The Thinking Approach LEAN CONCEPTS , IL Holdings, LLC All rights reserved 1

(1)

LEAN CONCEPTS

(2)

MANAGEMENT TACTICS OF A

LEAN TRANSFORMATION

(3)

LEAN MANAGEMENT

Fundamentals

of Lean

Management

Role of Lean

Management



Two key questions

UNDERSTANDING SKILLS

What is it?

How do we use it?

(4)

ROLE OF LEAN

MANAGEMENT

(5)

ROLE OF LEAN MANAGEMENT



Create vision of the ideal condition

What should we do?

What can

we do?

IDEAL CONDITION

1. Customer First Thinking

 0 Defects  100% Efficiency  100% On Time 2. Human Development  Career Opportunities  Security  Safety CURRENT CONDITION EVERY PERSON EVERY MINUTE EVERY DAY

(6)

DEVELOP THE CULTURE



Develop a ‘shop floor’ that can manage itself

1.

Create the need

2.

Respond to the need

3.

Motivate and structure to achieve the ideal

4.

Reinforce ideal thinking though

Organizational Culture

(7)

CREATE THE NEED

Current

Demand Demand Future

Demand Increase Increase EFFICIENCY Closer to ideal Increase human capability 

Kaizen



OA

improvement



Reduce waste

Cost Profit Don’t Increase CAPACITY 1

(8)

RESPOND TO THE NEED

Repairs Volume Change Break Down People Sick New Hires



Efficiency focus brings

problems to the surface



Requires urgency to correct

The ‘Shop Floor’

must manage itself by:

1. Solving problems

quickly, effectively,

and permanently

2. Developing all team

members to able to

respond to any

situation

Quality Problems Part Shortages 2

(9)

EFFECTIVE PROBLEM SOLVING



Actively expose

problems



Find the point of

occurrence and

determine true root

cause



Solve problems 1x1

2

Call for help

Quick Response 3 Countermeasure 4 1 See the problem Solve the problem

(10)

HUMAN DEVELOPMENT



Effective problem solving creates

developed people

KEY POINT:

Maximum benefit from an organization full

of capable problem solvers

ROOT CAUSE: Why did this

happen?

ROOT CAUSE: Why was this

passed? POINT OF CAUSE Bad Compo nent Supplie r Interna l Process

Practical Problem Solving

Human capacity is a priceless asset

(11)

DEVELOPING TEAM MEMBERS



Short term [New hires, Transfers, etc]

Team Leader

1

2

3

4 Role of Team Leader

Directly support work process to maintain quality, on time delivery, and safety until Team Member is leveled up

(12)

SUPPORTING TEAM LEADERS

Role of Group Leader

Work with team leaders to solve problems and develop team members Team Leader 1 2 3 4 Team Leader 1 2 3 4 Team Leader 1 2 3 4 Group Leader

(13)

HUMAN DEVELOPMENT



Long term development of capability

Team Leader 1 2 3 4 Team Leader 1 2 3 4

Role of Group Leader

Plan to create full cross functional skill set in group

Role of Team Leader

Plan to create full cross functional skill set on team

1.

Create broader understanding of organization

2.

Create flexibility in quickly learning new things

(14)

HOW TO DEVELOP



Cascade Method

Act

Reflect

Act

Reflect

Act

Reflect

Top

Mgmt

Middle

Mgmt

Floor

Learning and knowledge shared down through

(15)

STRIVING TO THE IDEAL

1. Accurate motivation

2. Additional support structure(s)

3

(16)

UNIT TIME Time required to produce each unit _hours/unit0.25

UNITS PRODUCED Total production quantity per interval _units/batch50

TOTAL HOURS

WORKED Work time per interval hours 13

Sample Indicator

ACCURATE MOTIVATION



True performance indicators



Represent full production picture



Capture all potential waste

𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 = 𝑈𝑛𝑖𝑡 𝑇𝑖𝑚𝑒 𝑋 𝑈𝑛𝑖𝑡𝑠 𝑃𝑟𝑜𝑑𝑢𝑐𝑒𝑑

𝑇𝑜𝑡𝑎𝑙 𝐻𝑜𝑢𝑟𝑠 𝑊𝑜𝑟𝑘𝑒𝑑

𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 = 0.25 𝑋 50

13 = 96%

(17)

REPRESENT THE FULL PICTURE

MAN MACHINE

Wait on machine

UNIT TIME

UNIT TIME = Man + Machine = 0.25 hours TRADITIONAL THINKING

MAN MACHINE

UNIT TIME = Man = 0.125 hours

LEAN THINKING Can do other

(18)

REPRESENT THE FULL PICTURE

UNITS PRODUCED TRADITIONAL THINKING LEAN THINKING

C

A

B

A

C

B

Rework

Scrap

Ship

Inspect

QTY = Ship + Scrap + Rework = 50

(19)

TOTAL HOURS = Direct labor only = 13 hours

TOTAL HOURS = System labor = 17 hours

REPRESENT THE FULL PICTURE

TOTAL HOURS WORKED

TRADITIONAL THINKING LEAN THIN KING FABRICATION ASSEMBLY LINE SHIPPING Customer Order Prod Prod Wthdwl Wthdwl TRADITIONAL THINKING LEAN THINKING

(20)

REPRESENT THE FULL PICTURE

TRADITIONAL THINKING LEAN THINKING Sample Indicator 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 = 𝑈𝑛𝑖𝑡 𝑇𝑖𝑚𝑒 𝑋 𝑈𝑛𝑖𝑡𝑠 𝑃𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝐻𝑜𝑢𝑟𝑠 𝑊𝑜𝑟𝑘𝑒𝑑 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 = 0.25 𝑋 50 13 = 96% 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 = 0.125 𝑋 42 17 = 31%

(21)

ADDITIONAL SUPPORT

TOP MANAGEMENT OPERATIONS MANAGEMENT PLANT MANAGEMENT PRODUCTION:  Team Members  Team Leaders  Group Leaders  Asst Managers SUPPORT:  Production Control  Quality Control  Maintenance  HR  Materials  Purchasing LEAN COORDINATOR Kaizen Team Lean Planning Team Lean Office



Planning team develops

ideal condition vision



Kaizen team can make

it happen

KEY ROLES

SAMPLE ORG CHART

(22)

VALUE OF THE LEAN OFFICE



Create focus on stability

and efficiency



Support discipline needed

to manage system



Technical support

SUPPORT THE SHOP FLOOR

HUMAN DEVELOPMENT



Develop and share knowledge

through organization



Develop enthusiasm for a

(23)

REINFORCE IDEAL THINKING

1. What is Organizational Culture?

2. What is needed for a Lean Culture?

3. How can we change Culture?

4

ORGANIZATIONAL CULTURE

Through

(24)

QUESTIONS

(25)

LEAN CONCEPTS

(26)

MANAGEMENT TACTICS OF A

LEAN TRANSFORMATION

(27)

LEAN MANAGEMENT

Fundamentals

of Lean

Management

Role of Lean

Management



Two key questions

UNDERSTANDING SKILLS

What is it?

How do we use it?

(28)

FUNDAMENTALS OF LEAN

MANAGEMENT

(29)

FUNDAMENTALS OF LEAN

MANAGEMENT

1. Define Our Goals

2. Grasping Current Condition

3. Support Kaizen Improvements

4. Control with Standardization

5. Sustainable Improvement

6. Fundamentals Summary

(30)

DEFINING GOALS



Who is the customer?



What is my customer’s demand?



How will I meet this demand?

CUSTOMER

FIRST

THINKING

How do we

accomplish this?

WE MUST UNDERSTAND:

1

(31)

WHO IS THE CUSTOMER?



Any person, group,

process, or system

that requires

information or

material from you

should be considered

the ‘customer’

(32)

WHAT IS MY CUSTOMER’S

DEMAND?



Demand is:



What the customer wants



When they want it



In the quantity they want it



At the price they want to pay for it



Qualify Demand:

GOALS

Customer

Demand

(33)

DEFINING GOALS

TRANSLATE DEMAND TO GOALS

The PERFORMANCE MATRIX aligns goals with demand

Goals meet demand of higher process Goals drive targets of lower process KEY POINT:

(34)

HOW WILL I MEET THIS DEMAND?



Targets MUST be

quantifiable



Targets MUST have a

completion timeline



Vague or behavioral

targets cannot be

achieved

TARGETS

Goals

DEFINING GOALS

(35)

HOW TO SET A TARGET

TIME C ON DITI ON Target Condition Ideal Condition Total Problem Gap Target Gap Current Condition

Gap between target and ideal closed with

future activity

CONTINUOUS

IMPROVEMENT

(36)

WHAT MAKES A GOOD TARGET?

A.

Is the target an

Accomplishment

or a behavior?

Create 10 more reports per hour VS. Work longer hours

C.

Do those working on the target have

Control

over it?

Can a machine operator improve sales directly?

O.

Does the target contribute to the overall

Objective(s)

?

Does it align with higher goals or is it stand alone?

R.

Can the target be

Reconciled

with outside goals?

Does meeting this target negatively impact something else?

N.

Can the target be measured with a

Number

?

Improve number of reports hour

VS.

Improve throughput

Use the ACORN TEST to ensure achievable targets

(37)

GRASPING CURRENT CONDITION



Start measuring

performance



Establish the current

condition



Analyze the gap between

current condition and

the target



Determine the

improvement

Weekly BT Chamber Production Lead Time By Month

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00 Apr-Jun '10

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov

Month P rod uc ti on Le a d Ti m e i n D a y s New schedules

introduced Cabinet, FA,

Test rebalanced Attempted cabinet

rebalance Eliminated process

downtime Expanded ambient room operational

(38)

MEASURE OUR PERFORMANCE

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00 Apr-Jun '10

Month P rod uc ti on Le a d Ti m e i n D a y s New schedules

downtime Expanded ambient room operational

BT Weekly On Time Shipments

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Month P e rc e nt of O n Ti m e S hi pm e nt s New Inventory Chambers

GRASPING CURRENT CONDITION



We use Key Point Indicators

(KPI)

WHY DO WE MEASURE?

1.

To understand performance

over time

2.

To establish a base line

3.

To track progress

HOW DO WE MEASURE?

KEY POINT:

There MUST be some means to track

progress toward every target that is set

KPI: A visual means to track

(39)

The goal is to check performance as frequently as possible

DEFINE CURRENT CONDITION



Our performance today

WHAT IS THE CURRENT CONDITION?

WHAT ABOUT HISTORY?



Gives insight to stability



Shows long term trends

WHY CURRENT CONDITION? Yesterday’s Condition Today’s Condition Improving

Yesterday _{May not improve today}

HOW CURRENT IS CURRENT?

(40)

MEASURE OUR STABILITY

HOW STABLE IS OUR CURRENT PROCESS?

A STABLE process must be leveled up to improve performance

An UNSTABLE process can be improved by controlling variation

HOW DO WE MEASURE OUR STABILITY?



We use Potential to Improve

Performance (PIP)



Compares the average to the

best performance

𝑃𝐼𝑃 = 𝐵𝑒𝑠𝑡 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒 First Shift 32 18 20 46 28 𝑃𝐼𝑃 = 46 28.8= 1.6 Second Shift 32 29 27 30 32 𝑃𝐼𝑃 = 32 30= 1.01

A PIP of 1 = Perfectly Stable Process

PIP

STABILITY

PIP STABILITY

(41)

ANALYZE THE GAP



Quantify the gap between

current condition and our

target



How far do we have to go

to reach our target?



Develop a tangible metric



Days



Hours



Sales dollars



Etc

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00 Apr-Jun '10

Month P rod uc ti on Le ad Ti m e i n D a y s New schedules

Test rebalanced Attempted cabinet rebalance Eliminated process downtime Expanded ambient room operational CURRENT CONDITION TARGET CONDITION

(42)

PRIORITIZE TARGETS

The PERFORMANCE AUDIT helps understand what targets to work toward first

1. Identify goals 2. Develop targets

3. Understand the impact of not meeting targets

DEFINE

1. Best performance 2. Average performance 3. Unit value or cost 4. Quantity of units 5. Calculate total and PIP

MEASURE 1. Stability -OR- level up 2. Which targets yield biggest gains ANALYZE

(43)

SAMPLE AUDIT

Two Goals Five Targets Measure the process stability Quantify unit cost and volume

Find the total current cost

𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑆𝑡𝑎𝑏𝑖𝑙𝑖𝑡𝑦 = 𝑇𝑜𝑡𝑎𝑙 1 − 1 𝑃𝐼𝑃

Calculate PIP and values ANALYZE THE RESULTS

Chase the big fish

(44)

DETERMINE THE

IMPROVEMENT

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00 Apr-Jun '10

Month P rod uc ti on Le a d Ti m e i n D a y s New schedules

downtime Expanded ambient room operational CURRENT CONDITION TARGET CONDITION QUANTIFIED GAP

Eliminating the gap achieves targets and meet goals

KAIZEN

How do we

accomplish this?

(45)

KAIZEN IMPROVEMENT

3 Gap Current Condition [Continuous Improvement] Target Time Management HUMAN RESOURCE Motivate Develop MATERIALS METHODS TOOLS Improvements ENGAGE RESOURCES TO KAIZEN DIRECT MANAGEMENT KAIZEN

(46)

EFFECTIVE HUMAN KAIZEN

SUPPORT KAIZEN IMPROVEMENTS

HOW DO WE CHANGE BEHAVIOR?

S

R

S

D

R

S

R Reinforce the correct response Be capable of responding Understand the stimulus

The BEHAVIOR MODEL builds processes that create competent performance

WELL DESIGNED ENVIRONMENT DEVELOPED PEOPLE COMPETENT PERFORMANCE STIMULUS RESPONSE

(47)

CONFIRMING RESULTS

ASSESS PERFORMANCE AFTER KAIZEN

BT Weekly On Time Shipments

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Month P e rc e nt of O n Ti m e S hi pm e nt s New Inventory Chambers BEFORE AFTER Kaizen Event Control Success

Did we meet

our target?

YES NO Quantify Gap Correct the Defect(s)

SUPPORT KAIZEN IMPROVEMENTS

1. Kaizen creates before and after condition 2. Determine a point in time to check results

(48)

CONTROL WITH

STANDARDIZATION



Why standardization?



How do we sustain the standard?



Standardization summary

4

(49)

WHY STANDARDIZATION?

Time Impr ov emen t K K _K _K K S K K K K S S S

Standardization helps sustain current improvements while creating a foundation to support future improvements

Key Point

S = Standardization K = Kaizen

Traditional Thinking Lean Thinking

(50)

WHAT IS STANDARDIZATION?



Defines what is required to

perform a job task

(Who/What/Where/Why/When)



The standard is a common

language between processes



Makes problems easy to see

STANDARDIZATION

(51)

WHAT IS STANDARDIZED WORK?



The most efficient work flow



Safety



Quality



Lead Time



Quantity



Cost



Human Movement

 Takt Time

 Work Sequence

 Element Times

 In-process Stock

STW Components

(52)

WHAT

MAKES A GOOD STANDARD?

R.

Reasonable:

Is the standard based on a realistic assessment?

Does is relate directly to the customer’s needs?

U.

Understandable:

Is the standard clearly defined so there can

be no disagreement over interpretation?

M.

Measurable:

Can we objectively measure performance

against the standard?

B.

Believable:

Can people buy into the standard? Is it

something team members can strive to meet?

A.

Attainable:

Is the standard something that can be reached?

Use the RUMBA TEST to ensure sustainable standards

(53)

SUSTAIN THE STANDARD

Confirm

Expectations

Visual

Management

Process

Audits

KEY POINT:

Frequently confirming expectations creates sustainment

Support both ways

(54)

AUDIT EXPECTATIONS

PRODUCTION MANAGEMENT

Accountability: TOP DOWN



A scheduled review of

condition(s) that checks:

STANDARDIZATION What is an Audit? 1.

Is condition normal or

abnormal

2.

Is status ahead or

behind

_{Audit of} Processes

Create accountability

 Constant feedback to T/M’s  Visibility for management  Confirmation of expectations

(55)

VISUAL MANAGEMENT

Visual Management facilitates the audit

1.

Normal <> Abnormal

Can we SEE problems?

2.

Ahead <> Behind

Can we SEE status?

NORMAL ABNORMAL 1 UNIT Behind Condition 2 UNITS Normal Condition 2+ UNITS Ahead Condition  Identify small problems at

the point of occurrence  Prevent development of

big problems

BENEFITS

PROACTIVE PROBLEM SOLVING

(56)

STANDARDIZATION SUMMARY

STANDARDIZATION

1. A standard that is

managed by correcting

abnormal conditions

creates

stability

2. An improvement is not

permanent until it is

stable and repeatable

!

(57)

SUSTAINABLE IMPROVEMENT



How do we reach our ultimate goals?



Small improvements create large improvements



Sustainability summary

(58)

TIME C O N D IT IO N Target Condition Ideal Condition Total Problem Gap Target Gap Current Condition

HOW TO REACH ULTIMATE GOALS?



We know where we are but

how do we get to where we

ultimately want to be?

1.

We can’t always reach our

goal in one step

2.

If we change too much too

fast we can’t judge what

worked and what didn’t

SUSTAINABLE IMPROVEMENT

Continue to improve

with repeated Kaizen

(59)

MAKE A GRADUAL SERIES OF

SMALL IMPROVEMENTS

SMALL IMPROVMENTS ADD UP

1.

Start with a stable process

2.

We quantify how much the

improvement will help

3.

Make the improvement

4.

Reestablish a stable process

after making the change

5.

Confirm we reached our

expected results with KPI’s

STABILITY

KAIZEN

Must have stable starting condition to build from SUSTAINABLE IMPROVEMENTS

SUSTAINABLE IMPROVEMENT

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00 Apr-Jun '10

Month P rod uc ti on Le a d Ti m e i n D a y s New schedules introduced Cabinet, FA,

rebalance Eliminated process downtime

Expanded ambient room operational

(60)

SUSTAINABILITY SUMMARY



Making small improvements, reestablishing

stability, confirming results with KPI’s, and then

repeating builds sustainable improvement!

KAIZEN IMPROVEMENT [DO] ESTABLISH STABILITY [CHECK] CONFIRM RESULTS [ADJUST] STABLE PROCESS [PLAN] SUSTAINABLE IMPROVEMENT

(61)

FUNDAMENTALS SUMMARY

1. Customer First Thinking

2. Grasp the Current Condition

3. Kaizen Improvement

4. Standardize Success

Define the Customer

Quantify Demand Set Targets Measure Performance Quantify Gap Establish Baseline Eliminate Gap Confirm Improvement

Create New Standard Audit Standard

(62)

FUNDAMENTALS SUMMARY

1. Customer First Thinking

2. Grasp the Current Condition

3. Kaizen Improvement

4. Standardize Success

Define the Customer Quantify Demand Set Targets Measure Performance Quantify Gap Establish Baseline Eliminate Gap Confirm Improvement

Create New Standard Audit Standard

CONTINUOUS REPETITION

(63)

FINAL THOUGHT

- RESPECT FOR PEOPLE -



Stay focused from the ground up



T/M’s own their processes [Experts]



T/M’s are empowered to solve their

problems



Organization benefits the most from

a factory full of problem solvers

The feedback, perspective, and expertise of an engaged work force is critical to creating

(64)