Keeping the Presses Rolling, More Efficiently

North Jersey Media Group, a Hackensack, New Jersey newspaper publishing company tells their story of Lean implementation in a non-manufacturing environment.

Lean Manufacturing. Continuous Improvement. Total Quality Management. Over the years, they have gone by many names, but in the final analysis, the mission has been about increasing efficiency, reducing waste and improving productivity. Yet, the best kept secret regarding these "lean" methods is that they are not just for businesses associated with manufacturing, processing operations, assembly lines and the like. And there is no better proof of this than North Jersey Media Group and its half-million dollar savings - minimum - in 2004.

NJMG provides a broad spectrum of news and information services to diverse communities all across North Jersey, publishing over 13 different magazines, 38 weeklies and two major award-winning daily newspapers, The Record and the Herald News. It may be recalled that Record photographer, Thomas Franklin, captured one of the nation's most memorable and thought provoking photos just after the 9/11 attacks in New York - the unforgettable image of hope as three firefighters raised the American Flag over Ground Zero. The photo was first published on Sept 12 in The Record.

Jonathan Markey is president and COO of NJMG and part of the core team that built USA Today, where he was the originator of that paper's Quality program. Beginning around 2000, NJMG was facing a number of difficult business issues, including circulation challenges, a significant drop in advertising revenue due to the economic downturn, changing market forces, and the need to maintain and improve quality and delivery services while at the same time managing operating costs. With his extensive experience in the business, Markey recognized that his was an industry steeped in tradition and often times resistant to change. Yet he also realized the time to reshape the way business was conducted was never more critical.

As head of NJMG, Markey was looking for something special to employ that would include both a high level of participation and commitment from the entire workforce and have a dramatic impact on the Media Group's operations, efficiency and customer service. As far as he was concerned, there could be no sustainable success without everyone in the company being on board. Markey had a history of recognizing the need for improved efficiency, having -deployed a number of process-based management and continuous improvement programs at NJMG. Some

of these included creative sessions for generating new ideas, -, employing Continuous Improvement techniques in NJMG's Commercial Printing Division, and tapping into the expertise of the National Newspaper Association of America in developing a "team-based" partnership program.

Productivity Inc. Comes On Board

As it turned out, most of these initiatives didn't offer a sufficiently robust structure or training program, and all of them failed to sustain significant progress. A recommendation was made to contact Productivity Inc. of Shelton, CT, and when Productivity participated in the bidding process, NJMG liked its level of knowledge and experience in Lean achievements, as well as the ability to guide NJMG to an understanding of how many of the successful methodologies could be adapted to the newspaper publishing industry. In January 2003, Productivity Inc. was hired and immediately developed a strategy for conducting management and employee training. Phase One was an intensive 4-week program in which 15 NJMG mentors were taught and discussed Lean Thinking fundamentals - fundamentals like what exactly Lean is, and precisely how it works. Topics that were covered included Wastelogy, Strategic Thinking, Value Stream Management, Leading World Class Teams, Mistake Proofing, Change Management and more.

"For many organizations there remains an air of mystery around Lean, where employees and upper management aren't quite sure what it is and how it can work in their own environment," says Senior Continuous Improvement Mentor, Mitchell Krugel. "Productivity Inc. helped dispel all that by explaining how to identify wasteful methods of operation in any department ... and how employees can help make changes to improve their own and the company's efficiencies."

Lean Office, as it is sometimes called, can do for a business's administrative functions what Lean Manufacturing can do for its production operations. In fact, it is estimated that 75% of an organization's opportunity for waste elimination can be found in areas other than manufacturing. Combine this with research that suggests white-collar "knowledge" workers are only 40% to 60% productive, and the possibilities for improvement are enormous. Yet Lean Office has been branded as a program for "just office" improvements, when in fact, there are hundreds of transactions taking place within an organization that are away from the so-called office. Markey and senior mentors, Mitch Krugel, Mike Ruiz and Jackie Wilson, who in the fall of 2003 formed the company's Lean leadership group known as the Office of Continuous Improvement, recognized that NJMG could benefit by becoming a truly Lean transactional environment. Throughout the 4-week, customized "train the trainers" sessions - spread over a four-month period - Productivity Inc. shared key Lean perspectives with the 15 NJMG mentors, all managers who represented various departments within the company. The sessions were crafted after a similar program offered by Productivity Inc. and the Fisher College of Business at The Ohio State University called the Lean Manager Certificate Program (LMAC). It is designed for middle and top-level executives at any company seeking the essential knowledge necessary to drive Lean throughout their entire organization. Successful completion results in full certification as Lean Managers by Productivity Inc. and The Fisher College of Business.

Discussions during the train the trainers sessions covered such topics as industry similarities on waste reductions, the transfer of Lean know-how, and most importantly, how Lean methods can apply throughout NJMG. Homework assignments were given, where employees were required to report back after developing Process Mapping, implementing a 5S program, planning and executing a Kaizen event (a small group of employees focusing on improving a specific area or operation), and identifying and suggesting other operational improvements. Management was invited to these "report outs" to hear what employees had discovered and learned. Then came Phase Two - two days of senior management training, followed by presentations to mid-management. After this the 15 mentors in various combinations held a series of full-day training sessions for 20-25 employees per class, representing different departments so as to create cross-functional learning and application skills. In total, from September 2003 through January 2004, nearly 1,100 employees were trained in the fundamentals of Lean and on the tools available for continuous improvement.

NJMG is comprised of five divisions, each responsible for an operation - the dailies, the weeklies, specialty publications, the Internet, and one for its commercial printing operations. However, its implementation phase focused on the Daily Division, which employs over 60% of the company's workforce and which publishes The Record and Herald News, with a combined circulation of 178,438 daily and 212,908 on Sunday. In 2004, nearly 200 improvement opportunities were identified, and with close to 700 employees participating, 68 different improvements were completed during 2004. The Daily Division's Lean Scoreboard ranged from saving five hours of part-time, local sports coverage time per week (and thereby shifting the help to busier work shifts) to saving $22,000 with an improved news archiving process, to increasing Saturday classified advertising color capacity, resulting in an opportunity for $236,000 of additional annual ad revenue.

Delivering the Goods

In January 2003, the first critical initiative undertaken by the Daily Division as a part of its Policies and Objectives Matrix was to improve newspaper on-time delivery service. Although its on-time average was a solid 92%, the Daily Division knew it had to get better. A cross-functional team representing all major departments was formed to prepare a process map of the steps involved in getting the newspaper out more efficiently. The team quickly discovered that the people involved in the different steps of the process didn't quite realize how their own task deadlines impacted down-the-line work efforts. After reviewing each task - editorial production, pre-press (making plates), going on press, and post-press bundling - a better process was developed to improve flow and reduce job times. The end result was that the Daily Division bumped up its on-time delivery average to 98%, and is working towards a goal of 98.5% for 2005. With the industry averaging only 89%, these numbers reflect the commitment that NJMG has made towards its customer service programs in its Lean journey.

By March 2004, the Daily Division was working on a number of other improvements ranging from creating capacity for more local news coverage to expanding opportunities to increase classified advertising space to reducing the number of customers who cancel deliveries due to poor service, otherwise known as Poor Service Stops. In fact, Poor Service Stops had accounted for over $127,000 in decreased circulation revenue and lost subscribers, as well as increased recovery expenses trying to recapture lost customers. Once again through Process Mapping, the Continuous Improvement (CI) team evaluated every step of the delivery process in order to determine how each job or task related to the others and to help standardize the workflow. the moment the papers leave the plant until they get into the hands of the carriers, each step was analyzed to calculate its impact on final delivery. Over and above this, the team created a number of Standard Operating Procedures, like daily paperwork processing, customer complaint follow up and substitute carriers, to help improve delivery service and NJMG responsiveness. Here again, the successful results speak for themselves, as the improvement in customer service significantly reduced the number of complaints and weekly Poor Service Stops.

The 5S methodology is another tool for improving productivity and efficiency. Essentially, 5S is a simple but highly effective set of techniques that remove waste from your work environment through better workplace organization, visual communication and general cleanliness. With total employee involvement, the Daily Division took a hard look at a number of work areas in its facility and awarded prizes for practical ideas and suggestions for improvements. The contest and the improvements were a dramatic success, with multiple areas cleaned up and better organized, and a reduction achieved in workplace cycle times. Over $20,000 in rewards was given out, while the program reinforced employee commitment and helped build momentum for future improvements. Also, results showed up in a significant increase in available plant space, easier retrieval of legacy data, a major improvement in workflow and efficiency and quicker responses to customer needs.

Where'd All the Cash Go? Still another example of generating savings through Lean came from a designated line item in NJMG's budget known as Unapplied Cash. This is money that an advertising customer has paid, but that for a variety of reasons has not been applied to any ads that have or are scheduled to run. The money might be an over or a short payment, have unidentified deductions, or simply lack sufficient support data with its remittance. Either way, without any precise accounting and application of these dollars, NJMG wasn't able to properly identify and count millions of dollars of advertising revenue. At the same time, this unapplied cash forced NJMG to continue billing customers, oftentimes delayed the release of paid advertising and eventually jeopardized relationships with a number of customers. As it turned out, Lean had a process for eliminating this wasteful deficiency as well. A team composed of representatives of the Cash and the Credit Departments was created to work together and focus solely on this problem. The team developed Standard Operating Procedures to help customers remit payments. Monthly 5S days were held to review the dollars in this account, and a deduction form was created and made a part of each customer's statement. Letters were then sent to customers in order to correctly identify where the money should be applied. In less than nine months, the team reduced unapplied cash by 72%, or $3.3 million, and saved additional money by reducing both the time and workload making accounting corrections.

Add to these savings other 2004 improvements such as stabilizing people costs, with OT savings of $263,000; improving overall net income by 20%; increasing operating cash flow by 11.6% and it's easy to see how NJMG says it realized an overall savings in 2004 of well over $500,000. Mitch Krugel is convinced that, given the difficulty in calculating the precise savings from all the programs implemented, the savings could even be two to three times that amount. Krugel goes on to say that the reduced operating costs have accomplished much more than their immediate impact on NJMG's bottom line indicates. He says the reductions in workflow time and the increased productivity has enabled them to move people into other areas, thereby saving the costs of new hires, while at the same time enhancing customer services, improve morale, and allowing NJMG to put more cash into areas that need improvement. Also, the added savings provide the company with the resources to acquire additional newspapers, which offer greater readership coverage and lead to larger markets and increased opportunities for advertising growth.

So what is NJMG most proud of ... besides the increased productivity and cost savings? "Working with Productivity Inc., we figured out a way to ramp up a Lean operation in under 18 months," says Markey, NJMG's president. "Even better, we're providing all our people with the know-how, the structure and the tools to continue applying Lean Thinking in everything they do."