Lean Principles and Practices:

A Healthy Corporate Lifestyle

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Arno van Berkum

Luncheon Presentation; September 25, 2014

The Institute of Internal Audit, Calgary

A Little Bit About Myself…

• Certified Lean Six Sigma (Master) Black Belt; 11+ years of hands-on and coaching

experience

• Worked in variety of industries - Oil & Gas, Utilities, Healthcare, Manufacturing,

Consumer Electronics

• …and different parts of the world - North America, Europe and Asia

• Married to an auditor, 2 sons

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Our Conversation Today

� Lean is an inherently simple, yet powerful methodology

� Good habits make for healthy organizations

� You already know some of this stuff!

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Lean Methodology Was Born Out Of Necessity

• Ford’s first attempt

• Toyota’s rise from the ashes: do more with less

• Adoption by automotive and others; now called Lean

Shorter Cycle Time Improves Capital Turns

Cycle Time

Ca

pit

al

In

Ca

pit

al

Ou

t

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Shorten Cycle Time By Reducing Waste

Value added activities are typically a small percentage (5% to 20%) of process cycle time.

Traditional approaches tend to focus on accelerating value add; Lean on reducing waste.

Wait in line

Print Boarding Pass

Wait in line

Correct

Spelling error

Check luggage

Security

clearance

Walk to

gate

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Wait in

line

Board plane

Travel Example:

To Eliminate Waste We Have To First Identify Value

VALUE Who are your customers and what do they value?

VALUE STREAM Map your end-to-end process, identifying which

activities add value to the customer, and which do not

FLOW Move towards continuous, single piece flow

PULL Provide solutions/ information/ services only

when it is required by the customer

PERFECTION Create visual performance measures and

drive continuous improvement

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Waste – Activities that Customers Don’t Want To Pay For

Waste identification requires different perspective on what good looks like, what’s feasible.

Oil that does not meet

refinery specification

Oil that exceeds refinery

specification (e.g. water content)

Too many parts ordered,

equipment idle

Moving parts between warehouses

Producing in excess of

customer demandParts not available

Moving back and forth between

work place and tool shed

7+1

Wastes

Where Does Waste Come From?

� Processes are complex

� Complexity leads to errors

� Errors lead to increased controls (more complexity)

� Fighting with internal processes at expense of focus on customer

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The Benefits Of Lean

Customer

� Improved responsiveness

� Improved quality

� Optimized cost

Culture� Empowerment

� Continuous improvement

� Customer focus

People

� More creativity

� Less frustration

� More autonomy

Business

� Increased competitiveness

� Higher staff engagement &

productivity

� Improved agility

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Project Example – Reduce Wellhead Facility Cycle Time

Key Performance Indicator Baseline Target

# Engineering designs Many 1

Engineering effort (hours) 1,200 None provided

Engineering cycle time (days) 275 None provided

Construction cycle time (days) 7 4

The trigger – “there has to be a better way”

Step 1 – Standardize Engineering Design

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Kaizen I Standardize design based on design variables; define MOC process

Marked up P&IDAsset 1 Asset 2 Asset 3

Step 2 – Streamline Process

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Kaizen II Pre-fabricating modules prior to construction, concurrent execution

Current State value stream map Future state: time-phased construction schedule

Step 3 – Implement, Monitor and Enhance New Process

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New piling

depth guideline

Integrate with

Completions

Results tracked and communicated via Scorecard

Improve

scheduling process

Root-causes, solutions identified using tools such as Pareto analysis

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The bottom line - $1.9 MM Cost Savings

Key Performance Indicator Baseline Target After

# Engineering designs Many 1 1

Engineering effort (hours) 1,200 None provided 500

Engineering cycle time (days) 275 None provided 35

Construction cycle time (days) 7 4 4

Additional benefits are increased flexibility, higher process awareness and less frustration.

Lean Tools & Techniques Alone Are Not Enough

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It is easier to change processes than mindsets and habits.

Diet Analogy - Rapid Weight Loss, Then Rebounding

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� Focus on short term results

� Underlying beliefs don’t change

� Incentives don’t change

� Old habits reappear

� Inefficiencies creep back in

Lifestyle Change – New Thinking, Healthy Habits

RESPECT EVERY INDIVIDUAL - Cultural Enablers

Involve everyone Ensure a safe environment

Develop people Build teamwork

SCIENTIFIC METHOD TO SEEK PERFECTION - Continuous Improvement

Stabilize, standardize process Eliminate waste

Fact-based decision making Integrate improvement with work

CLEAR PURPOSE - Enterprise Alignment

Align Strategy Align Systems (Mgt, Financial, HE, IT) Align Performance

CUSTOMER VALUE

Results

True North Metrics Leadership Behaviors Focus On The Problems

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Traditional Leadership – Hierarchy Rules

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Autocratic

All knowing

Management By

Objectives

Impatient

Blaming

Controlling

Lean Leadership – Questions Are The Answer

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Humility & Curiosity

Facilitator

Focus on what and how

Student

Coach

Communicator

Perseverance

Closing Thoughts

� Lean methodology and -tool set is powerful and relatively easy to grasp

� Lasting results require a different perspective on business; and new habits

� Deployed correctly, Lean will drive long term financial health, and a more

positive work environment

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Thank you!

Questions?

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Our Conversation Does Not Have To Stop Here

Personal coordinates:

• arno_vb@yahoo.com

• ca.linkedin.com/in/arnovanberkum

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