-packet improvements to other picking lines, drive out waste in goods-in, reduce the number of documents being used in areas like credit control and rationalize the range of packaging material used throughout the business. As well as ongoing work on the small-packet line to further improve performance, there a number of other projects in progress, covering areas such as customer service excellence, maintenance and delivery administration.
The goods-in project, which involved both operators and suppliers, has dramatically improved the flow of deliveries. The project also has had other benefits, including a suggestion from operators that the company should stagger its breaks to keep goods flowing and that truck drivers should send alerts of any problems during delivery within their allocated 15-minute window.
The internal one-day Continuous Improvement training program, provided by Silicon Beach, is being rolled out to the whole Hachette organization. Internal trainers are conducting two sessions a month for up to 10 delegates per session. The training is being very well received, and even the “doubting Thomases” who had avoided attending are now demanding to be on the course. In a recent employee survey, 75 percent of staff said that the program had positively effected their departments.
Littlehampton Book Services (LBS) Distribution Center
LBS is similar to Bookpoint in the services that it offers to publishers but differs in its products – Hachette Book Group’s Orion, Octopus and Little Brown Publishers have a product range that is more “high street trade”, with the ratio of third-party clients being much higher.
LBS started its Lean Six Sigma training approximately a year behind Bookpoint, in early in 2010. As the training program came to a completion at LBS, it launched their own improvement initiative, called PRIDE (Planning and Researching Intelligently to Deliver Excellence).
For LBS, the focus of the training program was Line 2, which handles the more expensive books, often called “coffee table books.” The books are spread across two mezzanines, with the launch station on the ground floor. On average, 600 orders per day are processed at LBS, taking two days from receipt to dispatch.
Using the cascaded training and DMAIC throughout, the teams found that LBS operated with a push model. Problems identified included significant queues occurring in the picking zones, quality problems from repacking and missing books, 22 days of inventory on hand in the forward pick area, fluctuating resource demands, and much more. The teams designed a pull process with a takt time of 25 seconds per carton and a pitch of 30 minutes. A heijunka box at launch provides levelling and an electronic counter after packing provides a kanban signal back to launch.
A program to reduce the forward inventory by 50 percent and consolidate the operation to one mezzanine with fewer zones will be complete by the end of the year. The impact has been to eliminate queues, double-handling and line stops due to congestion. The reduction in quality-control workload has released a resource to support picking and launch.
In addition to Line 2 improvements, other projects are already under way in the customer service department to map the value stream, and analyze the reasons for customer calls and the time-consuming rekeying of information so that they can be reduced or eliminated. A goods-in project also has begun that will incorporate the improvements from Bookpoint with LBS’s best practices. The training program for staff is also under way, and there is already a queue to attend the course. As a consequence, new suggestion boards in the work areas have been overflowing with suggestions.
Both Bookpoint and LBS improvement programs are up and running. Infrastructure has been established, benefits are starting to accrue and performance is improving. The drive from management and staff at both sites is very evident. Training of staff is moving forward and will continue into the future.
Both sites are currently working on projects and planning others. Some are focused on their unique requirements, but increasingly they will be working together to share their learning to overcome enterprise-wide problems. The projects that have been undertaken to date are already starting to free resources so that more investment in improvement can be made.
While it is too early to talk about cost savings, there is a strong belief within the organization that when business picks up after the recent industry-wide downturn, there will be less of a need for the return of temporary contract staff to meet customer demand.
Bookpoint and LBS are using Lean Six Sigma to improve their ability to take on and overcome the challenges that the publishing industry is facing. These changes will be relentless over the coming years. As the demands of customers for instant access at low cost increase, those distributors that are unprepared may not survive.