Improving Railroad Classification Terminal Performance Using Concepts of Lean Railroading Jeremiah R.

Dirnberger, Canadian Pacific Railway Christopher P.L. Barkan, University of Illinois Urbana-Champaign
INFORMS RASIG Roundtable II - November 5, 2006

Problem Statement
Inadequate terminal capacity is a barrier to improved service reliability and network efficiency

Building new terminals and/or expanding existing terminals are the most costly alternatives

New methods are needed to harness as much capacity from the existing infrastructure
Page 2

Presentation Outline

1) The Terminal as a Production System 2) Lean Railroading 3) Factory Physics The Science of Lean 4) Implementation Steps 5) Conclusions

Page 3

1) The Terminal as a Production System

[The Union Pacific] is a 33,000 mile factory with no roof.

Dick Davidson, 2003 Chairman and former CEO

This situation is analogous to a manager of an automobile assembly plant . . . In the railroad industry, the terminal superintendent is the plant manager and his function is to assemble inbound trains or parts of trains into completed outbound trains.
Ferguson, 1980 AAR No. R-412

Page 4

The Terminal as a Production System

Inbound trains Methods/ procedures Information People Information Equipment Infrastructure Weather Paperwork Outbound trains

Services

Enables use of proven production management techniques in the form of Lean Railroading
Page 5

2) What is Lean Railroading?

The adaptation of proven production management methods to the railroad environment - Lean - Theory of Constraints (TOC) - Statistical Process Control (SPC or six sigma) - Scheduled railroading is key Define value for the ultimate customer - The ideal product for my customer is . . . Then eliminate waste (any activity that does not add value) - Direct waste (bad railroading) - Variability (the root of all waste!)
Page 6

The Building Blocks

Improved network efficiency Increased service reliability and value Increased terminal capacity Statistical Process Control Variability reduction Lean Eliminate direct waste Theory of Constraints Bottleneck importance

Factory Physics (the science of manufacturing) Previous railroad reliability studies (FRA, AAR, MIT)
Page 7

Waste on the Railroad Reducing waste often results in tradeoffs: We seldom reduce any single type of waste . . . without increasing another.
Decrease terminal dwell Run shorter, more frequent trains Increase locomotives and crews Reduce mainline capacity Reduce lost sales, empty delivery lead time Increase capital and maintenance costs
Page 8

Purchase or lease additional railcars (safety stock)

3) Factory Physics Science of Manufacturing Provides the Theory behind Lean Variability is the root of all waste and takes two forms: internal and external
- Internal: outages, variable process times, rework, sorting, etc. - External: arrival times, weather, traffic volume and flow, yield management, etc.

Variability Buffering Variability in a production system will be buffered by some combination of:
- Inventory - Capacity - Time
Page 9

4) Implementing Lean Railroading in the Yard Implementation steps: 0. Eliminate direct waste: Take a fresh look at the terminal system, try to eliminate obvious sources of waste (Value Stream Mapping)
- Rework, car damage, unnecessary motion, yard engine failure, long setups, unnecessary information collection, etc.

1. Swap buffers: Decrease the time buffer by reducing idle time (continuous flow), increase the capacity buffer by improving bottleneck performance
Page 10

Implementing Lean Railroading in the Yard 2. Reduce variability:

a. Address problems in sorting, rework, car damage, down time and setups (apply SPC/six sigma) b. Implement standardized work plans c. Work with network management to increase ontime arrival of inbound trains d. Level the production schedule in the yard and set the network operating plan

3. Continuous improvement:
Once variability is significantly reduced, we can reduce the capacity buffer while continuing to identify and eliminate variability. Only at this point do we begin to make real gains in productivity.
Spearman (2002) Factory Physics White Paper Series Part II
Page 11

5) Conclusions
Lean Railroading is just beginning CPR Yard Operations Performance Group GE Yard Solutions Group UP VP Continuous Improvement BNSF Value Engineering Group The CN Philosophy GE estimates dwell time reduction could result in 15-30% terminal capacity improvement Combining scheduled railroading with lean, CPR has reduced average terminal dwell Many railroad applications beyond terminals
Page 12

Railroad Support while at Illinois

Research Fellowship

Page 13