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Lean Transformation A Journey Anand Subramaniam

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<ul><li>“You are here to enrich the world, and you impoverish yourself if you forget the errand.” </li></ul><ul><ul><li>- Woodrow Wilson </li></ul></ul>

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Origins of Lean <ul><li>Lean concepts evolved from the JIT philosophy pioneered in Japan by Toyota and embodied in their Toyota Production System (TPS) </li></ul><ul><li>The emphasis of JIT is the elimination of waste throughout the supply chain </li></ul><ul><li>In the 1990's companies adopted the term lean in place of JIT </li></ul>

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Basis of Lean Thinking <ul><li>Lean means producing </li></ul><ul><ul><li>What is needed </li></ul></ul><ul><ul><li>When it is needed </li></ul></ul><ul><ul><li>With the minimum amount of materials, equipment, labor, and space </li></ul></ul><ul><li>The goal of an enterprise adopting lean </li></ul><ul><ul><li>Make each process as efficient and effective as possible </li></ul></ul><ul><ul><li>Connecting those processes in a stream or continuous chain that is focused on flow and maximising customer value </li></ul></ul>

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Lean Principles <ul><li>Specify value in the eyes of the customer </li></ul><ul><li>Identify the value stream and eliminate the waste </li></ul><ul><li>Make value flow at the pull of the customer </li></ul><ul><li>Involve and empower employees (there is no better source of insight than the employees who are performing the work) </li></ul><ul><li>Continuously improve (kaizen) in pursuit of perfection </li></ul>Control Measure Analyse Improve

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Note.. <ul><li>It is a systematic approach to drive customer satisfaction and operational excellence </li></ul><ul><li>Be flexible and vary the approach depending on your organisation’s culture </li></ul><ul><li>It is a journey / endurance race for continuous learning and improving top & bottom line </li></ul><ul><li>It requires leadership, discipline, and buy in on lean philosophy </li></ul><ul><li>Process improvement and people development must go hand in hand </li></ul><ul><li>It is on the job, real time learning & training </li></ul><ul><li>Lean is 20% Technical and 80% Behaivioral </li></ul>

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Challenges <ul><li>Viewed as technical transformation (not cultural transformation) </li></ul><ul><li>Looked upon as “One-size-fits-all” approach </li></ul><ul><li>Lack of commitment and understanding of effort required by “C” Level and All Levels </li></ul><ul><li>Most organisations never get deep enough into the lean process to achieve true success </li></ul><ul><li>Focus on departments rather than value streams </li></ul>

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Internal Challenges Gap between enterprise resource planning (ERP) and factory floor Incompatible and Inconsistent systems Lack of timely information to make informed decisions Lack of strategy to unify information across manufacturing Lack of funds and/or lack of perceived value

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Best in Class – Strategic Actions Improve processes that manage the flow of material and information Lean Initiative Optimise performance at Individual plants and factories Drive standards and consistency Across Global manufacturing networks Improve Sales and Operations Planning Processes

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Improvements from Lean Implementation Adapted from: National Productivity Review, Industry Week, Deltapoint Actuals Total Cycle Time Revenues Inventories Invisible Inventories Blue-Collar Productivity White-Collar Productivity Availability Scrap Delivery Lead Times Time-to-Market Return-on-Assets 20 40 60 80 100 Ranges in % Improvement Best Practices from Actual Cases

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Lean Transformation – Implementation Implementation What are the key lean principles and practices? How do I transform my enterprise to lean? How do I assess my progress? Process / Checklist Enterprise Level Roadmap Enterprise Transition to Lean Lean Enterprise Self Assessment Tool

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Lean Transformation - Enterprise Approach Information Technology Certified Suppliers Uncertified Suppliers Warehouse Sales & Marketing Warehouse Customers Customer Service Accounting Engineering Human Resources Factory

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Enterprise Level Roadmap – High Level Entry / Re-entry Cycle Adopt Lean Paradigm Decision to pursue Enterprise Transformation Enterprise Strategic Planning Long Term Cycle Focus on the Value Stream Develop Lean Structure & Behavior Create & Refine Transformation Plan Focus on Continuous Improvement Implement Lean Initiatives Initial Lean Vision Lean Vision Lean Transformation Framework Short Term Cycle Detailed Corrective Action Indicators Outcomes on Enterprise Metrics Environmental Corrective Action Indicators Enterprise Level Transformation Plan + Source: MIT – Lean Aerospace Initiative Lean Impact

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Enterprise Level Roadmap – Detailed Scan the environment Segment the market Define leadership requirements Create leadership structures Define policies, objectives, targets and budgets Communicate! Communicate! Communicate! Play catchball with deployment teams Play catchball with action teams Use reliable, scientific methods at all levels Discover/correct performance variances Perform corporate diagnosis with top Champions Assess/analyse performance Capture learning and make it replicable Re-vision your strategy -- again Renew your business – in real time Use advanced planning methods Celebrate Success! Mission Statement Values Statement Vision Statement P/O Matrices Focus Team Charter Kickoff Promotion P/O Matrices Deploy- ment Plans P/O Matrices Action Plans Plan Summary CEDAC P/O Matrix Phase II: Pilot Phase I: Plan Phase III: Deploy Phase IV: Integrate Phase V: Excel business renewal strategy re-vision vision deployment implementation/adherence strategy re-vision Create mission; establish values Envision the future Study Missions Market Studies Product/ Market Matrix Technology Roadmaps Corporate Diagnosis Develop- ment Plan Relation- Ship Map Organi- graph Target/ means Analysis Finalise policies and budgets Target/ Means Analysis Target/ Means Analysis CEDAC JIT TPM CE Newsletter Website Progress Tables Site Visits CEDAC 5 Minute Meetings Weekly Meetings Monthly Meetings Study Missions Creative Thinking Bottom up Planning Strategic Scenarios Game Theoretic Models analysis and reflection business renewal  2003 Productivity, Inc. adC IP0201wc

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Example - Enterprise Level Roadmap Source: Productivity Inc.

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Benefits of Enterprise Level Roadmap <ul><li>Facilitates enterprise focus </li></ul><ul><li>Provides “sequence” for enterprise transformation </li></ul><ul><li>Increases understanding of “what went wrong” in previous transformation attempts </li></ul><ul><li>Focuses on people/leadership issues </li></ul><ul><li>Provides an organising framework for enterprise wide transition </li></ul>

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Enterprise Transition to Lean Begins with a description of a Top Level Flow of primary activities referred to as “The Roadmap” Then, provides descriptions of key tasks required within each primary activity Finally, leads discussion of issues, enablers, barriers, case studies & reference material relevant to each task in a common structured framework <ul><li>Focus on the Value </li></ul><ul><li>Stream </li></ul><ul><li>Map Value Stream </li></ul><ul><li>Internalise Vision </li></ul><ul><li>Set Goals & Metrics </li></ul><ul><li>Identify & Involve Key Stakeholders </li></ul>Source: MIT – Lean Aerospace Initiative

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Lean Enterprise – Self Assessment Source: MIT – Lean Aerospace Initiative Why Communicate “lean” enterprise-wide What A “lean” vision How Learn from successful “ lean” implementations Who The Enterprise Leader When First step Where Enterprise-wide Information Technology Certified Suppliers Uncertified Suppliers Warehouse Sales & Marketing Warehouse Customers Customer Service Accounting Engineering Human Resources Factory

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Checklist, Process & Procedure <ul><li>Lean Structure & Behaviour </li></ul><ul><li>Organise for Lean Implementation (checklist) </li></ul><ul><li>Identify & Empower Change Agents (process) </li></ul><ul><li>Align Incentives (process & procedure) </li></ul><ul><li>Adapt Structure & Systems (process & checklist) </li></ul><ul><li>Create & Refine Transformation Plan </li></ul><ul><li>Identify & Prioritise Activities (checklist) </li></ul><ul><li>Commit Resources (process) </li></ul><ul><li>Provide Education & Training (procedure) </li></ul><ul><li>Implement Lean Initiatives </li></ul><ul><li>Develop Detail Plans (process & Checklist) </li></ul><ul><li>Implement Lean Activities (As-Is/To-Be process, checklist) </li></ul><ul><li>Enterprise Transition to Lean (process & checklist) </li></ul><ul><li>Measure Improvement / Self Assessment / Lesson Learnt (checklist) </li></ul><ul><li>Adopt Lean Paradigm </li></ul><ul><li>Build Vision (process & checklist) </li></ul><ul><li>Convey Need (process & checklist) </li></ul><ul><li>Foster Lean Learning (procedure) </li></ul><ul><li>Make the Commitment (process) </li></ul><ul><li>Obtain Senior Management Buy-in (process) </li></ul><ul><li>Focus on Value Stream </li></ul><ul><li>Map Value Stream (process & checklist) </li></ul><ul><li>Internalise Vision (process & checklist) </li></ul><ul><li>Set Goals & Metrics (process & checklist) </li></ul><ul><li>Identify & Involve Key Stakeholders (process) </li></ul><ul><li>Focus on Continuous Improvement </li></ul><ul><li>Monitor Lean progress (process & checklist) </li></ul><ul><li>Refine the Plan (process) </li></ul><ul><li>Capture & Adopt New Knowledge (process) </li></ul>

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Example – “Lean Structure ” <ul><li>Phase – Lean Structure Behaviour </li></ul><ul><li>Outcome – Change Management Plan </li></ul><ul><li>Process – </li></ul><ul><ul><li>Strategic Alignment </li></ul></ul><ul><ul><li>Top Management support & commitment </li></ul></ul><ul><ul><li>Sense of Urgency and prorities </li></ul></ul><ul><ul><li>Stakeholder Involvement </li></ul></ul><ul><ul><li>Organisational Structure </li></ul></ul><ul><ul><li>Goals and Objectives </li></ul></ul><ul><ul><li>Transformation Plan </li></ul></ul><ul><ul><li>Monitoring and Nurturing </li></ul></ul><ul><li>Checklist – </li></ul><ul><ul><li>Customer need assessment </li></ul></ul><ul><ul><li>Communication assessment </li></ul></ul><ul><ul><li>Readiness assessment </li></ul></ul><ul><ul><li>Training Needs Analysis </li></ul></ul>

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Example - “Change - Checklist”

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Example - “Convey Need” <ul><li>Phase – Adopt Lean Paradigm </li></ul><ul><li>Outcome – Build a Vision </li></ul><ul><li>Process – review (culture, internal & external process, success criteria, stakeholder needs, training needs, case studies of successful lean implementation, research) </li></ul><ul><li>Checklist - </li></ul>Why Communicate “lean” enterprise-wide What A “lean” vision How Learn from successful “ lean” implementations Who The Enterprise Leader When First step Where Enterprise-wide

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Example - “Implement Lean” <ul><li>Phase – Implement Lean Initiative </li></ul><ul><li>Outcome – Baseline and improvement level using 5 S - Increase productivity, product quality & safety at work : reduce manufacturing cost: improve on-time delivery </li></ul><ul><li>Process </li></ul><ul><ul><li>Clearout and Classify - Clearing items no longer required : Tagging items that may be required and storing away from workplace </li></ul></ul><ul><ul><li>Configure - “ A place for everything & everything in its place” </li></ul></ul><ul><ul><li>Clean and check - Identify cleaning zones, establish cleaning routines </li></ul></ul><ul><ul><li>Conformity - Roll out across the organisation </li></ul></ul><ul><ul><li>Culture and practice- Monitor process adherence & continually validate </li></ul></ul><ul><li>Checklist – </li></ul>Level Sort Simplify Shine Standardise Sustain Baseline 0 Unsafe items in work area. Placement of items causes unsafe conditions. Spills, waste, trash, etc. produce unsafe conditions. No methods or procedures documented. No routine review/correction of unsafe conditions. Beginner 1 Needed and un-needed items found in work area. Needed and un-needed items are placed randomly throughout the workplace. Work area and machines are not cleaned on a regular basis. Methods of work not completely documented. Occasional, unscheduled 5S activity. Basic 2 Needed /un-needed items separated, un- needed tagged. Needed items stored in an organised manner. Area and equipment cleaned daily. Methods of work documented but not consistently used. 5S activities conducted on regular basis. Visual 3 Red tag area created, all un-needed items removed. Needed items have dedicated positions which are clearly indicated. Standard work layout posted and maintained. Methods of work posted and consistently used by some cell team members. 5S assessment conducted occasionally and results posted. Systematic 4 List of needed items developed, maintained, posted. Needed items can be retrieved within (cell target) seconds and (cell target) number of steps. Daily inspections of plant and area occurs. Methods of work consistently used by all cell team members. 5S assessment conducted on a regular basis and recurring problems are identified. Preventive 5 Un-needed items are not allowed in area. Method for adding/deleting indicators for needed items Root cause sources of dirt, grease & spillage have been eliminated. Methods of work are regularly reviewed and improved. Root causes of problems revealed by 5S assessment are identified and eliminated.

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Example - Value Stream Map

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Lean Building Blocks Value Stream Mapping Continuous Improvement Performance Measurement Performance Management Quick Changeover Standardised Work Batch Reduction Teams Quality at Source 5S System Visual Plant Layout POUS Cellular/Flow Pull/Kanban TPM POUS – point of use storage Source: Techhelp

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Waste Elimination Source: John Willey & Sons - 2009 97% NVA 3% VA Most Process Improvement Teams Attack this . . . . . . Achieve this 97% NVA Typical Value Stream Ratio Value-Added (VA) to Non-Value-Added Activity (NVA) . .and Ignore this Source: C. Fiore; Lean Strategies for Product Development , ASQ, 2003

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Reference - Lean <ul><li>www.lean.org </li></ul><ul><li>www.productivityinc.com </li></ul><ul><li>www.productivitypress.com </li></ul><ul><li>www.leanadvisors.com </li></ul><ul><li>“ Building the Lean Machine,” Advanced Manufacturing , January 2000. </li></ul><ul><li>Fiore, Clifford, Accelerated Product Development: Combining Lean and Six Sigma for Peak Performance , Productivity Press, NY, NY, 2005. </li></ul><ul><li>Hamilton, Bruce, “Toast Kaizen, An Introduction to Continuous Improvement & Lean Principles,” Greater Boston Manufacturing Partnership, University of Massachusetts, Boston, MA, 2005 (DVD). </li></ul><ul><li>Insights On Implementation-Improved Flow: Collected Practices and Cases , Ralph Bernstein, Editor, Productivity Press, 2006. </li></ul><ul><li>Jacobs, Robert F. and Chase, Richard B., Operations and Supply Management: The Core , McGraw-Hill/Irwin, NY, NY, 2008. </li></ul><ul><li>Nahmias, Steven, Production & Operations Analysis , 5 th Edition, McGraw-Hill/Irwin, NY, NY, 2005. </li></ul><ul><li>Nave, Dave, “How to Compare Six Sigma, Lean, and the Theory of Constraints,” Quality Progress, March 2002, pgs 73 – 78. </li></ul><ul><li>Thinking Beyond Lean - How Multi-Project Management is Transforming Product Development at Toyota and Other Companies (Cusumano, M. A. & Nobeoka, K. 1998) </li></ul>

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<ul><li>“ To improve is to change. To be perfect is to change often.” </li></ul><ul><ul><li>- Winston Churchill </li></ul></ul>

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<ul><li>Good Luck </li></ul><ul><li>http://www.linkedin.com/in/anandsubramaniam </li></ul>