National Environmental Symposium

1. National Environmental Symposium January 25, 2006

2. What’s in a Name? • Value Stream Mapping • Lean Manufacturing/Process • Kaizen All Are Basically the Same Change Management Technique

3. Why Change? • Things We’ve All Heard: • My Taxes Pay Your Salary, My Project should be Your Top Priority • If the Permit isn’t Processed Quickly, We’ll go to (Name of Nearby State) • The Slow Air Permitting is the Cause of the Downturn of the Economy in this State • Let’s set up a Blue Ribbon Committee of Outside Experts to Determine what should be Done

4. Proactive Focus Area of Concern Area of Influence

5. Focus of Value Stream Mapping • Process Versus People • Customer Requirements Versus “We’ve Always Done it that Way” • Value-Added Activities Versus Waste • “We Can” Versus “We Can’t”

6. What is a Value Stream? A Value Stream Involves all the Steps, both Value Added and Non Value Added, required to Complete a Product or Service from Beginning to End. What is a Value Stream Map? • Visual Representation of a Value Stream • Pencil & Paper Tool • Helps Reveal Waste & Problems with Flow • Establishes a Common Language to Document Processes • Provides a Blueprint for Improvement

7. Value Stream Maps - Why are They Unique? • Shows the Process Flow from a Systems Perspective • Includes Information Flow & Links it to Process Flow • Documents the Performance of the Process End Results, Metrics Highlight Waste, & Visibility of Progress & Quality

8. Waste Any Element that AddsNo Value to the Final Product: Waste only Adds Cost & Time Obvious Sources of Waste: • Excessive Handoffs of Work Product • Work Product Waiting in In-Baskets • Process Steps with High Error Rates

9. VSM Example – Eddie George/Jack Bauer Mail Order Company This example follows the evolution of the mail order company formed by Eddie George and Jack Bauer. The two friends formed the company to provide high quality sporting goods and named themselves the George-Jack company. In 1985 the two were operating much the same as older mail order firms had for the past 100 years. The customer would remove the order form from the George-Jack catalog and mail it in with their check or money order. Eddie would open the mail and sort the orders. Jack would retrieve the orders from Eddie’s out box and pull the ordered products from the shelves in the warehouse. After the orders were pulled, Jack would take that batch of products to shipping and package them for the mail. After processing the day’s mail, Eddie would go to shipping and match the packages to the orders, type up mailing labels. At the end of the day, Eddie would drive the truck home, stopping at the post office to mail all the packages. During this time period, the George-Jack Company could ship approximately 40 orders per day with a total processing time of 8 days and 33 minutes. However, due to errors, only 55 percent of all orders were processed correctly the first time. The remaining 45 percent of orders either required double effort on Eddie or Jack’s part, the wrong product was mailed to the customer, or the product was mailed to the wrong address. Typically, Eddie worked 9.2 hours each day while Jack worked only 7.3 hours.

10. IN IN IN IN P/T P/T P/T P/T P/T P/T P/T W/T W/T W/T W/T W/T W/T W/T FTQ FTQ FTQ FTQ FTQ FTQ FTQ Eddie George/Jack Bauer Company Current State in 1985 Client 50 Customers Per Day 40 Products Shipped 50 Orders Mailed to Company 10 Invalid Orders Returned Open mail, Review & Sort Order Get Order from Eddie Pull Product from Shelves Package Product & Bring to Shipping Match Order, Make and Apply Label Mail Product at End of Day on Way Home 1 day 3 hours 4 hours 1 day US Mail 5 days 100% Eddie 6 min --- 80% Jack 1 min 3 hrs 100% Jack 5 min 95% Jack 5 min --- 100% Eddie 6 min --- 90% Eddie 10 min --- 80% QTY 40 QTY 50 QTY 40 QTY 40 QTY 40 QTY 50 QTY 40 33 min P/T 6 min 1 min 5 min 5 min 6 min 10 min 5 days 1 day 3 hours 4 hours 1 day W/T 3 hours 8 days FTQ 100 % 80 % 100 % 95 % 100% 90% 80 % 55 % 8 days, 33 min Total Lead Time: Issues – Keeping track of stock, all paper system, Eddie working harder and longer than Jack ( 9.2 vs 7.3 hrs), both working long days, poor communication with customer, and many errors.

11. In 1995, Eddie and Jack began using a toll-free phone number to receive orders. This allowed Eddie to type up the order and mailing label while the customer was on the phone. This immediate quality check allowed a significant increase in first time quality. The company was able to increase from 40 to 60 products shipped per day with an average of three errors. The average processing for each order was reduced to 4 hours and 20 minutes but both Eddie and Jack had to increase their workday 10 hours.

12. IN P/T P/T P/T P/T W/T W/T W/T W/T FTQ FTQ FTQ FTQ George Jack Company Current State in 1995 Client 60 Customers Per Day 60 Orders called in to Company 60 Products Shipped (3 Errors) Receive & Type Order and Make Label Pull Product from Shelves US Mail Delivery Twice a Day Package Product Apply Label Take to Shipping Area Eddie moved to room where product is – as order comes in, Jack fills it 4 hours Eddie 10 min --- 95% Jack 5 min 0hrs 95% Jack 4 min --- 100% Jack 1 min --- 100% QTY 60 QTY 60 QTY 60 QTY 60 20 min P/T 10 min 5 min 4 min 1 min 4 hrs W/T 4 hrs FTQ 95 % 95 % 100% 100% 90 % 4 hrs, 20 min Issues: Keeping track of stock, all paper system, Eddie and Jack working long 10-hr days, and some errors. Total Lead Time: Improvements since 1985 – Increase in products sold from 40 to 60 (50%), less errors, wait time decreased from 8 days to 4 hours (95%), and processing time decreased from 33 to 20 minutes (39%)

13. In 2005, a very tired Eddie and Jack began taking orders over the internet. With this computerized system, customers typed in their own information and the computer converted it into order forms and mailing labels. Eddie and Jack both worked pulling the products from the warehouse shelves and packaging them for shipping. A conveyor system was used to transport the packages to the shipping area. While on the conveyor a bar code scanner would read the shipping label and automatically send an email to the customer notifying them of the date that their order had been shipped and providing them with a tracking number. Also, Eddie and Jack hired UPS to pick up their products four times a day for delivery. These changes allowed the George-Jack Company to increase from 60 to 160 products shipped per day - still with three errors. The average processing time was cut to 2 hours and 6 minutes and both Eddie and Jack were able to work only 6.7 hours per day.

14. IN P/T P/T W/T W/T FTQ FTQ George Jack Company Current State in 2005 Client 160 Customers Per Day 160 Products Shipped (3 Errors) Order emailed in to Company Convey to Shipping, Scan Bar Code, Email Tracking No. to Customer Package Product, Apply Label, Use Conveyor Pull Product from Shelves UPS Picks Up 4 Times Daily Computer Receives Order & Makes Label Eddie and Jack both fill orders 2 hours Jack/Eddie 4 min 98% Jack/Eddie 1 min --- 100% QTY 160 QTY 160 1 min 6 min P/T 4 min 1 min 2 hrs W/T 2 hrs FTQ 98 % 100% 98 % 2 hr, 6 min Total Lead Time: Improvements since 1995 – Increase in products sold from 60 to 160 (267%), less errors, both worked less hours, wait time decreased from 4 hours to 2 hours, 6 min (48%), and processing time decreased from 20 to 6 minutes (70%)

15. Waste POINTS TO REMEMBER ABOUT WASTE: • Consider Waste in the Context of the Value that the Process Provides to the Customer • Waste is Really a Symptom Rather than a Root Cause of the Problem • Waste Points to Problems within the System • Find and Address Causesof Waste to Improve Flow • Waste is Most Prevalent in the Information Flow of Non-manufacturing Processes • Experts Suggests up to 40% of What We do Adds no Value

16. Using the Value Stream Mapping Tool Value Stream Scope Determine the Value Stream to be Improved Understand How Things Currently Operate. This is the Foundation for the Future State Current State Drawing Future State Drawing Design a Lean Flow Standardize for Later Improvement Develop a Detailed Plan of Implementation to Support Objectives (What, Who, When) Implementation Plan Implementation of Improved Plan The Goal of Mapping!

17. Business Deployment Plan Current State Future State Bridges the Gap: From Where We Are to Where We Should Be

18. Focus of Value Stream Mapping • Process Versus People • Customer Requirements Versus “We’ve Always Done it that Way” • Value-Added Activities Versus Waste • “We Can” Versus “We Can’t”

19. Value Stream Mapping Candidates • Permitting Programs • Hiring Process • Process for Responding to Letters to the Governor • Any Manufacturing Process or Information Flow

20. Keys to Success • Leadership MUST Demonstrate their Commitment to Change • Involve All Levels of the Organization at Every Step • Constantly Communicate Positive Progress

21. “Nothing is Particularly Hard if you Divide it into Small Jobs.” - Henry Ford

22. Michigan’s Experience

23. Workshop Dates Pre-Scoping Session March 1, 2004 VSM Training March 29, 2004 Scoping Session April 1, 2004 Workshop April 26, 27, 28, 2004 System Development May – August 2004 New System September 7, 2004 Implemented

24. State of Michigan Air Permit Process • Leadership Panel • Steve Chester – MDEQ, Jim Sygo - MDEQ, Ray Tessier – General Motors, Tom Breneiser – DaimlerChrysler, Andy Hobbs – Ford, Robert Swanson – MLEG, Mike Johnston – MMA, Vince Hellwig - MDEQ • Workshop Participants • AQD – Lynn Fiedler, Steve Zervas, Bill Presson, Bob Byrnes, MaryAnn Dolehanty, Paul Collins, Cathy Simon, Steve Kish, Dennis Armbruster, Scott Klipa • Ford - Dennis Karl • DaimlerChrysler - Mary Snow-Cooper, Debra Rowe • General Motors - Steve Tomaszewski, Nick Ramos, Mike Zielke, Sue Bracciano, Chris Bates, Frank Kodrack • MMA – Mike Johnston • MDEC – Susan Holben • Value Stream Mapping (VSM) Coaches • Tim Connors, Carrie Saville

25. Purpose Statement The purpose of the Air Permit Team is to develop and implement an air permitting process that results in expeditious issuance of environmentally sound, operationally flexible, and achievable permits in a timeframe not to exceed 6 months and ensure requirements are identified clearly prior to submittal reducing rework in the process by 90% .

26. Measurable Metrics & Performance

27. IN SCOPE (We Can Do It) OUT OF SCOPE Interpretation of Rules, Policies and Guidance Documents (MDEQ / EPA) EPA Regulations Internal AQD Permit Organizational Structure Modify Existing Rules AQD Internal Permit Process and Timing Additional Resources Applicant Internal Permit Process and Timing Appeal Process Electronic Submittals Any new software / computerized system Application Content Mandated Public Participation Requirements Permit Content Title V Permitting Special Condition Content Communication (Internal and External)

28. Overarching Principles of New Process • Proactive vs. Reactive Process • Shared Accountability • Specific Timelines • Action/Resolution

29. Key Elements of Michigan’s New Permitting Process • Expectations for Success • Standardized Application Checklists • Permit Scoping Meetings • Up-Front Draft Conditions • Agency and Applicant Deadlines

30. Indicators of Success

31. Indicators of Success Administrative Completeness Complete at Submittal in 2003 – 82% Complete at Submittal in FY 2005 – 95%

33. Other Impacts • Process Timing for Other Groups • Better Working Relationships • Say What We Do and Do What We Say • Reduced 4 FTEs and Added 4 FTE’s Worth of Work from Other Groups • Improved Morale

34. New Process is Designed to: • Be Transparent • Be Efficient • Be Proactive • Be Timely • Foster Communication Between All Parties

35. If you make every game a life and death proposition, you're going to have problems. For one thing, you'll be dead a lot.-- Dean Smith, Basketball Coach UNC

36. Lynn Fiedler517-373-7087fiedlerl@michigan.govInformation on Michigan’s Processwww.deq.state.mi.us/aps/miparp.shtml EPA’s Website www.epa.gov/lean