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S h a r i n g S o l u t i o n s f o r Y o u r L e a n J o u r n e y

TIMES

What is a learningorganization

Progressive 5S:We’re not talkingtrash

6Leveraging leanto eliminateseasonal inventory

12 14

Ve r m e e r ’s Market-Based Strategy: Strategic Voice of the Customer

The success of companies that choose to undergo a lean transformation is catalyzedby passionate leadership and the resultingculture change that serves as the backbone of the journey. A lean leader creates the requisite excitement for a profitable growthacross the entire enterprise enabling theproper transformation to take place. For “lean” to work effectively, leadershipmust establish the overriding business visionand then communicate it constantly toeveryone. In addition, leadership must avoidmaking the transformation too easy bysetting stretch goals that are radical anduncomfortable. Failing to do so sets everyoneup for underperformance. It’s better to overreach, fail, and learn from the failurebecause taking the kinder, gentler road willstifle creativity.

Standard WorkOne implementation tool—standard

work—is a hallmark of a lean company. Oneelement of leadership’s standard work is tocommunicate continuously—the good, thebad, and the ugly. Another element is toshow the vigilance to monitor progress on aregular basis while embedding countermeasure sto handle anomalies. Involvement must beboth personal and visible to be effective.

Another part of the lean leader’s tool kitis policy deployment. It’s a structured way toexecute to achieve the vision by selecting fewvital, critical, quantifiable objectives that youmust focus on to drive change. You must

then commit to establishing metrics withwhich you will track progress, and createincentives to help everyone get there.

Cultural ShiftLean leaders must nurture a lean culture,

and it’s hard to drive such a culture changewithout creating a critical mass of believers.One way to make the nurturing viral is todevelop lean leaders—zealots—within theorganization. Zealots are the catalysts whowill drive organizational change and growth.Zealots will take your visions and help infecteveryone else with the lean “bug.” Zealotscan exist anywhere within the organization,so don’t limit your recruitment to titledmanagers when seeking them out. Zealots are willing to step outside their comfort zone, seek disruptive ideas, and lookfor breakthrough opportunities. They aretenacious optimists and they are your bestassets for helping to drive cultural change.

With an enthusiastic leadership team inplace as the catalyst for change, your firstlean steps must be “narrow and deep.” Thiswill allow you to show the true power of theprocess. The goal of going narrow and deepis to create change quickly and demonstratethe power of transformation by visible examples. If you’re interested in true culturechange across the entire organization, youneed to start with small and deep successesor you’ll never create enthusiasm. Over timeyou can expand on the success to bringchange to the rest of the organization. Thisis where policy deployment can be most useful: it helps you focus. The results fromthose initial projects can then be communicated across the company and theenthusiasm that is engendered can then beused to build on that highly visible success.

Win–WinUsing this roadmap, lean leaders can

inspire change, help create breakthroughs,jump-start the process, and mobilize and

PUBLISHER’SNOTE Lean Leadership and Culture Change

empower everyone to make improvements.It’s a team effort with the ultimate goal ofmaking it work for the benefit of all. Whencommitted leadership at all levels of theorganization can sustain a blameless environment where creativity and risk-takingare encouraged, then the culture change thatcreates competitive advantage will alwayscome naturally.

This issue’s articles touch on manyaspects of culture change and competitiveadvantage, starting with our feature fromVermeer Manufacturing Corporation onchanging the dynamics of your businessthrough a market-based growth strategy (p. 2). Part of developing a lean culturemeans becoming a learning organization andthe characteristics of such an organizationare described in an article by Joe Panebianco(p. 6). Negative behaviors can work to thedetriment of an organization’s lean journey.Learn how to deal with “bad actors” in“Combating Anti-Synergy” (p. 8) and howyour leadership style can affect your businessin “The Art of Consistency” (p. 11). For amore practical application to your lean journey, you can also learn about Progressive5S (p. 12).

I hope that some of these articles willhelp you to be better leaders in nurturingculture change within your own organizations.

Anand Sharma, President & CEOTBM Consulting Group, [email protected]

A publication of TBM Consulting Group

800.438.5535, www.tbmcg.com

Publisher

Anand Sharma: a s h a r m a @ t b m c g . c o m

Executive Editor

William A. Schwartz: [email protected]

Managing Editor

Julie Poudrier: [email protected]

Featured Columnists

Mark D. Core Bill SchwartzCarl Deeley Mike SerenaJoe Panebianco Anand SharmaGary Rascoe

Contributors Stacey Aponte-Morris Trudi FrechinHerb Brown Cheryl GrovesMartial Durin Angela Scenna

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On the cover: Vermeer ManufacturingCorporation is driving growth by running a different race—using strategic voice of thecustomer to determine where needs exist intheir current marketplace as well as whereentirely new, related markets might exist and then provide solutions for those needs.Taking the long view that can be gained by using strategic voice of the customer holds the greatest opportunities for true business-changing choices.

Effective May 1, Rainer Borgmann isthe new president and CEO of SpudnikEquipment Company in Blackfoot, ID.Former President and CEO Rolf Geier istaking on a major assignment withContinental Brake Systems in Sao Paulo,Brazil. … Joseph Saoud is the new presi-dent of Cummins Filtration. Before hisappointment as president, he was the generalmanager of the company’s Cookeville, TN,plant. … Michael Kayser is leaving AMIDoduco in Germany for a new challenge atRexnord as Vice President of Operations,Europe. … In January, KC Ng was promot-ed to vice president in charge of lean world-wide for Pulse Engineering. KC is fromSingapore, and prior to his promotion wasrunning a business unit for the company. …Pulse Engineering also recently acquired theDanish company Sonion. Sonion specializesin speakers for cell phones and has opera-tions in Denmark, Vietnam, and China(Suzhou and Dongguan). … At MattelArun Kochar, formerly vice president andgeneral manager of Mattel Jakarta (India)has been promoted to vice president andgeneral manager for all of Mattel’s Asia sites.Arun is replacing David Louis, who is retir-ing, in this position. … TBM has also hiredseveral new consultants and staff members.John Alford has joined the TBM Instituteas a senior trainer and design specialist.Dennis Donahue is a new U.S. consultant.Chandra Majjagi is a new consultant inTBM’s India office, and Sammy Leung is anew consultant in the China office. Lily Jiahas also joined the China office as anadministrative and accounting assistant. JeffHaswell joined TBM as web designer.Raymond Morisod has joined the TBMEurope as Accountant and PayrollAdministrator.

LEANCOMMUNITYNEWSMANAGINGQ 2. 0 8

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1Managing Times | Q2.08www.tbmcg.com/news/newsletter.php

CASESTUDY Vermeer Market Based StrategyBy Mark Core, Vice President, Forage Solutions and Corporate Marketing, Vermeer Corporation

2

In 1943, at the height of World War II,

American farmers were facing a shortage of

farm help. Farming at that time was still a

very labor-intensive industry. The shortage

of workers pushed some innovative farmers

to find better ways to work more efficiently.

One of those farmers was a man named

Gary Vermeer from Pella, Iowa. To help his

operation, Vermeer invented a mechanical

wagon hoist that made unloading a grain

wagon quicker and easier.

It didn’t take long for other farmers in

the area to ask Vermeer to build hoists for

their operations as well. Five years later, with

the support of his cousin Ralph, Gary

Vermeer built the idea into a business—and

Vermeer Manufacturing Company was born.

In the years that followed, Vermeer

continued to listen to people and look for

new ways to help farmers work more

efficiently. The company introduced the

Pow-R-Drive hammermill to help farmers

grind grain using their tractors’ power

take-off (PTO). PTO-powered irrigation

systems and trenchers followed and helped

the company open international markets.

In 1972, during an early-morning walk

with a long-time friend and farmer, Gary

learned that his friend was planning to get

out of the cattle business because of the

labor required to put up hay. Within weeks,

Vermeer was testing a large round hay baler

prototype—a product that changed the way

farmers harvested hay to this day.

Today, the company has grown from a

small machine shed to a multimillion dollar

global company with more than 2,000

employees, a 1.2-million-square-foot

manufacturing footprint and a diversified

product lineup that spans multiple industries

and includes grinders, brush chippers, stump

cutters, compost turners, horizontal

directional drills, trenchers and hay balers, to

name a few.

A Culture of InnovationVermeer’s culture has always been one

of innovation, but for its first forty years, the

process was very informal. As markets

evolved, the company became a high market

share manufacturer competing in mature,

relatively low-margin industries. It wasn’t

until the 1980s and 1990s that Vermeer

determined it was important to start devel-

oping a more focused process for innovation.

It started by establishing the company’s

4P philosophy of principles, people, pro d u c t ,

and profit. To support this philosophy,

Vermeer embraced the principles of lean

manufacturing, holding its first official

kaizen event in 1997 and completing 500 of

these events within three years. In 2001, the

company introduced lean to its distributors

and suppliers. By 2003, the company had

completed its 1000th kaizen event.

Managing Times | Q2.08www.tbmcg.com/news/newsletter.php

“While interacting with customers

and industry specialists, we collect

insightful information uncovering

meaning and value impacting

future decisions and strategies that

drive growth.”

Implementing these operational

efficiencies helped Vermeer weather a

significant downturn in the economy in the

early 2000s. Fo l l owing years of unpre c e d e n t e d

growth, a devastating downturn in the

global telecom industry resulting from the

dot-com bust caused a significant decrease in

Vermeer sales—and required the company to

reduce its workforce by nearly one-third.

The lessons learned from that time period

prompted Vermeer to develop new strategies

to help the company both grow and dive r s i f y

its product offering.

The new strategies helped Vermeer

identify the sweet spot between operational

effectiveness and strategic positioning (being

better and being different). This approach has

transformed the way Vermeer innovates

today. Today’s approach is market-driven,

and Vermeer calls it “Market-Based Strategy”

(MBS). Vermeer’s MBS process goes beyond

tactical-based research processes to help

identify new opportunities so that it can be

the first to the market with truly innovative

products and other solutions.

Strategic Voice of Customer—The Viewfrom 30,000 Feet

Vermeer starts the process by looking at

the broad picture of an industry or market,

identifying trends, needs, strategies, and

opportunities for broad-scale technology and

business investments. This phase of the

process is called the strategic voice of

customer (SVOC). Vermeer employees from

different backgrounds are brought together

and charged with investigating potential

industry and market opportunities. They

talk to industry experts in government,

trade, and universities. They research

published data. They investigate potential

strategic competitors. And, they talk to

customers—those who own Vermeer

products as well as those who don’t. Then

they return with a wealth of information.

Because Vermeer is a privately-owned

company, their long-term investment in this

process—which can sometimes mean

sending a team of Vermeer employees

overseas for weeks at a time researching

potential opportunities—isn’t hindered by

short-term shareholder profitability goals.

Often a return on their investment can take

several years. Sometimes, there is no finan-

cial return at all. Regardess, Vermeer believes

(and their success in introducing innovative

products has proven) that the investment is

worth the potential reward.


CASESTUDY

4

Value Innovation CurveSomewhere between collecting

information and data and turning it into a

new, profitable opportunity, there is a phase

Vermeer describes as the “value innovation

curve” (VIC). This visual representation

rates the key factors of an offering and

compares them to the actual offerings being

made by competitors in the market. By

addressing what customers deem as the most

important factors, Vermeer is able to develop

an offering that brings value to the end

customer. Ultimately, the question in the

VIC process comes down to how Vermeer

can help their customers be successful.


It’s not always product features that

offer value to the end customer. In fact,

through the VIC phase, Vermeer has often

identified opportunities like parts availabili-

ty, maintenance issues, safety, training, or

cost of operation as the key value offerings.

Using this information, Vermeer strives to

develop and market an offering that matches

the end customer’s needs.

Product Innovation—Product Voice ofCustomer and House of Quality

Not every idea makes it off the drawing

board. At Vermeer, the ideas that do are

defined and refined in a process described as

product voice of the customer (PVOC) and

house of quality (HOQ). Much of the com-

pany’s product development happens here,

still using a cross-functional team with

members from areas such as engineering,

marketing, product safety, production, pro-

curement, service, and parts distribution.

New product concepts are developed

with features designed to match SVOC and

VIC discoveries. These concepts are then

taken to the field for feedback from small

groups of Vermeer dealers, customers, and

noncustomers. Based on this outside feed-

back, product design enhancements are

strongly considered for incorporation into

the product design.

Refining Quality—Quality Voice ofCustomer

Launching new product can present a

variety of difficulties. One example is that

although Vermeer products are tested during

the prototype stage, real world use by end

customers can present different circum-

stances than those experienced during proto-

type testing.

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www.tbmcg.com/news/newsletter.php

The innovation process used at Vermeer

depends on gaining feedback from the

field—through dealers and end customers.

Vermeer describes this “listening” phase as

quality voice of the customer (QVOC). The

Vermeer product design teams use this feed-

back to continually find better was to

enhance the product.

Determining Customer Satisfaction

Vermeer takes its Market Based Strategy

even one step beyond final product develop-

ment by seeking out customer feedback—

both positive and negative—after each new

product launch. This “listening” phase of the

innovation cycle is unique in that it brings

together employees from across the compa-

ny, from production to executive manage-

ment to sales to engineering and beyond

into a group “lab” setting to determine a

product’s customer satisfaction index (CSI).

Participants make approximately 300

calls to Vermeer customers every month. To

date, more than 200 employees have con-

ducted more than 7,500 customer telephone

interviews. The interviews are designed with

a simple single-question philosophy primari-

ly used to determine a customer’s intent to

repurchase. But, beyond the obvious benefit

of identifying improvement opportunities,

the CSI process also puts Vermeer employees

in touch with end customers in a way that

helps employees understand the importance

of customers and their feedback.

Does It Work?

While this process-driven, buttoned-

down approach to innovation developed by

Vermeer Corporation may seem methodical

and complicated, it’s not too different from

the approach that Gary Vermeer took with

many of his early inventions.

But, does it work?

In the past few years, Vermeer has suc-

cessfully launched a variety of new products,

made several key strategic acquisitions in

growing markets, and helped redefine some

niche markets based on feedback received

through its market-based strategy. And, with

in-depth insights into evolving industries

and high-growth markets, Vermeer is poised

to take advantage of opportunities that its

competitors may not have seen coming

several years ago. Vermeer Corporation’s

investment of implementing its market-

driven approach is likely to pay dividends for

the company well into the future.

What Is Value Innovation? Pursuit of Radically Superior Value and Low Cost

6 Managing Times | Q2.08www.tbmcg.com/news/newsletter.php

A C C E L E R AT E DL E A R N I N G What Is a Learning Organization?By Joe Pa n e b i a n c o, Director and Team Leader, TBM LeanSi g m a® In s t i t u t e

At the start of every kaizen event I askthe group, “What are your expectations?”The most common answer is, “To learn.”They may say to learn about the process thatwe’re going to improve, to learn more aboutan area of the company that they aren’tfamiliar with, or to learn about the principles of the Toyota Production Systemand how they are used to improve a process.As a facilitator, my expectations are not onlyto achieve the business objectives of theevent, but to help the group learn so thatthey know the process and the principles,and can make improvements every day,thereby creating continuous improvement.The common thread in all of these expecta-tions is to learn. Learning is an essential partof continuous improvement. As Jeffrey Likerin The Toyota Way (p. 251) states, “Of all theinstitutions I’ve studied…I believe Toyota isthe best learning organization.”

Jeffrey Liker in The Toyota Way shares the14 management principles that have helpedToyota become the largest and most prof-itable car company in the world. Principalnumber 14 is: “Become a learning organiza-tion through relentless reflection and contin-uous improvement.”

But what is a learning organization? PeterSenge in his book The Fifth Disciplinedescribes learning organizations as “organiza-tions where people continually expand theircapacity to create the results they trulydesire, where new and expansive patterns ofthinking are nurtured, where collective aspi-ration is set free, and where people are con-tinually learning how to learn together.”

Peter Senge identifies five disciplines thatare key to building a learning organiza-tion—shared vision, personal mastery, teamlearning, mental models, and systems think-ing. Though other characteristics of learningorganizations have been written about, moststill draw upon the initial ideas and conceptsthat Senge described.

Shared VisionAll groups or organizations that have

achieved greatness have had goals, values,and missions that are deeply shared through-out. Don’t mistake “shared vision” with acompany’s vision or mission statement—they may not be the same. Shared visionsmotivate and drive people to excel, notbecause the boss tells them to, but becausethey want to.

Many leaders have a personal vision state-ment they never articulate to the organiza-tion. These types of leaders may still beeffective in their roles because they arecharismatic individuals and motivate peopleto follow them. When they leave the organi-zation, the motivation of the employees willleave, too. In order for an organization tohave a common commitment, focused onlong-term results and achievements, itsmembers must have a shared vision that lastswell beyond the tenure of any one individualleader. A great example of this is when JohnF. Kennedy said in 1961 that America wouldput a man on the moon by the end of thedecade. This single statement became theshared vision motivating a nation to achieveits goal even after it lost its leader.

Personal MasteryPersonal mastery is the individual’s moti-

vation to learn and become better, much as acraftsman or artist is driven to master hisdiscipline. In a learning organization, per-sonal mastery tells us that we are committedto a lifetime of learning and are able to real-ize the results that matter most to us. Anorganization’s ability to learn is determinedby its individual members’ desire to learn—either the drive to develop, improve, master,and excel exists or it doesn’t. For that reason,you need to have individuals that are trulycommitted and motivated to the sharedvision.

Joe Panebianco


Team LearningExamples abound of sports teams that

although filled with individual stars still havea losing record. Likewise, there are manage-ment teams that are staffed with high per-forming individuals that produce poor earn-ings or bankruptcy. “When teams are trulylearning, not only are they producingextraordinary results, but the individualmembers are growing more rapidly thancould have occurred otherwise.” (Senge, p.9) This is how individual learning becomes amechanism for team learning. In effect, teamlearning becomes a force multiplier of per-sonal mastery, with one person’s lessonquickly being passed on to the entire organi-zation, accelerating the learning andimprovement process exponentially.

Mental ModelsMental models are the assumptions and

beliefs that are the foundation for how weinterpret the world around us. Mental mod-els also drive our behaviors. In most cases,we aren’t even aware of our mental models.It can be something as simple as making anassumption about the type of person some-one is based on how that person is dressedor wears her hair. Mental models cause us totake a certain action or to take no action atall. Here we must be willing to look inward,examine and challenge our mental models,and be open and willing to change. A funda-mental tenet of the learning organization isthat the act of looking inward and examin-ing our core thoughts and beliefs is animportant tool for furthering personal mas-tery and continuously improving ourselves.

Systems ThinkingThe final characteristic of a learning

organization is that the organization utilizessystems thinking. Systems thinking involvestaking a macro look at the world or anorganization, rather than only seeing dis-crete, individual units or events. Throughthis broad perspective, we can observe pat-terns and cycles in an organization—how allindividual members are interrelated andinfluence each other—rather than viewingevents as isolated occurrences or separateparts. Finding this interrelationship of seem-ingly unrelated activities requires a systemsthinking approach. It requires a systems per-spective to comprehend how every eventwithin an organization helps shape thefuture of the organization and channel thosecollective events into lessons learned on thepath toward the shared vision.

As one seasoned Toyota manager commented after hosting over a hundred tours for visiting executives, “They alwayssay, ‘Oh yes, you have Kan-Ban systems, we do also. You have quality circles, wedo also. Your people fill out standardwork descriptions, ours do also.’ They all see the parts and have copied the parts. What they do not see is the way all the parts work together.” (Senge, p. 11)

Now I know what you’re thinking: sharedvision, personal mastery, team learning,mental models, systems thinking—that’s ahell of a lot to develop, implement, andspread throughout our organization. We willnever be able to adopt all those practices—orby the time we do master those, we’ll be sofar behind that what’s the point? But whatyou don’t realize is that the entire kaizenweek is a microcosm of a learning organiza-tion. The scope and objectives for the weekis the shared vision; the mental models arethe tools of the Toyota Production System

(i.e., batch vs. flow production). No oneindividual is capable of producing the resultsthat a full kaizen team produces, but byassembling a team of employees who areeach responsible for discovering the currentstate and sharing what they’ve each learnedwith the team, the team achieves results thatsurpass anything one individual could haveaccomplished on his own (personal masteryand team learning.) During a kaizen event,no project area can be considered in isola-tion—before changes are made, the teammust understand the interrelationships andidentify how a change will impact otherareas of the organization (systems thinking.)By continuing these practices beyond akaizen event and applying them to all aspectsof your business, you’ll have taken the firststeps to becoming a learning organization.

“The ability to learn faster then your

competitors may be the only

sustainable competitive advantage.”

—Arie De Geus, Royal Dutch/Shell

We often talk about the advantages ofsynergy: 1 + 1 = 3 (or more). Synergy is c o n s i d e red a good thing because the sum ofthe parts is often gre a t e r, and better, than theindividual parts themselves. But what aboutwhat I call “anti-synergy?” If synergy isdefined as above, then we can define anti-synergy as when the negative parts add up toa greater negative as a whole than they doindividually; that is: –1 + –1 = –3 (or worse).

Too often organizations will pro c r a s t i n a t eabout dealing with a bad situation. So m e t i m e sthey rationalize the inaction by thinking thatthe problem person or situation will eve n t u a l-ly be “dragged along” with eve ryone else—t h e y’ll eventually see the light or do the rightthing if you just give them enough time. T h et ruth is that the sooner an organization candeal with a problem person or situation, thebetter that organization will ultimately p e rform. By dragging their feet about dealingwith problems, these organizations inadve r-tently create a negative energy (or synergy, ifyou will) that tends to multiply its effect ove rtime and drag the organization down.

He re’s a re l a t i vely simple example from acompany where I worked years ago. This p a rticular company had several campuses and“s a t e l l i t e” buildings. In one of these buildings,personal safety equipment, specifically eyeand hearing protection, was re q u i red. T h epeople who worked in this building we rehighly skilled and essential to the business. Atsome point, one of the workers in this building decided to stop wearing his re q u i re dsafety equipment. Soon others began to f o l l ow his example. This one individual washaving an anti-synergistic effect on the entireg roup of operators in that area. By his example, he was in effect encouraging othersto forgo using needed safety equipment.

When something like this happens, theleadership of an organization has two choices.It can look the other way and hope that thep roblem will correct itself and further p roblems won’t arise, or it can act to stop thep roblem in its tracks. Often, leaders will takethe first approach. But as in this example,what usually happens is the problem becomesmagnified as more and more people start tob e h a ve in the unacceptable way. They see oneperson “getting away with it” and can thenjustify doing the same thing themselve s .

In this particular case, the pro b l e me m p l oyee was essential to the business andone could say that fact put leadership

“ b e t ween a rock and a hard place.” But therea re times when it’s appropriate to take a riskin order to rectify a problem. My boss and Iwent to that building and called in one of thepeople who was refusing to use pro t e c t i veequipment. We told him “If you leave thisroom and go back out on the floor withoutyour hearing and eye protection, you cankeep walking.” This was a tough call to make,because had he kept walking, his loss wouldh a ve had a significant impact on the business.But what my boss re c o g n i zed is that he hadto take a stand and stop the anti-synergy in itstracks or he would be opening up the organization to all sorts of additional p roblems. Ignoring the problem was simplythe first step on a slippery slope.

Sometimes they rationalize the inaction bythinking that the problem, person or situationwill eventually be “dragged along” with e ve ryone else. T h e y’ll eventually see the lightor the right thing if you just give themenough time. The truth is that the sooner anorganization can deal with a problem, personor situation, the better that organization willultimately perf o r m .

As my boss proved that day, you muststand up for what’s important, even if—as inthis case—it might hurt you in the shortterm. Letting bad things go unchecked willultimately lead to a culture that’s anti-synergistic, and that’s the opposite of what anorganization should be seeking.

A l l owing one operator to refuse to we a rp ro t e c t i ve equipment sent the message toe ve ryone that not following the rules waso k a y. Consider the situation where one person refuses to follow 5S or standard work .What does that do to productivity and, morei m p o rt a n t l y, morale? What does it say aboutyour culture? What sort of message is it sending to the rest of the organization?

It’s never easy to confront a person who isrefusing to cooperate, but it doesn’t get anyeasier if you choose to ignore it and hope itwill go away. In fact, delaying action allow santi-synergy to take hold, and before yo uk n ow it, what was potentially a small pro b l e m(i.e., one person) will soon become a muchlarger one. If you consistently address issuesearly on, before anti-synergy can rear its head,you will enable your company to maintain ac u l t u re that’s consistent with a lean organiza-tion. You will also dramatically increase thespeed at which your positive culture change,and your lean journey, will take place.

STRATEGICVISIONING Combatting Anti-SynergyBy Gary Rascoe, Senior Management Consultant and Trainer, TBM LeanSigma® Institute


Gary Rascoe

If you consistently address issuesearly on, before anti-synergy canrear its head, you will enableyour company to maintain a cul-ture that’s consistent with a leanorganization.


Readers of this column who are alsolong-term partners with TBM will re c o g n i zesome of the value innovation tenets pre s e n t e din Blue Ocean St ra t e gy (W. Chan Kim andRenée Mauborgne, Ha rva rd Business SchoolPublishing Corporation, Boston, MA, 2005).One of T B M ’s oft-repeated mantras is thatcompanies should leverage lean for growth bylearning to run a different ra c e. We tell ourp a rtners that once they have gotten theirhouse in order by using lean principles andk a i zen, they are ready to position themselve sfor growth by using value innovation. Bl u eOcean St ra t e gy p rovides we l l - reasoned andunderstandable explanations on how to ru nthat different race.

I consider Blue Ocean St ra t e gy re q u i re dreading for managers who want to becomem o re competitive in their mark e t p l a c e — w h owant to understand how to compete to win.

This is not a book about lean or theToyota Production System. It’s about strategyand understanding your market and lookingat your market differe n t l y. The authors showyou how to step away from the “red ocean,”w h e re there’s blood in the water as competi-tors fight over existing markets and pro d u c t s ,and find the market segments and pro d u c to p p o rtunities that we re previously unknow n ,the “blue ocean.” They want you to thinkabout the blue ocean—a vast, deep, wide-open space where the opportunities just maybe endless—where companies should bechoosing to compete.

Kim and Mauborgne emphasize the ideaof eliminating obsolete or aging qualities inp roducts, reducing things that people don’twant or need, and raising features that peoplec a re about or that are n’t currently cove red byexisting products. These concepts—strategicvoice of the customer and value innova t i o n —a re the cornerstone of this book.

Pa rt of what makes Blue Ocean St ra t e gy s oreadable is the we l l - p resented examples usedto illustrate the authors’ concepts. ConsiderRingling Bros. and Barnum & Bailey Circ u s ,which for more than a hundred years hasdefined what a circus is and should be.

Ac c o rding to the authors, most competi-tors of Ringling Bros. we re simply smallerversions of Ringling’s three rings under thebig top, with star performers and animal actsg a l o re. The authors also note that the circ u si n d u s t ry was one in decline. Children hadlots of other forms of entertainment and,

f r a n k l y, circuses have simply lost some oftheir charm and attraction for young peopleand adults alike.

Then in 1984, a group of street perf o r m-ers in Canada created a new type of circ u s :C i rque du Soleil. Cirque du Soleil achieve dfinancial success in less than one-fifth thetime it took Ringling Bros. to do so. Why?

C i rque du Soleil did not compete with Ringling Bros. and Barnum & Ba i l e y. Instead it created uncontested new market space that made the competition i r re l e vant. It appealed to a whole new g roup of customers: adults and corporate clients pre p a red to pay a price several times as great as traditional circuses for an unprecedented entertainment experiences. (p. 4)

What Cirque du Soleil offered was p e rformance that we re much more re f i n e d ,c h o reographed, and well-staged. They addedmusic, light, and dance to appeal to all thesenses, and re m oved vendors in aisles and animal acts.

Another probably more familiar exampleis the strategy used by So u t h west Airlines tore i n vent airline travel through the use of va l u ei n n ovation. So u t h west looked at what mostairlines offered and compared those offeringswith what travelers really wanted. So u t h we s tfound out that travelers wanted to save timeby flying but also wanted the greater scheduleflexibility and lower cost that could obtainedt h rough automobile travel. So u t h we s t’s blueocean strategy, re m oving those offerings com-mon to most airlines that customers placedl ow value on and concentrating on the high-value items—speed, flexibility, and econo-m y — a l l owed So u t h west to change the face ofthe airline industry.

My copy of this book is thoroughly dog-e a red and underlined. It’s an easy read andve ry logical. We often hear that some of thebest ideas are simple ideas, and this is one ofthem. If you want a greater understanding ofwhat it means to be a value innovator andh ow to move your lean journey to the nextstep to run a different race, add Blue Oc e a nSt ra t e gy to your library. It’s a book for leanpractitioners and value innovators to live by.

If you have any comments re g a rding this review or this book, please forw a rd them to meat bschwart z @ t b m c g . c o m .

Bill Schwartz

B O O K ST OR E A DBlue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant

By Bill Schwartz, Executive Vice President, TBM Consulting Group, Inc.

“If you want a gre a t e r

understanding of what

it means to be a value

innovator and how to

move your lean journ e y

to the next step to run

a diff e rent race, add

Blue Ocean Strategy t o

your library.”

– Bill Schwartz

Landscape Structures Inc., a globalprovider of commercial playground equipment, announced the passing of itspresident, Barbara “Barb” King on March 4,2008. King died at age 61 at home with herf a m i l y, after a seven-month battle with cancer.

Barb co-founded Landscape Structureswith her husband, Steven King, in 1971.The Kings founded the company in theirgarage in Golden Valley, Minnesota, with a$1,000 loan that they used to buy a radialsaw and pay an attorney for incorporation.Since then, the family-owned company hasintroduced numerous playground innova-tions that revolutionized the playground aswe know it. Barb headed up the sales andmarketing area, and oversaw the

manufacturing operations of the company, working

closely with staff ona day-to-day basis.

I first met the Kings nearly eight yearsago when Landscape Structures embarked onits lean journey, which the company namedCOOL, for “Creating and recognizingOpportunities to improve, Opportunities togrow, Learning as we go, and loving what we do!”

Barb advocated an open, friendly andempowering culture at Landscape Structuresthat focused on continuous improvement.She ensured that every one of the more than300 employees had an equal voice in suggesting change, improvement, and progressive action for the company. Barb was a very familiar face, both in the officeand out on the shop floor, and always had asmile for all.

“Barb’s death is, first of all, a tragic lossfor her family, and for all of us at LandscapeStructures. She was a tremendous part ofwho we are as a company, and had anincredible passion and zest for everything shedid. She was unfailingly optimistic, and hercuriosity and love of learning and life werecontagious,” states Vice President Pat Faust.“It was amazing—anyone who had even thebriefest interaction with her was profoundlyaffected. To say she’ll be missed is a hugeunderstatement.”

Barb was a true lean leader with veryhigh work ethics and deep concern and carefor the customers and the associates atLandscape St ru c t u res and the local community.Her leadership and passion will be deeplymissed by the lean community at large.

Parts of this text were taken from the pressrelease issued by Landscape Structures regarding the death of co-founder Barb King.

LEANCHAMPIONS Barb King, President of Landscape Structure sBy Anand Sharma, President & CEO, TBM Consulting Group, Inc.



While discussing the merits of policydeployment with one of our long-termclients the topic of management “style” and“personality” came to the table. This is acommon discussion point with corporateand site leadership teams, so the next day onmy flight to Washington I reworked the discussion points and recalled my own experiences that helped shape my opinionson what can be a very emotional subject.

When I first entered the factoryenvironment I had a boss who was truly a“hard piece of work,” as my father says. Heseemed at the time to be displeased with justabout everything, but those things he waspleased about were appreciated by everyone.Several years and bosses later I reported tosomeone whom I at first thought would bethe perfect manager: accessible, approach-able, and apparently not interested in gettinginvolved in the details of my responsibilities.Within a short period I was looking for atransfer. Why? Because under this managerguidelines and codes of conduct were notclear—the only constant was uncertaintyand change in direction, both of which werefrustrating and disabling to my effectiveness.

From that point on I took the stance ofbeing predictable to the people that Iworked with. I call this the art of consisten-cy. It’s an art because to achieve it you haveto practice, to interoperate a situation andalign your actions to the values and codes ofconduct in which you believe.

I found that being predictable in myapproach helped my peers and, moreimportantly, my direct reports to be moreeffective. When a manager uses a consistentapproach, it allows people to take actionimmediately rather than wait for direction.I’m of the opinion that someone who is partof an organization should know how to reactto any situation. This ability to react shouldnot be confused with having “the answer;”instead it means that everyone knows how tomove forward in a way that is consistentwith the rest of the organization’s values andexpectations.

Lean managers focus on process, and thisincludes maintaining an improvement culture. Change will more likely be sustainedwhen the individuals affected have

information that helps them conclude thatthe change is positive and beneficial. It’sthe manager’s responsibility to keep theinformation flowing.

When you’re promoting continuousimprovement and creating an environmentfor change, you also have to provide a firmanchor point—a stable foundation fromwhich the organization can work. I havefound that consistency in how you do thingsprovides that stability, and this consistencyincludes your decision-making processes likepolicy deployment, performance metrics,daily workplace reviews, and your changemethodology, such as kaizen and Design forLeanSigma®. Being consistent in insistingthat change is made through cross-functionalor team-based processes will help you unitethe organization and keep emotions in theworkplace positive.

All of this needs to be backed up by aclear set of values. If your organization hasn’tpublished a set of corporate values, then takethe time to communicate to your peers andreports what’s important to you. You can’trely on the intuition of your fellow workassociates to determine your expectations;you have to communicate regularly anddemonstrate those values and expectationsthrough your own actions. Remember if youwalk past an issue without responding thenthat makes you part of that issue. Knowingand doing are two separate things, and a leanleader must expect and demonstrate both.

Management style reflects who you are asan individual, and there is no right or wrongstyle, but it’s still important that your preferred style melds well with your workteams. You must know and master yourselffirst and then decide if your organization’sand co-workers’ values, styles, and personality are a reasonable fit. If so, thenyou’ll likely be able to help the business andits people grow and move forward as a learning organization on its lean journey.

I am always interested to hear the experi-ences of others in a bid to understand moreabout what has worked and hasn’t worked.Please contact me through e-mail [email protected] if you would like to shareyour experiences or would like to discuss issuesin the field of management facing you today.

FUTURESThe Art of ConsistencyBy Carl Deeley, Lean Value Chain Practice Leader, TBM Consulting Group, Inc.

Carl Deeley

“It is difficult to be always the master of oneself”

—Gautama Buddha

With so much emphasis these days onbecoming “lean” in the workplace, it is hardto believe that most people still refer to 5S assimply housekeeping. More properlydefined, 5S is a process for creating andmaintaining a safe, organized, clean, high-performance workplace. Promoting 5S doesn’t mean just picking up the trash,though that’s certainly a part of it. Theemphasis is on being organized, designatinga place for necessary items, and on being disciplined, ensuring that all items andequipment are always returned to their proper place.

In many organizations, 5S is implement-ed as an afterthought—another continuousimprovement element on the “lean transfor-mation checklist.” However, 5S must beviewed as a key prerequisite in preparing theculture for the necessary repeatability ofstandard work. But the simple truth is that ifan organization is unable to manage 5S—and that includes maintaining it—then it’sunlikely they’ll be able to manage the rest ofa lean journey as well.

Productivity and 5SToyota didn’t rise to the top just by

chance. Toyota is engaged in a never endingpursuit of waste elimination. Toyota understands that the largest, single contribu-tion to increased productivity is eliminating n o n value-added time. A clean, we l l - o r g a n i ze dworkplace and the discipline to keep it thatway solidifies the foundation upon which allother lean activities and productivityachievements are based. Implementing 5Shas multiple benefits in that it:

• creates the proper environment for standard work.

• is a prerequisite to perfect quality.• encourages visual control.• helps identify waste.• places a high value on safety.• promotes employee satisfaction.

Historically, 5S, was derived from theJapanese words that describe the five steps tocreating an organized workplace. This “traditional” approach to 5S can be difficultto implement, audit, and sustain. When anorganization takes the traditional approachto 5S, it tends to “mix and match” all fivelevels at once, which often leads to confusion and incomplete implementationof the program. Even if an organization canbe reasonably successful with such anapproach, the subjectivity of audits still presents a significant roadblock. For example, if an evaluator audits an area andrecords a 5S score of 2.5, what exactly doesthat mean? How does it compare to anotherauditor’s score of 2.5 for a different area?Auditing progress and sustainment under atraditional 5S system often results in a widerange of scores that places both the programand its success in questionable standing.

Progressive 5S The essence of Progressive 5S is the

ability to pair each step of the process with a specific task or activity along with a keydiscipline or behavior that would need to beperformed for that step. By focusing in onone level at a time, it becomes significantlyeasier to both implement and monitorresults. In short, we could not only reducethe amount of time to progress up the ladderto full compliance, but also be able to quantify results for performance trackingand to aid in ensuring sustainment. (Seegraph below.)

This simplified approach relating observ-able activities and behaviors offers one bigadvantage: it allows practitioners to concen-trate on their 5S implementation one level ata time until the step is fully implementedand sustained. This allows the whole processto be viewed as more acceptable from theperspective of the workforce as well as moremanageable from a plantwide perspective. If

TECHTALK P ro g ressive 5S: We ’ re Not Talking Tr a s hBy Mike Se rena, Ed.D., Managing Dire c t o r, TBM LeanSi g m a® Institute


Mike Serena

Step Activity Behavior

Sort Red tag Remove unnecessary items

Set Assign & label Designate a “home” for every item in the work area

Sustain Return Put it back where it belongs after use

Simplify Productivity Eliminate nonvalue-added effort

Standardize Plantwide Expand ownership to everyone to leverage the gains

TBM recently introduced EssentialLean Learning—a comprehensive

online training program for essential lean learning. Online

training is an effective way to buildawareness and understand across a broad base of employees. Visit

www.tbmcg.com/ELL to see the fulleLearning curriculum. The

Progressive 5S module can be purchased individually or as part

of a comprehensive 12-modulelearning program.

people understand the required behaviorsneeded to perform at a particular level, it’smuch easier for them to incorporate thosebehaviors as a regular part of their routines.The underlying logic to progressive 5S isthat successes and opportunities can bequantified at each step thus providing a clearroadmap to progressing up to the next level.

Step 1: SortSo how does one move or “progressively

improve” from one level to another? Onekey advantage of progressive 5S is the simplicity of scoring at the various levels.With Level 1, as with all of the 5S steps, tencategories are defined, along with examplesthat detail what items in an audited area areconsidered necessary to its operation. Eachof the ten categories can be tailored to anygiven area be it on the production floor orin an office. Of course, a clear definition ofnecessary and unnecessary items must bediscussed and agreed upon. For example,one category in the list of 10 might apply tofurniture and equipment, another mightrefer to personal safety equipment and athird might audit documentation andinstructional guides, and so on. If only theitems that are supposed to be in that category are there, then the area gets a scoreof 0.1 for that category. However, if an itemthat shouldn’t be there appears in the area,then the score for the category will be a 0,and the auditor will list those “extraneous”items so it is clear as to what needs to beremoved and for what reason. No categorycan receive a score of 0.1 if any violationsare observed in that category.

By using the defined ten categories and asimple scoring system of 0.1 for categoriesthat meet the criteria and 0 for areas that donot, it’s easy to keep track of where an areastands with respect to the initial first step of5S, or “Sort.” When an area has achieved ascore of 1.0 (that is, a score of 0.1 in each ofthe 10 categories), then it has mastered thatlevel and is ready to progress to the nextstep. Each level’s score is added to the thoseof previously achieved levels, continuing allthe way up to 5.0 for all five levels; howevereach step must be mastered before movingon to the next higher level.

Step 2: SetEveryone in an area agrees where each

item in that area will “live.” This is especial-ly crucial for areas that have multipleusers—placement of tools and equipmentshould make sense for their intended use,with frequency of use and ergonomics beinggiven main consideration. Once a locationhas been determined, the location should beclearly labeled. It’s helpful to identify andlabel fire containers, equipment, and furni-ture; desktop and flat-surface items; aisles;storage containers; and tools, jigs, and fixtures.

Step 3: SustainWhen an area is scored for compliance at

the second level of 5S, it’s possible to get atotal score of 2.0, that is, all unnecessaryitems have been removed and all items havea designated “home,” yet this score does notindicate or ensure that employees will actually place the items in the areas that areso designated. This behavior is evaluated inthird step of Progressive 5S. At level 3,“Sustain,” the scoring categories highlightthose items that are actually located wherethey are supposed to be when not in use. Inthis step, the importance of creating and sustaining operational steps or standardwork becomes critical to the consistency and sustainment of planned operations.

Step 4: SimplifyLevel 4 addresses eliminating nonvalue-

added effort. Originally, when we launchedthe Nissan facility in Smyrna, Tennessee, wewere allotted a ten minute clean-up periodat the end of each shift. But at level 4, wewere challenged with the question, “What isit that requires ten minutes of clean up everyday?” If workers have the discipline to keeptheir work area organized throughout a shift,then how much time would really berequired to clean up at the end of a shift? Bytaking this view at Nissan, we were able toadd nine minutes back to each shift, andthose minutes contributed to increased productivity.

To implement level 4, the root cause(s) of “nonvalue-added time” issues must be discovered and then effective countermea-sures must be implemented to eliminate


recurrence. Of course, eliminating the non-value-added activity is only a prerequisite tothe most important step of substituting a value-added activity in order to realize trueproductivity improvement.

Step 5: StandardizeLevel 5 expands the view from a particu-

lar area to the entire organization. Thisincludes evaluating the spaces between workareas, both on the shop floor and in officeareas as well as the surrounding plant prop-erty, including the parking lot, the loadingdock, and other “neutral” areas. If people inspecific areas begin to take on these “outsideareas,” or the spaces where their areas actual-ly interface, then the entire site takes on agreater responsibility and ownership of promoting a philosophy of organization anddiscipline. Further, this emphasis onplantwide 5S creates a significant impact onsite visitors (i.e., clients and potential customers) whose first impression is oftenthe most lasting memory of the e n t i re visit.At level 5, the entire organization, includingthe status of companywide communication,training, auditing, and a d h e rence to standardw o rk, is under scru t i n y.

A “House” in OrderInconsistent audits, sluggish progress,

and inflated scores are likely under the traditional 5S system, which tends to sufferfrom lack of sustainment and subjectivity.These shortcomings often mask opportuni-ties, diffuse program effectiveness, and erode management’s credibility. If you want toestablish an effective and lasting 5S program,one that will enable your entire organizationto move forward with great strides on yourlean journey, consider implementingProgressive 5S. Progressive 5S is a logical,step-by-step approach to organizing a highperformance workplace. Progress is com-pletely quantifiable, which makes it easy foreveryone to understand and accept. Withsuch a logical approach to building a foun-dation for high performance, who wouldn’twant to put their house in order as they p re p a re to entertain the global marketplace?

THINKSYNC

Like every successful corporation, this $3-billion manufacturer and marketer of consumer household and personal careproducts has ambitious growth targets. Afterreviewing a detailed analysis of the marketopportunity for each product family,company executives set a long-term goal totriple sales in the lighting segment. To dothat with their current fulfillment processeswould require an additional $30 to $100million dollars in finished goods inventory,and another million square feet in warehousing space. That was unacceptable.

Shedding New Light on an Old Problem One of the company’s best-selling

products in this segment is a light for boating and emergency situations. Marketedfor hurricane preparation in the spring andsummer, demand followed a somewhat seasonal pattern. In the factory where theymake the light bodies and assemble theminto the finished product, plant managershad established a clear material flow withtight tolerances and very little wasted movement from the injection moldingmachines through to assembly. But despitehaving an efficient production process, theywere achieving only three inventory turnsper year.

The problem was in the distributionnetwork. The company stored severalmonths of inventory in four regional distribution centers, plus two additional hurricane warehouse locations. One of itslargest retail customers, which accounted for


more than 50 percent of the sales volume forthe product, also had warehouses all over thecountry, as well as its own dedicated facilitiesfor hurricane-related items. It was also carry-ing 13 weeks of inventory. The companyneeded to pull together a cross-departmentteam to take a closer look at customerdemand and come up with a better invento-ry management strategy.

Making the Value Chain TransparentOne of the big “Aha!” moments for the

team came when they overlaid four data elements: (1) point-of-sale data from theirlargest customer, (2) historical inventorylevels, (3) shipment records, and (4) production volumes. The point-of-saledata went back to 2004, when four hurri-canes hit Florida (Charley, Frances, Ivan, andJeanne), three of them with sustained windsof more than 115 mph. A graph of this dataclearly shows how customer demand at theretail level spiked with the preparation andcleanup activity around these storms. A no-sales-tax incentive program by the Stateof Florida that encourages residents to stockup on storm supplies triggered another sales spike.

Even in the worst hurricane season,when the company sold 189,000 lights during a peak six-week timeframe, inventorylevels never fell below 500,000 units. Tomaintain pre-set inventory levels, as the dataclearly showed, production responded to thesharp sales increases by cranking up output,only to shut down the assembly lines in

Leveraging Lean to Eliminate Seasonal Inventory Surges Demand Analysis and In ve n t o ry Reduction Free Up Mo re Than $1 million in Wo rking Ca p i t a l

Ken Koenemann, Managing Dire c t o r, Lean Value Chain Practice, TBM Consulting Group, In c .

“What should you do afteryou’ve established a clear

material flow, dramaticallyreduced setup times, and

squeezed every ounce of wasteout of the production process?

It’s time to take a look at thebroader value chain.”

Out of Sync • As illustrated by this month-to-month overlay, orders and shipments for thishighly promoted product fail to align with the sales forecast, which is completely out ofsync with production. Low production rates in January ramp up rapidly in February andMarch. The line is shut down completely in April and May when orders fail to materialize.

High Variability SKUs

subsequent months when sales returned tonormal levels. It became very clear to theimprovement team that their inventorymanagement policies were responsible forcreating the spikes in production and shipments. Yes, they did need to build aheadto get ready for the no-tax events and thestorm season, but actual customer demandat the retail level over the course of the yearwas fairly stable. They also realized that they didn’t need to hold anywhere near theamount of inventory that they had been targeting.

To determine more appropriate inven-tory levels the team developed a complex simulation tool that allowed managers totest different inventory levels with eachSKU. The simulation allowed them tobecome more comfortable with what wouldhappen to their customers if they had lessproduct sitting in warehouses. Using actualshipment and point-of-sale data, they setnew min/max levels and looked at theimpact in the distribution centers and onproduction if they manufactured productcloser to customer demand. They paid closeattention to whether or not they would everrun out of product and thereby lose poten-tial sales, and calculated the number ofinventory turns they could expect to achieve.

Using the simulation the team foundthat they could reduce total inventory forthis particular product from $1.8 million to$500,000, increasing turnover to almost 11turns per year, and still achieve the current99.3 percent fill rate. Based on the

recommendation to pursue that target inphases, they developed an initial plan toreduce inventory to $800,000, which woulddouble turnover from three to six turns peryear. The week after completing the analysis,the client went from two shifts down to oneon this product line, and then shut downproduction entirely for five weeks to workdown the excess inventory.

To ensure that product would still be available during peak demand periods, theyalso established a weekly meeting during thehurricane season. Pulling together managersfrom sales, marketing, and operations, theydiscussed whether they needed to increase ordecrease production. If they needed to boostoutput, operations established a process forbringing in and training temporary labor sothat they could gradually ramp up production by 10,000 units per day.

Trust the NumbersAs part of this sales and operations

planning (S&OP) process, managers had tolearn to trust the statistically-based forecaststhat were being calculated by their advancedplanning and scheduling solution.Previously, the software would tell themwhat they needed to make, and then managers would manually adjust the numbers in order to hit the inventory num-bers that they thought were really needed. When they looked at the fulfillment process,the improvement team also found that orderpolicies were driving variation and volatilityin demand. Their minimum order quantity


“The team found that they could reduce inventory from $1.8 million to $500,000, tripling turnover to almost 11turns per year, and still achievethe current 99.3 percent fill rate.”

Bumpy Ride • Even for this low variability product, the alignment of orders and shipments could be improved further by smoothing the large swings in the January-February and September-December timeframes.

Low Variability SKUs

for the product was a 65-unit package thatshipped out on a quarter pallet, which retailers could move directly to the salesfloor. With average store sales of 10.6 unitsper week, the quarter pallet represented amonth and a half of inventory.

Working with their largest customer,company managers determined that a unitpack of 13 (aligned with the weekly salesaverage) would save floor space and dramatically smooth out the replenishmentprocess. Not only that, the redesigned packaging was cheaper than the currentpackaging, and it would fit into their existing merchandizing fixtures.

This consumer goods company hasbegun its journey toward a lean value chainby focusing on demand management. It’snow using point-of-sale data to set appropriate inventory levels. Regular S&OPmeetings are speeding communication andaligning market intelligence with production. Packaging configurations arebeing reviewed with customers to determinewhat’s best for both the retail shelf and theoverall value chain.

Developing a lean value chain meansaddressing four key links: demand manage-ment, order fulfillment, business planningand scheduling, and supply management.Managers now understand the benefits ofhaving inventory levels tied to customerdemand, and they know how to manage therisks. The company will achieve furtherinventory reductions, and the ability to support future sales growth, as it rolls outthese practices to other business units andproduct lines.

16

• These point kaizen topics can be assigned to or volunteered for by the team leaders in order to provide focus on necessary topics that will provide immediate impact by removing anabnormality.

• Post the “ABC” list at the line near the SQCD board. If operators become available, instead of looking for workfor them to do, the team lead or supervisor will have a handy list of topics for the person(s) to work on. This is a type of “set up reduction” for project selection by having them readilyavailable.

Once we had standard work in place forchoosing point kaizens, I began to work onthe incentive issue. At Milbank we estab-lished a process where once a week thesupervisors and team leaders make presenta-tions to the leadership on the point kaizensthey performed that week. The presentationsare kept short and simple: one to 10PowerPoint slides requiring three to 10 min-utes of explanation and are e-mailed to thekaizen promotion officer in advance.

The entire group can then vote on whichperson they thought obtained the bestresults for that week’s point kaizen.Choosing the best point kaizen adds areward factor to the process, which whencoupled with the accountability/peer pres-sure factor of having to present results week-ly, greatly enhances the probability of suc-cessful sustainment.

Another company that has instituted thisprocess is Gopher Engines. For the rewardpart of the program, Gopher buys variousgift cards that are placed in a hat and theperson whose kaizen is voted the best thatweek gets to choose a card from the hat.

Making Point KaizensEffective for Sustaining MDI

Usually after we train a company’s leader-ship team in managing for daily improve-ment (MDI), we recommend using pointkaizens as a means of helping to sustainresults. Often the results are mixed becausepoint kaizens were not given priority in theleaders’ daily or weekly activities. It becameclear to me that standard work for choosingpoint kaizens was needed, as well as somesort of extra incentive to ensure that pointkaizens were used successfully for sustainingMDI initiatives. It seemed that point kaizenswere akin to exercise—everyone recognizestheir value, but without incentive to actuallydo either one, both tend to be allowed to fallby the wayside.

First, we established standard work for developing point kaizens:

• Record end of the line abnormalities and list them as point kaizen topics.

• Divide the point kaizen topics into “ABC” groups. An “A” point kaizen may take up to a full day to work on. A “B” would be about a half a day in length, and a “C” would require two or fewer hours.


FIELDNOTES

A positive outcome of this process is thatit helps to drive culture change through con-tinuous improvement by formalizing thepoint kaizen as part of the standard work foranyone in a leadership position. Instead ofjust telling people they should be managingfor daily improvement, this gives them aneffective way to codify doing it.

— Gary Rascoe, Senior ManagementConsultant and Trainer,TBM LeanSigma® Institute

Fosfertil and LeanSigma®:Dramatic Changes in a Few

Short WeeksThe company implemented a solutiondeveloped by TBM Consulting, also reducing water consumption using

LeanSigma technology.__________________________________Fosfertil, Brazil’s largest supplier of raw

material for fertilizers, implementedLeanSigma over 12 weeks at its seven manufacturing units in Araucária (PR),Catalão (GO), Cubatão (SP), Piaçanguera(SP), Tapira (MG), Uberaba (MG), and theSea Terminal (SP). Fosfertil’s goal was tooptimize all of the organization’s processesthrough lean. Among the results acheivedwere productivity improvement of 50 percent for the industrial areas and a dramatic reduction of water and steam


consumption at some production units. Oneof the projects, dubbed “Hunters of LostWater,” implemented by a team at theAraucária unit, attempted to reduce waterconsumption by 2 percent. The team wasable to greatly exceed that goal byimplementing changes to the existingprocesses to produce some chemical combi-nations that allowed water to be re-used forsome processes, thereby reducing the use ofdrinkable water. In order to fight all waste atthe plant, repairs were also conducted onfaucets and automatic flushes. At theCubatão unit, the team was able to reducesteam consumption for the production ofammonium nittrate by 50 percent. At theSea Terminal, the defined goal was toimprove the capacity to transport fertilizersby 15 percent, and the team achieved animprovement of 27 percent. “Thanks to theLeanSigma process, we could understandhow it is possible to perform big changes ina short time and with a small investment,”noted Roberto Busato, Fosfertil industrialdirector. He also pointed out that results andsolutions were feasible thanks to the creativity of those professionals involved indoing the job. After implementing lean atthe industrial plants, the work was alsoexpanded into the administrative areas.

— adapted from Alimento Seguro (SafeFood) magazine, September 12, 2007

CONSIDER THIS!

The conference kicks off with a planttour of Vermeer Manufacturing Company—an accomplished lean organization withmore than 10 years of lean experience and a well-established lean culture. Observelean tools in use and understand their role in supporting the Vermeer culture of continuous improvement.

Keynote speaker Bodine Balasco will discuss the demands of today’s marketplace and how they requireus to learn newtechniques and newskills to help us turn our goals and ourvision into reality. Bodine Balasco was votedon of the top 21 speakers for the 21stCentury by Successful Meetings Magazine.Don’t miss this opportunity to hear fromthis engaging, informative speaker and learntechniques to help you boost your naturalcreative capacity and generate the results you want.

The Lean Excellence

ConferenceNetworking, Benchmarking,

and Strategies for the ContinuousImprovement Office

September 23–25, 2008Des Moines, IA

For more information: 800-438-5535

The Lean Excellence Conference willreplace the traditional LeanSigma®/KaizenPromotion Office Exchange we have hostedin the past. The conference is perfect formid-level managers and leaders managingthe daily implementation of lean inside theirorganizations.

At the Lean Excellence Conferenceyou’ll have the opportunity to benchmarkbest-in-class lean practices and participate incase studies and breakout sessions on today’shighest priority lean topics. There will be anexpanded agenda with unique discussiontracks for traditional manufacturing andcontinuous process manufacturers. Our preliminary list of topics includes:

• Building an effective continuous improvement office

• Identifying and tracking lean performance measurements

• Lean supplier management• Aligning lean results with financial

reporting• Sustaining the gains made from lean

improvement• Developing standard work for leaders• New plant planning and layout—how

to reduce significant capital spending by being more focused and moreeffective

• Leveraging lean to improve energy consumption and savings

Corporate Headquarters4400 Ben Franklin Boulevard

Durham, North Carolina 27704 USA

1.800.438.5535

Australia403A 86 Bay Street

Port Melbourne, Victoria3207 Australia

03.9681.7385

BrazilAvenida Moema 170, cj 45

Sao Paulo -- SPBrasil 04077-02055.11.5051.7490

ChinaRoom 3, 3/F, POS PLAZA

1600 Century Avenue Pudong

Shanghai, 200122 P.R. China

86.21.6888.6671

India“Technopolis”

Sector-54DLF Golf Course Road

Gurgaon, India 122 002 91.124.437.5995

MexicoCalzada San Pedro #250 Nte.

Edificio HQCol. Miravalle

CP 64660Monterrey, NL

52.81.50.00.91.36

Switzerland29, route de Pré-Bois

1215 Geneva 15Switzerland

41.22.710.77.70

United Kingdom3 Gleneagles House

Vernon GateDERBY DE1 1UP

United Kingdom44.1332.367378

TBM LeanSigma® Institute 2008 Event and Workshop Schedule

MANAGINGQ 2 . 0 8

TIMES

Business Process Kaizen Instructor Training Aug 26-29 Durham, NC

CEO Boot CampJul 28-30 TBD Dec 10-12 TBD

Design for LeanSigma® New Products and Processes Jul 7-11 Durham, NC Dec 8-12 Durham, NC

Kaizen Breakthrough Experience Sep 8-12 Gai-Tronics Limited - Staffordshire, UKNov 3-7 ConMed - Utica, NYNov 24-28 WIKA - Klingenberg, Germany

Kaizen Promotion Office Workshop May 13-16 Monterrey, Mexico Oct 14-17 Monterrey, MexicoJul 21-25 Durham, NC Oct 14-17 São Paulo, BrazilAug 25-29 Gurgaon, India Nov 18-21 Shanghai, ChinaOct 13-17 Durham, NC

TBM Lean Certification US Track 4 begins Jul 15US Track 5 begins Sep 9China Track 1begins Aug 25

Lean Management Accounting May 19-20 Monterrey, MX Oct 21-22 Monterrey, MXJun 17-18 Durham, NC Dec 2-3 Durham, NCSep 9-10 Durham, NC

LeanSigma for the Extended Enterprise (New Lean Value Chain Awareness Workshop)Jun 25-26 Huntingdon, United Kingdom

LeanSigma® for Process Industries Jun 10-11 São Paulo, Brazil Sep 17-18 Gurgaon, India

LeanSigma Vision TourMay 20 LaFonte, BrazilAug 28 TBD, Sao Paulo, BrazilOct 28-30 Hayward, Sealy, Hubbell, WIKA, Atlanta, GA / Aiken, SC

LeanSigma®/Kaizen Promotion Office Exchange Sep 23-25 Vermeer Manufacturing - Des Moines, IA

Managing for Daily ImprovementJun 2-6 Kenyon, MN Aug 4-8 Shanghai, ChinaJun 11-13 Monterrey, Mexico Sep 15-19 Utica, NY

Quest for The Perfect Engine™

Jun 11-12 Barcelona, Spain Sep 30-Oct 1 Paris, FranceJun 17-18 Boston, MA Oct 30-31 Frankfurt, GermanyJul 9-10 Monterrey, Mexico Nov 5-6 Buenos Aires, ArgentinaAug 13-14 Hong Kong, China Nov 5-6 New DelhiAug 20-21 Bangalore, India Nov 10-11 Beijing, ChinaSep 3-4 São Paulo, Brazil Nov 11-12 Monterrey, MexicoSep 30-Oct 1 Nashville, TN

Quest for the Perfect Engine™: With Plant Tour Aug 5-7 Salt Lake City, UT (Autoliv)

Quest for the Perfect Engine for the Garment IndustryMay 21-22 San Pedro Sula, Honduras Oct 21-22 Kuala Lumpur, MalaysiaJuly 29-30 Shanghai, China

Shop Floor Kaizen Breakthrough Instructor Training Aug 12-15 Durham, NC Oct 14-17 Shenzhen, ChinaSep 9-12 Monterrey, Mexico Oct 27-31 Gurgaon, IndiaOct 7-10 Derby, UK Nov 11-14 Durham, NC

Sigma Kaizen Black Belt Week 5: Jun 16-20 Northlake, ILWeek 1: Aug TBD

Sigma Kaizen Green Belt Week 1: Aug TBD

Documents

Managing Times Q2 2008