What Toyota’s lean principles tell us about building ops

Photo courtesy of the Samuel Zeller

Richard Hart–Strategic Energy Management at Cascade Energy–discusses how building operators can save time and money by cherry picking the best ideas from lean manufacturing.

Gridium:         Hello everyone, and welcome to this conversation with Richard Hart, of the Strategic Energy Management practice at Cascade Energy. We’ll discuss the value of lean manufacturing best practices for building operations. This is a juicy topic. We’ve explored the ideas of Kaizen, or continuous improvement, in our writing and we’ve spoken with Kilroy Realty’s SVP Sara Neff about the 5 Whys Method.

My name is Millen, and I’m with Gridium. Buildings use our software to fine tune operations.

I’m excited to speak with Richard about Toyota’s lean process principles and the results he’s seen in building operations. And of course, this is not only because Richard and I once worked together. OK, Richard, thanks for joining us.

Richard:        Well, thanks for inviting me, Gridium. You know, I’ve worked with manufacturers and with commercial buildings extensively over the last 10 years and it’s really great to cross that divide.

But let’s state at the outset that buildings are not the same as factories; if nothing else, building occupants are clearly a lot harder to please than cars moving through a production line. So, that’s why it’s important to cherry-pick the best ideas in Lean that are going to be really applicable to building operations and that’s what we want to focus on today.

Gridium:         Great, let’s get started. What is Lean in two sentences or so?

Richard:      Well, it’s going to be three, so here we go.

The first key idea is to eliminate waste and Toyota thought very carefully about this and they realized there are seven categories of waste, and we’ll go into those later and how they might apply to building operations.

The second key idea is that waste usually happens because of poor systems, not because of stupid people; so focus on the system, not the people. And the third key idea is that the best people to cut waste are the ones who are deep in the process and the equipment, so you have to give everybody the power and the opportunity to act.

Gridium: What are some of the benefits that organizations have seen?

Richard: Thousands of organizations have implemented Lean methodology and they’ve seen radical improvements in cost, quality, productivity and delivery times. I’m just going to cherry-pick a few examples from the state of Washington because I think it’s what they’ve seen across the state—they’ve had a really significant implementation—but they’ve seen things that are very close to what buildings can see so, I’ll give you some examples here. The facilities and buildings and grounds department decreased the percentage of repairs taking over two weeks from 76% to 18%.

Gridium: Awesome.

Richard: So, they went from majority of repairs taking more than two weeks to the majority of repairs taking less—like a real flip, from 76 to 18.

Another department involved in licensing improved the process of resolving complex calls and the result is they eliminated over 10 thousand customers who were waiting more than a day for a call back, and they freed up over a thousand staff hours, right?

So, we hear that about complex hot and cold calls, you see where that’s going. And the last one is in the area of safety and the department of enterprise services there decreased the number of severe injuries by 43%.

So, there we’ve got examples of repairs, calls and safety, things that people are involved in every day in buildings and they saw radical improvements in the state of Washington.

Gridium: Wow. Many folks in our audience own, run or fix buildings. How do you think it applies to building operations specifically?

Richard: Let’s go into that in more detail.

We all have moments in the day when we think, “Well, that was a total waste of time.” So, what do you mean by that? We typically mean that it really didn’t add any value. No one’s life was better as a result, so Toyota said, “Let’s make sure that everything we do adds value.”

Once you take that approach—and by the way, that means you have to think what is value in our organization. Not always an easy question, but let’s suppose you can really pinpoint what does it mean to add value.

You can start questioning a lot of routine activities, right? So, why do I produce that report weekly when it’s only looked at monthly? Why are work orders organized by system instead of floor, so I spend half my life in the elevator?

Why is it so hard to find tools in our storage area? Why do I keep on telling people to put their space heaters away? So, in other words, if your team adopts this Lean approach you’ve now got a common language to talk about problems. You can talk about value, you can talk about waste and you have a particular way to get to the bottom of what that waste—where that waste comes from.

And let’s say there are just four or five of you in the building management team, you don’t have to be a Lean expert to pick up some basic ideas and start weaving them into the day. And the great thing is you can start doing this slowly, so it doesn’t have to be a total revolution in your daily activities. Now, you know, let’s say a classic place to start is by asking, “Are we moving about the building too much?” And teams often find, if they just brainstorm on this fact and this issue in a structured way for 15, 30 minutes. They’ll find some ways to be more efficient. Now, you’re not going to solve everything, but you’ll start to see progress and that builds on itself and you start to see some typical ways that Lean adds value to the organization.

Now finally, we won’t get into this today, but some of your listeners are on the construction side as well and there’s a major effort to introduce Lean principles in the whole design and construction part of getting buildings up. And so if you’re planning a big project, you should check out some of the links that will be here in the show notes.

Gridium: That’s right. So for now, imagine you’re speaking to a chief engineer who is catching on to the gospel of Lean. What are some of the more detailed elements to this process?

Richard: So, you know, we talked about Toyota’s insight that waste is actually in seven categories. I’m going to go through those—you’re not going to remember them all and there’s lots of information in the notes and on the web, but let’s just sort of talk about them and maybe this will start to resonate.

So, the first is waiting. Like, how much time are you spending waiting, for example, at a job site for supplies or equipment? Or how many times are you spending idle waiting on hold for somebody? There’s a lot of waiting that goes on that is obviously a clear waste of time.

The second is transportation and that would be moving something from one place to another. Right? So, are you moving supplies or tools from one place to another? How many times do you have to go up and down sideways across the building to move something from one place to another and then back again? And other ways to reduce transportation.

The third is inventory. Now, clearly in manufacturing inventory’s a huge issue, but we can also think of inventory in any building: there’s going to be an inventory of supplies and how well is that inventory aligned with what you’re actually trying to do? Do you have a supply closet stuffed full of excess material that you never use? Do you have an expensive tool that’s rarely used that might be able to be rented, for example? So, these kinds of ways of thinking about inventory and the way it might address waste in the organization.

The fourth one is motion, so this goes back to the elevator example I just mentioned. How much time are you travelling unnecessarily around the facility, right? So, that’s just you moving from one location to another as opposed to transportation where material is moving from one place to another.

The fifth one is over-processing, right? So, in other words you’re doing more than you really need to do. Now, you know, you can think in manufacturing of buffing up equipment that don’t need to be buffed or that kind of thing. In buildings, what we’re thinking is people doing excess maintenance on some equipment and I think there have been a lot of interesting work done on the right periods for maintenance and how do you really schedule your preventive maintenance in a good way that’s not over-processing and not over-spending time on the maintenance.

And likewise, all around kind of office work, excessive polishing off those reports that really don’t need the work, right? The amount of time spent on PowerPoint and stuff, right? So, just over-processing in general.

The sixth one is overproduction, which typically in the manufacturing world means making more than you really need, but I like to use it actually on the energy side. So you can think of over-cooling, over-heating, over-lighting—these are typical things that we see, many buildings, different parts of the buildings are really over-producing heating and cooling and lighting, and there’s a really good opportunity to think about that.

And the last one is defects; in other words, the job wasn’t done right the first time and that’s just a classic problem and there’s lots of reasons why that might happen. But really trying to drill into what are some of the key reasons why you might be called back to a job that you thought you’d fixed. Now another side of defects might also be under-cooling or under-heating or under-lighting a certain part of the building and so, you can think about those kinds of defects as well.

So, those seven are waiting, transportation, inventory, motion, over-processing, over-production and defects. And again, once you write it down, look at some of the notes that are going to be on the Gridium website, then it’ll be much easier to start having this discussion with people inside the organization.

So, those are the 7 key waste types. Now, when you start looking through this, the Lean purist would say, “We’ve got to put all of these into a time management system and it doesn’t work without a whole big sort of overhaul of your approach.”

Now, I don’t think that’s actually true.

I think you can start with one or two that really cause strife, right? So, you might say that inventory is a really big issue which means the organization just has stuff everywhere. You might say, or there isn’t enough, right? So, that’s another issue that might be a problem. You might say that over-processing is a problem, that you really actually think you’re doing way too much in certain areas and you should be able to cut back. So, just pick one or two of these seven that are really going to have an impact on your organization just to get the hang of how to think about these in a Lean way.

So, those are the 7 Types of Waste. The second part of this is how to investigate those wastes and you mentioned earlier that you’ve had that conversation with Sara Neff of Kilroy about the Five Whys, so we don’t have to talk about that—that kind of increasing level of investigation—but I want to come back to a story about that in a minute, just because I think it’s a great story.

But the last piece is the Five S Description of the workplace and it’s… I’m not going to go through another list of things but the Five S Descriptions is essentially saying how well organized is your workplace to get stuff done.

So you can think of, if I’m at my desk and I need to get something out of my computer, I need to get something from a file, I need to get something from a drawing, how much work is it to find those things, right? Likewise, for custodial staff as they move about the building, how easy is it for them to walk into the custodian’s closet and grab exactly what they need as they need it, right? People who are doing maintenance, as they’re getting into various parts of the facility, how easy is it, how could… how good is the access? When you get access, what do you find up there? How clean is some of the areas that you happen to get access to?

You know, we’ve all been in these situations, we walk into a tightly-organized part of the facility, you know, where there might be some HVAC equipment in there tucked into a server closet or there might be a custodial closet that’s got all kinds of other stuff inside it and it just is… it’s like opening Pandora’s Box, right? You just wish you had never really walked in there so… so the degree to which you can organize the work space in an effective way. And again, I’ll stretch—that also means organizing all of your computer files and server information. That’s going to have a really big impact, right?

So, really the three things to think about are the 7 Types of Waste, the Five Whys and the Five S workplace. And again, I’m not going to go into the Five S, but you can certainly get into those kind of organizational principles by just doing a quick search on the web or using some of the notes that are going to be on the Gridium website. And again, I want to just stress: so that’s, seven things and five things and five other things and it just sounds like sort of a overwhelming lists for the organization.

You don’t really need to take everything on to be successful. You certainly can think about picking one of the 7 Types of Waste you want to act on. You can think of using the 5 Whys; well, that’s just asking why a lot of times, right? And so, it’s really possible to introduce this in a shorter way.

Let me just give an example.

Let’s think about this question: why is it so hard to find tools in our storage area. So this happens everywhere, right? In one example, the tool rack had been organized by someone who was actually six inches taller than many people on the current team, so they ended up dumping tools on a shelf rather than having to get a ladder to reach up and put things back in their place.

So, that was just a persistent problem—everyone got used to it. But obviously, if you’d just investigate a bit why are things the way they are, it gives you the opportunity to fix that particular problem. In another case, there was a tool belt—a series of tool belt hooks that were on the back of a door in a storage area, so it was inconvenient,  so people ended up just leaving their belts still filled with tools on the back of their chairs and no one could find any of the tools because they were scattered in belts all around the building.

That was another example where just sort of asking these questions in a systematic, fair way and saying, “Let’s think about a particular problem, a particular kind of waste”, in this case of this sort of motion, people having to move back and forth to find tools, they were able to really clarify the issue and then resolve it so that they were—everyone was moving about a lot less and also there was just a lot less stress amongst the team, because they weren’t just backbiting with each other trying to find out where stuff was, right?

So, using a particular approach and thinking about the 5 S’s, they actually were able to be really successful.

Gridium: These concrete examples are really helpful, Richard. I understand that you have some more stories where Lean principles have delivered quite impressive results. Can you share a little bit about that?

Richard: Sure, sure. So, I mentioned earlier the state of Washington—I wasn’t involved in that project but you can see how an organization can really make some significant strides in aspects that are really important.

So, I’m working right now with a hospital that has rolled out Lean and the facilities team, they have a clear understanding of how they deliver value to the organization; so, they understand that they affect patient satisfaction, they affect cost, they affect staff satisfaction—they’re really clear about how they do those things.

And they save thousands of dollars on operations costs. They’ve made some radical improvements in on-time completion of work orders. So, they started at 55% on time completion—that sounds pretty typical—and they’ve actually managed to work up to 95%. Now, they’re not at 95% all the time, but they were looking at 95%, they’ve reached that standard, and they’re hovering around it so that’s a big improvement…

Gridium: Cool.

Richard: …from only 55% completion to 95% completion. And they’ve also really engaged the team, so as I mentioned earlier, one of the key insights from Toyota is, “Look, you can’t get people coming in from the top or from outside to get the idea on how to improve. It really has to come from the people who are deep in the process.”

So, in this particular department, they’ve implemented over a dozen employee suggestions in the past 10 months, so they’ve able to get people to understand that there is a process, they’ve submitted their ideas, the ideas have been implemented and that’s why they’ve seen some of these massive savings in cost or this real improvement in their ability to deliver what the organization is asking from them, which is on-time completion of the work.

Now, let’s just sort of think about, “Well, how do they do that?” Well, a couple of things that really help them is they have a huddleboard—so, they’ve got this board in the engineering department and every day the team gathers at the huddleboard for a few minutes and the huddleboard is organized with some data and some ongoing activities and a report of where they are in terms of implementing the ideas, the Lean ideas that people have come up with.

And so, they take it in turns in the department—there’s about half a dozen of them—to describe their progress on eliminating waste and how they think they’re adding value, and they use standard charts and layouts to describe what’s going on. So, they know every time they come up to that board they’re going to see a series of layouts that they’re familiar with.

Now, the second thing is—I’ve just mentioned—is they have this everyday Lean idea form. So, it’s a standard way of asking people for ideas and then getting them to think through the consequences of those ideas. In their case, there’s actually an organization-wide thing and if you do a quick Google search on everyday Lean ideas, you’ll pick up a variety of different implementations of that.

But it’s essentially a standard form. Now, you know, your typical employee suggestion form often doesn’t really ask people to think through what they’re suggesting, right? So, this form says, “Well, why do you think this is going to have an impact?” “Did you follow the issue down to its real heart?” You know, it’s by asking the why, why, why, why, why questions and again, they don’t see that.

All employee suggestions do is scrape the surface of an issue without really thinking about why it’s happening and then they ask, “How do you know that you’re going to be successful? What measurement are you going to use to before and after?” So, those are some really good ideas that have helped this everyday Lean idea form actually work as a suggestion method and it’s really helped inside this facilities organization because people there can submit their ideas and they say they’ve actually implemented them because they’re good ideas and they’ve been thought through.

I want to just mention one quick example about the 5 Whys. If you look up—I think this is a YouTube video actually about 5 Whys of the Jefferson Memorial, there’s a very simple video—which shows a deep investigation into a crumbling masonry at the Jefferson Memorial in Washington DC.

And originally the team thought they were going to have to spend an inordinate amount of money trying to repair the facility and re-work the masonry there, and they figured out through a series of investigations that actually the problem was due to insects attracting spiders, attracting birds, attracting bird droppings, the bird droppings were mixing with the soap and with the cleaning solution that they were using in which the airline fuel—because they’re pretty close to national airport—and they realized that actually the solution was not preparing the facility or changing the way they were thinking about cleaning; it was actually leaving the lights on for less time, right?

So, if they could turn the lights off, they’d get fewer insects and the whole chain sort of went down from there. So, that’s a really good example of using 5 Whys where all they needed to do was turn the lights off and that really solved the problem. So, a really good video to sort of help you understand how this sort of deep thinking gets you to the heart of an issue and in their case in particular, digging deep saved them a ton of money because they addressed the issue in a very simple way as opposed to something much more complicated.

Gridium: That’s awesome. Earlier I asked you to dig a little deeper into the details, so if you will now allow me to ask for the highlight reel.

Richard: Sure.

Gridium: What would you say, Richard, are some of the most important elements here to remember?

Richard: Let’s go back to the key takeaway which is about eliminating waste and by standardizing your discussion about waste in these seven categories, you focus on the systems and the processes, not the people.

And the great thing is you can start to establish a common language that saves time and saves costs and reduces stress. And it’s really a holistic system in many organizations, but the great thing is you can start small within the team and build up from there. Now, there’s lots of info on the web and there’s some in the podcast notes, so you just have to remember 7 Wastes, 5 Whys and 5 S’s, and that’s really the way to start down this process.

Gridium: I’ll ask you offline, Richard, for some suggestions for our reading list which I’ll include here and we don’t need to chat through each one but thanks for gathering those and I look forward to sharing them with our audience.

Richard: Sure. I’ll just mention one. I mean, the EPA has done a nice job of putting together a lean energy toolkit on their website. They’ve really sort of thought through this so if you just, again, search for Lean Energy Tool Kit EPA, there’s quite a nice gathering of all relevant information into one place. Otherwise, you can just look at some of those things that will be on the podcast notes.

Gridium: Excellent. Well, thank you Richard for speaking with us today, this has been fun. I’ve really enjoyed it.

Richard: Yeah, thanks for the opportunity, Millen. It’s been a good conversation. Look me up on LinkedIn if you want to continue the conversation.

Gridium: Great. Thank you, Richard.

About Millen Paschich

Millen began his career at Cambridge Associates, trained in finance at SMU, and has an MBA from UCLA. Talk to him about bicycling, business, and green chile burritos.

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