Don’t think "lean" methods are just for businesses associated with manufacturing. They aren’t. And there is no better proof of this than North Jersey Media Group (NJMG) and the half-million dollar savings - minimum – it achieved from Lean Office techniques in just the first months of the program.

NJMG publishes over 13 different magazines, 38 weeklies and two major award-winning daily newspapers, The Record and the Herald News. In scrutinizing their operations, they realized they were 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, Jonathan Markey, president and COO of NJMG, 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.

A Strategic Approach

NJMG decided to take a “more than just tools” strategic approach which would not only adapt successful Lean methodologies to the newspaper publishing industry, but also establish a planning and deployment process to ensure Lean initiatives would be tied to overall strategic objectives.

Fifteen NJMG associates were selected to participate in the initial intensive 4-week training program designed by Productivity Inc. to create Lean mentors. These Lean mentors would oversee Lean initiatives within NJMG and train additional mentors. The training program consisted of classroom training in topics that included Wasteology, Strategic Thinking, Value Stream Management, Leading World Class Teams, Mistake Proofing, Change Management and more. The classroom training would be supplemented with hands-on activities and shop floor projects, taking the lessons learned in the classroom directly into the operation. Throughout the 4-week, customized Lean Mentor Program - 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.

For many organizations there remains an air of mystery around Lean," says NJMG senior continuous improvement mentor, Mitchell Krugel. "Productivity Inc. helped dispel all that by demonstrating 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."

And improvements came almost immediately. Upon examination, nearly 200 improvement opportunities were identified, and with close to 700 employees participating, 68 different improvements were completed initially, with the others scheduled to be worked on. 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.

Markey and senior mentors, Mitch Krugel, Mike Ruiz and Jackie Wilson immediately recognized that NJMG could greatly benefit by creating a truly Lean transactional environment.

Delivering the Goods

Although its “on-time delivery” average was a solid 92%, the Daily Division knew it had to get better. A cross-functional team representing all major departments was formed. 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 was working towards a goal of 98.5%, well above the industry average.

The Daily Division worked on a number of other improvements ranging from creating capacity for more local news coverage and expanding opportunities for increased classified advertising space to reducing the number of customers who cancel deliveries due to poor service. This last item, otherwise known as Poor Service Stops, had accounted for over $127,000 in decreased circulation revenue and lost subscribers. Though Process Mapping, the Continuous Improvement team evaluated every step of the delivery process, from the moment the papers leave the plant until they get into the hands of the readers. The team created a number of Standard Operating Procedures, and improvement in customer service significantly reduced the number of complaints and weekly Poor Service Stops.

5S Methodology

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?

In NJMG's budget, Unapplied Cash is defined as 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. Therefore, 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, or 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. 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 to improvements in stabilizing people costs - with OT savings of $263,000; improving overall net income by 20%; and increasing operating cash flow by 11.6% and it's easy to see how NJMG realized an overall savings in one year 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 says that in addition, 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, improving 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.

In total, nearly 1,100 employees were trained in the fundamentals of Lean and on the tools available for continuous improvement. The implementation phase focused on NJMG’s 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.

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." ◊