MOHAWK LEAN TRAINING

PHASE 2: LEAN PROJECT MANAGEMENT

INTRODUCTION / AGENDA Welcome and Introductions

What to Expect

Forming a Team

Leading a Project – DMAIC Define

Measure

Exercise – Mapping a Process Analyze

Exercise – Improving a Process Improve

Exercise – Bridging the Gap Control

Managing Change

Determining Savings

Project Timeline

Follow-up Actions

WELCOME AND INTRODUCTIONS Who are you? What do you do? How long have you been doing it? What project have you chosen to work on?

WHAT IS LEAN? A time tested method and set of tools to help us understand:

What adds value to our customers How work gets done currently How we can identify root causes of problems What an “Ideal / No Waste” process looks like How we can improve performance

Lean embodies a way of thinking and acting to continually improve services, eliminate waste, and enhance customer value

Lean engages the people working in the process

WHAT IS LEAN?

Order Cash

All we are doing is looking at the time line, from the moment the customer 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.

WASTE ELIMINATION APPROACH

Value Added Activities

Non Value Added Activities

essential non-essential(reduce) (eliminate)

Lean focuses on these areas

FORMING A TEAM

SUPPLIERS CUSTOMERS

Basically anything that you get from

someone else:Reports

Looking up info on computer

PaperEmails

Approvals

Basically anything that you send to

another department:

ReportsSpreadsheets

Emails

PROCESS

You Are

Here

FORMING A TEAM

You have suppliers… Provide constructive feedback to those that

provide you with information

Ensure your feedback is understood

Don’t give up!

…and you have customers too. Ask for feedback on the work you do

Listen to what your customers are saying

Take action to prevent future defects

FORMING A TEAM

Create a Cross Functional Team Suppliers to the Process

The Process Being Evaluated

Customers of the Process

Specialists where necessary

Need “Doers” and not just Managers Team should be minimum of four – five members

DMAIC ROADMAP

Write the problem down

(Project Charter)

Process Mapping(Current State)

Process Mapping(Future State)

Action Item Tracker

Develop metric(s) andreview periodically

PROCESS FLOW Searching for Lean Nirvana

Orienting your work processes Organizing your work place Changing your work tasks so that your

product or service is always in a state of constant value adding

DMAIC ROADMAP - DEFINE

“If I were given one hour to save the

world, I would spend 59 minutes defining

the problem and one minute solving it.”

- Albert Einstein

DMAIC ROADMAP - DEFINE

Project Charter Helps to focus on and define the

process, and the problem being worked

Lists the Specific Objective(s), Team Members, Metrics, Future State, and Savings

DMAIC ROADMAP - DEFINETitle: Pricing Claims Reduction

Description: 8,500 Price claims were filed in 2013, majority of those were with Builder/MultiFamily customers. Goal of the project is twofold - eliminate the majority of the Price Claims by attacking their root causes, and streamline the process used to receive, investigate, document, and disposition these claims.

Business Unit: FlooringDivision/Area: Residential SalesEvent Owner: Linda WoodyLean Leader: Phil Zolan

Event Start Date: 1/24/14

Annual Cost of Process: $3,357,500Once Complete, How Much

Annual Savings are Expected:$1,678,750

How Much Savings Are Expected This Year:

$1,091,188

Team MembersTeam Leader Linda Woody

Team Member Jay HaganTeam Member Jay BakerTeam Member Kelly LaceyTeam Member Kevin HayesTeam Member

Support Required: NoneProcess Owner: Linda Woody (Claims), Kevin Hayes (Credit)

Notes: 2013 Claims amount: $1,700,000; Mohawk time spent on these claims: $1,020,000 (@ $120/claim); Dealer time spent on these claims: $637,500 (@ $75/claim).

Process Improvement Charter

DMAIC ROADMAP - MEASURE

Process Map – Current State Visually display every step of life

cycle of a particular process

Interactions and handoffs between people are highlighted

Often identifies steps not known by everyone involved in the process

Participation by all affected groups is critical

EXERCISE 1 – MAPPING A PROCESS

DMAIC ROADMAP - ANALYZE Process Map – Future State

What would the ideal process look like Identify and eliminate bottlenecks – Which steps in the process

constrain the throughput Condense multiple locations, reduce unnecessary movement Multiple approvals – How many steps involve approval or review

of actions in previous steps Automate wherever practical Question every existing step, approval, and handoff - eliminate

unnecessary steps The 5 Whys

DMAIC ROADMAP - ANALYZE The 5 Whys

5 Whys is a SIMPLE but POWERFUL technique for uncovering the root cause of a problem when you lack data regarding why the problem is occurring

If we don’t correct the root causes of problems, the same problem will resurface again

DMAIC ROADMAP - ANALYZE The 5 Whys Example

Why 1: Why didn’t my car start?

DMAIC ROADMAP - ANALYZE The 5 Whys Example

Why 1: Why didn’t my car start? The battery is dead.

DMAIC ROADMAP - ANALYZE The 5 Whys Example

Why 1: Why didn’t my car start? The battery is dead. Why 2: Why is the battery dead?

DMAIC ROADMAP - ANALYZE The 5 Whys Example

Why 1: Why didn’t my car start? The battery is dead. Why 2: Why is the battery dead? Because the alternator is not

charging it.

DMAIC ROADMAP - ANALYZE The 5 Whys Example

Why 1: Why didn’t my car start? The battery is dead. Why 2: Why is the battery dead? Because the alternator is not

charging it. Why 3: Why isn’t the alternator charging it?

DMAIC ROADMAP - ANALYZE The 5 Whys Example

Why 1: Why didn’t my car start? The battery is dead. Why 2: Why is the battery dead? Because the alternator is not

charging it. Why 3: Why isn’t the alternator charging it? Because the alternator

belt broke.

DMAIC ROADMAP - ANALYZE The 5 Whys Example

Why 1: Why didn’t my car start? The battery is dead. Why 2: Why is the battery dead? Because the alternator is not

charging it. Why 3: Why isn’t the alternator charging it? Because the alternator

belt broke. Why 4: Why did the belt break

DMAIC ROADMAP - ANALYZE The 5 Whys Example

Why 1: Why didn’t my car start? The battery is dead. Why 2: Why is the battery dead? Because the alternator is not

charging it. Why 3: Why isn’t the alternator charging it? Because the alternator

belt broke. Why 4: Why did the belt break? Because it was well beyond its

useful service life and wasn’t replaced per the owners manual.

DMAIC ROADMAP - ANALYZE The 5 Whys Example

Why 1: Why didn’t my car start? The battery is dead. Why 2: Why is the battery dead? Because the alternator is not

charging it. Why 3: Why isn’t the alternator charging it? Because the alternator

belt broke. Why 4: Why did the belt break? Because it was well beyond its

useful service life and wasn’t replaced per the owners manual. Why 5 and Root Cause: Why wasn’t the manual followed?

DMAIC ROADMAP - ANALYZE The 5 Whys Example

Why 1: Why didn’t my car start? The battery is dead. Why 2: Why is the battery dead? Because the alternator is not

charging it. Why 3: Why isn’t the alternator charging it? Because the alternator

belt broke. Why 4: Why did the belt break? Because it was well beyond its

useful service life and wasn’t replaced per the owners manual. Why 5 and Root Cause: Why wasn’t the manual followed? I never

follow the manual, and prefer to take the risk instead.

DMAIC ROADMAP - ANALYZE

5 Min 15 Min End5 Min 5 Min5 Min

BEFORE

5 Min

15 Min

15 Min

15 Min

End5 Min 5 Min

AFTER

Future State Mapping

EXERCISE 2 – IMPROVING A PROCESS

DMAIC ROADMAP - IMPROVE Action Items need to be SMART

DMAIC ROADMAP - IMPROVE Action Item Tracker

Provides visibility of every action

Maintains accountability to get things done

Allows easy follow-up in the Control phase

Total Action Items 0Completed Actions 0

Open Actions 0% Actions Complete

Problem Description Date Action AssignedProjected

CompletionActual

CompletionNotes

Action Item Tracker

DMAIC ROADMAP - IMPROVE

Total Action Items 12Completed Actions 11

Open Actions 1% Actions Complete 92%

Problem Description Date Action AssignedProjected

CompletionActual

CompletionNotes

Phase II Training Powerpoint 11/26/14 Complete Powerpoint ready for training Michael Savini 12/31/14 12/31/14

Weekly Update - Schedule UpdatesReview Charter and how to fill out

form a teamScramble eggs on Process MAP

Phase II Training Powerpoint 11/26/14 Complete Powerpoint ready for training Phil Zolan 01/30/15 02/04/15

Manage DMAIC Milestones See PHOTO for DMAIC StepsChange Management

Follow up Process -Save Money & Follow the processReport to CFO ELT Monthly

report to Jeff Quarterly

Monday Report 11/26/14 Send Monday report to emory - See notes for detailsMichael

Savini/Phil Zolan

01/28/15 02/04/15Jeff and Frank Projects, Roadblocks, How can Emory Help,

Bullet points onlyexamples - Claims, Tax, Web Site

Monthly Metrics Reort (Automation)Current Month Project StatusPrevious Month Project StatusAll Project StatusPotential SavingsOn TimeHopper ReportTrained Metric 40 per Year

11/26/14 Automate Monthly Metrics package Emory 01/28/15 02/01/15 Phil to complete Charter

Action Item Tracker

EXERCISE 3 – IDENTIFYING ACTIONS

DMAIC ROADMAP - CONTROL Maintain the Solution

Document and standardize the improvements

Update the Final State process map

Publish standard metrics Review procedures regularly

(annually) Share learnings across

organization Celebrate your success!

MANAGING CHANGE Just what is Change Management?

Change management is about introducing change successfully

It is managing the people-side of business change to achieve the required business outcome, within the social infrastructure of the workplace.

Formalizes the need for making sure that change within an organization is managed effectively, through:

Competent Managers

Effective Processes

Quality Tools

MANAGING CHANGE Why Do Some Organizations Fail?

Normally because of lack of recognition of the need to change or a sense of urgency.

Managers are often encouraged and trained to maintain the current system.

Focus changes from solving customer’s needs to market share and increasing revenue per customer.

So what is the Solution? Initiate Change early Create a culture of Leadership Involve the whole organization, not just the

managers

MANAGING CHANGEThe Normal Change Cycle

MANAGING CHANGEThe Normal Change Cycle – Step 1: Anxiety and Fear

MANAGING CHANGEThe Normal Change Cycle – Step 1: Anxiety and Fear

Why People Resist Change Disturbs the status quo

Desire not to lose something of value

Fear of the unknown

Fear of loss of control

Fear of losing face

Fear of surprise

MANAGING CHANGEThe Normal Change Cycle – Step 2: Denial

MANAGING CHANGEThe Normal Change Cycle – Step 2: Denial

Dealing with resistance Organizations often underestimate the variety

of ways people react to change and resist it

Engagement of key stakeholders and top management is critical

Employee involvement from the beginning is also critical

MANAGING CHANGEThe Normal Change Cycle – Step 3: Misery

MANAGING CHANGEThe Normal Change Cycle – Step 3: Misery

It takes deliberate action to overcome this step

Early and open communication is the key

Employee involvement and participation helps significantly

Understand who knows what – don’t assume you have all the information

MANAGING CHANGEThe Normal Change Cycle – Step 4: Willingness to Try

MANAGING CHANGEThe Normal Change Cycle – Step 4: Willingness to Try

Show why it is worth trying – explain the benefits

Make sure that everyone affected by the change has the training and resources necessary to function in the “new world”

MANAGING CHANGEThe Normal Change Cycle – Step 5: Challenging the Change

MANAGING CHANGEThe Normal Change Cycle – Step 5: Challenging the Change

Encourage continued refinement of the process

Continue employee involvement Communicate successes

MANAGING CHANGEThe Normal Change Cycle – Step 6: Gradual Acceptance

MANAGING CHANGEThe Normal Change Cycle – Step 6: Gradual Acceptance

Testing before committing Watching others accept the change People find a way to match their

skills and abilities to the new process

MANAGING CHANGEThe Normal Change Cycle – Step 7: Acceptance

MANAGING CHANGESo How Do I Get People to Change Successfully?

Eight Steps (and you must do them all!)

1. Create a Sense of Urgency

2. Form a Team

3. Create a Vision

4. Communicate the Vision

MANAGING CHANGESo How Do I Get People to Change Successfully?

Eight Steps (and you must do them all!)

5. Empower others to Act on the Vision

6. Create Quick Wins

7. Build on the Change

8. Institutionalize the Change

MANAGING CHANGE

DETERMINING SAVINGS

HARD SAVINGS ARE ACTUAL

$ Saved

FTE employee reassigned

Cost Avoidance

SOFT SAVINGS ARE LESS QUANTIFIABLE

Time reduction

Improved efficiency

Customer Satisfaction

Increased Sales

SAVINGS: HARD VS. SOFT

DETERMINING SAVINGSSAVINGS: Hard vs. Soft Example

Task Person Performing TaskBefore

Automation After Automation Savings (min) # Contracts Rate/Hr Savings ($)Find current form and create contract DM/TM/Admin 20 10 10 1,300 $75 16,250$

Accounting 5 0 5 1,300 $606,500$

RVP/Regional Admin 3 0 3 1,300 $1207,800$

SVP/SVP Admin 3 0 3 1,300 $20013,000$

All 20 5 15 1,300 $75 24,375$

Total: 127 57 70 1,300 139,208$

Accounting reducing one headcount: 55,000$

Total annual savings: 194,208$

Avg Time spent per contract (min)

DETERMINING SAVINGSSAVINGS: Hard vs. Soft Example

Task Person Performing TaskBefore

Automation After Automation Savings (min) # Contracts Rate/Hr Savings ($)Find current form and create contract DM/TM/Admin 20 10 10 1,300 $75 16,250$ Scan, fax or email between Admin and DM DM/Admin 10 1 9 1,300 $75 14,625$ Process form and get it to Accounting Admin 5 1 4 1,300 $45 3,900$ Get readable copy and enter in ClearPay Accounting 20 15 5 1,300 $60 6,500$ Print copy and provide to Acct Mgr Accounting 3 0 3 1,300 $60 3,900$ Review/Approve contract Acct Mgr 5 5 0 1,300 - -$ Print ClearPay screens, combine with Contract, and route to Regional Admin

Accounting 5 0 5 1,300 $606,500$

Review contract and ClearPay entries Regional Admin 5 5 0 1,300 - -$ Route hard copy version to RVP Regional Admin 3 0 3 1,300 $60 3,900$ Review/Approve contract and forward hard copy to SVP

RVP/Regional Admin 3 0 3 1,300 $1207,800$

Review/Aprove contract and forward hard copy to Originator

SVP/SVP Admin 3 0 3 1,300 $20013,000$

Reviewing with Dealer DM/TM 15 15 0 1,300 - -$ Providing Dealer copy DM/TM 5 0 5 1,300 $100 10,833$ Routing signed copy to Admin and Acctg DM/TM/Admin 5 0 5 1,300 $75 8,125$ Tracking contract to determine who has it, calling/emailing to get it signed, providing duplicate copies when lost, filing, sending copies when requested, researching etc

All 20 5 15 1,300 $75 24,375$

FedEx, copying, and filing Accounting/Sales 19,500$ Total: 127 57 70 1,300 139,208$

Accounting reducing one headcount: 55,000$

Total annual savings: 194,208$

Avg Time spent per contract (min)

PROJECT TIMELINE

Project Milestones

Select Team and Create Charter (D) 2 Weeks

Process Map the Current State (M) 3 Weeks

Define the Future State (A) 2 Weeks

Recommend and Implement Improvements (I) 4 Weeks

Periodically Reconfirm Actions (C) 3 Weeks

Total: 14 Weeks

LEAN CONTINUOUS IMPROVEMENT

Questions?

Your Mohawk Resources Flooring and Home

Phil Zolan x42062

Corporate and Ceramics Mike Savini x42025