How Town of Cary used LEAN to Create a Better Contract Approval Process

1. How Town of Cary used LEAN to Create a Better Contract Approval Process Michelle Brooks, CPA Financial Operations Analyst March 12, 2013

2. The Background • In December 2009, the Town of Cary held a training session on LEAN principles and practices with staff from the NC State University Industrial Extension Office. • The training included a mock exercise to help the group understand how the analysis worked and how we should consider applying it to Town processes. • Prior to deciding how to move forward, town management wanted it specifically expressed that the focus of any process chosen for LEAN review would be to save staff time by streamlining the process. That there was no intent to use the information learned to place blame or eliminate positions involved.

3. The Background (cont.) From the training, it was decided that the Town’s existing contract approval and routing process would be a good candidate for LEAN analysis. In February 2010, a group of 8 key staff from a variety of town departments heavily involved in the contracting process met with a facilitator from the NC State Industrial Extension Office to conducted a Value Stream Mapping of the existing contract routing and approval process.

4. The Background (cont.) Value Stream Mapping is used to study a process to determine the total time needed for completion, the time where action occurs and the wait time. It was a 2.5 day process to map out the current process and determine the time wasted by waiting in the linear process. The group used actual information gleaned from the existing contract routing software system in the evaluation process. This measurable information was key in determining where the true problems were in the process.

5. What Did We Learn • Combined overall route time of all contract approval processes averaged 28.4 days. • The full current contract approval process averaged 53.3 days to complete, then approximately 50% of all Town contract volume. • Contracts routed through the PO process (PO with terms included) average 22.3 days, then approximately 10% of all Town contract volume. • This is we referred to as the current state. • Most importantly, we discovered that there were many contracts across Town departments that were not being approved through the contract approval process.

6. Conclusions Based on the timeframes measured, we concluded that: • More contracts being approved through alternate processes would greatly speed up the approval process. • We needed to remove stops in the process where no value was added. • Expanded use of standard contracts would speed up the approval process. We used these conclusions to map out a proposed future state.

7. The Future State Based on the conclusions of the analysis, the group created a future state with these goals: • Reduce volume of contracts required to flow through the full approval process by using new authority levels. • Employ a set of standard terms and conditions for contract development. • Employ use of more standard contracts.

8. The Big Sell • On the afternoon of the 3rd day, we brought management back in to present the results of the analysis. • They were surprised to learn that approvals were taking longer than they even perceived. • The group presented the proposed future state. • The Town Manager gave the go ahead to create an implementation team.

9. Implementation The team began a bi-monthly meeting schedule in March 2010. We determined what procedures needed to be modified and created. All documents were modified and processes documented in late 2010. We went to council in December 2010 to gain their approval for the delegated authority the new process depended on.

10. Implementation (cont.) January –February 2011 the software was modified to support the new process and clean up of old and incomplete system data was completed. A training plan was developed and executed to train staff town-wide how the new process works. We went live with the new process March 1, 2011.

11. New Process Challenges • Process is more complex – authority levels, approval levels. • Greater risk in the contracting process because the Town Manager is not the approver of all contracts. • More responsibility – decentralized process means more responsibility on those involved in the process.

12. Outcomes • What did we gain: • A more efficient process for contract approval – contracts are being approved at the appropriate levels within the organization • A complete population of contracts approved • Documented delegation of approval authority • Standardized terms & conditions, and contract documents that are used by all town departments • A routine contract training program and materials for new staff and any that need refreshing on the process

13. Would We Do It Again? YES! With the right project. YES! If there is support from the Town Manager’s office to make a big change in process. YES! If there is capacity within existing staff to effectively implement changes based on the analysis. YES! If we have resources to hire a facilitator because we do not have the right skill set on staff to facilitate in-house.

14. Before You Decide…. • Is the project you are considering small enough in scope that it is manageable? If not you may need to break it down into multiple projects. • Do you have measureable information about the process you are considering. This is especially critical. • What is the level of management support for change? Without support from the top, there might not be enough resources available to you. • Be realistic about how long it’s going to take. It took us a year to implement! • Do you have a strong, knowledgeable project manager to push the project forward? All successful projects have a champion! • Be upfront and honest with your stakeholders. It won’t be easy, but it will be worth it.

15. Thank you!