In 2011-2012, PMC used Lean Project Management techniques to help Ultima Foods deliver a very ambitious project. This project won the PMI Montreal Chapter's Project of the Year Award 2012 as well as many other awards for its packaging and marketing campaign. This presentation will show how Lean Project Management can be used to deliver successful projects. Here is the Ultima Foods story:
For more than 40 years, Ultima Foods, owned by Agropur and Agrifoods, two of the biggest dairy cooperatives in Canada, has produced yogurt for the Canadian market under the licensed brand “Yoplait”. In early 2011, Ultima Foods risked losing the license to produce, distribute and market Yoplait (brand) yogurts across Canada. This license agreement was expiring at the end of September 2013 and Ultima Foods had no brand of its own.
Ultima Foods needed to launch a new innovative and complete yogurt line in August 2012 to ensure the presence of its own new brand in the Canadian market from coast to coast (Atlantic to the Pacific). This would enable Ultima Foods to secure 750 jobs, to protect the financial investment in the plant and to remain a major player in the yogurt industry for years to come. The objective of the “Nouvelle-France” (New-France, a.k.a. NF) project was to launch competitive new yogurt lines, drinkable yogurts and fresh cheese. These product lines included Diet, Active Health, Conventional/natural, Greek, fresh cheese, tubes and drinkable.
At that time, Ultima Foods had just completed the optimization of its new product development process, which, in theory, could deliver one product line of six SKUs (A SKU or stock-keeping unit is an item with one bar code that is sold in grocery stores) in just under 24 months. However, NF planned the launch of seven new product lines totalling 73 new SKUs in a record period of 18 months. This project was a colossal challenge; it was 12 times larger than any previously managed initiative. It must be mentioned that Ultima Foods employees had to work on the NF project while attending to their regular workload!
From the start, the company bet on its employees’ expertise, on its unprecedented innovation capacity and on innovative project management methods and techniques, including Lean and agile approaches, to deliver this project on scope and on budget with a 25% lead-time reduction.
On August 13th, 2012, after 18 months of development and US$70,000,000* in financial commitments, Ultima Foods launched the new iögo (pronounced yo-go) brand as promised. This has been one of the most successful product launches in the Canadian food and retail industry. The complete scope of the project was delivered with world-class quality, extremely short deadlines, while improving existing processes to leverage human resources (R&D, Marketing, Manufacturing, Distribution, HR, IT, Communications and Sales.) The brand attained 12% national market share within just 6 weeks of its launch!
The Deliver Better, Faster and Leaner Projects presentation will show the different notions of Lean Project Management that enabled the delivery of the Nouvelle-France project and other projects in different industries. It will identify how to address key issues in order to ensure delivering projects with great results.
When we ask employees today if they have lots of work, most people will say that they have more than they can handle. Here is a simple two-step exercise to do a quick workload assessment of the project team members:
Step 1: Imagine that you list the 10 prioritized to-dos you can do during that work day?
Step 2: At the end of the day how many of those will you have done?
People usually answer that they will have completed between three and six prioritized tasks and many emergencies during their work day. Many people will say that if they could work on these priorities without all the disturbances, many more tasks would get done on time. Just ask people how productive they are if they work from home without any disturbances. We are often twice as productive when working from home.
The challenge in today's workplace is that we have trouble concentrating on one thing at a time. We are constantly working in a reactive work mode, and although many people would like to work in a more proactive mode, they don't know how to go about it. Most of the emergencies come from sources that they can't control. In many companies, people are asked to work on their operational work and their project work. With so many emergencies requiring their immediate attention, the project work often gets last priority.
Making to-do lists is essential, but resolving the issues that generate the emergencies is critical. Remember that operational work often competes with project work. In any case, we must address and resolve the sources of the emergencies.
Using a time management tool such as a to-do (task) list is a simple but very efficient idea if it is used properly. It can be as simple as giving a template to-do list with the following columns:
b) Due date
c) Work effort (hours)
d) Description of the to-do (task)
The priority column will be defined as:
- A - must be done today
- B – must be done tomorrow
- C – must be done this week
Every morning, each individual must prioritize their to-do's. This is done by prioritizing the A's as A1, A2, A3, A4, and so on. Resources will have a daily challenge of following their priorities. Although many people use such methods, imagine if most people prioritized this way. The emergencies would be reduced significantly.
Key Project Drivers
When defining a project, the key project drivers must be defined. To make this example simple, the traditional key project drivers will be chosen: They are scope, time and cost. When asked which one is the most important one, the usual answer is “they are all important and equal.” This basically means that we don't have key project drivers that are prioritized! How can decisions be taken throughout the course of the project when there is no established priority?
To define the project driver priorities, just ask the project team the questions below. (These are questions to break the tie among scope, time and cost):
- Time versus cost – On a one-year project, what would be chosen between two extra weeks to complete the project or an extra 5% needed for the budget?
- Time versus scope – On a one-year project, what would be chosen between two extra weeks to complete the project or decreasing the scope by 5%?
- Scope versus cost – What is most important on this project, decreasing the scope by 5% or adding an extra 5% needed for the budget?
These simple questions will establish the priorities amongst the key project drivers. The key here is to adapt the questions to your project reality and make choices. Of course, make sure that there are no ties in those answers. When the key project drivers are prioritized, they must be communicated to all project members. This will ensure that everyone has a clear understanding of how their deliverables and day to day project work can be performed. For example, in a project the prioritized key project drivers could be:
This hierarchy of drivers will guide decision making during the project for all project contributors.
All project managers know the importance of defining the work breakdown structure (WBS) at the outset of the project. The deliverables must be well defined. Is that really the case?
Here is a Six Sigma example:
The goal of Six Sigma is to reduce defects by reducing process variations. This results in improved process quality to reduce costs.
What is the chance that a service of five consecutive activities be delivered correctly when activities each have an 80% conformity rate?
The rolled throughput yield (RTY) = 80% x 80% x 80% x 80% x 80% = 33%. In other words the chance of having a deliverable being successfully done on the first pass on these five consecutive activities is (RTY=) 33%, which means this process has 67% rework! This means that there are two chances out of three that the deliverable will need rework on one or more of these activities! This is a guaranteed emergency situation.
Note: If the 5 activities had a 90% conformity rate, the RTY would be 59% with 41% rework!
Do you remember the to-do list and the emergencies that were presented at the beginning of this article? Where do these emergencies come from? Yes, the rework is certainly a big cause of emergencies.
Can this be applied to projects? The same situation occurs in projects. The answer lies in this question: How many times do your deliverables need rework? If time is one of your most important project drivers, then the definition of deliverables is crucial for your project. At the beginning of the project, many stakeholders will say that they don't have time to do a thorough definition of the WBS elements. However, this must be clear, early stakeholder involvement is essential to have well-defined deliverables. This will prevent much of the rework (emergencies) in the project and it will enable the project resources to do proactive work. As the saying goes, “A stitch in time saves nine.”
One of the simplest methods to define the WBS is by doing a brainstorming method followed by a session to organize the WBS elements. This sounds simple, but in many projects deliverables are unclear. Make sure that the WBS is crystal clear to members. Moreover, rework must be minimized. Make sure that everyone understands that when they deliver something to another person, that person is their internal (or external) customer. The best way to achieve a successful transfer of a deliverable between two individuals is to simply have them talk to one another before the start of the activity and define exactly what must be delivered. Make sure that they have an agreement to guarantee a no-surprise policy on the deliverables. This will prevent lots of rework and reduce lead time.
Now that the deliverables are identified, the project schedule must be defined with all its activities.
When defining activity duration estimates, it must be known that durations follow a log-normal curve. In other words, if you ask a resource what is the duration of his or her activity, most of the time he or she will make long-duration estimates. Let's say that 50% of the time it takes four days to finish the activity and that 90% of the time the activity is done in eight days; then the resource manager will certainly give an eight-day duration estimate to the project manager. In other words, the activity will have a buffer 50% of the time and this may be true for most of the activities in the project schedule.
Understanding the Student Syndrome and Parkinson's Law is key to knowing what will happen. Here are the two definitions:
The Student Syndrome – People will start to fully apply themselves to a task just at the last possible moment before a deadline.
Parkinson's Law – Work expands so as to fill the time available for its completion.
To summarize this, every activity has a buffer that is owned by the resource and according to the Student Syndrome and Parkinson's Law it will be close to impossible to finish ahead of time! Does that sound like a normal project?
To state it simply, this regular work behavior makes it extremely difficult to deliver the complete scope, ahead of the schedule and at a lower cost. This is where notions of Lean can be of great help to optimize the project schedule.
Here are the basics of Lean:
The goal of Lean is to improve process velocity by reducing non value-added time (a.k.a. waste). This will result in improved flow to reduce WIP work-in-process, cost and lead time.
Lean divides activities into three types: value-added, business value-added and non value-added (or waste). They are basically defined as:
- Value-added (VA) – Any process activity that is essential to deliver the service or product to the customer.
- Business value-added (BVA) – Activities that are required to execute VA but aren't required from the customer standpoint.
- Non value-added (NVA) or waste – Activities that add no value from the customer's standpoint and aren't required for business reasons.
When looking at a process (or activities), an indicator such as cycle efficiency can be an eye opener for improvement. It is basically the percent value added time during the total lead time. Here is the formula:
Process Cycle Efficiency = Value-added time / Total lead time
When processes or activities are analyzed, typical cycle efficiencies often range from 5% to 30%. This means that lead time can be composed of 70% to 95% waste (See Reference 1).
If work must be done to eliminate waste it must be identified and measured. Here is how waste can be subdivided into one of eight types (See Reference 2):
- Defects find their source in poor quality control, poor repair, poor documentation, lack of standards, inadequate processes, poor design, and a misunderstanding of customer needs.
- Overproduction finds its source in producing to forecasts (just in case) and long setups.
- Waiting is caused by work stoppages often related to unbalanced flow (bottlenecks), long setups, and insufficient staffing.
- Non-utilized/underutilized talent is found when employees doing the job are not considered as experts. This results in employees not involved in problem solving with poor communications, lack of training, and teamwork. It is a general result of poor management.
- Transportation is caused by poor plant or office layout, inadequate processes, and poorly designed systems.
- Inventory is caused by over-production, poor layout, unbalanced lines, and long setups.
- Motion is unnecessary movement of people caused by poor shop, office, and workstation layout and poor housekeeping.
- Excess processing is caused by trying to add more value that what the internal or external customer wants to pay for. This is due to a misunderstanding of customer needs, lack of standards, poor process control, and human error.
To improve these activities, waste must be identified and reduced on key activities in the project. Depending on the project, waste reduction efforts will be done on activities that are part of the critical path or on activities done by critical resources.
The best way to do this is certainly by working with the people doing the job... the experts. If they participate in this project optimization, they will be part of the new optimized solution and they will definitively want to respect their commitments. To do this, take one activity and identify each one of its steps from the moment the deliverables are received until the moment the deliverable is accepted by the internal (customer). Each step will be identified as VA, BVA, or NVA (such as defect, overproduction, waiting, non-utilized talent, transportation, inventory, motion, and extra processing.)
In most systems, defects, waiting, and inventory are the biggest wastes. The experts must acknowledge the waste. Then the objective is to work with them to make the process leaner. Their ownership of the improved solution is crucial to the success of this waste reduction effort. Remember, this is done to prevent the resources from being overwhelmed by their workload during the project execution. Reduced lead times of 30% and more can often be obtained. Imagine what this can do to a tight schedule…suddenly it's so much easier to deliver on the project deadline.
Delivering a successful project is always a challenge. Using Lean Six Sigma tools, resource management and traditional project management can put the chances of succeeding on your side. Remember this: Processes make it possible and people make it happen. Projects are very much people-oriented: People's selected involvement in every phase of the project is critical to projects’ success. Using Lean Project management can enable resources to deliver more scope, take less time, cost less, and deliver outstanding quality.
The lean project management techniques presented were key for the delivery of a project 12 times bigger than any previously managed initiative. Furthermore, it was delivered in 18 months instead of 24 months, helping to secure 750 jobs. These techniques were used in this non-traditional project environment and other environments to deliver never before seen business results.
Good luck on using some or all of the presented concepts to deliver better, faster and leaner projects.