BPI Startup at Kansas City Southern Railroad v4 mpbmichiganlean.org/Resources/Documents/2014 Conference... · 2014-08-07 · BPI Black Belt Type Project Rocio Cisneros Yescas Core

©2013 Kansas City Southern

BPI - Business Process Improvement Startup

at Kansas City Southern Railroad

Matt Bommarito – Director of Process Improvement


� Welcome

� KCS Background

� BPI – Business Process Improvement Rollout

– Initiative Overview – Critical Steps & Pitfalls

� Assessment Tools

� Group Exercise

� Debrief

2

Agenda


Kansas City Southern

3


KCS’ primary U.S. holding:

�The Kansas City Southern Railway Company, serving the central and south central U.S.

KCS’ international holdings:

• Kansas City Southern de Mexico, S.A. de C.V., serving northeastern and central Mexico and the port cities of Lazaro Cardenas, Tampico and

Veracruz; and

• A 50 percent interest in Panama Canal Railway Company, providing ocean-to-ocean freight and passenger service along the Panama Canal.

KCS’ North American rail holdings and strategic alliances are primary

components of a NAFTA Railway system, linking the commercial and

industrial centers of the U.S., Mexico and Canada.

4



Organization

5

Kansas CitySouthern

KCSRU.S. Operating

Company(100%)

Meridian Speedway, LLC

(70%)

KCSMMexican

OperatingCompany(100%)

Tex-Mex(100%)

Panama Canal Railway

Company (50%)



©2014 Kansas City Southern 6

� Founded in 1887, KCS is a 127 year old growth story

� More than 6,400 track miles

� Seamless network in and out of Mexico

� Service to 12 Gulf ports and 1 Pacific Ocean port

� Service to more than 140 transload centers and 11 intermodal ramps

� 181 interchange points with other railroads, including all U.S. and Mexico Class I railroads


Incorporated

1887

1890

1900 1994 1998

40 mile line began

operation in 1890 as

an interline connection

Became Kansas City

Southern Railway

Company

1939

Acquisition of

Louisiana & Arkansas

railway, connecting

Kansas City and New

Orleans

Took over the MidSouth Rail

Corporation, which extended

KCSR's service territory to

Meridian, MS; Counce, TN;

Tuscaloosa and Birmingham,

AL

1997

Expansion to E. St.

Louis and Springfield

Invested in the Panama

Canal Railway Company

2005

KCS acquired Mexrail

and TFM

7

Kansas City Southern History


2009 2010 2011

$1.5B

$1.8B

8

KCS Revenue Growth

2012

$2.1B

$2.2B

$2.4B

2013


BPI - Business Process

Improvement at Kansas City

Southern

9


IWhat is BPI?

10


Business Process Improvement:

�BPI is data-driven, systematic, problem solving – consistently

delivering measurable, sustainable performance improvement;

done right the first time, solved for the last time

�BPI applies proven Lean and Six Sigma methodologies to

targeted projects led by skilled problem solvers, known as

Black Belts

�BPI is guided by leadership to selected targets of opportunity

and managed as an Investment

11

What is BPI?


� Must believe change is important and valuable

� Develop a future state vision

� Understand and eliminate Barriers

� Total organization must buy-in

� Leaders must model the process/set example

� Effective training

� Quantified measurement systems

� Continuous feedback to all

� Provide coaching and mentoring

� Recognition and rewards in place

12

How to bring about change?

Source: Business Process Improvement, The Breakthrough Strategy for Total Quality, Productivity, and Competitiveness. Dr. James Harrington, 1991 McGraw-Hill, Inc.


Market Expectations:

Revenue Growth, Cost Management, Improved ROIC

Customer Expectations/ System Constraints:

Time Sensitivity (On Time Delivery), Predictability,

Freed Capacity, Safety & Security, Asset Utilization

KCS Talent Development:

BPI empowers our people to successfully tackle significant

business challenges and deliver measurable, sustainable

improvement

13

Why BPI at Kansas City Southern?

BPI will become a standard mechanism

to deliver KCS leadership results


KCS BPI Strategy

Business Process Improvement will provide continuous improvement solutions with

consistency and quality for customers through effective utilization of improvement tools.

Realized Project results will be tracked for organizational success with appropriate ROIs.

Overall BPI value will be based on incremental

shareholder returns, customer orientated culture and overall

satisfaction of our employees, customers and communities.

Business Process Improvement will work with the business to identify and priority

opportunities in achieving KCS’s goals and objectives by seeking measurable improvements in

Safety, Delivery (Service), Cost and Quality KPI’s (key process indicators) for both process

measures and outcomes.

The vision of Business Process Improvement (BPI) is to support enterprise efforts towards

Business Plan-On-a-Page Outcomes. BPI will provide the structure and leadership necessary

to enable consistently high-quality process improvements to all customers requiring

operational improvements for new and existing processes.

Value Proposition

Vision

Mission

©2013 Kansas City Southern15

BPI Methodology

Define Current State

Identify Opportunities

Develop Future State

Implement and Measure

Solutions/Action Plans

BPI builds a

systematic

framework for

consistent,

effective,

repeatable

problem solving


Lean and Six Sigma Project Methodologies

Combine for Maximum BPI ImpactSix Sigma: • Process Centered, Data-based

• Measurable, Controlled• Eliminate Defects and Variation

Lean:

• Flow of Materials & Information

• Streamline & Standardize

• Eliminate Waste & Constraints

Lean Six Sigma reduces variation and centers

process performance to the target

Off-Target Variation

On-Target

Center

ProcessReduce

Spread

XX

XXXX

XXX

X

XX

X

X

X

X

XX

X

X

XXX

XXXXX

XXXXX

XXX X


The 5 Principles Of Lean

Elimination of waste . . . unnecessary process steps

Lean techniques are used to reduce unnecessary steps, eliminate rework, save

time, save cost and extend capacity of valuable resources by:

1. Specifying the Value of the process

2. Identifying the Value Stream for each process

3. Allowing value to Flow without interruptions

4. Letting the customer Pull value from the process

5. Continuously pursuing Perfection

17

Lean focuses on increasing speed

by eliminating Waste.

Identifying waste and making it

visible is the first step!


By Adding Customer Specifications,

We Can Assess Process CapabilitySpec

Limit

(VOC)

Spec

Limit

(VOC)

Target

Performance

LSS Centers

Performance on the

Target and Minimizes

Variation to Ensure

We Meet Customer

Requirements

σ σ σ σ σσ σ σ σ σσ σ σ σ σσ σ σ σ σ σσσσ��

In general, it is much easier to center a process than reduce variation


How are we implementing BPI?

19


BPI Black Belt Type

Project

Rocio Cisneros Yescas Core Equipment Strategic Planning

Ernesto Gonzalez Garza Core Whirlpool NB Intermodal Phase 2

Amanda Booz Core Car Handling Events

Nicolas Klein Core Savi Expansion for Intermodal

Judith Maribel Espino Gonzalez Embedded Establish Contingency Plan for Peak Volumes (NB Border)

Antonio Robles Embedded SB Grain Trains Inspection

Susana Mendoza Garcia Embedded Improve Locomotive Fuel Efficiency

Heberto S. Raga Ferro Embedded Boxcar Rejects - US

Carlos Alejandro Flores Blanco Embedded Locomotive Utilization

Edith Rodriguez Silva Embedded Reduce Dwell Time during Crew Changes (Mexico)

Karla Dinorah Estrada Embedded Eliminate Northbound Set Outs at Nuevo Laredo

Patrick Valadez Embedded NB 50 ft. Boxcar Reloads

Ruth Becker Embedded Improve Maintenance Spend on System Equipment

Bill Corcoran Embedded Reduce Work Events Laredo Yard SB

Michael Schuler Embedded Intra-Mexico ISS Settlements

Salvador Leon Tea Embedded Decrease Dwell Time in Monterrey Yard

People: Wave 1 Black Belt and Their Projects

20

Estimated Combined Annual Benefits:

� $6M+, Hard Savings

� $5M+, Avoided Costs/Soft Savings

� Enhanced Customer Satisfaction, Competitive

Position, Safety, Regulatory Compliance


BPI Project Timeline (example)

Aug 2014

• BPI Project Request /Goals Approved

• Team Formation� Interviews

� Baseline Mapping

� Project Planning

Sept 2014

• Data Validation• Data Type • MSA • Data Collection• Baseline

Capability

Nov 2014

• Solution ID• Implementation Go

Live

• Validation• Capability Impr.• Transfer to Owner

Oct 2014

• Hypothesis Testing• Statistical Analysis• Correlation • Regression • Opportunity

Identification

• Root Cause Analysis

Dec 2014 + 18M

• Project Closure• Control Plan • Financial Validates

Define Measure Analyze Improve Control


� Skills Application - Effective Tool Application� Projects on scheduled - September 30th

� Training – Completed all 4weeks of BPI Black Belt Training with excellent quality and delivery*

� Executive Report-Outs – June 12th MTY, July 9th and Aug 7th

� BPI Project Data Repository – Database online Aug 4th

� Excellent BPI Individual project presentations � BPI Black Belt Team cohesiveness / consistently growing� BPI included in Board of Directors Meeting – Aug 5th

22

BPI Accomplishments at KCS

* Source: BPI Weekly Survey


BPI Project(s) Category

10 Projects Are Presently Green 10

3 Projects are Yellow 3

Decrease Dwell Time in Monterrey (Schedule/Resource)

Car Handling Events and Improve Locomotive Utilization

(Benefits, Data Quality and Sustainability) 3

23

BPI Project Gate Review

5 Point Assessment Scale:

- Schedule - Data Quality - Sustainability

- Resource - Benefits

S>8.0

5.0

`BPI Project Status Update

24


MAY JUN JUL AUG SEP OCT NOV DEC | JAN FEB MAR APR MAY

25

Black Belt Wave 1/ Project 1

BBW1 - Project 2

KC Green Belt

MTY Green Belt

2015 Project ID/Selection:

• Replication/Leverage • Green Belt-level projects

Champion

Workshops

(KC & MTY)

BPI Project Proposals / SC

Approval & Prioritization

GB

Candidate

Selection

BPI Deployment

Black Belt

Wave 2

2014 2015

2nd Project Selection:

• Replication/Leverage• Expansion

Champion

Workshops

(KC or MTY, as

req’d)

BPI Project Proposals:

SC Approve, Prioritize

& Assign


BPI Roles & Responsibilities

26


BPI Roles and Responsibilities

27

•Owns vision, direction,

integration, results

•Validate & Track

•Delivered

•Benefits

•Lead BPI

teams, train

•Manages Processes

Impacted by BPI projects

•Commission

projects; provide

resources; manage

improved processes

Project Pipeline Management,

Business Priority

Understand BPI vision,

mission and value.

Resource pool for

working teams

Lead BPI

Deployment

Executive

Sponsor

Financial Analyst*

Process OwnerProject Champion*

BPI Director*

Steering

Committee*

All Employees Green Belts

Core Team & Embedded BBs

MBB & Black Belts*


A person who leads teams to solve difficult business

problems for the last time

A skilled practitioner of Lean Six Sigma methodologies

Black Belts have a dedicated focus on Lean Six Sigma projects

They are not easily stopped

They engage and inform Process Owners

They communicate with Project Champions

on project progress, issues, and barriers

They learn, teach, and mentor

Models the vision of BPI

Proven Performers Who

Deliver Quantified Results

What Is A Black Belt?

28


BPI Black Belts (Core and Embedded)

29

KCS’s BPI Black Belt Deployment Strategy Includes two paths:

Embedded (In-place) Black Belts –• Report to their existing Management• 50+% committed to BPI activities• Available for assignment to BPI projects aligned with current

organization’s goals; responsible for BPI project execution for a

minimum of 18 months

Core Black Belts –• Report to BPI Director • 100% committed to BPI • Available for assignment

as needed throughout the

organization

• Develop tools and curricula for all BBs

• Training and develop Green Belts (Q1, 2015)

BPI Director

Core

Black

Belts

CEO

Ops HR Sales &

MarketingFinance Corp

Affairs

IT


Exec Sponsor President and

CEODavid Starling

KCSM Operations: Oscar del

Cueto

PresidenteKCSM

Jose Zozaya

EVP Sales and Marketing

Patrick Ottensmeyer

Intermodal Operation:

Morris Godwin

Customer Solutions:

Mick Fenley

EVP/CFOFinance & PurchasingMichael Upchurch

Finance:

Mary Stadler

SVP OPS/CIO

Mike Naatz

Network Design:

Greg Walling

BPI Director: Matt

Bommarito

SVP Human Resources

Vacant

AVP HR Don

Emery

People: Initial BPI Steering Committee Membership Defined

30

BPI Steering Committee

Provides Program Governance,

Manages The Project Pipeline,

Oversees Program Results,

Authorizes Project Closure

PROBLEMS SOLUTIONS

Managing the BPI ‘Factory’


Project Pipeline Development

31

Continued focus on Project

Identification through:

� Updated Strategic Targets

� Leverage Targets (Replication of First Wave Projects)

� Next Targeted Organizations – Goal Flowdown/Champion Workshops

We continue to maintain a Project Pipeline


Critical Steps and Pitfalls

32


� Organization

� People

� Process

� Tools

� Governance

� Communication

33

BPI Strategic Outline


BPI Critical Steps

#1 – Develop the Strategy

#2 - Determine the Baseline

#3 - Understand the Requirements

#4 - Determine the Gap

#5 - Operationalize – Put into effect

Organization, People, Process, Tools, Governance and

Communication


� BPI Structure

– BB’s, GB’s, Project Champions, Process Owners with Roles and responsibilities

� Steering Committee

– Develop BPI Steering Committee• Participants, meeting cadence, roles and responsibilities, standard

agenda, project request->approval-> close flowchart

• Includes governance functions

– Setup 1st meeting & Inform BPI SC Participants

� BPI Charter

– Responsibilities / Meeting functions, Executive Leadership, Champion, Process Owner(s), Change Agents, Stakeholders, Project

Pipeline Origination & Reviews, Personnel Requirements

� Form BPI Team – BB’s, GB’s, Project Champions

35

Organization


� “Right” People

– Identification of prerequisites for:• Character Competencies• Technical Competencies

� In “Right” Role

– Ensure the correct individuals are matching the opportunities– Green Belt / Black Belt– Develop Job Descriptions including responsibilities, education, traits,

skills and competencies

36

People


� With “Right” Skill

– Match BPI Processes and Tools with the Skill desired

� Working on the “Right” Projects

– Ensure the Black / Green Belts are working on the right projects.

37

People (cont.)


� Implement a seamless process for projects identification,

assignment, reviews and closure

– Objective: Successfully implement the BPI process: data-driven, systematic, problem solving – consistently delivering measurable,

sustainable performance improvement; done right the first time,

solved for the last time

� Determine Process Scopes for BPI (examples)

– Process Scope #1 – BPI 1st Wave Projects for BB’s– Process Scope #2 – BPI 2nd Wave Projects for BB’s– Process Scope #3 - Green Belt Development Program– Process Scope #5 - Lean, 5s Expansion, etc.– Process Scope #6 - Cost Improvement Model

38

Process


� Standardized Tools – BPI Participants

– Competency Assessment/Skills Matrix, BPI Job Description, BPI Responsibilities Checklist, BPI Career Path, Certifications, etc.

� Format Repository – SharePoint

– Strategy, Communication, Projects

� Analytics

– Decision Support, Financial Models, etc.

� Training Documentation

– Executive, Project Champion, Black Belt, Green Belt, etc.

� Standardized Templates

– Assortment of tools used by Belts

� Project Repository

– Standard folders for file sharing, working folder, Project Tracking

39

Tools


� Leadership Team – Establish a Leadership/ Business Operating Team to monitor

BPI performance, project status reviews, identification and scoping of projects, escalation support and closure consensus

– Set-up Steering Committee (as identified above)– Approve BPI Strategy, Processes, Tools, Projects, etc. – Govern BPI Framework

40

Governance


� Educate: Executive Leadership, Champions, Process Owners,

SMEs, Belts, Stakeholders, Others

– BPI Kick Off– Lunch & Learn – BPI Newsletter– Black Belt Presentations

� Engage: Working Sessions, Status Meetings, Collaboration Tools

– Project Identification Meetings (Goal Flow Down)– Black Belt Meetings/Presentations to Project Champions

� Inform: Status Updates, Newsletters, Activity Boards, SharePoint

41

Communication


Assessment Tools

42


� How many participants are planning on implementing a similar program to the BPI – Business Process Improvement Initiative at KCS?

� Do we have representatives that would like to volunteer for their respective organization?

� Form teams of 4-5 � Complete assessments (20 minutes total ) � Report out on findings (10 minutes per group)

51

Exercise – Using Assessment


BPI Strategic Assessment Category

Item is place and operating effectively to meet goal

Item is in place but not meeting goal

Item has not been developed

52

BPI Rating Scale


� Each group discusses their findings – What constraints exist prior to your organization begin the BPI

deployment process?– What areas show strengths/weakness?– Discuss some key points regarding your teams’ assessment

• Areas of opportunity • Areas we already were aware• Areas that will require effort

� Discuss “next steps” for your group/organization

53

Exercise Debrief


� Organization

� People

� Process

� Tools

� Governance

� Communication

54

Potential Pitfalls


– Organizational Not Open to Process Improvement – Un-engaged Steering Committee/Champions/Process

owners

– Organization not effective at responding to new challenges

– Organization not able to successfully manage change proactively?

– Organization struggles to measure current performance– Message unclear or not supported from Senior Leaders

55

Potential Pitfalls – Organization


- Current leadership acceptance of Process Improvement

- Lack of “Right” Technical and Character competencies

does not exist for potential change agents

- A pool of personnel to pull for performance improve-

ment change agents does not exist

- There is no identified “leader” identified to provide

performance improvement strategic plan /deployment

- Champions unwilling to provide project oversight

- Process owners unwilling to accept change/team

solutions

56

Potential Pitfalls – People


- No alignment to organization strategic goals

- Poor structure regarding the methodology of

process improvements (Lean, Six Sigma, Other)

- Lack of Training Process/Structure

- Limited mechanism for project identification,

approval, review and closure

- No expansion plans i.e., Greenbelt/Replication

- No plans for continuation future

- No Reward / Recognition in place

57

Potential Pitfalls – Process


- No standardized “tools” for competency assessment, skills

matrix, BB job description, BB responsibilities checklist, BB

career path, certifications

- No Standard repository (SharePoint), Standards

Documentation, place to share (strategy, communication,

projects)

- Effective Training – Lean Six Sigma training sources (in-

house, consultancies, etc.) for Black Belts, Champions,

Executives

- Effective Lean Six Sigma templates, project report-outs (4

panels), project checklists, presentations, etc.

58

Potential Pitfalls – Tools


- Governance processes are clearly defined and roles and responsibilities are understood (People, Process, Tools)

- Governance process understand the usage of specific Performance Improvement Processes & Tools i.e., control charts, etc.

- Clear path for project approval, reject, close process?- Clear path for BB's, GB's identification for program

inclusion?- Clear path for Champions to identify projects through a

"Goal Flow-Down/Champion Training" Workshop?

59

Potential Pitfalls – Governance


- Ensure an effective process to inform all personnel

� Senior Leadership

� Project Champions

� Change Agent (Black / Green Belts)

� SME – Subject Matter Experts

� Finance

� Process Owners

� General Workforce

- Newsletters, SharePoint, Meetings, Project

Presentations, etc.

60

Potential Pitfalls – Communication


For additional information …..

61

Matt BommaritoDirector - Business Process Improvement

P.O. Box 219335, Kansas City, MO 64121-9335

816-983-1358 (office)

816-665-6740 (cell)


Questions?