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1 /GE Proprietary Information
LEAN WorkshopOctober 2006
Sharon Garavel, SVP Quality & OperationsRaj Wadehra, Lean & Originations Process Leader
Ryan McMillian, ACFC Lean Leader
GECapital Solutions
GE PROPRIETARY INFORMATIONThe information contained in this document is disclosed in confidence to GEcustomers/partners. It is the property of the General Electric Company andshould be used only within your company this notice shall appear on anyreproduction, in whole or in part. It should not be disclosed to others withoutthe expressed written consent of the General Electric Com
pany.
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LEAN Workshop Agenda
Change Management at GE Sharon Garavel
LEAN Principles Raj Wadehra
LEAN for Knowledge Flow Raj Wadehra
LEAN for Manufacturing Ryan McMillian
Launching LEAN at GE Sharon Garavel
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Strategy & Growth:IBs, CECOR, Lean, Customer Centric, Execution
Work-Out / Town Meetings:Empowerment, action Expert-Driven Decision-Making, Action Work-Outs, Customized Work-Outs
Productivity / Best Practices:Benchmarking External Organizations, Sharing Best Practices
Process Improvement:Process-mapping, re-engineering, Bullet Train Approach
Change Acceleration Process (CAP):Increase success and accelerate change
Key Strategic Initiatives:QMI*, NPI*, OTR*, SP*, Productivity, Globalization
Make Customers Winners:GE Tool-Kit
Six Sigma Quality:
Productivity, Span, Data-Driven Decision-Making
Digitization:Sell, Buy, Make using Technological Tools
ACFC (At the Customer For the Customer):Faster, Better, Closer to the Customer
Imagination at Work:Imagine, Solve, Build, Lead
* New Product Introduction, Quick Market Intelligence, Orderto Remittance, Supplier Partnership
1989
GEs change culture:A Continuing Journey
Using Change as a Strategic andCompetitive Advantage
Optimizing ChangeEffectiveness
Building a Culture thatDrives Change
1992
1996
1998
2000
2003
2004
Lean Six SigmaSpeed & Quality2005
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Lean Six Sigma
Lean Doesnt Replace Six Sigma But Complements It
Same Goal = Continuous Process Improvement for
Growth & Customer
- Business Process Ys: NPI, ITO, OTR
Lean
Reduce Waste
Decrease Cycle Time to increasecapacity and customer loyalty
Continuous Process Improvement
Intuitive and proven solutions
Six Sigma
Defect Reduction
Remove variability to increaseoutput and customer loyalty
Control keeps process defect free
Need Analytics to Find Problem
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1995
GE Launches Six SigmaThroughout Company
Focus :
Core Activities
Objective :
Productivity & AssetUtilization
Evolution Of LEAN Six Sigma At GE
PRODUCTIVITY
Evolution
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1997
GE Turns to Six Sigma ForNew Products
Focus :
New Product Design
Objective :
World Class Capability in theMarket Place
Evolution Of LEAN Six Sigma At GE
PRODUCTIVITY
Evolution
PRODUCT DESIGN
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1999
GE Turns Six Sigma Looseat the Customer
Focus :
Customer Productivity& Value Added Services
Objective :
Revenue Growth & Share Shift
PRODUCTIVITY
Evolution
PRODUCT DESIGN
CUSTOMER FOCUS
Evolution Of LEAN Six Sigma At GE
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2001Six Sigma LeadershipCritical to Success
Focus :
Developing Future Six SigmaLeaders
Objective :
Common Company WideTraining & Certification
PRODUCTIVITY
Evolution
PRODUCT DESIGN
CUSTOMER FOCUS
THE WAY WE WORK
Evolution Of LEAN Six Sigma At GE
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2003
Enabling Growth
Focus :NPI, ITO, OTR, ACFC
Objective :
Improve/Digitize KeyProcesses & Free UpResources for Growth
PRODUCTIVITY
Evolution
PRODUCT DESIGN
CUSTOMER FOCUS
THE WAY WE WORK
ENABLE GROWTH
Evolution Of LEAN Six Sigma At GE
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Enabling Growth
PRODUCTIVITY
Customer Focus
PRODUCT DESIGN
CUSTOMER FOCUS
THE WAY WE WORK
ENABLE GROWTHENABLE GROWTH
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Net Promoter Score (NPS)
Links Customer Loyalty to Business Performance
Drives growth through improved customer focus
On a scale of 0 -10, how willing would you
be to recommend GE to a colleague?
% Promoters%
Detractors
0 6Detractors
7 - 8PassivelySatisfied
9 - 10
Promoters
10
987
654321
% Net
Promoters
0
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LEAN Principles
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Batch vs. Flow Simulation
Batch Processing
First person writes their name on all post-it notes. When finished signing every post-it in the
packet they hand off to the next person.
Then 2nd person writes their name on all post-it notes and hands complete batch to the next
person.
Continue until last person has finished signing all post-it notes.
Flow Processing
First person writes their name on one post-it notes and hands to second person as soon as
theyve finished signing one post-it.
While the second person is signing the 1st post-it, the first person begins signing the 2nd post-it
note.
Continue until last person has finished signing all post-it notes.
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What Is LEAN?
Defines Value from the Customers perspective.
The relentless pursuit of the perfect process through
Waste Elimination.
Minimize Material or Information Flow Time from Startto Finish Process/Goods.
All we are doing is looking at a time line from the momentthe customer gives us an order to the point when we collectthe cash. And we are reducing that time line by removingthe non-value added wastes
Taiichi Ohno
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Understanding & Eliminating Waste
Lean can deliver impactto nearly any process
After
Before
Work: Value
added time
Reduced cycle times Better delivery More capacity Better quality Higher productivity
Driving improved
customer satisfaction
Wait time/waste:
Non-value added time
Cycle time or lead time
Cycle time or lead timeLean
attacks
waste
here
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Why LEAN?
>Employ proven tools to eliminate waste, manage variability, andsynchronize flows
>Deploy cross-functional problem-solving teams throughout theorganization, driving to measurable, actionable solutions
Improve
performance
Eliminate waste >Deliver exactly what customers need exactly when and where they need it>Eliminating all that does not add value in the eyes of the customer
Change the
culture
>Reinforce a performance culture and sense of urgency; learn by doing>Tied to clear goals, and real consequences
Grow the
business
>Optimize service, cost, and asset productivity>Segment, integrate, and accelerate information flows throughout the
business
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Jidoka
TOYOTA
Just-in-T
ime
Single Piece Flow
Pull Production
TAKT TimeProduction
Autonomation
Built-In Quality
Stopping atAbnormalities
Level Loading
Sequencing
Stability
Heijunka
ToyotaProduction System
Toyota Production System
People
People
People
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What is Heijunka?
Heijunka is the foundation of the Toyota Production system, and is the
process of leveling and sequencing an operation.
There are three main elements of Heijunka
2. Leveling: Overall leveling of a process to reduce variation in output
3. Sequencing: Managing the order in which work is processed (Mixed Production)
4. Stability or Standard Work: Reduce process variation
Heijunka
Customer Demand Leveling
TPS House - Heijunka
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There are two main elements of Jidoka2. Autonomation: Automation with human intelligence operate autonomously
3. Stop at Every Abnormality
What is Jidoka?
Jidoka allows machines/processes to operate autonomously by shutting
down automatically if an abnormality occurs. This prevents defective
products from passing to the next process.
Normal Abnormal
TPS House - Jidoka
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There are three main elements of JIT1. Single Piece Flow: Completing the process from start to finish continuously.
2. Pull Production: A system in which each process takes what it needs from the preceding
process when it needs it and in the exact amount needed
3. TAKT Time: Available time / required output (actual or forecasted demand )
e.g. 1 shift = 1980 min/wk, forecast = 198 units/wk
TAKT Time = 1980 min/wk / 198 units/wk = 10 min/unit
What is Just-in-Time?Just-in-Time provides the customer what is needed, when it is
needed, in the quantity it is needed.
TPS House - JIT
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Continuous movement of products,
services & information from end to
end through the process
Nothing is done by the upstream
process until the downstream
customer signals the need
Complete elimination of waste so all
activities create value for the
customer by continuous improvement
Define value from the customers
perspective and express value in
terms of a specific product
Map all of the stepsvalue added &
non-value addedthat bring a
product or service to the customer
3
Establish Flow
4Implement Pull
5Work to
Perfection
1Specify Value
2Map the
Value Stream
Lean Thinking Principles
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1. Specify Value
Typical Process: 5-10%
Activities Value-Adding
Value Added Activity
Any activity that changes the form, fit, or function of
materials or information to meet customer requirements
- OR - something customers are willing to pay for
Non-Value Added ActivityAdds no value to the
customer.simply raises
costs in our business!
Incidental Work
Does not add value, but
required by the business
(eg. Taxes)
Value can only be defined by customer
Product Flow: Value changes the form, fit and function of the product.
Knowledge Flow: Value adds necessary knowledge or information.
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2. Identify the Value Stream
OTR
Most Value Streams have less than 5% Value Add Time
The VALUE STREAMis a time series of all activities &
steps (both value add and non-value add) requiredto bring a product or service to the customer
TheVALUE STREAMcuts across functional
Boundaries
GE focuses on 3 mainVALUE STREAMS
New Product
Introduction
Inquiry to Order Order to Remittance
ITONPI1 2 3
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2. Identify the Value StreamCurrent State
Future State
A 2 hours process is taking us 63 days!
Goal: Reduce 63 day lead time to 27 days!
6-9 Month Roadmap
Typical Cycle Time Improvements > 50%
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3. Flow
A B C A B C
Batch Production Flow Production
5 Orders
3 Process Steps
1 Hour per order/operation
Operator 1 Operator 2 Operator 2
5 Hours 5 Hours 5 Hours+ +
Time for First Order = 15 Hours
Time for Last Order = 15 Hours
Time for First Order = 3 Hours
Time for Last Order = 7 Hours
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4. Pull Customer initiates business process
Produce only what is required by the customer
Each step in the process takes the product and adds knowledge it needs, as
it is needed
No action is taken until the downstream process initiates it to prevent
batches and queues
supplier customer
One more
please!Okay
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5. Improve To Perfection
Goal: perfect process
Tools allow you to see & eliminate waste
There is always more waste
True continuous improvement philosophy
The perfect process is a continuous flowof customer value add, without interruption
Current State
Future State
Next Future State
Original State
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Over ProcessingWaiting
Motion
InventoryMoving Things
Overproduction
Defects/Inspection
Waiting Transportation
Overproduction
Inventory
The Seven Types Of Waste
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Value Stream Mapping
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TOTAL VALUE STREAM
SUPPLIERS YOUR PROCESS CUSTOMER
What Is A Value Stream?
A value stream shows all the tasks (Value and Non-Value) required tobring a product, service, or capability from start to customer delivery
Value streams cut across functional boundaries
Most value streams have ~5% value add time (rest is waiting time)
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Value Stream Maps (VSM)
Customer focused
Look at the end-to-end value stream
Helps us to visualize flow
Helps see waste and its source
Becomes the blueprint for improvement
Shows the linkage between information
and physical flows
Reality Map
Traditional Process Maps
Functional Focused
Varies in scale from Macro to Micro functions
Used to understand the steps in a process
No value judgments made
Used for continuous improvement, business
planning, scoping or establishing boundaries
of what and where
Planned Map
Value Stream Maps vs. Process Maps
i l
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Sales locatesdecision and
sends tocustomer
Process BoxA point in the value stream at which flow stops andinventory has the opportunity to accumulate
Enter Deal IntoAuto-
Decisioningtool
Submit creditinfo to CreditDepartment
1. Add process steps
Creating a Current State Value Stream Map
Customerreceives credit
decisionnotification
1. Define Start and Stop Points
Customer callsand provides
credit applicationinformation
1. Collect Data
Daily demand
Process Time
Inventory
Yield
Daily demand
Process Time
Inventory
Yield
Daily demand
Process Time
Inventory
Yield
Daily demand
Process Time
Inventory
Yield
Daily demand
Process Time
Inventory
Yield
1. Map information flows
PARTNER RIGHTFAX EXPERIAN/
EQUIFAX
LEGACY
SYSTEMS
GENPACT PARTNER
1. Create cycle time ladder
5 Mins 0.2 Min 1 Min 7 Min 1 Min
1 Mins 40 Mins 90 Mins ~240 Min
Processing Time 14 mins
Typical Cycle Time 370 MinsTrain sales
to enter
deals
1. Identify the Waste
W
~240 Min
W
40 Mins
W90 Mins
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Future State VSM Mapping
Future state map is the desired next stage in thecontinuous improvement journey.
Once we reach the desired next stage, future state map
will become the current state map and a new futurestate map should be created so that we keep moving
closer to perfection
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Creating The Future State
Where can I eliminate process steps entirely?
Where can I combine steps & create flow?
Where do I need to create pull?
Where can I execute process steps in parallel (or move processes from
critical path)
Which steps are creating waste for other steps in the process?
Fundamental questions to ask
No large IT projects (think excel macros not ERP systems)
No capital outlay No additional resources (resource re-allocation is OK)
Realistic: needs to be completed within 3-9 monthsCONTRAIN
TS
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Defining Action Workout Teams
current state
future state
Kaizen
Team #1
Kaizen
Team #3
KaizenTeam #2
KaizenTeam #4
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Value Stream Map Utilization
Ryan McMillianACFC Lean Leader
Effectively Analyzing a
VSM to Improve the
Manufacturing Process
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Eliminate Waste
A Focused Strategy to:
Increase Speed
Simplify the Process
Reduce Variation
Consistently Meet Customer Requirements
Scope of LEAN In Manufacturing?
Reduce Cost
All we are doing is looking at a time line from the moment thecustomer gives us an order to the point when we collect the
cash. And we are reducing that time line by removing the
non-value added wastes
Taiichi Ohno
Th V l f V l St M
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The Value of a Value Stream Map
Free RideAirlines
2 shifts
Tote = 20 parts
38,000 pcs/mo-20,000 LB-18,000 SB
Daily
Daily
Forging Vender
6-weekForecast
90/60/30 dayForecast
ProductionControl
DailyOrder
Daily Schedule
Long Set upOXOX
Issue Cutting Laser Finish Final & Ship
C/T=5.5 min
C/O=0 min.
3 SHIFTS
0% SCRAP
VA= .5 min
Up Time = 100%
C/T=120 min
C/O=240 min
3 SHIFTS
10% SCRAP
VA=7 min
Up Time = 80%
C/T=1445 min
C/O=15 min.
3 SHIFTS
5% SCRAP
VA=5 min
Up Time = 98%
C/T=2880 min
C/O=0 min.
3 SHIFTS
0% SCRAP
VA=1500 min
Up Time = 99%
C/T=720 min
C/O=0 min.
3 SHIFTS
1% SCRAP
VA=72 min
Up Time = 100%
1900pieces
I1900 pieces LB1900 pieces SB2 days
I19 piecesLB
2880 min
.5 min
5 min
7 min
5 min
5 min
1440 min
1440 min
1440 min
720 min 2172 min
5770 min
62% Queue
1900pieces
FlowProblems
Too MuchInventory
HighScrap
Long Set up
MachineIssues
Cutting
C/T=120 min
C/O=240 min
3 SHIFTS
10% SCRAP
VA=7 min
Up Time = 80%
k h
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36 /GE A CFC -L e a n /
8/25/2006
Stop @
Abnormality
Takt TimeProduction
Single Piece
Flow
Pull
Production
Autonomation
SequencingLeveling
THE HOUSE OF TOYOTATHE HOUSE OF TOYOTA
JIT Jidoka
Heijunka
TPS
VSM & TPS Work Together
VSM Helps Identify Current State and Prioritizean Improvement Plan
TPS are Tools for Improvement
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Cutting
C/T=120 min
C/O=240 min
3 SHIFTS
10% ReworkVA= 7 min
Up Time=80%
Breaking Down Value Stream Map
Cycle Time
Value Added
Change Over Time
Process Up Time
Defect Rate
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C/T=120 min
C/O=240 minC/O=240 min3 SHIFTS3 SHIFTS
10% Rework10% ReworkVA= 7 min
Up Time=80%Up Time=80%
Breaking Down VSM Flow
Cycle Time
Value Added
ToolsSpaghetti Chart
5SStandard Work
Cell Formation
Cutting
h h
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Previous Flow Chart New Flow Chart
1
3
4
2
5
6
7
8
12
34
Spaghetti Chart
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5S Workout
Before
After
Ensure that the workplace
contains only what is needed,when it is needed and where it is
needed
Quickly, any abnormalities can
be detected
Minimal time is spent on non-
value added activities A way to see and eliminate
waste
5S I t
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Planning
Tools
Material
Cart
5S Improvement
S Fl I t
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Old Process 2 Hours
Tools Spaghetti Chart, 5S
Results 12 minutes
Summary Flow Improvement
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C/T=120 minC/T=120 min
C/O=240 min.3 SHIFTS3 SHIFTS
10% Rework10% ReworkVA= 7 minVA= 7 min
Up Time=80%Up Time=80%
Breaking Down VSM Setup
Change Over Time
ToolsSetup Reduction
Cutting
d i
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Setup Reduction
PART A
PRODUCTION
PART B
PRODUCTION
Finish part A Make and Inspect B
SETUP
PART A
PRODUCTION
PART B
PRODUCTION
Finish part AMake and Inspect B
SETUP
INTERNAL : You must shut the
machine off to perform
Changing chuck jaws
Changing diesChanging insertsAdjustments to dial in
EXTERNAL : You can perform while
the machine is running
Pre accumulate tooling
Installing / replacing insertsGetting paperwork together
Setting tool heights
Set Up Reduction Example
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Establish Visual Controls
Set Up Reduction Example
Afte
r
Before
Change Over Benchmark
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1) Internal Vs External
2) All tools and equipmentare at arms length
3) Standard work has beenpracticed to perfection
4) Continuous observation and
analysis drives continuousimprovement
Types of Waste Eliminated Searching Finding Selecting
Transporting Waiting
Change Over Benchmark
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Old Process 4 Hours
Tools 5S, Internal to External
Results 27 minutes
Summary Setup Improvement
k l
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C/T=120 minC/T=120 min
C/O=240 min.C/O=240 min.3 SHIFTS3 SHIFTS
10% ReworkVA= 7 minVA= 7 min
Up Time=80%Up Time=80%
Breaking Down VSM Quality
Defect Rate
ToolsBuild Quality In
Poka YokeSix Sigma
Cutting
Six Sigma Tools
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Six Sigma Tools
Before Process Capability After Process Capability
Find Top Problems Pareto
Standardize the Process
S S t I t
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Old Process 10% Rework
Tools Six Sigma Analysis
Results 0.7% Rework
Summary Setup Improvement
B ki D VSM M hi U Ti
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C/T=120 minC/T=120 min
C/O=240 min.C/O=240 min.3 SHIFTS3 SHIFTS
10% Rework10% ReworkVA= 7 minVA= 7 min
Up Time=80%
Breaking Down VSM Machine Up Time
Process Up Time
ToolsPreventativeMaintenance
Cutting
i i
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Preventative Maintenance
Machines Deteriorate Over
Time
Maintenance Should Be
Preformed in the Beginning
Stages of Deterioration You can pay me now (with
short daily CCO)...or pay me
later (with poor quality, lots of
downtime, high maintenance
costs, etc...)
CCO Checklist
Badge/Date
Machine #:
General
- Nuts/bolts loose, wobbly or missing?
- Any play in moving parts or fixture mounting section?
- Any unnecessary items on the body of the machine?
Lubrication
- Are oil levels correct?- Does oil reach sliding parts?
- Any oil leaks from supply devices, pipes, fittings?
Pneumatics
- Pressures gages in proper range?
- Any stop valve, ball valve leaks?
- Air flowing through closed valves?
Sample CCO Checklist
l
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Results
Increased Capacity for Customer Growth
Significant Cash Savings to the Business
Old New ImprovementCycle Time (min) 120 12 90%
Setup Time (min) 240 27 89%
Defect Rate 10% 0.7% 93%Process Up Time 80% 100% 20%
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Launching LEAN at GE
d ll h d d h
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Toyota vs.
US auto industry
Dell vs.
PC industry
Growth (CAGR)Revenue 8% vs. 3% 28% vs. 3%
Earnings 24% vs. 0% 33% vs. 10%
Lean focusInventory turns Every 2 hrs vs. 5 min. vs. 11 days
NPI cycle time 30% faster
Toyota and Dell have demonstrated thatcycle time reduction in core customer
facing processes drives growth
but how do we make it work for us??
K T S At GE
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Keys To Success At GE
1. Select the Right Process(ITO,OTR, NPI)
4. Select the Right Business(Showcases)
7. Select the Right Approach
(Lean Workshops)
Focus On External Process To Drive Growth
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What happens if Engines takes NPI cycle time from 24 months to 18 months?
What happens if Healthcare can create breakthroughs in 1 year instead of 2?
What happens if Wind responds to an order in 1 month instead of 6 months?
What happens if Plastics can consistently respond to orders in 5 days?
What happens if Commercial Finance can offer financing to a CFO of a mid size companyin the first meeting?
What happens if Healthcare could propose a DI solution in the first meeting with a
radiologist?
Innovate Better: New Product Introduction
Sell Better: Inquiry to Order
Fulfill Better: Order to Remittance
Focus On External Process To Drive Growth
Create Excitement Through LEAN Showcases
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LEAN Showcasesprove that cycle time reduction in
GEs core customer-facing processes drives growth
Criteria For Selecting Initial Lean Showcases:
Passionate Business Leader
Growth Impact Greater Than $50MM Revenue
Must address at least 2 of 3 customer facing processes
(New Product Introduction, Inquiry to Order, Order toRemittance)
Create Excitement Through LEAN Showcases
Lean WorkOuts Are The Perfect Tool For
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WEEK ONE
Draw Wing-to-wing value stream maps for innovating (NPI), selling (ITO), and/or
fulfilling (OTR) including all relevant multi-functional participants to define future
vision for the organization
WEEK TWO
Action teams implement as much as possible during the Lean WorkOut to reducecycle times
30+ Lean Showcases Across GE In Place Today
First transaction 63to 1 day capability
15% additionalgrowth in 2006
Retail Sales Finance Magnetic Resonance Quoting from 62
days to samemeeting
NPI from 29 to 0
weeks
Lean WorkOuts Are The Perfect Tool ForDriving Significant Cycle Time Reduction
L
EANWorkOut
Approach
Locomotive Assembly cycle from
29 to 10 days
40% increase in
capacity
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Integrating LEAN With
Six Sigma
When To Use LEAN vs Six Sigma
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ToolSophistication
0 1 2 3 4 5 6
LEAN Six Sigma
Complexity&Control
Speed&
WasteElimination
Six SigmaLEAN
LEAN
Six Sigma
Time / Cultural Maturity
When To Use LEAN vs. Six Sigma
Integrating LEAN With Six Sigma
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Integrating LEAN With Six Sigma
ImproveDefine Measure Analyze Control
USE LEAN METHODOLGY TO DRIVE IMPROVEMENTS WHERE
CYCLE TIME IS IDENTIFIED AS ROOT CAUSE
Project Management Still Uses DMAIC With Lean
as a Critical Tool For Improving Processes
Value Stream
Mapping
Current State
Value Stream
Mapping
Future State
Action Workout -
Implement
Changes
DMleanC
Broader Perspective Of Our Evolution
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WorkOut
Change accelerationprocess
Project focused Six Sigma
Career focused Six Sigma
Lean Six Sigma wing-to-wingprocess focused
Employee voice
X-Functionalinvolvement
Productivity
Leadership
Customer impactand growth
1989 1992 1996 1999 2005
Broader Perspective Of Our Evolution
Employee Response To LEAN
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Employee Response To LEAN
91%would recommend participation in future Lean events to
colleagues
91%are excited about using Lean to grow our business
95%agree that the improvements made areREAL and willimprove the way we do business
93%feel that the improvements made will increase our
responsiveness to customer needs and reduce our processcycle time
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Considerations For
Implementing LEAN InYour Organization
Thoughts On Implementing LEAN
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Thoughts On Implementing LEAN
Focus on the Customer
Target processes that most directly touch the customer and drive
growth for your business.
Measure Customer Impact
Translate cycle time reductions to customer impact. Either through NPS
or through incremental revenue and net income.
Get Everyone Engaged
Lean works best when you focus wing to wing and drive cross-functional
participation.
Create a Continuous Learning Culture
Create new processes and dont be afraid to fail. Try new approaches
and learn from your mistakes.
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Questions?Questions?