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February 2013



Rail Industry Trends Article
Railroads should use their strong safety culture as a foundation for improving service and productivity (commentary)



Rail Industry Trends

— by Jeff Adams, general manager of continuous improvement, Canadian Pacific; W. Scott Timpson, president, Canada of Argo Inc.; and David Bilby, vice president of operations, Argo Inc. Contact them at info@argoconsulting.com

There's increasing urgency among Class I railroads to drive operating ratios into the low 60s. With investors looking for cost reductions and operational improvement, railroads should capitalize on their strong safety culture and use it as a foundation for improving quality of service, utilization and productivity.

A strong safety culture is evidence of strong fundamentals and can be a powerful illustration of the cultural change achievable more broadly in the organization. The top three requirements of a strong safety culture — standard work, accountability and problem-solving skills — are also the top requirements of a continually improving operation.

To implement standard work, begin by observing variations in current processes, which can lead to accidents and wasted labor, assets and components. For example, in asset maintenance, an oil filter replacement can vary greatly depending on the individual doing the work. Does the person stop to get the filter or line it up beforehand? Is the actual replacement step 7 or step 20 within the work sequence? Is the work sequence even defined? By making detailed observations of different work sequences for a particular task, managers can determine the best way — the most effective, efficient and safe way — to perform the work, and then standardize exactly how it should be performed.

The Power Of Positive Reinforcement

Driving accountability is critical to implementing and sustaining standard work. Without proper consequences consistently applied, leaders are unlikely to drive and sustain new behaviors. Individual behavior must be reinforced positively for following the standard but corrected when variation is introduced. Visual management is another powerful reinforcement that increases accountability and productivity by allowing workers to see how they're doing, on as close to a real-time basis as possible, via appropriate key performance indicators.

As unexpected issues will arise despite standardization, robust problem-solving skills are necessary to ensure that workers can address these issues safely and effectively. After demonstrating consistent leadership and defining the desired outcome — for instance, decreasing a scheduled locomotive maintenance from 19 to 13 labor hours — managers can help develop problem-solving skills by engaging workers in determining how to reach that outcome. What do they see as the one best way to do the work? What visible measures would let them know they've done a good job?

This collaborative "bottom-up" process will lead to workers "owning" the new standards and give them valuable practice in observing and documenting a problem, determining an answer based on careful analysis of those observations, and implementing a viable, sustainable solution.

By taking the tools and methodologies used to develop a strong safety culture and applying them across the organization, railroads can improve quality of service, cost control and asset utilization. But there are additional points to keep in mind that will help lead to organization-wide operational excellence:

  • Start small, think big. A pilot project can serve as an initial "lab" to demonstrate results and generate buy-in, but bottom-up improvements need to be driven and executed by effective top-down leadership on objectives and priorities. This requires focused goals by each value stream, cutting across functional silos and communicating how individuals can contribute.
  • Convert to financial improvement. Determine what the outcome of standardizing a particular process will be in the relevant operating metric, and link that outcome to financial improvement to create a platform for change. Once the change is executed, it's critical to crush out expenses or assets to render the financial benefit, and not let the removed waste migrate elsewhere.
  • Develop internal capability. Deploying standard work, visual management and facilitating precise behavioral reinforcement are specialized skills, and most cost effective when delivered with internal resources. If these skill sets are not internally developed, outside expertise should be engaged with a specific goal of knowledge transfer to internal resources.

Ultimately, developing a culture of operational excellence will also lead to improvements in safety, as undefined processes and a lack of consequences can create safety issues that will be minimized via standard work, accountability and problem-solving skills.

 



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