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Leaner operations and cost-effective workflow

METLIB Zagreb, May 21, 2010Jens Ingemann, City Librarian

About

Jens Ingemann City Librarian, City of Copenhagen, since 2004Adjunct professor, Royal Danish Library School

• Copenhagen - capital of Denmark • 530.000+ inhabitants• Greater Copenhagen Area – 2.500.000+ inhabitants (Denmark / Sweden).

Denmark

NV – kombineret bibliotek og kulturhus

Ørestad folke- og skolebibliotek

Copenhagen Central Library

City Hall Library

Sundby Library and Cultural House

Vigerslev Public and School Library

PRÆSENTATIONSTITEL12 DATO

Contents – this is not Business School but…

ABC – Activity Based Costing What is ABC and how it can be used Results – from ABC to LeanLean What is Lean and how we have worked

with Lean What we have achieved with Lean Holding onto/anchoring Lean


What is Activity Based Costing?

• An accounting costing system based on the assignment of all costs (direct and indirect, for example, capacity and overhead).

• The indirect costs are spread by assigning them proportionally to the activities.

• Gives the real costs of a service (e.g. a book loan consists of the purchase of the book, the material processing but also rent (cost of facility) , IT etc.

ABC – a small explanation …

What can ABC-models be used for?

ABC-models focus on variations in both direct and indirect costs.

ABC-models calculate the ”profitability” of products and services.

Which companies and organisations may use ABC-models

ABC is very relevant for organizations where a large part of total costs are indirect costs – i.e. public sector services.

Budget for service

Variable costs relatedto specific service

-

ABC-modeller ser på

variationenher og her!

Indirectcosts

’Cost of doing business’


A budget divides the financial situation into organisational units.

But it is not possible via budget statements to see development in effectiveness, i.e. how price per unit of a particular service changes.

A budget and the ABC model fulfil thus two different management tasks and are supplement to each other:Budget: Follows costs and income and the overall financial

result including liquidity development. Management of general financial development.

ABC model: Follows effectiveness and profitability. Input for strategic planning.

Why ABC when we already have a budget …


The results of an ABC analysis

The result of an ABC analysis is an answer to the question: ”How much does it cost”

The costs will be the average realised costs in the period analysed.

You will not just get the overall costs but also, for example, the proportion of the costs assigned to the payroll, IT, material processing, rent, overhead, etc.

The results can, for example, be used in a forward-thinking planning and budgeting of variations in activity levels.


What can ABC be used for

A quality basis for decision, for example, on how much the loan of a physical item of material costs versus a digital loan

Focus on high resource consumption areas – how much do we use, for example, on projects, institution services, etc.

Information about the flow of materials – important, for example, in connection with a new retrieval system, materials flow assessment, etc.

ABC for the assessment of focus areas for LEAN, etc.


The scope of the analysis

Pilot project in 2005 at HB + 3 local libraries

The existing analysis covers all of the year 2006 – and all the local libraries, HB and FSE

Data sources: Accounts 2006 Database with loans 2006 Time tracking information 2006


Composition of costs according to the type of costs

55%

0%

16%

12%

1%

16%

Payroll, netto

Staff costs

Material costs

Other

Arr.& Exhib.

Property costs.

Omkostning BeløbPayroll costs 134.673.277Payroll income -7.027.575Staff costs 1.062.802Material costs 36.344.013Other 28.841.608Arr.&Exhib.. 1.825.260Property costs. 37.089.336Other income -27.817.331Total 204.991.390


Composition of costs according to services

51%

21%

10%

1%

1%

1% 3%

5%

1%6%

Material flow

Direct user contact

Services for institutions and special groups

Special services - § 20 and revenue fundedactivities..

21. Bibliotek/ bibliotek.kk.dk

Teaching (formalised)

Arrangements, etc.. (formalised)

Development, projects, net services, PR andcommunication

Local cooperation in the community

Adminstration Fællesservice


Material flow

Material flow costs include all the costs of processing material from cradle to grave.

Processing loans and reservations Acquisition of material, purchasing and discarding Transport Administration of fees Proportion of local administration and competency development Proportion of property costs and IT

Covers both local costs and central costs at central library (HB) and Joint Services in Copenhagen Libraries(FSE)


The average loan

3,64

0,80

2,82

0,36

1,45

1,60

6,26

1,28

0,55

3,63

-

5,00

10,00

15,00

20,00

25,00

Local processing

Transport and sorting of material

Local purchase of material

FSE purchase of material

Local preparation, discarding, etc.

FSE cataloguing, preparation, basic care, etc.

Services HB – fees, etc.

Management and adm. Locally and communal

IT

Property costs

Loan processin

g

Purchase of material

Material management


Local costs

1,26

0,67

0,57

0,32

0,80

1,14

0,46

1,28

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

Local material acquisition

Preparation of new material

Local discarding and maintenance ofmaterialsShelving of material after transport

Reserved material not picked up

Processes for returned material - reservedmaterial

Processes for returned material - notreserved

Fetching reserved material


Activities 2006

Library Loans Returns Difference i%Bispebjerg 94.864 97.384 -2.520 -2,7%Blågaard 232.171 249.915 -17.744 -7,6%Brønshøj 223.057 223.558 -501 -0,2%Rodosvej 173.294 179.646 -6.352 -3,7%Islands Brygge 127.197 134.268 -7.071 -5,6%Christianshavn 113.655 120.707 -7.052 -6,2%HB 1.051.013 908.708 142.305 13,5%Husum 105.880 109.931 -4.051 -3,8%Nørrebro 288.309 310.488 -22.179 -7,7%Jagtvej 371.244 381.965 -10.721 -2,9%Ørnevej 181.115 187.558 -6.443 -3,6%Østerbro 314.352 322.387 -8.035 -2,6%Solvang 86.836 89.435 -2.599 -3,0%Sundby 311.266 323.790 -12.524 -4,0%Sydhavn 117.578 121.488 -3.910 -3,3%Tingbjerg 36.507 37.488 -981 -2,7%Valby 219.573 227.435 -7.862 -3,6%Vanløse 274.210 279.818 -5.608 -2,0%Vesterbro 320.201 337.143 -16.942 -5,3%Vigerslev 72.838 73.710 -872 -1,2%


Costs per loan (total costs)

Plus 3,64 kr. for property costs

Library Loans Costs Costs/per loanBispebjerg 94864 2.013.198 21,22 Blågaard 232171 4.044.262 17,42 Brønshøj 223057 3.743.220 16,78 Rodosvej 173294 2.669.717 15,41 Islands Brygge 127197 2.138.496 16,81 Christianshavn 113655 2.056.784 18,10 HB 1051013 21.364.516 20,33 Husum 105880 1.868.332 17,65 Nørrebro 288309 4.792.566 16,62 Jagtvej 371244 6.124.647 16,50 Ørnevej 181115 3.571.842 19,72 Østerbro 314352 5.029.625 16,00 Solvang 86836 1.524.390 17,55 Sundby 311266 4.878.384 15,67 Sydhavn 117578 2.399.403 20,41 Tingbjerg 36507 944.422 25,87 Valby 219573 3.966.829 18,07 Vanløse 274210 4.088.459 14,91 Vesterbro 320201 4.973.828 15,53 Vigerslev 72838 1.319.158 18,11


Local variations – loans

0

5

10

15

20

25

30

35

Tingbje

rg B

ibliot

ek

Bispeb

jerg

Bibliot

ek

Sydha

vnen

s Bibl

iotek

Hoved

biblio

teke

t

Ørnev

ej Bibl

iotek

Christ

iansh

avns

Bibl

iotek

Vigers

lev B

ibliot

ek

Valby

Bibliot

ek

Husum

Bibl

iotek

Solvan

gs C

entre

ts B

ibliot

Blågår

dens

Bibl

iotek

Islan

ds B

rygg

e Bibl

iotek

Brøns

høj B

ibliot

ek

Nørrebr

o bib

liote

k

Øbro

Jagt

vej B

ibliot

ek

Øster

bro

Bibliot

ek

Sundb

y Bibl

iotek

Veste

bro

Bibliot

ek

Bibliot

kesh

uset

Rod

osve

j

Vanlø

se B

ibliot

ek

Local processing

Transport and sorting of material

Local purchase of material

FSE purchase of material

Local preparation, discarding, etc.

FSE cataloguing, preparation, basic care, etc.

Services HB – fees, etc.

Management and adm. locally and communal

IT

Property costs


ABC analysis of material processing

The ABC analysis from 2006 shows that: 105 FTE are used for material processing at the

libraries 33 % of total staff time in the libraries are used

for material processing, while ca. 27 % are used for direct contact with users.

Material processing connected with loans takes up the most time


From ABC to Lean

ABC is an analysis of the actual resource consumption while Lean is a method or a tool to improve working procedures, make them more efficient and/or give a better service.

ABC can be used to select focus areas for Lean and subsequently provide documentation for effect/less consumption of resources.


Lean objectives in material processing

To free resources in the material processing that is connected with loan processes and as a result:

Improve the physical working environment by reducing the amount of repeated and monotone work.

• Improve user services by transferring the resources to direct user contact and development tasks.


What has been done?

Lean has been implemented at all the libraries in Copenhagen in 2008-2010 (19 local libraries and Central Library).

A manager and 2 employees from each library have participated in a joint training course with other libraries.

The training courses have consisted of 5 modules (over a 4 month period) with both training in Lean and tasks connected with preparing local initiatives.

A ”Toolbox” has been prepared with descriptions of solutions that can be used at the libraries.

Now Lean will be implemented at all institutions in the Department for Culture and Leisure.


What did we discover?

Diagnosis as basis for Lean Lacking knowledge of users’ preferences Have we optimally organised our daily tasks? Too much firefighting and not enough planning Individuals making priorities – no ”team” prioritisation We don’t, in fact, include operation and service

objectives in our daily work Not all tasks are visible Standards are not actively used Duty is shared out … not tasks There is often no precise responsibility for operation

tasks Operation management is not in focus


What has been achieved?

Now generally more focus on production management

Improvement of specific working procedures so that the libraries supply users with material quicker with a lower resource consumption

Improvement of the physical working environment by reducing the amount of repeated and monotone work

Better service for users by transferring resources to direct user contact and development tasks

Basis for further work with continuous improvement due to greater focus on production management and target management.


What have we learnt?

Management is crucial in order to get results. Lean is about creating a better daily operation. It is difficult to transfer experience from one

library to another – the training process is also a learning process for the participants.

Important to define a local target for the implementation, e.g. 10 % cost reduction..

Solutions should be tailored to local requirements and conditions

Lean and management

Lean puts focus on operations management – an often forgotten discipline in service organisations and in connection with administrative tasks Focus on management is often either on professional management or strategic managementPrestige and rewards are often connected with development projects.”The operation looks after itself”


Strategic managementFocus and direction

Personale ledelseSikring af ressourcer

Faglig ledelseFaglig kompetence og kvalitet

DriftsledelseStyring og optimering

Personnel management

Providing resources

Pofessional management

Professional expertise And quality

Operations management

Control and

optimisation


Holding onto and anchoring Lean Lean as a way of working – focus should be held onto this

for continuing results with Lean Fora should be planned for knowledge sharing,

assessment and the opportunity of consulting an adviser in connection with ad hoc initiatives.

Lean/operations management as a part of the education of management within administration

Lean/operations management participating in performance based pay and Balanced Scorecard

Lean/operations management as a mutual language and method in administration

From a change management to an improvement management!


Objectives for Lean in 2010-

To ensure an effective, safe and professional operation by:

Securing better quality services for citizens. Streamlining working procedures so that existing

tasks are executed with fewer resources. Improving the working environment by reducing

stress and repeated working procedures . Introducing a structured target management and

improvement culture. Within the main objectives, local management

should formulate objectives for e.g. freeing resources in order to extend opening hours or retaining a level of service despite a cutback.

Thank you!!

Questions and comments are most welcome!

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